Power Purchase Agreements

Tolling Agreement
Disco Colesonco Holdco

Power Purchase Agreement

Disco Nuclearco

Vesting Agreement
Genco Disco Holdco

October 1, 2004

EXECUTION COPY

NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION and NEW BRUNSWICK POWER COLESON COVE CORPORATION and NEW BRUNSWICK POWER HOLDING CORPORATION

TOLLING AGREEMENT COLESON COVE GENERATING STATION

October 1, 2004

TABLE OF CONTENTS ARTICLE 1 INTERPRETATION......................................................................................................... 4 1.1 Definitions ................................................................................................................ 4 1.2 Headings and Table of Contents............................................................................. 22 1.3 Gender, Number and Grammatical Changes .......................................................... 22 1.4 Business Days ......................................................................................................... 22 1.5 Currency.................................................................................................................. 22 1.6 Calculation of Interest............................................................................................. 23 1.7 Statutes.................................................................................................................... 23 1.8 Invalidity of Provisions........................................................................................... 23 1.9 Entire Agreement.................................................................................................... 23 1.10 Waiver..................................................................................................................... 24 1.11 Amendment............................................................................................................. 24 1.12 Governing Law ....................................................................................................... 25 1.13 Technical Terms ..................................................................................................... 25 1.14 Schedules ................................................................................................................ 25 ARTICLE 2 TOLLING AND CAPACITY ........................................................................................ 26 2.1 Tolling, Capacity and Fuel...................................................................................... 26 2.2 Sellers Failure to Deliver Net Energy ................................................................... 29 2.3 Title and Risk relating to Net Energy and Fuel ...................................................... 31 2.4 Transmission and Related Costs ............................................................................. 32 2.5 Capacity Payments.................................................................................................. 33 2.6 Availability after the In-Service Date..................................................................... 33 2.7 Adjustments for Environmental Costs.................................................................... 35 2.8 Emission Credits and Other Environmental Attributes .......................................... 42 2.9 Heat Rate................................................................................................................. 42 2.10 Taxes....................................................................................................................... 44 2.11 Metering.................................................................................................................. 45 2.12 Start-Ups ................................................................................................................. 45 2.13 New Fuel................................................................................................................. 45 2.14 Gypsum and Ash..................................................................................................... 46 2.15 Notice of Shutdown ................................................................................................ 46 ARTICLE 3 OUTAGES ....................................................................................................................... 47 3.1 Planned Outage Schedule ....................................................................................... 47 -i-

3.2 3.3 3.4 3.5 3.6

Changes to Planned Outage Schedule .................................................................... 47 Forced Outages ....................................................................................................... 49 Maintenance Outages.............................................................................................. 49 Cost of Changes ...................................................................................................... 50 Scheduling .............................................................................................................. 50

ARTICLE 4 ANCILLARY SERVICES.............................................................................................. 52 4.1 Self Supply by Buyer.............................................................................................. 52 4.2 Payment for Ancillary Services .............................................................................. 52 ARTICLE 5 COVENANTS.................................................................................................................. 54 5.1 Operation, Repair and Maintenance ....................................................................... 54 5.2 Refurbishment Obligations ..................................................................................... 55 5.3 Information ............................................................................................................. 55 5.4 Inspection................................................................................................................ 56 5.5 Insurance................................................................................................................. 56 5.6 Damage, Destruction and Repair ............................................................................ 57 5.7 Derations................................................................................................................. 58 5.8 Unit Generator Load and Common Service Load .................................................. 58 5.9 Regulatory Compliance .......................................................................................... 58 5.10 Notification of Actions ........................................................................................... 59 ARTICLE 6 BILLING, PAYMENT, AUDIT AND CREDIT........................................................... 60 6.1 Billing and Other Statements.................................................................................. 60 6.2 Payments and Interest ............................................................................................. 62 6.3 Adjustments ............................................................................................................ 62 6.4 Disputed Bills ......................................................................................................... 62 6.5 Audit ....................................................................................................................... 63 6.6 Credit and Collateral Requirements........................................................................ 65 ARTICLE 7 REPRESENTATIONS AND WARRANTIES ............................................................. 67 7.1 Representations and Warranties of the Seller ......................................................... 67 7.2 Representations and Warranties of the Buyer......................................................... 68

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ARTICLE 8 TERM, DEFAULT AND TERMINATION.................................................................. 70 8.1 Term........................................................................................................................ 70 8.2 Events of Default by Buyer .................................................................................... 70 8.3 Termination by Seller ............................................................................................. 72 8.4 Events of Default by Seller..................................................................................... 73 8.5 Termination by the Buyer ....................................................................................... 75 8.6 NB Power Holdco Remedy..................................................................................... 76 8.7 Termination and Survival ....................................................................................... 76 ARTICLE 9 LIABILITY AND INDEMNIFICATION ..................................................................... 78 9.1 Limitation of Liability ............................................................................................ 78 9.2 Liquidated Damages ............................................................................................... 78 9.3 Indemnification by Seller........................................................................................ 79 9.4 Indemnification by the Buyer ................................................................................. 80 9.5 Sole Remedies and Injunctive Relief...................................................................... 81 9.6 Defence of Claims .................................................................................................. 81 ARTICLE 10 CONTRACT OPERATION AND ADMINISTRATION............................................ 86 10.1 Operating Committee.............................................................................................. 86 10.2 Record Retention .................................................................................................... 86 10.3 Notices .................................................................................................................... 87 ARTICLE 11 FORCE MAJEURE ........................................................................................................ 90 11.1 Effect of Invoking Force Majeure and Notice ........................................................ 90 11.2 Definition of Force Majeure ................................................................................... 91 11.3 Prolonged Force Majeure........................................................................................ 92 11.4 Extension ................................................................................................................ 93 11.5 No Capacity Payment ............................................................................................. 93 11.6 NB Power Holdco Limitation ................................................................................. 93 ARTICLE 12 MISCELLANEOUS PROVISIONS .............................................................................. 94 12.1 Informal Dispute Resolution Procedures................................................................ 94 12.2 Arbitration Procedures............................................................................................ 94 12.3 Legal Relationship .................................................................................................. 95 12.4 Assignment ............................................................................................................. 95 -iii-

12.5 12.6 12.7 12.8 12.9 12.10

Set-off ..................................................................................................................... 98 Further Assurances ............................................................................................... 100 Confidentiality ...................................................................................................... 100 Agency .................................................................................................................. 102 Time of the Essence.............................................................................................. 103 Counterparts.......................................................................................................... 103

SCHEDULES Schedule 1.1.16 Schedule 1.1.25 Schedule 1.1.28 Schedule 1.1.55 Schedule 1.1.64 Schedule 1.1.107 Schedule 2.1.4 Schedule 2.5 Schedule 2.9.4 Schedule 5.1 Schedule 12.2 Capacity Payment Contracted Energy Price CPI Adjustment Fuel Specifications Heat Rate Test Refurbishment Description Scheduling Procedures Adjustments to Capacity Payment Heat Rate Adjustment and Start-Up Fees Coleson Cove Operating Characteristics Arbitration Procedures

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TOLLING AGREEMENT

THIS TOLLING AGREEMENT is made effective this 1st day of October, 2004, B E T W E E N: NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (the Buyer) and NEW BRUNSWICK POWER COLESON COVE CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (the Seller) and NEW BRUNSWICK POWER HOLDING CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (NB Power Holdco)

-2RECITALS: A. The Buyer and the Seller are the successors to the distribution business and the electricity generation business located at Coleson Cove, respectively, of New Brunswick Power Corporation. B. New Brunswick Power Corporation was restructured as a result of the proclamation of the Electricity Act on the date hereof and its assets and liabilities were transferred, in part, to five corporations, two of which are the Buyer and the Seller. C. The Seller has agreed to (i) sell to the Buyer tolling capacity and related services from Coleson Cove to convert fuel to Electricity, and (ii) sell services to, and act as the agent of, NB Power Holdco in certain circumstances. The Buyer and/or NB Power Holdco will cause all necessary fuel to be provided to the Seller as required for the generation of Electricity from Coleson Cove. D. The Seller is refurbishing Coleson Cove and the Buyer, NB Power Holdco and the Seller have prepared this Agreement in contemplation that the Refurbishment will be completed. E. In addition to the transactions contemplated by this Agreement, the Buyer provides the Seller with Electricity at several delivery points at voltages of 25 kV or lower. The provision of this Electricity by the Buyer to the Seller does not form part of this Agreement. F. The Seller may assign, transfer, pledge or otherwise dispose of all or part of its rights and interests under this Agreement pursuant to section 12.4.1.2 upon a Transfer of all or part of the Facilities to which the Province has consented, and upon the assignee, transferee, pledgee or other acquiror assuming the Sellers liabilities and obligations hereunder, the Seller shall be freed and relieved from such liabilities and obligations pursuant to section 12.4.3.

-3NOW THEREFORE in consideration of the mutual covenants set forth herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows:

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ARTICLE 1 INTERPRETATION 1.1 Definitions In this Agreement and the recitals to this Agreement: 1.1.1 Affiliate means, with respect to any Person, any other Person that, directly or

indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under the common Control of a third Person. 1.1.2 Agreement means this tolling agreement and all Schedules attached to this

tolling agreement, in each case as they may be amended, restated or replaced from time to time, and unless otherwise indicated, references to Articles, recitals, sections and Schedules are references to articles, recitals, sections and schedules in this tolling agreement. 1.1.3 Ancillary Services means services and products necessary to maintain the

reliability of the SO-Controlled Grid, including frequency control, voltage control, reactive power and operating reserve. 1.1.4 Applicable Law means, collectively, all applicable laws, statutes, ordinances,

decrees, rules, regulations, by-laws, legally enforceable policies, codes and guidelines, the Market Rules, judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, decisions, directives, rulings and awards, and conditions of any grant of approval, permission, certification, consent, registration, authority or licence by any court, statutory body, self-regulatory authority, stock exchange or other Governmental Authority. 1.1.5 Availability means, for any period of time and expressed as a percentage: 1.1.5.1 the amount of Net Energy declared available by the Seller to the Buyer

during that period of time in accordance with section 2.1.4 and the Scheduling Procedures; divided by

-51.1.5.2 the aggregate of the Contracted Capacities for each hour during that

period of time; provided that: 1.1.5.3 a Unit Generator on (i) a Planned Outage during March, April, May,

September, October or November which was Scheduled in compliance with the terms of this Agreement, (ii) a Planned Outage in any other month which was Scheduled in compliance with the terms of this Agreement, provided that, for the purposes of this section 1.1.5.3, the Buyer has provided its consent to such Planned Outage, which consent shall be in the Buyers sole discretion, or (iii) a Maintenance Outage consented to by the Buyer in accordance with the terms of this Agreement, which consent shall be in the Buyers sole discretion (but not, for greater certainty, a Forced Outage), shall be considered to have available for each hour of such Planned Outage or Maintenance Outage, Net Energy equal to the amount of the Unit Generators DNC, notwithstanding the Sellers declaration to the Buyer pursuant to section 2.1.4 and the Scheduling Procedures in respect of the Unit Generators actual availability; and 1.1.5.4 a Unit Generator that has been subject to a Deration during that period

of time shall be considered to have available for each hour that the Deration occurs during such period of time Net Energy equal to the sum of (i) subject to section 1.1.5.3, Net Energy declared available by the Seller to the Buyer during each such hour in accordance with section 2.1.4 and the Scheduling Procedures, and (ii) the decrease in that Unit Generators availability as a result of the Deration. For greater certainty, whether or not a Unit Generator is actually dispatched by the SO shall not affect Availability. 1.1.6 Availability Statement means for any Billing Month or other period of time a

statement of the Availability for that Billing Month or that period of time in a form which is acceptable to the Buyer, acting reasonably.

-61.1.7 1.1.8 1.1.9 1.1.10 1.1.11 Bbl means one barrel. Bill has the meaning attributed to that term in section 6.1.1. Billing Month has the meaning attributed to that term in section 6.1.1. Board has the meaning attributed to that term in section 1.11. BTU means the amount of heat energy necessary to raise the temperature of

one pound of water one degree Fahrenheit. 1.1.12 Business Day means any day, other than a Saturday, Sunday, any statutory

holiday in the Province of New Brunswick, or any day on which banking institutions in Fredericton, New Brunswick are not open for the transaction of business. 1.1.13 Buyer means New Brunswick Power Distribution and Customer Service

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Distribution and Customer Service Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Distribution and Customer Service Corporation or any continuance under the laws of another jurisdiction. 1.1.14 1.1.15 1.1.16 1.1.17 Buyer Event of Default has the meaning attributed to that term in section 8.2. Buyer Indemnitee has the meaning attributed to that term in section 9.3.1. Capacity Payment has the meaning attributed to that term in Schedule 1.1.16. Capital Threshold means: 1.1.17.1 for the Fiscal Year ending March 31, 2005, $5,000,000; and 1.1.17.2 for each Fiscal Year thereafter, the product of (i) the Capital Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year.

-71.1.18 Change of Control means the occurrence of any change in the Control or For greater certainty, a change in either the equity

Effective Control of a Person.

ownership or the voting control of a Person which results in a decrease in the beneficial ownership of or control over the equity value or voting rights or interests, respectively, of that Person from more than 50% to 50% or less of the outstanding equity value or voting rights or interests, respectively, shall be considered a Change of Control for the purposes of this Agreement. 1.1.19 Coleson Cove means the Coleson Cove generating station located in

Saint John, New Brunswick. 1.1.20 Collection Period means the period in days commencing on the first day of a

Billing Month and ending on the date that is 30 days after the Payment Date for that Billing Month. 1.1.21 Commercially Reasonable Efforts means efforts which are designed to enable

a party, directly or indirectly, to satisfy or perform its obligations under this Agreement or to otherwise assist in the consummation of the transactions contemplated by this Agreement and which do not require the performing party to expend any funds or assume liabilities other than expenditures or liabilities which are reasonable in nature and amount in the context of such obligations or transactions or, where applicable, usual commercial practice. 1.1.22 Common Service Load means the total amount of Electricity measured in

MWh consumed by the Facilities which is not Unit Generator Load, as measured at the applicable Metering Installation(s). 1.1.23 Confidential Information has the meaning attributed to that term in

section 12.7. 1.1.24 Contracted Capacity means 100% of the aggregate DNCs of the Unit

Generators, provided that and notwithstanding the foregoing, (i) prior to the In-Service Date, the aggregate Contracted Capacities of the Unit Generators for the purposes of this Agreement shall not exceed 998 MW and if 100% of the aggregate DNCs of the Unit

-8Generators exceeds 998 MW, the Contracted Capacity for the purposes of this Agreement shall be deemed to equal 998 MW, and (ii) on and after the In-Service Date, the aggregate Contracted Capacities of the Unit Generators shall not exceed 978 MW and if 100% of the aggregate DNCs of the Unit Generators exceeds 978 MW, the Contracted Capacity for the purposes of this Agreement shall be deemed to equal 978 MW. 1.1.25 Contracted Energy Price has the meaning attributed to that term in

Schedule 1.1.25. 1.1.26 Control means: 1.1.26.1 when applied to the relationship between a Person and a corporation, the beneficial ownership by such Person at the relevant time of shares of the corporation: (i) carrying more than 50% of the voting rights ordinarily

exercisable at meetings of shareholders of the corporation, and (ii) representing more than 50% of the equity value of the corporation; 1.1.26.2 when applied to the relationship between a Person and a partnership or joint venture, (i) the beneficial ownership by such Person at the relevant time of: (a) more than 50% of the voting interests of the partnership or joint venture, and (b) partnership or joint venture interests representing more than 50% of the equity value of the partnership or joint venture, and (ii) it can reasonably be expected that the Person directs the affairs of the partnership or joint venture; 1.1.26.3 when applied to the relationship between a Person and a limited partnership, the beneficial ownership by such Person at the relevant time of: (i) shares of the general partner or general partners of the limited partnership carrying more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of such general partner or general partners such that it can reasonably be expected that the Person directs the affairs of the limited partnership, and (ii) partnership interests representing more than 50% of the equity value of the limited partnership; or

-91.1.26.4 when applied to the relationship between a Person and another Person that is not a corporation, partnership, joint venture or limited partnership, (i) the beneficial ownership by such Person at the relevant time of more than 50% of any equity, participating and any other ownership interests of that other Person, and (ii) it can reasonably be expected that the Person directs the affairs of that other Person; and the term Controlled by has a corresponding meaning; provided that a Person (the first-mentioned Person) who Controls a corporation, partnership, limited partnership, joint venture or other Person (the second-mentioned Person) shall be deemed to Control a corporation, partnership, limited partnership, joint venture or other Person which is Controlled by the second-mentioned Person and so on. 1.1.27 CPI (New Brunswick) means the Consumer Price Index for New Brunswick,

All items (Not Seasonally Adjusted), 1992 = 100, or any index published in substitution therefor if the Consumer Price Index for New Brunswick, All items (Not Seasonally Adjusted), 1992 = 100, is no longer published, or any other replacement index designated by the Buyer and acceptable to the Seller, acting reasonably, published by Statistics Canada (or any successor thereof or any other Governmental Authority) from time to time. 1.1.28 1.1.29 CPI Adjustment has the meaning attributed to that term in Schedule 1.1.28. Deration means any normal operating condition, not caused by the Sellers

negligence or practices, methods or activities not in accordance with Good Utility Practices, that has the effect of decreasing a Unit Generators availability, provided that: 1.1.29.1 the normal operating condition must be capable of being remedied or repaired by a Maintenance Outage or a Planned Outage which would have a duration of no more than 72 hours; 1.1.29.2 the decrease in a Unit Generators availability as a result of one or more Derations occurring at the same time shall in no circumstances exceed 50 MW and if such decrease in availability exceeds 50 MW, such decrease in availability shall be deemed to equal 50 MW for purposes of this Agreement; and

- 10 1.1.29.3 the normal operating condition is remedied or repaired within 120 hours of its commencement and if it is not so remedied or repaired, the Deration shall be deemed for purposes of this Agreement to have terminated at the end of such 120th hour. 1.1.30 1.1.31 Direct Claim has the meaning attributed to that term in section 9.6.8. Dispatched Differential has the meaning attributed to that term in

section 2.1.11. 1.1.32 1.1.33 1.1.34 Disputes has the meaning attributed to that term in section 12.1. Disputes Committee has the meaning attributed to that term in section 12.1. DNC means, in respect of a Unit Generator, that Unit Generators demonstrated

net maximum capability to deliver Net Energy to the Point of Delivery, as declared from time to time by the Seller and acceptable to the Buyer, acting reasonably, provided that if the SO determines, establishes or audits the demonstrated net maximum capability of a Unit Generator, that Unit Generators DNC for the purposes of this Agreement shall equal such demonstrated net maximum capability determined, established or audited by the SO from time to time. For greater certainty, a Unit Generators DNC shall be calculated net of that Unit Generators Unit Generator Load and net of that Unit Generators pro rata share of the Common Service Load. 1.1.35 Effective Control means control in fact by one Person, together with its

Affiliates and those with whom it is acting in concert, exercising effective control over another Person or over the decision-making of that other Person, either directly or indirectly, whether through the holding of shares of a corporation or through the holding of a significant portion of any class of shares of a corporation or through the holding of units in a partnership or limited partnership or through the holding of outstanding debt of a corporation, partnership or limited partnership or of any shareholder or member of a corporation, partnership or limited partnership or by any other means; any Person which holds voting or equity securities (as defined in the Securities Act (Ontario)) representing, in

- 11 the aggregate, 50% or more of the outstanding securities of any class of the Person shall be deemed for the purposes of this Agreement to have Effective Control of that Person. 1.1.36 Electric Finance Corporation means New Brunswick Electric Finance

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Electric Finance Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Electric Finance Corporation or any continuance under the laws of another jurisdiction. 1.1.37 Electricity means electrical capacity and/or energy measured in MW or MWh,

as applicable. 1.1.38 1.1.39 Electricity Act means the Electricity Act (New Brunswick). Emission Allowances means any allowances issued, allocated or granted under

Applicable Law authorizing the emission into the Environment of specified substances in specified levels or quantities, including the emission of particulates, nitrogen oxide, sulphur dioxide and carbon dioxide. 1.1.40 Emission Credits means any credits issued, allocated or granted under

Applicable Law which are associated with an amount of emissions into the Environment which have been avoided or reduced. 1.1.41 Environment means the air, water (including surface water and underground

water) and land. 1.1.42 1.1.43 Environmental Costs has the meaning attributed to that term in section 2.7.1.2. Environmental Law means all Canadian federal, provincial and municipal

laws, statutes, ordinances, decrees, regulations, by-laws, decisions and rules, and any legally enforceable orders, codes, policies and guidelines of any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any permits, certificates, approvals, consents, authorizations, registrations or licences issued by any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any

- 12 requirements or obligations arising under Canadian common law, relating specifically to the Environment, the Release and/or threatened Release of Hazardous Substances into the Environment, and/or the manufacture, processing, distribution, use, treatment, storage, transport, disposal and/or handling of Hazardous Substances, including the Canadian Environmental Assessment Act (Canada), the Canadian Environmental Protection Act, 1999 (Canada), the Fisheries Act (Canada), the Pest Control Products Act (Canada), the Transportation of Dangerous Goods Act, 1992 (Canada), the Clean Air Act (New Brunswick), the Clean Environment Act (New Brunswick), the Clean Water Act (New Brunswick), and the Transportation of Dangerous Goods Act (New Brunswick), and the respective regulations thereunder and any municipal noise or sewer use by-law. 1.1.44 Estimated Collection Value means an estimated amount payable for a

Collection Period by the Buyer to the Seller equal to (i) the product of the estimated aggregate Net Energy that is expected to be Scheduled with the SO to be delivered by the Seller to the Buyer at the Point of Delivery during the Collection Period and the Contracted Energy Price applicable during the Collection Period, plus (ii) any estimated Capacity Payment applicable for the Collection Period as estimated to be decreased pursuant to section 2.6, if at all. The Estimated Collection Value shall be determined by the Seller, acting reasonably, by reference to the Scheduling instructions and its expected Availability for the Collection Period. 1.1.45 1.1.46 1.1.47 Event of Default means a Buyer Event of Default or a Seller Event of Default. Excluded Month has the meaning attributed to that term in section 3.2.1.5. Facilities means the plant, facilities, buildings, equipment, supplies and

improvements owned or leased by the Seller and located at, on, in, upon, over, across, under or within Coleson Cove. 1.1.48 Final Heat Rate Test has the meaning attributed to that term in section 2.9.1 or

2.9.2, as applicable. 1.1.49 Final Hourly Balanced Schedule has the meaning attributed to that term in the

Market Rules.

- 13 1.1.50 1.1.51 Firm Estimate has the meaning attributed to that term in section 2.7.4. Fiscal Year means the 12-month period from April 1 in one year to March 31

in the next year, inclusive. 1.1.52 1.1.53 Force Majeure has the meaning attributed to that term in section 11.2. Forced Outage means an unplanned Unit Generator outage, including an

unplanned Unit Generator outage that is a result of: 1.1.53.1 automatic action of equipment without any action of the operator; 1.1.53.2 action of the operator where such operator reasonably believes that such action is necessary to avoid: (i) compromising the health or safety of any Person, (ii) compromising the integrity of the Environment, (iii) damage to material plant or facilities, or (iv) breaching the provisions of Applicable Law; 1.1.53.3 action of the operator where such operator reasonably believes that such action is necessary to avoid an automatic disconnection of a Unit Generator that would have occurred shortly after the intentional disconnection of a Unit Generator by the operator; or 1.1.53.4 Force Majeure. 1.1.54 Fuel Delivery Point means the point where the pipeline that delivers fuel to the

Seller crosses into Coleson Cove. 1.1.55 Fuel Specifications means the required specifications for fuel provided or

caused to be provided by the Buyer, its agents (including NB Power Genco) or NB Power Holdco to the Seller in connection with this Agreement, as set out in Schedule 1.1.55. 1.1.56 Generation Interconnection Agreement means the generation interconnection

agreement between the Seller and New Brunswick Power Transmission Corporation, as amended, restated or replaced from time to time.

- 14 1.1.57 Good Utility Practices means, as applicable to the party obliged to use Good

Utility Practices hereunder, any of the practices, methods and activities adopted by a significant portion of the North American electric utility industry as good practices applicable to facilities of similar design, size and capacity to Coleson Cove or any of the practices, methods or activities which, in the exercise of skill, diligence, prudence, foresight and reasonable judgment by a prudent operator in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, expedition and Applicable Law. Good Utility Practices are not intended to be limited to the optimal practices, methods or acts to the exclusion of all others, but rather to be practices, methods or acts generally accepted in the North American electric utility industry. 1.1.58 Governmental Authority means any federal, provincial, municipal or local

government, parliament or legislature, or any regulatory authority, agency, tribunal, commission, board or department of any such government, parliament or legislature, or any court or other law, regulation or rule-making entity, or any arbitrator, each having or reasonably purporting to have jurisdiction in the relevant circumstances, including, for greater certainty, the SO, or any Person acting or reasonably purporting to act under the authority of any such Governmental Authority. 1.1.59 1.1.60 GST means all tax payable under Part IX of the Excise Tax Act (Canada). Guarantee means a guarantee in a form satisfactory to the Seller, acting

reasonably, as provided by a Guarantor pursuant to section 6.6.1.1 or replaced pursuant to section 6.6.4. 1.1.61 Guarantor has the meaning attributed to that term in section 6.6.1.1 and

includes a Guarantors permitted assignee pursuant to section 6.6.4. 1.1.62 Hazardous Substances means: 1.1.62.1 any chemicals, materials or substances defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, hazardous constituents, restricted hazardous materials, extremely hazardous

- 15 substances, toxic substances, deleterious substances, contaminants, pollutants, toxic pollutants or words of similar meaning and regulatory effect under any applicable Environmental Law, including any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls waste; and 1.1.62.2 any other material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law. 1.1.63 Heat Rate Adjustment has the meaning attributed to that term in

Schedule 2.9.4. 1.1.64 Heat Rate Test means a test of a Unit Generators heat rate as described in

Schedule 1.1.64. 1.1.65 HST means all tax payable under the Harmonized Sales Tax Act (New

Brunswick) and under Part IX of the Excise Tax Act (Canada). 1.1.66 including, included and include means including, included or include,

each without limitation. 1.1.67 1.1.68 Indemnifiable Loss has the meaning attributed to that term in section 9.3.1. Indemnifying Party means a Person required to provide indemnification under

this Agreement. 1.1.69 be. 1.1.70 In-Service Date means the first day in the first calendar month following the Indemnitee means a Seller Indemnitee or a Buyer Indemnitee, as the case may

completion of the Refurbishment, which completion shall be evidenced by an appropriate declaration of in-service in respect of the Facilities being delivered by the Seller to the Buyer.

- 16 1.1.71 Insolvency Legislation means the Bankruptcy and Insolvency Act (Canada),

the Companies Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act (Canada) and any other similar legislation, statutes, regulations and rules. 1.1.72 Interest Rate means, for any day, the annual rate of interest equal to the rate

which the Bank of Montreal establishes at its principal office in Fredericton, New Brunswick as the reference rate of interest to determine interest rates it will charge on such day for commercial loans in Canadian dollars made to its customers in Canada and which it refers to as its prime rate of interest, plus 1%. 1.1.73 Knowledge of any Person means the actual knowledge of the corporate officers

of that Person charged with responsibility for the particular function. 1.1.74 1.1.75 kV means kilovolt. Letter of Credit means one or more irrevocable, standby letters of credit issued

by a Canadian commercial bank or foreign bank with a Canadian branch having an S&P debt rating in respect of its most senior unsecured debt of at least A or another debt rating at least equivalent to the foregoing S&P rating in respect of its most senior unsecured debt, and in a form acceptable to the Seller, acting reasonably. 1.1.76 Maintenance Outage means an unplanned Unit Generator outage which is

required as a result of equipment failure, an order from a Governmental Authority, or any other event or condition which, without a Unit Generator outage, would reduce safety or materially reduce unit reliability, and the operator has some discretion to schedule the outage (as opposed to a Forced Outage where the operator has no such discretion). 1.1.77 1.1.78 Rules. 1.1.79 Metering Installation means any apparatus used to measure electrical Market Rules means the rules made under section 58 of the Electricity Act. Market Participant has the meaning attributed to that term in the Market

quantities.

- 17 1.1.80 Minimum Credit Rating has the meaning attributed to that term in

section 6.6.3. 1.1.81 1.1.82 MMBTU means one million BTUs. Monthly Capital Payment has the meaning attributed to that term in

Schedule 1.1.16. 1.1.83 1.1.84 1.1.85 MW means megawatt. MWh means megawatt hour. NB Power Genco means New Brunswick Power Generation Corporation, a

corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Generation Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Generation Corporation or any continuance under the laws of another jurisdiction. 1.1.86 NB Power Holdco means New Brunswick Power Holding Corporation, a

corporation continued under the laws of New Brunswick, and includes any successor to New Brunswick Power Holding Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Holding Corporation or any continuance under the laws of another jurisdiction. 1.1.87 Net Energy means the aggregate of Net Generation per Unit for all of the Unit

Generators less the Common Service Load, provided that if Net Energy is a negative amount, Net Energy shall be deemed to be zero. 1.1.88 Net Generation per Unit means in respect of a Unit Generator, the total

amount of Electricity measured in MWh delivered at the Point of Delivery for that Unit Generator less the Unit Generator Load applicable to that Unit Generator measured in MWh. For greater certainty, Net Generation per Unit can be a negative amount for the purposes of this Agreement.

- 18 1.1.89 New Fuel Capital Costs means the actual reasonable capital costs incurred or

expended by the Seller in order to permit the Seller to accept and use a fuel other than heavy fuel oil to generate Electricity from the Unit Generators, such capital costs to be agreed to by the Seller and the Buyer or, failing such agreement, to be determined in accordance with the provisions of section 12.1 and, if required, section 12.2. 1.1.90 Notice of Informal Resolution has the meaning attributed to that term in

section 12.1. 1.1.91 O&M Threshold means: 1.1.91.1 for the Fiscal Year ending March 31, 2005, $500,000; and 1.1.91.2 for each Fiscal Year thereafter, the product of (i) the O&M Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. 1.1.92 Operating Characteristics means the operating characteristics set out in

Schedule 5.1, as they may be amended in accordance with section 5.1.2. 1.1.93 1.1.94 Operating Committee has the meaning attributed to that term in section 10.1. Operating Period End Date means, at any given time, the date, determined as

of that time, when the last Unit Generator is expected to be shut down and to stop generating Electricity on a permanent basis, such date to be agreed to by the Buyer and the Seller or, failing such agreement, to be determined in accordance with the provisions of section 12.1 and, if required, section 12.2. 1.1.95 ORIMULSION Fuel Supply Agreement means the fuel supply agreement

between New Brunswick Power Corporation and Bitumenes Orinoco, S.A. and binding on PDVSA, effective May 6, 2003, for the supply of ORIMULSION, as such agreement may be amended, restated or replaced from time to time. 1.1.96 Other Facilities means all plant, facilities, buildings, equipment, supplies and

improvements, other than the Facilities, related to, or used in connection with, the

- 19 generation of Net Energy which are owned or leased by the Seller or which the Seller is permitted to use. 1.1.97 1.1.98 1.1.99 Outage means a Forced Outage, a Maintenance Outage or a Planned Outage. Payee has the meaning attributed to that term in section 6.1.3. Payment Date has the meaning attributed to that term in section 6.2.

1.1.100 Payor, except in section 2.10 where such term is separately defined, has the meaning attributed to that term in section 6.1.3. 1.1.101 PDVSA means the Petroleos de Venezuela, S.A. 1.1.102 Person means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, Governmental Authority or entity however designated or constituted. 1.1.103 Planned Outage means any Unit Generator outage other than a Maintenance Outage or a Forced Outage. For greater certainty, a Planned Outage may arise because work is being conducted on the Facilities which requires a Unit Generator outage, even though work is not being performed on that Unit Generator. 1.1.104 Planned Outage Schedule has the meaning attributed to that term in section 3.1. 1.1.105 Point of Delivery means, in respect of a Unit Generator, the high voltage terminals of the step-up transformer for that Unit Generator. 1.1.106 Province means Her Majesty the Queen in right of the Province of New Brunswick. 1.1.107 Refurbishment means the refurbishment of the Facilities as described in Schedule 1.1.107.

- 20 1.1.108 Release means any spilling, leaking, pumping, pouring, emitting, venting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the Environment. 1.1.109 S&P has the meaning attributed to that term in section 6.6.3. 1.1.110 Schedule, Scheduled and Scheduling means all acts necessary pursuant to and in accordance with the Scheduling Procedures and the Market Rules for the Buyer (and its agents) and the Seller, or either one of them, to schedule, dispatch and deliver, or to cause to be scheduled, dispatched and delivered, Electricity to the Point of Delivery, including, if applicable, (i) the submission or re-submission of all dispatch data or bilateral contract data to, and (ii) the receipt of dispatch communications or instructions from, the SO. 1.1.111 Scheduling Procedures means the procedures for Scheduling set out in Schedule 2.1.4 as those procedures may be amended, supplemented, or replaced from time to time by the Operating Committee and any such amended, supplemented or replaced Scheduling Procedures shall be deemed to be the Scheduling Procedures referred to in this Agreement. 1.1.112 Seller means New Brunswick Power Coleson Cove Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Coleson Cove Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Coleson Cove Corporation or any continuance under the laws of another jurisdiction. 1.1.113 Seller Event of Default has the meaning attributed to that term in section 8.4. 1.1.114 Seller Indemnitee has the meaning attributed to that term in section 9.4.1. 1.1.115 Shutdown means, in respect of a Unit Generator, when that Unit Generator has been shutdown and has stopped generating Electricity on a permanent basis. 1.1.116 SO means the New Brunswick System Operator established under section 40 of the Electricity Act, and includes any successor thereto.

- 21 1.1.117 SO-Controlled Grid means the transmission systems with respect to which, pursuant to Applicable Law, the SO has authority to direct operations. 1.1.118 Start-Up means the bringing of a Unit Generator from a desynchronized to synchronized condition in accordance with the Scheduling Procedures or dispatch instructions from the SO. For greater certainty, a Start-Up shall not include any

unsuccessful attempt to bring a Unit Generator from a desynchronized to a synchronized condition. 1.1.119 Start-Up Fee has the meaning attributed to that term in Schedule 2.9.4. 1.1.120 Start-Up Fuel means the aggregate MMBTU (high heating value) of the fuel used by a Unit Generator for a Start-Up as set out in Schedule 5.1. 1.1.121 Target Heat Rate Curve means, for a Unit Generator, the heat rate curve (expressed in MMBTU per MWh) for that Unit Generator as determined by the Final Heat Rate Test for that Unit Generator. 1.1.122 Taxes means all sales taxes, including HST, GST, use taxes, ad valorem taxes, value added taxes, excise taxes, and any similar taxes, whether enacted before or after the date of this Agreement, but excluding taxes based on excess profits, profits, net income, income, taxable income or net worth, capital taxes, and any similar taxes and any payments in lieu of any such taxes. 1.1.123 Term has the meaning attributed to that term in section 8.1. 1.1.124 Termination Date has the meaning attributed to that term in section 8.1. 1.1.125 Testing Period has the meaning attributed to that term in section 2.9.1. 1.1.126 Third Party Claim has the meaning attributed to that term in section 9.6.1. 1.1.127 Transfer means a sale, assignment, lease, sublease, mortgage, encumbrance, disposition, licence, tolling, or any other transaction whereby ownership of, or the right to control, use, occupy or operate all or part of the Facilities and/or the Other Facilities has

- 22 been transferred to, or conferred on, any Person. Transferred has a corresponding meaning. 1.1.128 Transmission and Related Costs means all costs applicable to, or incurred by a party in relation to, the transmission of Electricity, including, if applicable, Ancillary Services costs, transmission charges and transmission losses. 1.1.129 Unit Generator Load means, in respect of a Unit Generator, the total amount of Electricity consumed by that Unit Generator as measured at the Point of Delivery for that Unit Generator. 1.1.130 Unit Generators means the three electrical generating units located at Coleson Cove designated as Unit Generator 1 to Unit Generator 3, inclusive, and Unit Generator means any one of them. 1.2 Headings and Table of Contents The inclusion of headings and a table of contents in this Agreement is for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.3 Gender, Number and Grammatical Changes In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. 1.4 Business Days If any payment is required to be made pursuant to this Agreement on a day which is not a Business Day, then such payment shall be made on the next Business Day. 1.5 Currency Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency.

- 23 1.6 Calculation of Interest Any interest to be calculated pursuant to this Agreement shall be calculated based on the amount upon which interest is payable multiplied by the product of the specified rate of interest and the total number of days lapsed for which interest is payable divided by 365 (366 in a leap year). For any period of time, the first day of such period shall be included and the last day of such period shall be excluded. 1.7 Statutes Any reference in this Agreement to a statute or to a regulation or rule promulgated under a statute or to any provision of a statute, regulation or rule shall be a reference to the statute, regulation, rule or provision, as amended, re-enacted or replaced from time to time. 1.8 Invalidity of Provisions Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction or an arbitrator shall not affect the validity or enforceability of any other provision of this Agreement. To the extent permitted by Applicable Law, the parties waive any provision of Applicable Law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the legal and economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.9 Entire Agreement This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by a party to this Agreement or its partners, shareholders, directors, officers, employees or agents, to the other parties to this Agreement or their partners, shareholders,

- 24 directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and no party to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.10 Waiver No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver or operate as a waiver of, or estoppel with respect to, any subsequent failure to comply, unless otherwise expressly provided. 1.11 Amendment Except as expressly provided in this Agreement, no amendment of this Agreement shall be binding unless executed in writing by each of the parties. Notwithstanding the foregoing and sections 12.1 and 12.2, for so long as the Buyer, NB Power Holdco and the Seller remain directly or indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the Province, any party may submit in writing any concerns or issues relating to the terms of this Agreement to the board of directors of the Electric Finance Corporation (the Board) for its consideration, provided that such party provides a copy of any such submission to the other parties at the same time it is provided to the Board. Provided that the other parties are permitted to deliver a reply submission to the Board and that all parties are given a reasonable opportunity in the circumstances to provide the Board with additional written or oral submissions with respect to the concerns or issues raised, the parties acknowledge and agree that the Board may, in its sole discretion, amend the terms of this Agreement to protect the financial integrity of the parties, to prevent undue hardship for consumers, or to facilitate a third party investment in or Transfer of the Facilities and/or the Other Facilities. If the Board amends the terms of this Agreement, each party shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, agreements, written amendments, assurances and things as may be reasonably required for the purpose of giving effect to the

- 25 amended terms directed by the Board and shall take all such steps as may be reasonably within its power to implement to their full extent the terms of any amendment made by the Board. 1.12 Governing Law This Agreement and any Disputes shall be governed by and construed in accordance with the laws of the Province of New Brunswick and the laws of Canada applicable therein. 1.13 Technical Terms Words or abbreviations that have well known technical or trade meanings are used in this Agreement in accordance with their recognized meanings. 1.14 Schedules The following are the Schedules attached to this Agreement: Schedule 1.1.16 Schedule 1.1.25 Schedule 1.1.28 Schedule 1.1.55 Schedule 1.1.64 Schedule 1.1.107 Schedule 2.1.4 Schedule 2.5 Schedule 2.9.4 Schedule 5.1 Schedule 12.2 Capacity Payment Contracted Energy Price CPI Adjustment Fuel Specifications Heat Rate Test Refurbishment Description Scheduling Procedures Adjustments to Capacity Payment Heat Rate Adjustment and Start-Up Fees Coleson Cove Operating Characteristics Arbitration Procedures

- 26 ARTICLE 2 TOLLING AND CAPACITY 2.1 2.1.1 Tolling, Capacity and Fuel The Seller shall make the Contracted Capacity and related services to convert fuel

into Electricity exclusively available to the Buyer, unless the Seller is instructed to do otherwise by the SO. 2.1.2 Subject to section 2.1.3, the Buyer shall (i) at the cost of the Buyer, provide, or

cause to be provided, all fuel required by the Seller (as the Buyer is notified of such by the Seller from time to time) to comply with its obligations under this Agreement, including necessary fuel inventory and fuel required for the Unit Generator Load and Common Service Load, but not limestone or light fuel oil required for Start-Ups, and (ii) ensure that all such fuel meets or exceeds the Fuel Specifications. Notwithstanding the foregoing, if any such fuel is not in compliance with the Fuel Specifications, including any fuel provided to the Seller pursuant to section 2.1.3, the Seller shall accept and use such fuel unless to do so would be a breach of its obligations under section 5.1. The Buyer shall (i) notify the Seller on or prior to provision of any fuel, if the Buyer is aware that such fuel is not in compliance with the Fuel Specifications, and (ii) compensate the Seller for its reasonable incremental out-of-pocket costs and expenses arising from using fuel provided or caused to be provided by the Buyer or its agents, or, in the case of ORIMULSION, by NB Power Holdco, that does not comply with the Fuel Specifications. Such reasonable incremental out-of-pocket expenses shall be agreed to by the Operating Committee or, failing such agreement, shall be determined in accordance with section 12.2, without first having to comply with section 12.1. 2.1.3 NB Power Holdcos predecessor entered into the ORIMULSION Fuel Supply

Agreement for the provision by Bitumenes Orinoco, SA of ORIMULSION for use at Coleson Cove. Notwithstanding section 2.1.2, NB Power Holdco may, at its option and at its own cost, provide, or cause to be provided, ORIMULSION to the Seller and to the extent it does so, the Buyer is relieved of its obligations pursuant to section 2.1.2 to supply fuel to the Seller and ensure that such fuel meets the Fuel Specifications, but not of its obligations pursuant to section 2.1.2 to compensate the Seller for fuel, including

- 27 ORIMULSION, that is not in compliance with the Fuel Specifications, or to notify the Seller, if it is aware, that fuel, including ORIMULSION, does not comply with the Fuel Specifications. NB Power Holdco shall ensure that all such ORIMULSION meets or exceeds the Fuel Specifications and shall notify the Seller on or prior to delivery if NB Power Holdco is aware that any such ORIMULSION is not in compliance with the Fuel Specifications. The Seller shall act and agrees to act as NB Power Holdcos agent when storing, handling and using ORIMULSION at Coleson Cove and agrees to comply with all of the provisions of the ORIMULSION Fuel Supply Agreement relating thereto, provided that NB Power Holdco shall provide the Seller with the information necessary to permit such compliance. 2.1.4 The Seller shall declare to the Buyer, in good faith, its maximum bona fide

availability from the Unit Generators and shall promptly declare, in good faith and from time to time, any change to its maximum bona fide availability from the Unit Generators. The Buyer and the Seller shall Schedule Net Energy in accordance with, and perform their respective obligations set forth in, the Scheduling Procedures. 2.1.5 In accordance with the Scheduling Procedures, each hour the Seller shall

generate, sell and deliver to the Buyer Net Energy Scheduled with the SO to be sold and delivered by the Seller to the Buyer during that hour. 2.1.6 The Seller agrees to act in accordance with any reasonable instructions provided

by the Buyer or its agents in connection with the Sellers use, storage or handling of fuel provided to the Seller pursuant to section 2.1.2 and to immediately notify the Buyer and its agents of any spill or pollution incident involving such fuel. 2.1.7 The Seller agrees to act in accordance with any and all instructions provided by

NB Power Holdco or its agents in connection with the Sellers use, storage or handling of ORIMULSION provided to the Seller by NB Power Holdco or its agents and to immediately notify NB Power Holdco and its agents of any spill or pollution incident involving such ORIMULSION.

- 28 2.1.8 NB Power Holdco or its agents shall give the Seller reasonable notice prior to

providing, or causing to be provided, ORIMULSION to the Seller pursuant to section 2.1.3. 2.1.9 The Seller acknowledges that the Buyer or its agents, or NB Power Holdco in the

case of ORIMULSION, are providing, or causing to be provided, fuel to the Seller pursuant to section 2.1.2 or 2.1.3, as the case may be, in order for the Seller to provide the Buyer and its agents and NB Power Holdco with the services contemplated in this Agreement. 2.1.10 The Buyer shall pay the Seller monthly for Net Energy Scheduled with the SO to

be purchased and received by the Buyer in each hour of each calendar month an amount equal to the product of (i) such Scheduled Net Energy and (ii) the applicable Contracted Energy Price. 2.1.11 Notwithstanding any other provision of this Agreement, any reference in this

Agreement to an amount of Net Energy Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer for each hour shall mean that amount of Net Energy Scheduled with the SO in the last balanced hourly schedule submitted by the Buyer or its agent to the SO, being the Final Hourly Balanced Schedule, in respect of that hour and not, for greater certainty, the amount of Net Energy ultimately dispatched by the SO, to the extent the amounts are different. For greater certainty, the Buyer shall pay the Seller for each MWh included in the Final Hourly Balanced Schedule submitted by the Buyer or its agent for each hour regardless of the amount of Net Energy ultimately dispatched by the SO; and the Buyer shall purchase and receive Net Energy in any hour up to the amount of Net Energy included in such Final Hourly Balanced Schedule for that hour. For greater certainty, but subject to section 4.2.2, any payment to or from the SO required under the Market Rules as a result of the amount of Net Energy included in the Final Hourly Balanced Schedule for any hour being different from the amount of Net Energy ultimately dispatched by the SO for that hour (such difference being the Dispatched Differential for that hour) shall be settled directly between the SO and the Market Participant for the Unit Generators and the Facilities and to the extent such settlement is not so made, the

- 29 Buyer shall be responsible for such settlement with the SO. settlement with the SO, but subject to section 4.2.2: 2.1.11.1 in the event that the Dispatched Differential for an hour arises as a result of the amount of Net Energy Scheduled in the Final Hourly Balanced Schedule for that hour being greater than the amount dispatched by the SO for that hour, the Seller shall pay the Buyer an amount equal to the Contracted Energy Price multiplied by the Dispatched Differential for that hour; and 2.1.11.2 in the event that the Dispatched Differential for an hour arises as a result of the amount of Net Energy Scheduled in the Final Hourly Balanced Schedule for that hour being less than the amount dispatched by the SO for that hour, the Buyer shall pay the Seller an amount equal to the Contracted Energy Price multiplied by the Dispatched Differential for that hour. 2.1.12 The Seller agrees to irrevocably appoint the Buyer, or an agent of the Buyer as Notwithstanding such

may be designated by the Buyer from time to time upon notification to the Seller, as the Market Participant for the Unit Generators and the Facilities and agrees to do, take, execute, or deliver, or cause to be done, taken, executed or delivered all such acts, steps, deeds or documents necessary to effect such appointment with the SO in accordance with the Market Rules. The Seller acknowledges that such appointment is coupled with an interest in such appointment by both the Buyer and any agent designated by the Buyer pursuant to this section 2.1.12. The Seller also agrees to, if requested by the Buyer, enter into a power of attorney with any such agent reflecting the irrevocable appointment of such agent as the Sellers Market Participant for the Unit Generators and the Facilities. 2.2 Sellers Failure to Deliver Net Energy Unless excused or relieved from performance hereunder by Force Majeure or unless Outages or other operating conditions have prevented the Seller from declaring to the Buyer in good faith the maximum bona fide availability from the Unit Generators, if, as a direct or indirect result or consequence of the Seller failing to comply with its obligations under this Agreement, the Seller fails to declare to the Buyer in good faith the maximum bona fide availability from the Unit Generators, the following provisions shall apply:

- 30 2.2.1 For each MWh of such Net Energy not so declared available by the Seller, the

Seller shall pay the Buyer as liquidated damages, and not as a penalty, amounts equal to the positive difference, if any, between: 2.2.1.1 the price the Buyer pays to purchase replacement Electricity for such

MWh, plus the aggregate direct, out-of-pocket costs and expenses, including Transmission and Related Costs (calculated as a per MWh amount) reasonably incurred by the Buyer in effecting the purchase of the replacement MWh; and 2.2.1.2 the Contracted Energy Price which the Buyer would have paid the

Seller for such MWh, plus the aggregate direct, out-of-pocket costs and expenses, including Transmission and Related Costs (calculated as a per MWh amount) that the Buyer would have reasonably incurred had the Buyer purchased such MWh from the Seller hereunder; provided, however, that: 2.2.1.3 the Buyer shall have taken Commercially Reasonable Efforts to

mitigate its damages. 2.2.2 Provided that replacement Electricity is available to be purchased by the Buyer

and without in any way limiting section 2.6, the right to receive liquidated damages under section 2.2.1 shall be the Buyers sole and exclusive remedy for any and each failure of the Seller to declare in good faith the maximum bona fide availability from the Unit Generators as a direct or indirect result or consequence of the Seller failing to comply with its obligations under this Agreement and all other damages and remedies are hereby waived by the Buyer. For greater certainty and notwithstanding section 8.5, it shall not be considered a Seller Event of Default, nor shall the Buyer have the termination rights or other remedies contained in section 8.5 or elsewhere in this Agreement, in circumstances where (i) the Seller has failed to declare in good faith the maximum bona fide availability from the Unit Generators as a direct or indirect result or consequence of the Seller failing to comply with its obligations under this Agreement, (ii) replacement Electricity was available and purchased by the Buyer, and (iii) the Seller paid the Buyer liquidated damages under section 2.2.1 in respect thereof in accordance with this section 2.2. If

- 31 replacement Electricity is not available to be purchased by the Buyer, the Buyer shall be entitled to specific performance and any other appropriate equitable or other remedy pursuant to section 9.5.2 or otherwise. 2.3 2.3.1 Title and Risk relating to Net Energy and Fuel Each hour, property and title in and risk relating to Net Energy up to the amount

Scheduled with the SO to be delivered and sold by the Seller to the Buyer during that hour, shall pass from the Seller to the Buyer at the Point of Delivery. The Seller warrants that any such Net Energy so Scheduled with the SO will be free and clear of all liens, security interests, claims and encumbrances of any kind by any Person arising prior to the Point of Delivery. 2.3.2 Subject to section 2.3.3, risk relating to all fuel provided, or caused to be

provided, to the Seller by the Buyer or its agents will pass to the Seller at the Fuel Delivery Point. For greater certainty, title to all fuel delivered, or caused to be delivered, to the Seller by the Buyer shall remain with the Buyer or its agents, depending on who provided the fuel, and the Buyer may, in its sole discretion and at its own cost, cause the Seller to return such fuel to the Buyer or its agents, depending on who provided the fuel, prior to it being used in accordance with this Agreement, including as contemplated by sections 8.3.3 and 8.5.1.1. In that situation, risk relating to such fuel will pass back to the Buyer or its agents, depending on who provided the fuel, at the Fuel Delivery Point. 2.3.3 Notwithstanding any other provision of this Agreement, title to and risk of loss of

any ORIMULSION provided, or caused to be provided, to the Seller by NB Power Holdco shall in no event pass to the Seller and shall at all times remain with NB Power Holdco, and any such ORIMULSION shall at all times remain under the sole control of NB Power Holdco with respect to its storage, handling and use, it being acknowledged by the parties that the Seller is solely acting as the agent of NB Power Holdco in respect of the storage, handling and use of such ORIMULSION, and, as such, is at all times subject to the direction and control of NB Power Holdco in respect thereof, in order to enable NB Power Holdco to satisfy and discharge, in all respects, its obligations under the ORIMULSION Fuel Supply Agreement. NB Power Holdco may, in its sole discretion and at its own cost, cause the Seller to return such ORIMULSION to NB Power Holdco

- 32 prior to it being used in accordance with this Agreement, including as contemplated by section 8.6. 2.3.4 The Buyer or NB Power Holdco, as the case may be, shall be responsible for all

costs relating to the transport, storage, maintenance and delivery of fuel to the Fuel Delivery Point. The Seller shall be responsible for all costs relating to the transport, storage, maintenance and delivery of fuel from and after the Fuel Delivery Point. The Buyer shall be responsible for ensuring that the parties have sufficient access to and use of the pipeline that delivers fuel to the Seller and if, for any reason, the parties cease to have access to such pipeline, or such pipeline otherwise becomes unavailable, the Buyer shall be responsible for providing another means of delivering fuel to the Seller and in that case the parties shall, if necessary, and acting reasonably, determine a new Fuel Delivery Point for the purposes of this Agreement. 2.3.5 The Buyer represents and warrants that it, or its agents, depending on who

provided the fuel, has title to all fuel provided or caused to be provided by it or its agents to the Seller hereunder free and clear of all liens, security interests, claims and encumbrances of any kind by any Person. 2.3.6 NB Power Holdco represents and warrants that it has title to all ORIMULSION

provided or caused to be provided by it to the Seller hereunder free and clear of all liens, security interests, claims and encumbrances of any kind by any person. 2.4 Transmission and Related Costs Save and except for charges payable by the Seller under the Generation Interconnection Agreement for equipment and facilities after the Point of Delivery, the Buyer shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable after the Point of Delivery in respect of Net Energy delivered and sold by the Seller to the Buyer hereunder during each hour up to the amount Scheduled by the Buyer with the SO to be delivered and sold by the Seller to the Buyer during that hour. The Seller shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable (i) prior to the Point of Delivery in respect of Net Energy delivered and sold to the Buyer at the Point of Delivery, or (ii) in respect of Unit Generator Load and Common Service Load. The Seller shall have no

- 33 responsibility for obtaining or arranging any transmission rights necessary or required to permit Net Energy delivered and sold by the Seller to the Buyer hereunder to be transmitted from the Point of Delivery. 2.5 Capacity Payments Beginning on the In-Service Date and subject to section 2.6, the Buyer shall pay the Seller the Capacity Payment in arrears for each remaining calendar month until the Termination Date or such earlier date on which this Agreement may be terminated. For greater certainty, prior to the In-Service Date, the Buyer shall have no obligation to pay the Seller any Capacity Payment. The Capacity Payment for the last calendar month prior to the Termination Date or such earlier date on which this Agreement may be terminated shall be decreased by a factor equal to the quotient obtained by dividing the number of days in that calendar month after that date by the total number of days in that calendar month. If New Fuel Capital Costs are incurred or expended by the Seller in order to permit the Seller to accept and use ORIMULSION to generate Electricity from the Unit Generators, the Monthly Capital Payment shall be adjusted as necessary pursuant to Schedule 2.5 to reflect such New Fuel Capital Costs. 2.6 2.6.1 Availability after the In-Service Date Subject to sections 2.6.2 and 2.6.5 and beginning on the In-Service Date, if during

any of December, January or February of any Fiscal Year the Availability of the Unit Generators is less than 95% for any such calendar month, the Capacity Payment for that calendar month shall be decreased by the percentage equal to (i) 95%, less (ii) the Availability for that calendar month. 2.6.2 Notwithstanding sections 2.6.1 and 2.6.5, but subject to section 2.6.6: 2.6.2.1 if the Availability of the Unit Generators for any period of three

successive calendar months of December, January and February in a Fiscal Year equals or is greater than 95%, there shall be no decrease to the Capacity Payments for those calendar months and any decrease to the Capacity Payment for any of those calendar months which was previously effected pursuant to sections 2.6.1 and/or 2.6.5 shall be repaid by the Buyer to the Seller, together with interest thereon at the Interest Rate from and including the date the Capacity Payment was

- 34 made with the decrease to the date the amount of the decrease is paid by the Buyer to the Seller; and 2.6.2.2 if the Availability of the Unit Generators for any period of three

successive calendar months of December, January and February in a Fiscal Year is less than 95%, the Capacity Payments for those calendar months shall be recalculated for such three month period and decreased by the percentage equal to (i) 95%, less (ii) the Availability for such three month period; and any resulting overpayment or underpayment when such recalculated Capacity Payments are compared to the Capacity Payments calculated pursuant to sections 2.6.1 and/or 2.6.5 shall be refunded or paid by the Seller or the Buyer, as the case may be, to the other, together with interest thereon at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or the payment thereof, as the case may be. 2.6.3 Subject to sections 2.6.4 and 2.6.5 and beginning on the In-Service Date, if during

any of June, July or August of any Fiscal Year the Availability of the Unit Generators is less than 85% for any such calendar month, the Capacity Payment for that calendar month shall be decreased by the percentage equal to (i) 85%, less (ii) the Availability for that calendar month. 2.6.4 Notwithstanding sections 2.6.3 and 2.6.5, but subject to section 2.6.6: 2.6.4.1 if the Availability of the Unit Generators for any period of three

successive calendar months of June, July and August in a Fiscal Year equals or is greater than 85%, there shall be no decrease to the Capacity Payments for those calendar months and any decrease to the Capacity Payment for any of those calendar months which was previously effected pursuant to sections 2.6.3 and/or 2.6.5 shall be repaid by the Buyer to the Seller, together with interest thereon at the Interest Rate from and including the date the Capacity Payment was made with the decrease to the date the amount of the decrease is paid by the Buyer to the Seller; and

- 35 2.6.4.2 if the Availability of the Unit Generators for any period of three

successive calendar months of June, July and August in a Fiscal Year is less than 85%, the Capacity Payments for those calendar months shall be recalculated for such three month period and decreased by the percentage equal to (i) 85%, less (ii) the Availability for such three month period; and any resulting overpayment or underpayment when such recalculated Capacity Payments are compared to the Capacity Payments calculated pursuant to sections 2.6.3 and/or 2.6.5 shall be refunded or paid by the Seller or the Buyer, as the case may be, to the other, together with interest thereon at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or the payment thereof, as the case may be. 2.6.5 Notwithstanding sections 2.6.1 and 2.6.3, but subject to sections 2.6.2, 2.6.4 and

2.6.6, if for any calendar month the Availability of the Unit Generators is less than 50%, the Capacity Payment for that calendar month shall be zero. 2.6.6 For the purposes of calculations pursuant to sections 2.6.2 and 2.6.4, if for any

calendar month, the Availability of the Unit Generators is less than 50%, the Availability of the Unit Generators for that calendar month shall be deemed to be zero. 2.7 2.7.1 Adjustments for Environmental Costs The Seller shall promptly notify the Buyer, in writing, if it becomes aware of one

or more of the following which would prevent the Seller from (i) being able to deliver the Net Energy Scheduled by the Buyer with the SO to be delivered by the Seller to the Buyer at the Point of Delivery, and/or (ii) meeting the Availability requirements so that the Capacity Payment is not decreased pursuant to section 2.6: 2.7.1.1 a change or proposed change in Environmental Law which applies

generally to electricity generators in New Brunswick, or in Canada if the change is imposed at the federal level, and not specifically to the Seller, and which results, or would result if the proposed change was enacted, in the Emission Allowances and/or Emission Credits the Seller has in respect of the Facilities being insufficient to permit (i) the generation and delivery of such Net Energy to

- 36 the Point of Delivery, and/or (ii) the Seller to meet such Availability requirements; and/or 2.7.1.2 a change or proposed change in Environmental Law which applies

generally to electricity generators in New Brunswick, or in Canada if the change is imposed at the federal level, and not specifically to the Seller, and which results, or would result if the proposed change was enacted, in the Seller being required to make additional capital expenditures and/or to incur additional operations and maintenance costs (collectively, Environmental Costs) in order to be able to (i) generate and deliver such Net Energy to the Point of Delivery and/or (ii) meet such Availability requirements. Together with such notice, the Seller shall also indicate to the Buyer: 2.7.1.3 each of the possible methods for addressing the change or proposed

change in Environmental Law; and 2.7.1.4 the Sellers best estimate of (i) the amount it will cost to acquire

additional Emission Allowances and/or Emission Credits which will be sufficient to allow the Seller to generate and deliver such Net Energy to the Point of Delivery and/or to meet such Availability requirements, and/or (ii) the amount of such Environmental Costs, setting out separately such Environmental Costs which are capital costs in nature and those which are operations and maintenance costs in nature, each in respect of the least cost method for addressing the change or proposed change in Environmental Law. 2.7.2 Upon receipt of a notice pursuant to section 2.7.1 of a change in Environmental

Law (but not, for greater certainty, notice of a proposed change in Environmental Law), the Buyer shall, in its sole discretion and within a reasonable amount of time in the circumstances and upon written notice to the Seller, determine whether the Buyer will reimburse the Seller for (i) the cost of acquiring additional Emission Allowances and/or Emission Credits which will be sufficient to allow the Seller to generate and deliver such Net Energy to the Point of Delivery and/or to meet such Availability requirements, if applicable, and/or (ii) making or incurring such Environmental Costs. In this regard, the

- 37 Seller shall assist the Buyer in making such determination, including by providing the Buyer and its agents, representatives and advisors, with all information, data, books and records, and access to the Facilities and the Other Facilities and all directors, officers, employees, agents, representatives and advisors of the Seller, that the Buyer may request. Further, the Seller shall, upon the request of the Buyer, use reasonable efforts to challenge or dispute the necessity of the change or proposed change in Environmental Law and/or the requirement to procure such additional Emission Allowances and/or Emission Credits or to make or incur such Environmental Costs. The Buyer shall be responsible for and/or shall reimburse the Seller for all reasonable costs incurred by the Seller in carrying out any such challenge or dispute requested by the Buyer. 2.7.3 If the Buyer does not agree that the Seller has selected the least cost method for

addressing the change in Environmental Law or that the Sellers best estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or the amount of such Environmental Costs is reasonable and appropriate in the circumstances, the Buyer and the Seller shall discuss and negotiate in good faith the method to be used and such costs in order that agreement between the Buyer and the Seller can be reached as to the method to be used and a reasonable and appropriate estimate of the costs thereof. If the Buyer and the Seller cannot agree on a reasonable and appropriate estimate of such costs, the estimate shall be determined in accordance with the provisions of section 12.1 and, if required, section 12.2. The least cost method for addressing the change in

Environmental Law shall be used unless the Buyer agrees otherwise. 2.7.4 Once the method for addressing the change in Environmental Law and the

estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or such Environmental Costs has either been agreed between the Buyer and the Seller or determined in accordance with the provisions of section 12.1 and, if required, section 12.2 (such estimate to be referred to as the Firm Estimate), the Buyer shall determine, at its sole option and in its sole discretion and upon notice to the Seller, whether it shall reimburse the Seller for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for such Environmental Costs, provided that if the Buyer determines that it shall so reimburse the Seller, the following provisions shall apply:

- 38 2.7.4.1 The Buyers obligation to reimburse the Seller for such Environmental

Costs which are capital costs in nature shall be capped at the Firm Estimate in respect thereof plus 50% of all actual Environmental Costs incurred or made (the Actual Capital Costs) in excess of the Firm Estimate in respect thereof. For greater certainty, the Seller shall be solely responsible for 50% of the Actual Capital Costs in excess of the Firm Estimate in respect thereof. 2.7.4.2 If ultimately the Actual Capital Costs are less than the Firm Estimate in

respect thereof, the Buyer shall be responsible for reimbursing the Seller in aggregate for the amount of (i) the Firm Estimate in respect thereof, less (ii) 50% of the difference between the Firm Estimate in respect thereof and the Actual Capital Costs. 2.7.4.3 The Firm Estimate shall include an estimate of the Environmental

Costs which are operations and maintenance costs in nature and/or an estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits, as applicable, for the Fiscal Year in which the change will take effect and for each Fiscal Year thereafter and the Buyers obligation to reimburse the Seller for such Environmental Costs and/or for the cost of acquiring such additional Emission Allowances and/or Emission Credits, as applicable, shall be capped at the Firm Estimate thereof in respect of each Fiscal Year. For greater certainty, the Seller shall be solely responsible for any such costs incurred by the Seller in a Fiscal Year in excess of the Firm Estimate of such costs in respect of that Fiscal Year. 2.7.5 Subject to the limits set forth in section 2.7.4, if the Buyer determines that the

Seller shall be reimbursed by the Buyer for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, then: 2.7.5.1 in respect of such Environmental Costs which are capital costs in

nature, the Buyer shall, at its sole option and upon notice to the Seller, either:

- 39 2.7.5.1.1 reimburse the Seller in arrears, pursuant to monthly Bills,

for such Environmental Costs actually incurred or made during the applicable Billing Month; or 2.7.5.1.2 adjust the Monthly Capital Payment in accordance with

section 2.7.6; and 2.7.5.2 in respect of the cost of acquiring such additional Emission Allowances

and/or Emission Credits and/or such Environmental Costs which are operations and maintenance costs in nature, the Buyer shall reimburse the Seller in arrears pursuant to monthly Bills for such costs and expenses incurred or made during the applicable Billing Month. 2.7.6 If the Buyer chooses to reimburse the Seller for such Environmental Costs which

are capital costs in nature by adjusting the Monthly Capital Payment, the Monthly Capital Payment shall be adjusted as set forth in Schedule 2.5. 2.7.7 Notwithstanding any of the other provisions of this section 2.7, but subject to

section 2.7.10, the Buyer shall not be obligated to reimburse the Seller for Environmental Costs which are capital costs in nature unless all of such Environmental Costs arising from a change in Environmental Law in aggregate exceed the Capital Threshold at the time of the change in Environmental Law. Notwithstanding any of the other provisions of this section 2.7, but subject to section 2.7.10, the Buyer shall not be obligated to reimburse the Seller for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for such Environmental Costs which are operations and maintenance costs in nature unless all of such costs and expenses arising in a Fiscal Year from a change in Environmental Law in aggregate exceed the O&M Threshold for that Fiscal Year. For greater certainty, for purposes of this section 2.7.7, all changes to Environmental Law related to one another and implemented at the same time as part of a series or package of changes shall be considered a change in Environmental Law. 2.7.8 If the Buyer decides to reimburse the Seller for the cost of acquiring such

additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, the Seller shall complete the project under which such costs

- 40 will be incurred or such expenditures will be made and the Buyer shall be permitted to monitor the project. The Seller shall follow its normal practices to solicit bids or

expressions of interest in respect of such project through a competitive process so that such costs or expenditures are minimized and competitive in relation to similar projects. The Seller shall provide the Buyer with all details related to any such competitive process, including copies of all bids or expressions of interest provided to the Seller. To the extent possible, the Seller shall enter into fixed-price or guaranteed maximum contracts in respect of such costs or expenditures or projects. The Seller shall consult with the Buyer about any material deviation in or amendment to the scope or schedule or costs of the project. The Seller shall regularly update the Buyer, and provide written reports upon the request of the Buyer in reasonable detail, with respect to the progress, details and costs of any such project. The Seller shall promptly notify the Buyer in writing if it reasonably expects that any such project will be delayed or the costs thereof will exceed the Firm Estimate thereof. 2.7.9 If the Buyer determines that the Seller shall not be reimbursed by the Buyer for

the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, and provided that such costs and expenditures are in excess of the Capital Threshold or the O&M Threshold, as applicable, then: 2.7.9.1 notwithstanding any other provision of this Agreement, the Seller shall

not be liable for failing to deliver all or part of Net Energy to the Point of Delivery to the extent such failure arises because the Seller has not (i) acquired such additional Emission Allowances and/or Emission Credits, and/or (ii) made or incurred such Environmental Costs; 2.7.9.2 until the Termination Date, or such earlier date on which this

Agreement may be terminated, the Buyer shall pay the Seller in respect of each MWh of Net Energy that the Seller is not capable of delivering to the Buyer to the Point of Delivery as a result of the Seller failing to (i) acquire such additional Emission Allowances and/or Emission Credits, and/or (ii) make or incur such Environmental Costs, an amount equal to the Contracted Energy Price less all non-capital costs or variable costs which can be avoided as a result of the MWh

- 41 not being generated and delivered to the Buyer at the Point of Delivery and all costs, expenses or damages which have been mitigated by the Seller; and 2.7.9.3 notwithstanding any other provision of this Agreement, the Seller shall

not be liable for failing to meet the Availability requirements to the extent such failure arises because the Seller has not (i) acquired such additional Emission Allowances and/or Emission Credits, and/or (ii) made or incurred such Environmental Costs, and the Capacity Payments shall not be decreased pursuant to section 2.6 as a result of such failure. The Seller shall use Commercially Reasonable Efforts to mitigate its costs, expenses and damages and assist the Buyer with minimizing all costs, expenses and damages which may arise as a result of the Buyers determination not to reimburse the Seller for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs. For the purposes of calculating the Net Energy not able to be delivered by the Seller to the Buyer at the Point of Delivery as a result of the Buyers determination, the forecasted Net Energy that could have been delivered shall be based upon the then current projections of capacity factors for the Unit Generators for each year until the Operating Period End Date in respect thereof or the expected Termination Date, whichever is earlier, determined as of the date of notification of the Buyers decision not to reimburse the Seller for the costs to acquire such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs. 2.7.10 Notwithstanding the foregoing provisions of this section 2.7, or section 2.14.2, if,

as a result of any costs being incurred or expenditures being made as described in those sections, the Sellers projected annual operations and maintenance costs will decrease, the Buyers obligation to reimburse the Seller pursuant to section 2.7 or section 2.14.2, as the case may be, shall correspondingly decrease. Any such decrease pursuant to this

section 2.7.10 to the Buyers obligations to reimburse the Seller pursuant to section 2.7 or section 2.14.2 shall be considered and reflected in determining whether the Capital Threshold or the O&M Threshold, as applicable, has been exceeded pursuant to section 2.7.7. For greater certainty, the Buyer and the Seller acknowledge that if the Buyer chooses to reimburse the Seller for any such costs or expenditures by adjusting the

- 42 Monthly Capital Payment pursuant to section 2.7.6, the formula set out in Schedule 2.5 already contemplates an adjustment to reflect a decrease in annual operations and maintenance costs. 2.8 Emission Credits and Other Environmental Attributes For no additional consideration payable to the Seller, the Buyer shall be entitled to, and the Seller shall assign, convey, transfer and deliver to the Buyer, all Emission Credits and all other environmental grants, credits or benefits allocated to, or in respect of, Coleson Cove, the Unit Generators, the Facilities or Net Energy, which the Seller has received and which are not required by the Seller to operate the Unit Generators, the Facilities and the Other Facilities in accordance with the Scheduling Procedures or any dispatch instruction from the SO. 2.9 2.9.1 Heat Rate The Seller shall conduct a Heat Rate Test in respect of each Unit Generator at

least once during the calendar month in which the In-Service Date occurs or during such other period as the Seller and Buyer may mutually agree (the Testing Period), but may repeat a Heat Rate Test in respect of any Unit Generator during the Testing Period any number of times, and the last such Heat Rate Test completed in respect of a Unit Generator shall be deemed to be the Final Heat Rate Test for that Unit Generator for the purposes of this Agreement. The costs of performing any such Heat Rate Test, other than costs to provide the fuel which the Buyer or NB Power Holdco is required to provide or cause to be provided to the Seller under this Agreement, shall be borne by the Seller. The Seller shall give the Buyer at least 10 days prior written notice of, and the Buyer and its agents, representatives and advisors may attend and observe, all Heat Rate Tests conducted during this period. The Seller shall provide the Buyer with the results of any Heat Rate Test conducted by the Seller during this period. 2.9.2 If during the Testing Period, ORIMULSION is not the fuel being used by the

Seller, and subsequently, NB Power Holdco begins delivering ORIMULSION to the Seller, the Seller shall conduct a Heat Rate Test in respect of each Unit Generator at least once during the period commencing on the first date that NB Power Holdco delivers ORIMULSION to the Seller and ending 30 days thereafter, but may repeat a Heat Rate

- 43 Test in respect of any Unit Generator during this period any number of times, and the last such Heat Rate Test completed in respect of a Unit Generator shall, notwithstanding section 2.9.1, be deemed to be the Final Heat Rate Test for that Unit Generator for the purposes of this Agreement when ORIMULSION is the fuel being used by such Unit Generator. The costs of any such Heat Rate Test, other than the costs of providing the ORIMULSION, shall be borne by the Seller. The Seller shall give the Buyer at least 10 days prior written notice of, and the Buyer and its agents, representatives and advisors may attend and observe, all Heat Rate Tests conducted during this period. The Seller shall provide the Buyer with the results of any Heat Rate Test conducted by the Seller during this period. 2.9.3 The Seller shall use reasonable efforts to obtain any liquidated damages or other

payments the Seller is entitled to receive pursuant to or in connection with guarantees and/or warranties received by the Seller in respect of the heat rate or other operating characteristics of one or more of the Unit Generators under turbine contract #0770-41100M20 and boiler contract #0700-38100-M16. The Seller shall pay to the Buyer any such amounts it receives, after excluding any Taxes included or deemed to be included in such amounts that the Seller is required to pay or remit and any reasonable legal fees or other reasonable costs incurred by the Seller to obtain such amounts. The Buyer shall reimburse the Seller for the amount of any reasonable legal fees or other reasonable costs incurred by the Seller in connection with this section 2.9.3 to the extent they are not otherwise accounted for. The Seller has provided the Buyer with a copy of those contracts. 2.9.4 Beginning on the In-Service Date, the Buyer shall pay to the Seller in arrears for

each remaining calendar month until the Termination Date or such earlier date on which this Agreement may terminate an amount equal to the Heat Rate Adjustment, if any, for that calendar month, or where the Heat Rate Adjustment for that calendar month is negative, the Seller shall pay to the Buyer in arrears an amount equal to the Heat Rate Adjustment (expressed as a positive number) for that calendar month. 2.9.5 The Seller shall maintain appropriate procedures consistent with Good Utility

Practices in order to be able to accurately measure the amount of fuel provided to the Seller

- 44 by the Buyer or its agents or NB Power Holdco from time to time and the amount of fuel used by the Seller from time to time. 2.10 2.10.1 Taxes The Contracted Energy Price, the Capacity Payments and all other amounts

payable, set-off or reimbursed under this Agreement are exclusive of all Taxes and where any such amounts are deemed under Applicable Law to be inclusive of Taxes, the parties shall ensure that such amounts are appropriately increased to take into account such deeming factor, and shall reflect any such increase in any Bills provided under this Agreement. For greater certainty, all HST and GST payable in respect of the Contracted Energy Price, the Capacity Payments, and such other amounts shall, as required by Applicable Law, be borne and payable by the party (the payor for the purposes of this section 2.10) paying such payment or paying, setting off or reimbursing such amount under this Agreement, and shall be collected and remitted by the other applicable party (the recipient for the purposes of this section 2.10). If, contrary to this section 2.10, and subject to any joint tax election the parties may make under section 156 of the Excise Tax Act (Canada), the payor does not pay HST or GST to the recipient, such HST or GST shall be deducted by the recipient from any amounts becoming due to the payor hereunder. Each party shall provide the others with its HST or GST registration number upon request therefor. 2.10.2 For greater certainty, each party is responsible for its own income taxes or taxes

based on excess profits, profits, net income, taxable income or net worth, capital taxes, and any similar taxes, and any payments in lieu of any such taxes. 2.10.3 Each party shall act reasonably in considering a request by another party to file

any joint tax election that may be available from time to time and shall agree to do so where filing the joint tax election is of net benefit or not adverse to the party receiving the request.

- 45 2.11 Metering Net Energy shall be calculated in accordance with the Market Rules and any metering procedures adopted or approved by the Operating Committee from time to time, provided that, in all circumstances: 2.11.1 all Metering Installations used in connection with this Agreement shall be

certified as meeting the requirements of Measurement Canada or any successor thereof or any other applicable Governmental Authority, including, if applicable, the SO; 2.11.2 if the SO develops validation, estimation or other metering procedures to produce

final metering data or to replicate missing metering data, any metering procedures adopted or approved by the Operating Committee shall be consistent with, and not contradict, any such metering procedures of the SO; and 2.11.3 the Seller agrees to authorize the SO to provide the Buyer and its agents, advisors

and representatives with access to metering data controlled by the SO as reasonably required by the Buyer from time to time. 2.12 Start-Ups The Buyer shall pay the Seller an amount equal to the Start-Up Fee for any StartUp in accordance with the Scheduling Procedures or at the request or direction of the SO, but not in any circumstances for any Start-Up as a result of or following an Outage. 2.13 New Fuel The Buyer may only provide or cause to be provided to the Seller pursuant to section 2.1.2 fuel that is not heavy fuel oil or ORIMULSION with the consent of the Seller, which consent shall not be unreasonably withheld. If the Seller consents to the use of a fuel that is not heavy fuel oil or ORIMULSION, then the parties shall (i) if the Seller is required to incur New Fuel Capital Costs in order to permit it to accept and use the new fuel to generate Electricity from the Unit Generators, adjust the Monthly Capital Payment in accordance with Schedule 2.5, and (ii) cooperate and negotiate in good faith to amend any other provision of this Agreement as may be necessary to reflect that the fuel provided to the Seller is not heavy fuel oil or ORIMULSION, including the Fuel Specifications, the Heat Rate Adjustments and the

- 46 Operating Characteristics, and take such further actions as may be necessary to make such amendments, including conducting additional Heat Rate Tests and tests to determine Operating Characteristics, while maintaining the intended legal and economic effects of this Agreement. 2.14 2.14.1 Gypsum and Ash If gypsum and ash are produced as a by-product of generating Net Energy, the

Seller shall use Commercially Reasonable Efforts to (i) produce such gypsum and ash in a condition that is marketable to potential third party purchasers, and (ii) sell such gypsum and ash to such third party purchasers. 2.14.2 If the Seller, after complying with section 2.14.1, is unable to sell any or all of

gypsum and ash generated as a by-product of producing Net Energy, the Seller may dispose of such unsold gypsum and ash in one or more landfills at Coleson Cove, or such other location or locations mutually agreeable to the Buyer and the Seller, acting reasonably, if there is insufficient space at Coleson Cove, and the requirement to dispose of the unsold gypsum and ash in one or more landfills shall be deemed to be a change in Environmental Law which applies generally to electricity generators in New Brunswick and not specifically to the Seller and the costs of constructing and operating such landfill or landfills and any other capital or operating costs incurred by the Seller as a result of the Seller, after complying with section 2.14.1, being unable to sell such gypsum and ash, shall be deemed to be Environmental Costs, all as described in section 2.7.1.2, and the remaining provisions of section 2.7 shall be deemed to be incorporated into this section 2.14.2 mutatis mutandis. 2.15 Notice of Shutdown To the extent possible, the Seller shall provide the Buyer with a minimum of five years notice in writing of the planned Shutdown date of any Unit Generator, and shall provide the Buyer with any changes to that planned Shutdown date that may be made from time to time.

- 47 ARTICLE 3 OUTAGES 3.1 Planned Outage Schedule The Seller and the Buyer have agreed to a schedule of Planned Outages (the Planned Outage Schedule) that includes the expected starting date and ending date of each Planned Outage during the period commencing on the date of this Agreement and ending on March 31, 2006. Subject to first complying with the provisions of section 3.2, the Seller shall provide a revised Planned Outage Schedule to the Buyer by October 1 of each Fiscal Year, or sooner if required by the Buyer to meet any requirements under Applicable Law, that includes details with respect to Planned Outages from the date of such revised Planned Outage Schedule until the end of the next Fiscal Year. Any such revised Planned Outage Schedule shall be (i) prepared in accordance with section 3.2, and (ii) deemed to amend and replace the then current Planned Outage Schedule. The Seller shall schedule its Planned Outages with the SO at any time pursuant to and only in accordance with the then current Planned Outage Schedule at that time. 3.2 3.2.1 Changes to Planned Outage Schedule Changes to the Planned Outage Schedule for the purposes of (i) including the next

Fiscal Years Planned Outages, (ii) adding or removing Planned Outages, or (iii) changing the timing or duration of Planned Outages identified in the then current Planned Outage Schedule, may be initiated by either the Buyer or the Seller and shall be made only in accordance with the following: 3.2.1.1 The Buyer and the Seller shall co-operate to amend the then current

Planned Outage Schedule, but, subject to the remaining provisions in this section 3.2, no such changes to such Planned Outage Schedule shall be made by the Buyer or the Seller without the others prior written consent, which consent shall not be unreasonably withheld or delayed. For greater certainty, it will be reasonable for the Buyer to withhold its consent to a change in a Planned Outage identified in the then current Planned Outage Schedule if the costs to the Buyer,

- 48 including replacement Electricity costs and additional reserve costs, are likely to increase as a result of the proposed change. 3.2.1.2 No more than one Unit Generator may be scheduled for a Planned

Outage at any time without the Buyers prior written consent, which consent shall not be unreasonably withheld or delayed. 3.2.1.3 The duration of Planned Outages in any two year period shall not

exceed an average of four weeks per Unit Generator per year without the Buyers prior written consent, which consent shall not be unreasonably withheld or delayed. 3.2.1.4 Notwithstanding any provision to the contrary in this section 3.2, the

Seller may amend the then current Planned Outage Schedule without the Buyers consent if the Seller is so required by the SO, provided that the Seller shall not initiate with the SO any amendment to the Planned Outage Schedule not in compliance with the other provisions in this section 3.2. If the Seller amends the then current Planned Outage Schedule pursuant to this section 3.2.1.4, the Seller shall co-operate with the Buyer to minimize the adverse impacts on the Buyer of such amendment to the Planned Outage Schedule. 3.2.1.5 Except for a Planned Outage to complete the Refurbishment, no

Planned Outages scheduled to occur in whole or in part during January, February, March, November or December (each, an Excluded Month and collectively, the Excluded Months) shall be added to the Planned Outage Schedule, and the timing of any Planned Outage included in the Planned Outage Schedule shall not be changed in a manner which results in any part of such Planned Outage being scheduled to be conducted in whole or in part during an Excluded Month, even if such Planned Outage was already scheduled to occur in whole or in part during one or more Excluded Months, without the Buyers prior written consent, which consent shall not be unreasonably withheld or delayed. For greater certainty, it will be reasonable for the Buyer to withhold its consent pursuant to this section 3.2.1.5 if the costs to the Buyer, including replacement Electricity costs

- 49 and additional reserve costs, are likely to increase as a result of the proposed change. 3.2.1.6 Any changes made in accordance with this section 3.2 shall be reflected

in a revised Planned Outage Schedule and shall be deemed to amend and replace the then current Planned Outage Schedule. 3.3 Forced Outages Forced Outages of the Unit Generators may be taken by the Seller as they arise and, in any event, in the Sellers sole discretion, provided that: 3.3.1 the Seller shall use Commercially Reasonable Efforts to terminate or end a Forced

Outage of a Unit Generator as soon as possible; and 3.3.2 the Seller shall not during a Forced Outage, without the Buyers prior written

consent, such consent not to be unreasonably withheld or delayed, undertake any work not related to the cause or effects of the Forced Outage, including, for greater certainty, work scheduled to be conducted during an upcoming Planned Outage, if completing and undertaking such work would extend the length or duration of the Forced Outage. 3.4 3.4.1 Maintenance Outages Maintenance Outages of the Unit Generators shall be scheduled, to the extent

possible, with the prior written consent of the Buyer, acting reasonably, and in any event, the Seller shall, in scheduling a Maintenance Outage, use Commercially Reasonable Efforts to: 3.4.1.1 consider the Buyers alternate generation sources, the cost to the Buyer

of replacement Electricity, and the Buyers forecasted load in order to minimize the impact on the Buyer; and 3.4.1.2 3.4.2 schedule the Maintenance Outage outside of an Excluded Month.

In the event that the Buyer and the Seller are unable to reach an agreement as to

the scheduling of a Maintenance Outage, the Seller, using Good Utility Practices, shall

- 50 have the right to unilaterally schedule the Maintenance Outage in order to protect its investment in a Unit Generator by avoiding additional equipment maintenance that would be in excess of normal maintenance requirements, provided that the Seller: 3.4.2.1 considers the Buyers alternate generation sources, the cost to the

Buyer of replacement Electricity, and the Buyers forecasted load in order to minimize the impact on the Buyer; 3.4.2.2 shall not during a Maintenance Outage, without the Buyers prior

written consent, undertake any work not related to the cause or effects of the Maintenance Outage, including, for greater certainty, work scheduled to be conducted during an upcoming Planned Outage, if completing and undertaking such work would extend the length or duration of the Maintenance Outage; and 3.4.2.3 to the best of its abilities, schedules the Maintenance Outage outside of

an Excluded Month. 3.4.3 The Seller shall use Commercially Reasonable Efforts to terminate or end a

Maintenance Outage of a Unit Generator as soon as possible. 3.5 Cost of Changes Except in the case of a change to the Planned Outage Schedule pursuant to section 3.2.1.4, the party initiating a change in a Planned Outage identified in the then current Planned Outage Schedule shall pay the other partys (the Buyers or the Sellers, as the case may be) reasonable out-of-pocket incremental costs and expenses resulting from any such change that is ultimately made to the Planned Outage Schedule; provided, however, that unless otherwise agreed to by the Buyer and the Seller the cost of replacement Electricity and additional operating reserves shall not be included in such incremental costs and expenses. In the case of a change to the Planned Outage Schedule pursuant to section 3.2.1.4, the Buyer and the Seller shall each bear and be responsible for its own costs and expenses resulting from any such change. 3.6 Scheduling Each of the Buyer and the Seller shall participate in any Maintenance Outage or Planned Outage co-ordination meetings of Electricity generators in New Brunswick, including

- 51 any such meetings arranged or required by the SO. In addition, the Operating Committee will develop outage procedures to govern the communications between the Buyer and the Seller relating to the scheduling, duration, conduct and termination of Outages and each of the parties shall comply with any such procedures so developed and adopted by the Operating Committee. For the purposes of financial planning, at the time each Planned Outage Schedule is determined annually, the Buyer and the Seller shall also discuss and set out, for information only, the Planned Outage requirements for at least one additional Fiscal Year beyond the Planned Outage Schedule then being determined.

- 52 ARTICLE 4 ANCILLARY SERVICES 4.1 Self Supply by Buyer The Buyer and Seller acknowledge that the Seller has an obligation to provide Ancillary Services to the Buyer under this Agreement. Subject to the Market Rules and the Transmission Tariff, the Buyer may, at its option, and for no additional consideration, instruct the Seller to offer to supply Ancillary Services from the Unit Generators to the SO in connection with the Buyers self-supply of Ancillary Services so long as such instructions are consistent with the Operating Characteristics or, to the extent not contemplated therein, Good Utility Practices. The Seller shall follow such instructions from the Buyer and supply such Ancillary Services from the Unit Generators to the SO in connection with the Buyers self-supply of Ancillary Services. 4.2 4.2.1 Payment for Ancillary Services If the Seller receives a payment in any form for any Ancillary Services provided

by the Seller under any agreement or arrangement the Seller may have in respect of one or more of the Unit Generators, the Seller shall forthwith notify the Buyer of such payment and the Buyers obligation to make payments to the Seller under this Agreement shall be reduced by the amount or value of such payment to the Seller in respect of the Unit Generator(s) under any such agreement or arrangement. 4.2.2 The parties respective obligations for imbalance charges are as follows: 4.2.2.1 the Buyer is responsible for and shall pay any charges levied by the SO

relating to an imbalance associated with or caused by a load forecast error; and 4.2.2.2 except where such imbalance charges are caused by Disco or its agents

acting as Market Participant for the Unit Generators and the Facilities, the Seller is responsible for and shall pay to Disco an amount equal to any charges levied by the SO relating to an imbalance associated with or caused by a Unit Generator being off schedule, and Disco or its agents shall settle such amount directly with the SO.

- 53 The parties shall cooperate with each other in good faith to minimize any imbalance charges.

- 54 ARTICLE 5 COVENANTS 5.1 5.1.1 Operation, Repair and Maintenance The Seller shall operate, repair, maintain and rehabilitate (or cause to be operated,

repaired, maintained and rehabilitated) (i) the Unit Generators, (ii) the Facilities, and (iii) the Other Facilities, in accordance with Good Utility Practices and all Applicable Laws and in a manner that permits the Seller to satisfy and perform its obligations under this Agreement. In doing so, the Seller shall ensure that it carries out (or causes another Person to carry out) such operation, repair, maintenance and rehabilitation in a manner and to the extent necessary to comply with the requirements specified in any insurance policy relating to Coleson Cove and/or the Facilities and/or such Other Facilities required to be held by the Seller under this Agreement. 5.1.2 The Seller shall at all times operate, repair, maintain and rehabilitate the Unit

Generators in a manner which meets or exceeds for the better, and otherwise complies with, the Operating Characteristics. The Seller shall conduct appropriate tests of each Unit Generator at least once during the Testing Period, but may repeat any such tests in respect of any Unit Generator during the Testing Period any number of times, and the last of such tests shall be used to establish the Operating Characteristics for that Unit Generator for the period commencing on the In-Service Date and ending on the Termination Date or such earlier date on which this Agreement may be terminated and Schedule 5.1 will be deemed to be amended to reflect such Operating Characteristics. The costs of any such test, other than costs to provide the fuel which the Buyer or NB Power Holdco is required to provide or cause to be provided to the Seller under this Agreement, shall be borne by the Seller. The Seller shall give the Buyer at least 10 days prior written notice of, and the Buyer and its agents, representatives and advisors may attend and observe, all such tests conducted during the Testing Period. The Seller shall provide the Buyer with the results of any such test conducted by the Seller during the Testing Period.

- 55 5.2 5.2.1 Refurbishment Obligations The Seller shall on and after the date of this Agreement: 5.2.1.1 proceed diligently with the Refurbishment at its sole cost, risk and

expense; and 5.2.1.2 complete the Refurbishment in accordance with, and be responsible for

complying with all conditions attached to, all licences, permits, consents, and approvals required by Applicable Law in connection with the Refurbishment, including under the Clean Environment Act (New Brunswick). 5.2.2 The Seller shall promptly advise the Buyer when the Refurbishment has been

completed and shall execute and deliver to the Buyer an appropriate declaration of inservice in respect of the Facilities to evidence the completion of the Refurbishment. 5.3 Information The Seller shall: 5.3.1 within a reasonable period after a written request by the Buyer, provide to the

Buyer information on the state of repair, condition and operation of any part of the Facilities or the Other Facilities, which request shall not, unless the circumstances require, be made more frequently than annually; 5.3.2 promptly provide to either the Buyer or the SO, upon request, incremental cost

and production efficiency data necessary to economically dispatch the Unit Generators; and 5.3.3 promptly notify the Buyer of any material loss or any material damage to the

Facilities or the Other Facilities or any portion thereof, including those situations in which the Seller is obliged to give notice to a Governmental Authority or to an insurer under a policy of insurance required to be maintained under this Agreement, provided that the Operating Committee may specify which notices to a Governmental Authority are to be provided to the Buyer.

- 56 5.4 Inspection Upon the Buyer or NB Power Holdco giving the Seller reasonable prior notice, the Seller will permit the Buyer and its authorized representatives and advisors, or NB Power Holdco and its authorized representatives and advisors, at all reasonable times, to inspect at its own expense the Facilities and the Other Facilities for the purposes of determining whether the Seller is complying with its obligations under this Agreement, including complying with instructions provided by the Buyer or its agents pursuant to section 2.1.6, or NB Power Holdco pursuant to section 2.1.7. In conducting such inspections, the Buyer and its authorized

representatives and advisors, or NB Power Holdco and its authorized representatives and advisors, shall not unduly interfere with the operations of the Seller and will be subject to the same limitations and conditions of access as are applied to the Seller and its employees. 5.5 5.5.1 Insurance The Seller shall, until the Termination Date or such earlier date on which this

Agreement may be terminated, and at its expense, take out and maintain in full force and effect in the name of the Seller, the Buyer and its agents, as designated for this purpose by the Buyer, and NB Power Holdco, as their respective interests may appear, such insurance (including re-insurance, where appropriate) from reputable insurance companies against such risks and up to such limits as a prudent owner or tenant of premises such as the Facilities and the Other Facilities would procure (including, for greater certainty, full site property damage insurance with coverage equal to and not less than the replacement cost, from time to time, of the Facilities and the Other Facilities), but in no event shall such insurance coverage be less than that required by Applicable Law. 5.5.2 The policies shall be primary and without rights of contribution to any other

insurance carried by or for the Seller, the Buyer or its designated agents or NB Power Holdco relating to the Facilities and/or the Other Facilities and the amount of any deductible shall not exceed an amount that would be arranged by a prudent owner or tenant of premises such as the Facilities and the Other Facilities. The policies shall also provide that the insurer cannot cancel or materially alter any policy or permit its lapse so as to adversely affect the protection of the Seller, the Buyer or its designated agents or NB Power Holdco, as the case may be, except after 90 days (or such lesser period if the

- 57 insurers are unwilling after the Seller has used Commercially Reasonable Efforts to obtain a notice period of 90 days, but in any event not less than 30 days) prior written notice to each of them. All such policies shall (i) contain a waiver of subrogation in favour of the Seller, the Buyer and its designated agents and NB Power Holdco, (ii) be for the mutual benefit of the Seller, the Buyer and its designated agents and NB Power Holdco and (iii) contain a provision for cross-liability and severability of interests. 5.5.3 The Seller shall duly and punctually pay, or cause to be paid, all premiums and

other sums of money payable for maintaining any insurance required to be obtained and maintained pursuant to this section 5.5. The Seller will produce to the Buyer or its designated agents or NB Power Holdco upon request evidence of payment of any premiums required for maintaining such insurance not later than the due date thereof and shall, upon request of the Buyer or its designated agents or NB Power Holdco and upon the Buyer or its designated agents or NB Power Holdco, as the case may be, providing reasonable notice to the Seller, provide to the Buyer or its designated agents or NB Power Holdco, as the case may be, certified copies of the insurance policies and/or certificates of insurance in a form satisfactory to the Buyer or its designated agents or NB Power Holdco, as the case may be. 5.6 Damage, Destruction and Repair In the event of any damage to or destruction of all or part of the Facilities or the Other Facilities, the Seller shall, at its sole cost and expense, repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Facilities or the Other Facilities which has been damaged or destroyed. The Seller shall use all insurance proceeds received as a result of such damage or destruction to repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Facilities or the Other Facilities which has been damaged or destroyed. Notwithstanding the foregoing, if, having complied with section 5.5, the Seller does not have the right to receive insurance proceeds, less the amount of any deductible, sufficient to cover such costs and expenses to repair, reconstruct or replace the damaged or destroyed part of the Facilities or the Other Facilities, the Seller shall be relieved of its obligations under this section 5.6, but only to the extent such costs and expenses are not so covered.

- 58 5.7 5.7.1 Derations The Seller shall be deemed to have claimed a Deration with effect from the

commencement of the operating condition giving rise to the Deration when the Seller gives to the Buyer written or oral notice which is reasonably prompt in the circumstances (but if oral, promptly confirmed in writing by the Seller in accordance with section 10.3) of the Deration and reasonably full particulars thereof. 5.7.2 The Seller shall use Commercially Reasonable Efforts to remedy or repair the

Deration as soon as reasonably possible. The Seller shall give the Buyer prompt notice of the commencement and the termination of the Deration. In addition, the Seller shall, as soon as reasonably practicable following the Deration and from time to time thereafter, provide the Buyer with (i) access to all information, data, books and records about the Deration, the effects thereof and the plans or proposals to remedy or repair the Deration, and (ii) access to the Facilities and the Other Facilities to conduct inspections with respect to the Deration. 5.7.3 Any Dispute between the Buyer and the Seller as to whether an operating

condition constitutes a Deration shall be resolved in accordance with sections 12.1 and 12.2. 5.8 Unit Generator Load and Common Service Load The parties acknowledge and agree that the Seller is responsible for making its own arrangements with respect to servicing its Unit Generator Load and Common Service Load requirements through third party arrangements or self-supply. 5.9 Regulatory Compliance Each party shall be responsible for obtaining and maintaining all approvals, permits, certificates, consents, registrations, authorizations and licences of or from, and shall make or file all declarations, filings and registrations with, or notices to, Governmental Authorities required for or in respect of the performance of its respective obligations under this Agreement. Subject to sections 2.7 and 2.14 and to the Scheduling Procedures, each party will be responsible for its own costs and fees in connection with its compliance with this section 5.9

- 59 and in connection with its compliance with any changes in Applicable Laws. In exercising its respective rights and remedies under this Agreement, each party agrees that it shall do so only in compliance with Applicable Law. 5.10 Notification of Actions Each party (for the purposes of this section 5.10, the disclosing party) shall notify the other parties as soon as reasonably practicable of any action, suit, proceeding or investigation by or before a Governmental Authority that would, in the opinion of the disclosing party, acting reasonably and taking into account the disclosing partys reasonable assessment of the likelihood of success of any such action, suit, proceeding or investigation, have a material adverse effect on the disclosing partys ability to perform its obligations under this Agreement if such action, suit, proceeding or investigation were determined adversely to the disclosing party.

- 60 ARTICLE 6 BILLING, PAYMENT, AUDIT AND CREDIT 6.1 6.1.1 Billing and Other Statements The Seller shall render and deliver to the Buyer, in accordance with section 10.3,

a monthly billing statement (the Bill) promptly following each calendar month (the Billing Month) setting out: 6.1.1.1 the quantity of Net Energy that was Scheduled by the Buyer with the

SO to be delivered and sold by the Seller to the Buyer during the Billing Month and the amount payable by the Buyer to the Seller for such Scheduled Net Energy; 6.1.1.2 the amount of any reasonable incremental out-of-pocket expenses of

the Seller payable by the Buyer pursuant to section 2.1.2; 6.1.1.3 any amount payable by the Seller or the Buyer pursuant to

section 2.1.11; 6.1.1.4 the amount of any liquidated damages payable by the Seller pursuant to

section 2.2.1; 6.1.1.5 any Capacity Payment payable by the Buyer in respect of the Billing

Month, after reflecting any decrease thereto, if any, pursuant to section 2.6.1, 2.6.3 or 2.6.5; 6.1.1.6 any underpayment or overpayment in respect of any Capacity Payment

as described in section 2.6.2 or 2.6.4; 6.1.1.7 any amount payable by the Seller or the Buyer pursuant to

section 2.9.3; 6.1.1.8 the Heat Rate Adjustment payable by the Buyer or the Seller, as the

case may be;

- 61 6.1.1.9 the amount of any Start-Up Fees payable by the Buyer to the Seller

pursuant to section 2.12 in respect of the Billing Month; 6.1.1.10 the amount or value of any payments the Seller has received for Ancillary Services provided by the Seller during the Billing Month; 6.1.1.11 any amount payable by the Seller to the Buyer pursuant to section 4.2.2; and 6.1.1.12 all other costs, expenses or amounts owed by the Buyer to the Seller or the Seller to the Buyer pursuant to this Agreement in respect of the Billing Month or any other applicable period. Together with each Bill, the Seller shall also provide the Buyer with the metering information and all other relevant data upon which the Bill is based. The Buyer shall provide the Seller with all information required in respect of section 6.1.1.4 to which the Seller does not have access. 6.1.2 In each Bill, the Seller shall net the amounts payable by the Seller to the Buyer

against the amounts payable by the Buyer to the Seller to determine the aggregate amount payable by either the Buyer or the Seller pursuant to the Bill. 6.1.3 Amounts payable by the Buyer or the Seller (the Payor) pursuant to a Bill shall,

subject to sections 6.3 and 6.4, be paid by the Payor to the Seller or the Buyer, as the case may be, (the Payee). Notwithstanding section 6.2, if the Bill is a negative amount, the Seller shall pay the absolute value of such amount to the Buyer at the time the Bill is delivered. 6.1.4 The Seller shall prepare and deliver to the Buyer, in accordance with section 10.3: 6.1.4.1 an Availability Statement in respect of each Billing Month no later than

the 20th day following the last day of the Billing Month; 6.1.4.2 an Availability Statement in respect of each December 1 to February 28

(inclusive) period no later than March 20th; and

- 62 6.1.4.3 an Availability Statement in respect of each June 1 to August 31

(inclusive) period no later than September 20th. 6.2 Payments and Interest Subject to section 6.4, the Payor shall remit to the Payee full payment in respect of a Bill by the later of (i) 10 days after receipt of the Bill by the Buyer, or (ii) the 20th day of the calendar month immediately following the Billing Month in respect of which the Bill was issued (such later date being the Payment Date). All payments hereunder shall be made by wire transfer to an account designated by the Payee or in such other manner as is agreed by the Payor and the Payee. Interest on unpaid amounts shall be paid by the Payor and shall accrue daily at the Interest Rate from and including the date such payment is due until the date it is paid. 6.3 Adjustments If the Seller renders a Bill on an estimated basis, the Seller shall concurrently provide the Buyer with the basis of such estimate. Any adjustment for estimated amounts shall be made in the Bill delivered by the Seller following the date the actual information becomes available. Each Bill shall also be subject to adjustment for errors in arithmetic, computation, meter readings, or other errors until 24 months after the date the Seller rendered the Bill, after which time the Bill shall be final and conclusive for all purposes of this Agreement unless the Bill has been disputed in accordance with section 6.4. If it is determined that a Bill should be adjusted for any such errors, the Seller will include such adjustment in the next Bill delivered to the Buyer. Any overpayment or underpayment relating to an adjustment in a Bill shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or payment thereof. 6.4 Disputed Bills If the Buyer disputes a Bill or any portion thereof, the Buyer or the Seller, as the case may be, shall pay both the disputed and undisputed portions of the Bill payable by it. The Buyer shall provide written notice to the Seller setting out the portions of the Bill that are in dispute, an explanation of the dispute and the amount that the Buyer believes is the correct amount. If it is subsequently determined through arbitration or agreed that an adjustment to the disputed Bill is appropriate or that the disputed portion of the Bill should not have been paid, the

- 63 Seller shall include an adjustment in the next Bill delivered to the Buyer. Following a

determination or agreement as set out above, any overpayment or underpayment in connection with the disputed Bill and the adjustment in respect thereof shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment in respect of the disputed Bill to the date of the refund or payment thereof. If a Bill dispute has not been resolved between the Buyer and the Seller within 30 days after receipt of written notice of the dispute by the Seller, the dispute may be submitted to the Disputes Committee by either party in accordance with section 12.1. 6.5 6.5.1 Audit The Seller shall provide the Buyer and is agents and NB Power Holdco and its

agents and each of their internal auditors and professional advisors with access to the Facilities, including the Point of Delivery, the Other Facilities, and to any books, records, and information, including the station log and Metering Installation readings, as may be reasonably required by the Buyer or NB Power Holdco or such agents, auditors or advisors to (i) confirm and verify Net Energy, Unit Generator Load, Common Service Load, and/or Availability; (ii) audit the accuracy of any Start-Up Fee; (iii) audit the accuracy of a Heat Rate Adjustment; (iv) audit the accuracy of a Bill or any charge or computation or calculation made hereunder or thereunder; (v) audit the basis for any claim by the Seller of Force Majeure or a Deration; (vi) audit the DNC declared by the Seller for any Unit Generator from time to time or the maximum bona fide availability declared by the Seller from the Unit Generators from time to time; (vii) audit the accuracy of or basis for Environmental Costs or costs to acquire additional Emission Allowances or Emission Credits; or (viii) otherwise confirm and verify compliance by the Seller with the terms of this Agreement, and shall provide the Buyer and NB Power Holdco and such agents, auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications. 6.5.2 The Buyer and NB Power Holdco shall each provide the Seller and its internal

auditors and professional advisors with access to any books, records and information as may be reasonably required by the Seller or such auditors or advisors to (i) audit the basis for any claim by the Buyer for liquidated damages hereunder; (ii) audit the basis for any

- 64 claim by the Buyer of Force Majeure; or (iii) otherwise confirm and verify compliance by the Buyer and NB Power Holdco with the terms of this Agreement, and shall provide the Seller and such auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications. 6.5.3 Any audit, confirmation or verification (which shall collectively be referred to as

audits for the purposes of this section 6.5.3) shall be conducted in accordance with the following: 6.5.3.1 audits shall be made at reasonable times and on at least five Business

Days prior notice; 6.5.3.2 the Buyer shall not commence an audit of a Bill later than 24 months

after the receipt of the Bill; 6.5.3.3 audits shall be made without unreasonably interfering with the

operations of any party; 6.5.3.4 each party shall provide copies of and review and discuss with the other

party or parties, as the case may be, the results and findings of any audit conducted pursuant to this section 6.5 prior to the finalization thereof, and the other party or parties, as the case may be, may prepare and submit a response to such results and findings within 15 days of receipt thereof from the auditing party; and 6.5.3.5 any fees, costs and expenses incurred by a party in connection with an

audit shall be solely for its account. 6.5.4 For greater certainty and without limiting section 6.5.1, the Seller shall provide

the Buyer with access to the Facilities so that the Buyer can (i) read meter data from the Metering Installations at Coleson Cove in order to permit the Buyer to conduct the audits, confirmations or verifications described in section 6.5.1, and (ii) test the accuracy of such Metering Installations. In addition, the Seller shall provide the Buyer with access to the

- 65 results of any tests of the accuracy of such Metering Installations performed by the Seller or any other Person if the Seller has access to the results of such tests. 6.6 6.6.1 Credit and Collateral Requirements The Buyer shall provide to the Seller one of the following forms of security for so

long as it does not have a Minimum Credit Rating: 6.6.1.1 a Guarantee from the Person or Persons that ultimately Controls or

Control the Buyer, provided that such Person or Persons has or have a Minimum Credit Rating (the Guarantor); 6.6.1.2 6.6.1.3 a Letter of Credit; or an equivalent form of security satisfactory to the Seller, acting

reasonably; each in an amount equal to the Estimated Collection Value from time to time. Except as otherwise provided for in this section 6.6, the Buyer shall have the sole discretion to select which of the above forms of security it will provide to the Seller. 6.6.2 The Buyer shall provide security pursuant to section 6.6.1 within five Business

Days of it failing to have a Minimum Credit Rating. 6.6.3 The Buyer will be considered to have a Minimum Credit Rating if its credit

rating is rated (i) by Standard & Poors (S&P) as BBB or above, (ii) by Dominion Bond Rating Service as BBB or above, or (iii) by Moodys Investors Service as Baa2 or above. 6.6.4 If the Buyer has delivered a Guarantee to the Seller, the Seller agrees that the

Guarantor may assign its obligations under the Guarantee to an Affiliate of the Guarantor or to any other Person that has (i) a credit rating equal to or better than the Minimum Credit Rating, and (ii) substantial assets in Canada. Such assignment shall be effective only when the assignee has delivered to the Seller a replacement guarantee in a form satisfactory to the Seller, acting reasonably. Upon delivery of the replacement guarantee, such guarantee shall be deemed to be the Guarantee and such assignee shall be deemed to be the Guarantor for all purposes of this Agreement.

- 66 6.6.5 If the Buyer delivers one form of security pursuant to this section 6.6 or if the

Buyer obtains or restores a Minimum Credit Rating, the Seller shall concurrently release any form of security, if any, previously delivered by the Buyer. 6.6.6 Subject to section 6.6.4, if the Buyer has delivered a Guarantee to the Seller and

the Guarantor, at any time, fails to have a Minimum Credit Rating, the Buyer shall provide to the Seller within five Business Days of such failure a Letter of Credit in an amount equal to the Estimated Collection Value from time to time. 6.6.7 The cost of any Letter of Credit or equivalent form of security shall be borne by

the Buyer.

- 67 ARTICLE 7 REPRESENTATIONS AND WARRANTIES 7.1 Representations and Warranties of the Seller The Seller represents and warrants to the Buyer and NB Power Holdco as follows and acknowledges that each of the Buyer and NB Power Holdco is relying on such representations and warranties in entering into this Agreement: 7.1.1 The Seller is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 7.1.2 This Agreement has been duly authorized, executed and delivered by the Seller

and is a valid and binding obligation of the Seller enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 7.1.3 The execution and delivery of this Agreement by the Seller and the performance

by the Seller of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of the Seller under: 7.1.3.1 any contract or obligation to which the Seller is a party or by which it

or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on the Sellers ability to fulfill or perform its obligations and covenants under this Agreement; 7.1.3.2 the articles, by-laws or other organizational or constating documents of

the Seller; or 7.1.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit,

certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to the Seller.

- 68 7.1.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation or other similar proceedings pending against the Seller or being contemplated by the Seller or, to the Knowledge of the Seller, threatened against the Seller. 7.1.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which this Agreement may be terminated. 7.2 Representations and Warranties of the Buyer The Buyer represents and warrants to the Seller and NB Power Holdco as follows and acknowledges that each of the Seller and NB Power Holdco is relying on such representations and warranties in entering into this Agreement: 7.2.1 The Buyer is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 7.2.2 This Agreement has been duly authorized, executed and delivered by the Buyer

and is a valid and binding obligation of the Buyer enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 7.2.3 The execution and delivery of this Agreement by the Buyer and the performance

by the Buyer of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of the Buyer under: 7.2.3.1 any contract or obligation to which the Buyer is a party or by which it

or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on the Buyers ability to fulfill or perform its obligations and covenants under this Agreement;

- 69 7.2.3.2 the articles, by-laws or other organizational or constating documents of

the Buyer; or 7.2.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit,

certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to the Buyer. 7.2.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation, or other similar proceedings pending against the Buyer or being contemplated by the Buyer or, to the Knowledge of the Buyer, threatened against the Buyer. 7.2.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which the Agreement may be terminated.

- 70 ARTICLE 8 TERM, DEFAULT AND TERMINATION 8.1 Term The term of this Agreement (the Term) shall commence upon the date hereof and, subject to sections 8.3, 8.5, 8.7, 11.3 and 11.4, shall include all days up to and including the date which is one day before 25 calendar years after the In-Service Date (the Termination Date). Subject to sections 8.3, 8.5, 8.7, 11.3 and 11.4, this Agreement and the parties

respective obligations hereunder shall terminate on the Termination Date and be of no further force and effect. 8.2 Events of Default by Buyer Each of the following will constitute an event of default by the Buyer (each, a Buyer Event of Default): 8.2.1 The Buyer fails to make any payment required to be made by the Buyer to the

Seller under this Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by the Buyer of written notice of the failure from the Seller. 8.2.2 Other than a failure referred to in section 8.2.1, the Buyer fails to perform in all

material respects or is otherwise in material breach of its obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by the Seller to perform, or a breach by the Seller of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) the Buyer fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by the Buyer of written notice of the failure or breach from the Seller, or (b) the Buyer, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach within 90 days after receipt of such written notice. 8.2.3 Any representation or warranty made by the Buyer contained in this Agreement is

or becomes untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be

- 71 terminated and, if the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by the Buyer within 30 days after receipt by the Buyer of written notice from the Seller that the representation and warranty is untrue or incorrect. 8.2.4 An effective resolution is passed for, or documents are filed in good faith with an

office of public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of the Buyer, unless there has been a valid assignment of this Agreement by the Buyer under section 12.4 to a Person that is not dissolving, terminating its existence, liquidating or winding up and the Buyer has been relieved from all of its liabilities and obligations hereunder. 8.2.5 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of the Buyer or of any of its assets, undertaking or property is appointed by a Governmental Authority or pursuant to the terms of a debenture or a similar instrument. 8.2.6 By judgment, order or decree of a Governmental Authority, the Buyer is

adjudicated bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing is made or filed against the Buyer in good faith pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 8.2.7 The Buyer makes an assignment for the benefit of its creditors generally under the

provisions of any Insolvency Legislation, consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal, application or filing pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized or shall have

- 72 taken advantage of any of the provisions of any Insolvency Legislation in respect of its own debts. 8.3 8.3.1 Termination by Seller If a Buyer Event of Default occurs, then, without prejudice to any other rights that

the Seller has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, the Seller may at its option and in its sole discretion: 8.3.1.1 subject to section 8.3.2, upon written notice to the Buyer and

NB Power Holdco immediately terminate this Agreement and, subject to section 8.7, the parties respective obligations hereunder; and/or 8.3.1.2 submit a claim to be resolved in accordance with section 12.2 (without

first having to comply with section 12.1) against the Buyer for Indemnifiable Losses asserted against or suffered by the Seller where the Event of Default has arisen as a result of a breach by the Buyer of a covenant or agreement or a representation and warranty of the Buyer contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 8.3.2 Notwithstanding section 8.3.1.1, if the Buyer disputes whether the Buyer Event of

Default has occurred, the Seller shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 12.2 (without first having to comply with section 12.1) and it has been determined or agreed that the Buyer Event of Default occurred, provided that if the dispute is resolved in favour of the Seller such that it is determined that the Buyer Event of Default had occurred and the Seller should have been able to terminate this Agreement immediately, the Buyer shall be liable to the Seller for all additional Indemnifiable Losses incurred or suffered by the Seller as a result of the delayed termination of this Agreement, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement. 8.3.3 If the Seller terminates this Agreement pursuant to this section 8.3, the Buyer may

at its option and in its sole discretion, require the Seller to return to the Buyer or its agents,

- 73 depending on who provided the fuel, any fuel stored at Coleson Cove which the Buyer or its agents previously delivered to the Seller in accordance with section 2.1.2. 8.4 Events of Default by Seller Subject to section 2.2.2, each of the following will constitute an event of default by the Seller (each, a Seller Event of Default): 8.4.1 The Seller fails to make any payment required to be made by the Seller to the

Buyer under this Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by the Seller of written notice of the failure from the Buyer. 8.4.2 The Seller fails to make the Contracted Capacity exclusively available to the

Buyer in accordance with section 2.1 or the Seller sells, delivers or Schedules Net Energy to any Person other than to the Buyer under this Agreement, unless in the latter case the Seller has been instructed to so sell, deliver or Schedule Net Energy by the SO. 8.4.3 The Seller fails or ceases to hold any material licence, permit, approval,

permission, certification, consent, registration or authority required under Applicable Law to permit the Seller to perform its obligations under this Agreement and the failure or cessation was not excused by Force Majeure and, if the failure or cessation is capable of being corrected, the failure or cessation is not corrected within 30 days after receipt by the Seller of written notice of the failure or cessation from the Buyer. 8.4.4 Other than a failure referred to in section 8.4.1, 8.4.2 or 8.4.3, the Seller fails to

perform in all material respects or is otherwise in material breach of its other obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by the Buyer to perform, or a breach by the Buyer of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) the Seller fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by the Seller of written notice of the failure or breach from the Buyer, or (b) the Seller, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach within 90 days after receipt of such written notice.

- 74 8.4.5 Any representation or warranty made by the Seller in this Agreement is or

becomes untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be terminated and, if the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by the Seller within 30 days after receipt by the Seller of written notice from the Buyer that the representation and warranty is untrue or incorrect. 8.4.6 An effective resolution is passed for, or documents are filed in good faith with an

office of public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of the Seller, unless there has been a valid assignment of this Agreement by the Seller under section 12.4 to a Person that is not dissolving, terminating its existence, liquidating or winding up and the Seller has been relieved from all of its liabilities and obligations hereunder. 8.4.7 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of the Seller or of any of its assets, undertaking or property is appointed by a Governmental Authority or pursuant to the terms of a debenture or a similar instrument. 8.4.8 By judgment, order or decree of a Governmental Authority, the Seller is

adjudicated bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing is made or filed against the Seller in good faith pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 8.4.9 The Seller makes an assignment for the benefit of any of its creditors generally

under the provisions of any Insolvency Legislation, consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal, application or filing pursuant to any of the provisions of any

- 75 Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized, or shall have taken advantage of any of the provisions of any Insolvency Legislation in respect of its own debts. 8.4.10 If any material execution, attachment or similar process shall be issued against the

Seller, or any encumbrancer shall take any action or proceeding which is not being diligently defended by appropriate proceedings by the Seller, whereby Coleson Cove or the Facilities or the Other Facilities or any portion thereof, shall be taken or attempted to be taken by someone (other than the Seller), unless such execution, attachment or similar process, action or proceeding is set aside, vacated, discharged or abandoned within 30 days after its commencement. 8.4.11 The Seller makes a sale in bulk of all or a substantial portion of its assets other

than in conjunction with an assignment, transfer, pledge or other disposition permitted by section 12.4 or consented to by the Buyer. 8.5 8.5.1 Termination by the Buyer If a Seller Event of Default occurs, then without prejudice to any other rights that

the Buyer has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, the Buyer may at its option and in its sole discretion: 8.5.1.1 require the Seller to return to the Buyer or its agents, depending on who

provided the fuel, any fuel stored at Coleson Cove which the Buyer or its agents previously delivered to the Seller in accordance with section 2.1.2; 8.5.1.2 subject to section 8.5.2, upon written notice to the Seller and

NB Power Holdco immediately terminate this Agreement and, subject to section 8.7, the parties respective obligations hereunder; and/or 8.5.1.3 promptly submit a claim to be resolved in accordance with section 12.2

(without first having to comply with section 12.1) against the Seller for Indemnifiable Losses asserted against or suffered by the Buyer where the Event of Default has arisen as a result of a breach by the Seller of a covenant or agreement

- 76 or a representation and warranty of the Seller contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 8.5.2 Notwithstanding section 8.5.1.2, if the Seller disputes whether the Seller Event of

Default has occurred, the Buyer shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 12.2 (without first having to comply with section 12.1) and it has been determined or agreed that the Seller Event of Default occurred, provided that if the dispute is resolved in favour of the Buyer such that it is determined or agreed that the Seller Event of Default had occurred and the Buyer should have been able to terminate this Agreement immediately, the Seller shall be liable to the Buyer for all additional Indemnifiable Losses incurred or suffered by the Buyer as a result of the delayed termination of this Agreement, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement. 8.6 NB Power Holdco Remedy If a Seller Event of Default occurs or the Seller terminates this Agreement pursuant to section 8.3, then without prejudice to any other rights that NB Power Holdco has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, NB Power Holdco may, at its option and in its sole discretion, require the Seller to return to NB Power Holdco any ORIMULSION stored at Coleson Cove which NB Power Holdco previously provided to the Seller pursuant to section 2.1.3. 8.7 Termination and Survival Neither the expiration of the Term nor the termination of this Agreement shall affect, prejudice or excuse any rights, obligations or liabilities that exist or have accrued or arisen under this Agreement prior to or upon such expiration or termination, and such rights, obligations and liabilities shall survive such expiration or termination of this Agreement. Without limiting the generality of the forgoing, the provisions of sections 1.12, 2.10, 8.3, 8.5, 8.6, 8.7, 10.2, 12.1, 12.2, 12.4, 12.5, 12.6 and 12.7 and Article 9 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect indefinitely and each party shall be entitled to the full performance thereof by the other parties

- 77 without limitation as to time or amount (except as specifically set forth in this Agreement). The provisions of sections 6.1, 6.2, 6.3, 6.4, and 6.5 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect for a period of two years, or such later period as is required in order that all Bills have been deemed to be final hereunder and all disputed Bills have been resolved, and shall thereafter terminate and be of no further force and effect, provided that the Seller shall not be required to render and deliver Bills to the Buyer in respect of any Billing Month for which no amounts are payable.

- 78 ARTICLE 9 LIABILITY AND INDEMNIFICATION 9.1 Limitation of Liability Notwithstanding any other provision in this Agreement, but except (i) for the payment of liquidated damages by the Seller pursuant to section 2.2 or (ii) in respect of a breach by a party of the obligations contained in section 12.7 (none of which shall be limited by this section 9.1), in no event shall a party (including any Indemnitee) be entitled to recover from another party (including an Indemnifying Party), for any liabilities, damages, obligations, payments, losses, costs, expenses or Indemnifiable Losses under this Agreement, any amount in excess of the actual compensatory direct damages, court costs and reasonable lawyers and other advisor fees suffered or incurred by such party, and each party waives any right to recover: 9.1.1 9.1.2 punitive, indirect, incidental, exemplary or consequential damages; economic loss or damages in respect of loss of opportunity or loss of profit or loss

of use of any property; or 9.1.3 Indemnifiable Losses in respect of replacement Electricity or the costs thereof

unless another party is specifically required under the terms of this Agreement to deliver replacement Electricity or pay the costs thereof; arising in connection with or with respect to this Agreement (or any performance or nonperformance hereunder) under a statute, in tort or contract, under any indemnity provision or otherwise. 9.2 Liquidated Damages Nothing in this Article 9 shall reduce any claim by the Buyer for liquidated damages pursuant to section 2.2. The parties agree that the liquidated damages payable pursuant to section 2.2 are not penalties and are a reasonable and genuine pre-estimate and calculation of actual damages and the Seller hereby irrevocably waives any right it may have to raise a defence that such damages are unreasonable, excessive or punitive.

- 79 9.3 9.3.1 Indemnification by Seller Subject to sections 2.2 and 9.1, the Seller shall indemnify, defend and hold

harmless the Buyer, NB Power Holdco, their subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents, including, for greater certainty, in the case of the Buyer, NB Power Genco, for so long as it is the Buyers agent hereunder (each, a Buyer Indemnitee) from and against any and all claims, demands, losses, damages, liabilities, including liabilities for bodily injury to, or death of, persons, obligations, payments, costs and expenses and accrued interest thereon (including the costs and expenses of, and accrued interest in respect of, any and all actions, suits, and proceedings and assessments, judgments, settlements and compromises relating thereto and reasonable lawyers fees and reasonable disbursements in connection therewith) (each, an Indemnifiable Loss) asserted against or suffered by a Buyer Indemnitee relating to, in connection with, resulting from, or arising out of: 9.3.1.1 the Sellers storage, maintenance, handling or use of fuel provided to it

by the Buyer or its agents pursuant to section 2.1.2 or NB Power Holdco pursuant to section 2.1.3; 9.3.1.2 the Sellers ownership, occupation or operation of the Facilities and

Other Facilities, including in connection with the Refurbishment; 9.3.1.3 any negligence or willful misconduct of the Seller, its employees or any

authorized representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, in performing the Sellers obligations under this Agreement; or 9.3.1.4 any breach by the Seller of any representations and warranties or

covenants or agreements contained in this Agreement; except to the extent that the Indemnifiable Loss is caused by (i) the negligence or willful misconduct of a Buyer Indemnitee or any authorized representative of the Buyer or NB Power Holdco, including any of their third party contractors, subcontractors, consultants, agents or advisors, performing the Buyers or NB Power Holdcos obligations

- 80 under this Agreement, (ii) a breach by the Buyer or NB Power Holdco of any representations and warranties or covenants and agreements contained in this Agreement, or (iii) the Seller following or implementing instructions provided by the Buyer or by NB Power Holdco or any authorized representative of the Buyer or NB Power Holdco, including any of their third party contractors, subcontractors, consultants, agents or advisors, pursuant to section 2.1.6 or 2.1.7. 9.3.2 It is the intention of the Seller to constitute the Buyer as trustee for the Buyer

Indemnitees that are not party to this Agreement of the covenants of the Seller in section 9.3.1 and the Buyer agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. 9.4 9.4.1 Indemnification by the Buyer Subject to section 9.1, the Buyer shall indemnify, defend and hold harmless the

Seller, its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, a Seller Indemnitee) from and against any and all Indemnifiable Losses asserted against or suffered by a Seller Indemnitee relating to, in connection with, resulting from, or arising out of: 9.4.1.1 any negligence or willful misconduct of the Buyer, NB Power Holdco,

their employees or any authorized representatives, including any of their third party contractors, subcontractors, consultants, agents, or advisors, including, for greater certainty, in the case of the Buyer, NB Power Genco, for so long as it is the Buyers agent hereunder, in performing the Buyers or NB Power Holdcos obligations under this Agreement; 9.4.1.2 any breach by the Buyer or NB Power Holdco of any representations

and warranties or covenants or agreements contained in this Agreement; or 9.4.1.3 any negligence or willful misconduct of Disco or its agents in acting as

Market Participant for the Unit Generators and the Facilities; except to the extent that the Indemnifiable Loss is caused by (i) the negligence or willful misconduct of a Seller Indemnitee or any authorized representative of the Seller, including

- 81 any of its third party contractors, subcontractors, consultants, agents or advisors, performing the Sellers obligations under this Agreement, or (ii) a breach by the Seller of any representations and warranties or covenants or agreements contained in this Agreement. 9.4.2 It is the intention of the Buyer to constitute the Seller as trustee for the Seller

Indemnitees that are not party to this Agreement of the covenants of the Buyer in section 9.4.1 and the Seller agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. 9.5 9.5.1 Sole Remedies and Injunctive Relief Except to the extent otherwise provided in section 2.2, the parties agree that

sections 9.3 and 9.4 set out the sole and exclusive manner by which a party may seek compensation or other monetary relief from the other party or parties (other than the right of set-off contained in section 12.5), and is in lieu of any and all other rights and remedies which a party may have, for any matter in respect of which the party may make a claim for indemnification. 9.5.2 Each of the Seller, the Buyer and NB Power Holdco acknowledges that a breach

or threatened breach by any party of any provisions of this Agreement, including, for greater certainty, the Sellers obligations hereunder to deliver Net Energy (unless the Seller is instructed to do otherwise by the SO) and make the Contracted Capacity exclusively available to the Buyer, will result in the other parties suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, each of the Seller, the Buyer and NB Power Holdco is entitled to equitable relief, including interim, interlocutory and permanent injunctive relief, specific performance, and other equitable remedies, in the event of any breach of the provisions of this Agreement, in addition to any other remedies available to the parties. 9.6 9.6.1 Defence of Claims If any Indemnitee receives notice of the assertion of any claim or of the

commencement of any claim, action or proceeding made or brought by any Person who is not an Indemnitee (a Third Party Claim) with respect to which indemnification is to be

- 82 sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying Party reasonably prompt written notice thereof, but in any event such notice shall not be given later than 20 calendar days after the Indemnitees receipt of notice of such Third Party Claim. Such notice shall describe the nature of the Third Party Claim in reasonable detail and shall indicate the amount or, if the amount is not then determinable, an appropriate and reasonable estimate of the potential amount of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party will have the right to participate in or, by giving written notice to the Indemnitee, to elect to assume the defence of any Third Party Claim at such Indemnifying Partys expense and by such Indemnifying Partys own counsel; provided, however, that (i) counsel for the Indemnifying Party shall conduct the defence of such Third Party Claim in a manner reasonably satisfactory to the Indemnitee, and (ii) if the defendants to the Third Party Claim include both the Indemnifying Party and the Indemnitee, and the Indemnitee has reasonably concluded that there may be legal defences available to it which are different from, additional to or inconsistent with those available to the Indemnifying Party, the Indemnitee shall have the right to select separate counsel to participate in the defence of the Third Party Claim on behalf of the Indemnitee and the reasonable fees and disbursements of such separate counsel shall be considered Indemnifiable Losses for the purposes of this Agreement. The Indemnitee shall co-operate in good faith with the Indemnifying Party in defence of the Third Party Claim at the Indemnitees own expense. If an Indemnifying Party elects not to assume control of the defence of any Third Party Claim, the Indemnitee shall be entitled to assume such control and may compromise or settle such Third Party Claim over the objection of the Indemnifying Party, which settlement or compromise shall conclusively establish the Indemnifying Partys liability pursuant to this Agreement and the Indemnifying Party shall be bound by the results obtained by the Indemnitee with respect to such Third Party Claim. 9.6.2 If, within 20 calendar days after an Indemnitee provides written notice to the

Indemnifying Party of any Third Party Claim, the Indemnitee receives written notice from the Indemnifying Party that the Indemnifying Party has elected to assume the defence of such Third Party Claim as provided in and subject to section 9.6.1, the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in

- 83 connection with the defence thereof unless the Indemnitee is permitted to select separate counsel pursuant to section 9.6.1, provided, however, that if the Indemnifying Party shall fail to take reasonable steps necessary to defend diligently such Third Party Claim within 20 calendar days after receiving notice from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defence and the Indemnifying Party shall be liable for all reasonable expenses thereof. 9.6.3 Without the prior written consent of the Indemnitee, the Indemnifying Party shall

not enter into any settlement of any Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification under this Agreement. The Indemnifying Party shall not settle any Third Party Claim or conduct any legal or administrative proceeding in a manner which would, in the opinion of the Indemnitee, have a material adverse impact on the Indemnitee. If a final offer is made to settle a Third Party Claim and the offer creates no liability or financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification under this Agreement and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such final offer within 20 calendar days after its receipt of such written notice, the Indemnifying Party shall be relieved of its obligations to defend such Third Party Claim and the Indemnitee may contest or defend such Third Party Claim. In such event, the maximum liability of the Indemnifying Party as to such Third Party Claim will be the amount of such settlement offer plus reasonable costs and expenses paid or incurred by the Indemnitee up to the date of such written notice. 9.6.4 In the event that any Third Party Claim is of a nature such that the Indemnitee is

required by Applicable Law to make a payment to any Person (a Third Party for the purposes of this section 9.6.4) with respect to such Third Party Claim before the completion of settlement negotiations or related legal proceedings, the Indemnitee may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount of any liability under the Third Party Claim in respect of which such a payment was made, as finally

- 84 determined, is less than the amount which was paid by the Indemnifying Party to the Indemnitee, the Indemnitee shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Indemnifying Party. 9.6.5 Except in the circumstances contemplated by sections 9.6.1, 9.6.2 or 9.6.4 and

whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnitee shall not negotiate, settle, compromise or pay any Third Party Claim except with the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed). 9.6.6 The Indemnitee shall not permit any right of appeal in respect of any Third Party

Claim to terminate without giving the Indemnifying Party notice thereof and an opportunity to contest such Third Party Claim. 9.6.7 The Buyer, the Seller and NB Power Holdco, as applicable, shall co-operate fully

with each other with respect to Third Party Claims, shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available) and shall each designate a senior officer who will keep himself informed about and be prepared to discuss the Third Party Claim with his counterparts and with counsel at all reasonable times. 9.6.8 Any claim by an Indemnitee on account of an Indemnifiable Loss which does not

result from a Third Party Claim (a Direct Claim) shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, stating the nature and factual basis of the Direct Claim in reasonable detail and indicating the amount, or if the amount is not then determinable, an approximate and reasonable estimate of the potential amount of the Direct Claim, but in any event such notice shall not be given later than 20 calendar days after the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party shall have a period of 20 calendar days within which to investigate and respond to such Direct Claim. For the purpose of such investigation, the Indemnitee shall make available to the Indemnifying Party the information relied upon by the Indemnitee to substantiate the Direct Claim. If the Indemnitee and the Indemnifying Party agree, at or prior to the expiration of such 20 calendar day period, to the validity and amount of the Direct Claim,

- 85 the Indemnifying Party shall immediately pay to the Indemnitee the full agreed upon amount of the Direct Claim. If the Indemnifying Party does not respond within such 20 calendar day period, the Indemnifying Party shall be deemed to have accepted the Direct Claim. If the Indemnifying Party rejects the Direct Claim, the Indemnitee will be free to seek enforcement of its right to indemnification under this Agreement and shall be entitled to submit the Dispute to the dispute resolution procedure set out in section 12.2 (without first having to comply with section 12.1). 9.6.9 If the amount of any Indemnifiable Loss, at any time subsequent to the making of

an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by, from or against any other Person, the amount of such reduction, together with any interest earned on such amount, if applicable, less any deductibles, cost or expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party. 9.6.10 A failure to give timely notice as provided in this section 9.6 shall not affect the

rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party which was entitled to receive such notice was actually prejudiced.

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ARTICLE 10 CONTRACT OPERATION AND ADMINISTRATION 10.1 Operating Committee The Buyer and the Seller shall each appoint, from time to time, a representative to an operating committee (the Operating Committee) which representative shall be duly authorized to act on behalf of the party that has made the appointment, and with whom the other party may consult at all reasonable times, and whose instructions, requests, and decisions shall be binding on the appointing party as to all matters pertaining to this Agreement; provided, however, that the Operating Committee shall not have the authority to amend this Agreement except as specifically provided for in this Agreement. The Operating Committee shall meet from time to time as required and, in any event, at least once each calendar year. The Operating Committee shall address operating and administrative issues related to the Agreement, including the formulation, adoption and approval, if and as required, of the Scheduling Procedures, metering procedures and outage planning procedures, along with any and all other issues arising between the Buyer and the Seller under the Agreement which either the Buyer or the Seller may reasonably request the Operating Committee to address. The Seller shall provide through the Operating Committee all additional information relating to an Outage of a Unit Generator reasonably requested by the Buyer. 10.2 Record Retention Each party (the disclosing party for the purposes of this section 10.2) shall keep complete and accurate records and all other data required by each party for the purpose of the proper administration of this Agreement. All such records and data shall be maintained for a minimum of seven years after the creation of the record or data or for such longer period of retention as required by Applicable Law or a Governmental Authority. The disclosing party, on a confidential basis as provided for in section 12.7 and subject to the limitations of disclosure set forth in section 6.5, shall provide to another party (the receiving party for the purposes of this section 10.2) reasonable access to the relevant and appropriate records and data kept by the disclosing party which are required by the receiving party in order for the receiving party to be able to comply with its obligations to Governmental Authorities or under Applicable Law or in

- 87 order to provide the receiving party with all relevant information required by the receiving party in connection with this Agreement and the parties compliance herewith. A party may use its own employees for the purposes of any such review of records and data provided that those employees are advised of and bound by the confidentiality obligations provided for in section 12.7. 10.3 Notices Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be given by facsimile or other means of electronic communication or by mail, registered mail, courier or hand-delivery as provided below. Any such notice or other communication, if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the sending or, if delivered by hand or courier, shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Any such notice or communication given by mail shall be deemed to have been delivered on the 5th Business Day following the deposit thereof in the mail and if given by registered mail, shall be deemed to have been delivered on the 3rd Business Day following the deposit thereof in the mail. If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system which might affect the delivery of mail, any such demand, notice or other communication shall not be mailed but shall be given by personal delivery or by electronic communication. Notice of change of address shall also be governed by this section 10.3. addressed as follows: (i) (A) all Bills and Availability Statements shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: Controller (506) 458-4000 Notices and other communications shall be

- 88 -

(B)

all other notices and other communications to the Buyer shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

(ii)

all notices and communications to the Seller shall be to: New Brunswick Power Coleson Cove Corporation P.O. Box 2060 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

(iii)

all notices and communications to NB Power Holdco shall be to: New Brunswick Power Holding Corporation P.O. Box 2010 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

Notwithstanding the foregoing, any notice or other communication required or permitted to be given by any party pursuant to or in connection with any arbitration procedures contained in this

- 89 Agreement or in any Schedule to this Agreement may only be delivered by hand. A failure to provide a notice in the manner provided for in this section 10.3 shall not affect the rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party entitled to notice in such manner was actually prejudiced.

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ARTICLE 11 FORCE MAJEURE 11.1 11.1.1 Effect of Invoking Force Majeure and Notice A party shall be deemed to have invoked Force Majeure with effect from the

commencement of the event or circumstances constituting Force Majeure when that party gives to the other parties written or oral notice which is reasonably prompt in the circumstances (but if oral, promptly confirmed in writing in accordance with section 10.3) of the effects of the Force Majeure and reasonably full particulars of the cause thereof. Any Dispute between the parties as to whether a valid Force Majeure has occurred shall be resolved in accordance with section 12.1 and, if required, section 12.2. The party claiming Force Majeure shall use all reasonable efforts to remedy the situation and remove, so far as possible and with reasonable dispatch, the effects of the Force Majeure, including, for greater certainty, in the case of section 11.2.9, the Buyer using all reasonable efforts to obtain an alternative fuel for delivery to the Seller, provided, however, that the settlement of labour disputes shall be within the discretion of such party. The party claiming Force Majeure shall give prompt notice to the other parties of the termination of the event of Force Majeure. In addition, the party claiming Force Majeure shall, as soon as reasonably practicable following the occurrence of the Force Majeure and from time to time thereafter, provide the other parties with (i) access to all information, data, books and records about the Force Majeure, the effects thereof, and the plans or proposals to remedy or remove the effects of the Force Majeure, reasonably requested by the other parties, and access to the Facilities and the Other Facilities, if applicable, to conduct inspections with respect to the Force Majeure, and (ii) the opportunity, but not the obligation, to take, at that other partys own cost, the steps it deems are reasonably necessary to remedy the effects of the delay or prevention of performance caused by the Force Majeure. If by reason of Force Majeure a party is unable, wholly or partially, to perform or comply with its obligations hereunder, then that party shall be excused and relieved from performing or complying with such obligations and shall not be liable for any liabilities, damages, losses, payments, costs, expenses or, for greater certainty, Indemnifiable Losses (excluding Indemnifiable Losses which relate to negligence or willful misconduct, which arose prior to the event of Force

- 91 Majeure or which do not relate to the event of Force Majeure) to, or incurred or made by, the other parties in respect of or relating to (a) such Force Majeure and (b) such partys failure to so perform or comply during the continuance of such Force Majeure, to the extent of the inability so caused from and after the invocation of such Force Majeure and until the termination of such Force Majeure. 11.1.2 If a party claims a valid Force Majeure pursuant to section 11.1.1, the parties shall

use Commercially Reasonable Efforts to reschedule any fuel deliveries as may be required to take into account the event of Force Majeure. 11.2 Definition of Force Majeure For the purposes of this Agreement, the term Force Majeure means and is limited to any circumstance, act, event, cause or condition that is beyond the party claiming Force Majeures reasonable control, that is not caused by such partys negligence, and that, by the exercise of all reasonable efforts, such party is unable to overcome or prevent, including: 11.2.1 11.2.2 11.2.3 an earthquake, tornado, severe storm, flood, fire, lightning or other act of God; an epidemic, plague or quarantine; an act of civil or military authorities, insurrection, war (whether declared or

undeclared), revolution, sabotage, invasion, blockade, occupation, civil disturbance, an act of public enemies or terrorists, riot or vandalism or a local, regional or national state of emergency, or explosion resulting from any of the foregoing; 11.2.4 an interruption, disruption or failure in the operation of electric lines or an

interruption, disruption or failure in the operation of transmission or distribution lines, systems, equipment or facilities, including any such interruption, disruption or failure caused by weather, an explosion or accident; 11.2.5 transmission restrictions, loss or deterioration of transmission or electric services,

or any transmitter or rotating loadcuts required by the SO; 11.2.6 a strike or other work stoppage or other labour dispute; or

- 92 11.2.7 an order, judgment, decree, legislation, ruling or direction by a Governmental

Authority restraining a party from performing its obligations hereunder, provided that the affected party has not applied for or assisted in the application for, and has used Commercially Reasonable Efforts to oppose, the order, judgment, decree, legislation, ruling or direction; but excluding: 11.2.8 subject to section 11.2.7, changes in Applicable Law;

provided that and notwithstanding the foregoing: 11.2.9 in the case of the Buyer, a valid force majeure claim by Bitumenes Orinoco, S.A.

under the ORIMULSION Fuel Supply Agreement shall constitute a valid Force Majeure claim by the Buyer for the purposes of this Agreement. 11.3 Prolonged Force Majeure If the delivery or receipt of Net Energy at the Point of Delivery is interrupted due to Force Majeure, then the party not claiming Force Majeure may at its option and in its sole discretion and upon written notice to the party claiming Force Majeure, terminate this Agreement and, subject to section 8.7, the parties respective obligations hereunder, if: 11.3.1 the Force Majeure continues for a period of two years or more after the notice

described in section 11.1 is received by that party or if at any time it becomes impossible for the party claiming Force Majeure to remove or remedy the effects of the Force Majeure prior to the expiry of such two year period; or 11.3.2 at any time the party claiming Force Majeure is not using all reasonable efforts to

remedy the situation and remove, with all reasonable dispatch, the effects of the Force Majeure, provided, however, that the settlement of labour disputes shall be within the discretion of such party.

- 93 11.4 Extension The Term of this Agreement and the Termination Date shall not be extended by the length or duration of any valid Force Majeure unless the length of such event of Force Majeure is equal to or greater than 90 days, in which case the party not claiming Force Majeure may, at its option, extend the Term of this Agreement and the Termination Date by the entire length of such event of Force Majeure. 11.5 No Capacity Payment For greater certainty, if either the Buyer or the Seller has validly claimed Force Majeure pursuant to this Agreement and such Force Majeure affects the availability of one or more of the Unit Generators or the capability of the Seller to deliver or the Buyer to receive Net Energy to or at the Point of Delivery, the Availability of the Unit Generators shall be reduced accordingly. 11.6 NB Power Holdco Limitation Notwithstanding the foregoing provisions of this Article 11, NB Power Holdco may not (i) claim Force Majeure, (ii) terminate this Agreement due to Force Majeure pursuant to section 11.3, or (iii) extend the Term of this Agreement and the Termination Date pursuant to section 11.4, and the rights of NB Power Holdco pursuant to this Article 11 shall be limited to receiving any notices that a party is required to provide pursuant to this Article 11.

- 94 -

ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Informal Dispute Resolution Procedures Unless otherwise specifically provided for in this Agreement, all disputes, disagreements, controversies, questions or claims (including claims for indemnification) arising out of or relating to this Agreement, including with respect to its formation, execution, validity, application, interpretation, performance, breach, termination or enforcement (Disputes), shall first be submitted to a disputes committee (the Disputes Committee) for informal resolution. A party may commence an informal resolution under this section 12.1 by delivering a written notice of informal resolution to the other party or parties, as the case may be (the Notice of Informal Resolution). Once the Notice of Informal Resolution has been delivered, each applicable party shall within 5 days appoint an executive officer to the Disputes Committee. If a nominee is unable to continue acting on the Disputes Committee or if a nominating party wishes to replace its nominee, the nominee shall be replaced by another executive officer of the nominating party. The Disputes Committee shall review the Dispute on a timely basis. If the Disputes Committee is unable to resolve the dispute within 30 days of the date of receipt of the Notice of Informal Resolution by the receiving party or parties, as the case may be, then any applicable party may commence arbitration proceedings in accordance with the provisions of section 12.2. 12.2 Arbitration Procedures Unless otherwise specifically provided for in this Agreement, any Dispute that is not resolved by the Disputes Committee pursuant to section 12.1 shall be determined in accordance with Schedule 12.2, which sets out the sole and exclusive procedure for the resolution of Disputes not resolved by the Disputes Committee. The resolution of Disputes pursuant to the terms of Schedule 12.2 shall be final and binding upon the parties to this Agreement, and there shall be no appeal therefrom, including any appeal to a court of law on a question of law, a question of fact, or a question of mixed fact and law. The application of subsection 7(2) of the Arbitration Act (New Brunswick) is expressly excluded. The arbitrator

- 95 shall be authorized only to interpret and apply the provisions of this Agreement and shall have no power to modify or change the Agreement in any manner. 12.3 Legal Relationship Except as otherwise specifically provided for in this Agreement, none of the Persons employed by any party shall be considered employees, agents or authorized representatives of the other parties for any purpose. Except as otherwise specifically provided for in this Agreement, nothing in this Agreement nor any action of a party shall create or be deemed to create a relationship of partners, joint venturers, fiduciary, principal and agent or any other relationship or association between the parties. 12.4 12.4.1 Assignment This Agreement and all of the provisions of this Agreement shall be binding upon

and shall enure to the benefit of the parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by the Buyer without the prior written consent of the Seller, by the Seller without the prior written consent of the Buyer, and NB Power Holdco, if such assignment would materially affect the rights, duties, responsibilities or obligations of NB Power Holdco under this Agreement or would constitute a breach of the ORIMULSION Fuel Supply Agreement, or by NB Power Holdco without the prior written consent of both the Buyer and Seller, which consent or consents shall not be unreasonably withheld or delayed. Applicable Law: 12.4.1.1 the Seller or its permitted assignee may as security only assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing the Facilities and/or the Other Facilities, including such an assignment, transfer or other disposition upon or pursuant to the exercise of remedies by such Person with respect to such financing or refinancing; Notwithstanding the foregoing, but subject to

- 96 12.4.1.2 the Seller or its permitted assignee may grant a security interest in or assign, transfer, pledge or otherwise dispose of (absolutely or as security) all or part of its rights and interests under this Agreement to any Person to which all or part of the Facilities have been Transferred, provided that the Province has consented to such Transfer; 12.4.1.3 NB Power Holdco or its permitted assignee may assign, transfer, pledge or otherwise dispose of all or part of its rights and interests under this Agreement to NB Power Genco or the Buyer; 12.4.1.4 the Buyer or its permitted assignee may as security only, assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing any of the Buyers assets, including such an assignment, transfer or other disposition upon or pursuant to the exercise of remedies by such Person with respect to such financing or refinancing; and 12.4.1.5 any of the Buyer, the Seller or NB Power Holdco (or any of their respective permitted assignees) may grant a security interest in or assign, transfer, pledge or otherwise dispose of (absolutely or as security) all or part of its rights and interests under this Agreement to the Province or an agent thereof; provided that: 12.4.1.6 as a condition of an assignment, transfer, pledge or other disposition as a security interest, the assignee, transferee, pledgee or other acquiror enters into and delivers an agreement in favour of the assignor and enforceable against the assignee, transferee, pledgee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor, other than pre-existing liabilities and obligations, under this Agreement from the time of the exercise of its remedies under the security until the assignment, transfer, sale or other disposition of its interest in

- 97 this Agreement to another Person is made in accordance with the terms of this Agreement; 12.4.1.7 as a condition of an assignment, transfer or other disposition, other than as a security interest, or an assignment, transfer, sale or other disposition pursuant to the exercise of a secured partys remedies as contemplated in section 12.4.1.6, the assignee, transferee or other acquiror enters into and delivers an agreement in favour of the other parties and enforceable against the assignee, transferee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor under this Agreement, including pre-existing liabilities and obligations, from the date of the assignment, transfer or acquisition; and 12.4.1.8 subject to sections 12.4.3, 12.4.4 and 12.4.5, none of the foregoing assignments, transfers, pledges, grants or other dispositions shall relieve or discharge the Seller, the Buyer or NB Power Holdco from any of its obligations under this Agreement. 12.4.2 Notwithstanding section 12.4.1, for so long as the Buyer, NB Power Holdco and

the Seller remain directly or indirectly wholly-owned by the Province and/or any whollyowned Affiliates of the Province, no party shall assign any of its rights, interests or obligations under this Agreement pursuant to section 12.4.1 without first obtaining the prior written consent of the Electric Finance Corporation. 12.4.3 An assignment, transfer, pledge or disposition by the Seller as described in

section 12.4.1.2 or 12.4.1.5 shall free and relieve the Seller from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and the Buyer and NB Power Holdco shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 12.4.4 An assignment, transfer, pledge or disposition by the Buyer as described in

section 12.4.1.5 shall free and relieve the Buyer from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the

- 98 assignee, transferee, pledgee or other acquiror and the Seller and NB Power Holdco shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 12.4.5 An assignment, transfer, pledge or disposition by NB Power Holdco as described

in section 12.4.1.3 or section 12.4.1.5 shall free and relieve NB Power Holdco from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and the Seller and the Buyer shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 12.4.6 Any Change of Control of the Seller shall be deemed to be an assignment of the

rights, interests or obligations of this Agreement by the Seller and, accordingly, subject to the provisions of section 12.4.1. 12.4.7 Each party agrees, at the assigning partys expense, to execute and deliver such

documents as may be reasonably required to accomplish any such permitted assignment, transfer, pledge or other disposition of rights and interests under this Agreement by the assigning party so long as the other parties rights and interests under this Agreement are not thereby altered, amended, diminished or otherwise impaired. 12.4.8 The Seller shall deliver to the Buyer, at the written request of the Buyer at any

time and from time to time, a certificate of the Seller signed by a senior officer thereof (without personal liability) which states whether or not any Change of Control of the Seller has occurred since the date hereof and which sets out the relevant facts with respect to the Control and Effective Control of the Seller in sufficient detail to enable the Buyer to determine whether there has been any Change of Control of the Seller. 12.5 12.5.1 Set-off Any amount (the First Amount for purposes of this section 12.5) payable by

one party (the first party for the purposes of this section 12.5) to another party (the second party for the purposes of this section 12.5) under this Agreement, in circumstances where an Event of Default has occurred with respect to the second party or

- 99 the second party is in default of its obligations under any other agreement between the first party and the second party, shall, at the option of the first party, be reduced by or set-off against any amount (the Second Amount for purposes of this section 12.5) payable (whether at such time or in the future or upon the occurrence of a contingency) by the second party to the first party under (i) this Agreement, (ii) any other agreement between the second party and the first party, (iii) any instrument or undertaking issued or executed by the second party to, or in favour of, the first party, (iv) any arbitrators award or court order, or (v) any other legal obligation. The Second Amount will be discharged promptly and in all respects to the extent it is so set-off. 12.5.2 The first party will give notice to the second party of any set-off effected under Notwithstanding any other terms of this Agreement or any other

this section 12.5.

agreement between the first party and the second party, a set-off under this section 12.5 may be effected at any time before, upon and at any time after, the termination of this Agreement or any such other agreement. 12.5.3 If a Second Amount is unascertained, the first party may in good faith estimate

that amount and set-off in respect of the estimate, subject to the first party accounting to the second party when the obligation is ascertained. For greater certainty, the Second Amount includes any amounts payable (whether at such time or in the future or upon the occurrence of a contingency) under any indemnity including the indemnities set forth in sections 9.3 and 9.4, and if the amount payable under these indemnities is unascertained, the first party may in good faith estimate that amount in accordance with the immediately preceding sentence. 12.5.4 If the First Amount and the Second Amount are denominated in different

currencies, then at the option of the second party, all or any portion of either amount may be converted by the second party into the currency in which the other is denominated at the rate of exchange at which the second party would be able, acting reasonably and in good faith, to purchase the relevant amount of that currency. 12.5.5 Nothing in this section 12.5 shall be effective to create a charge or other security

interest. This section 12.5 shall be without prejudice and in addition to any right of set-off,

- 100 combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, agreement or otherwise). Further, this section 12.5 shall be without prejudice to any other rights that the parties have pursuant to this Agreement or Applicable Law, including general principles of common law or equity. 12.6 Further Assurances Each of the parties shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, documents, assurances and things as the other parties may reasonably require from time to time for the purpose of giving effect to this Agreement and shall use Commercially Reasonable Efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement. 12.7 Confidentiality The terms of this Agreement, all information and knowledge relating to operations hereunder, including pricing and scheduling, information provided pursuant to any provision of this Agreement (including any disclosure under section 6.5 or section 10.2) and all other information emanating from or pertaining to a partys business (in any form) that a party (the receiving party for purposes of this section 12.7) may acquire under the terms or otherwise as a result of this Agreement or by virtue of the relationship between the parties created by this Agreement (collectively, Confidential Information), shall be considered confidential and, except as otherwise permitted in this Agreement, shall not be used by, or disclosed, revealed or divulged to, any other Person, or published in any manner whatsoever, in a manner not specifically permitted by this Agreement without first obtaining the written consent of the other applicable party (the disclosing party for purposes of this section 12.7), which consent shall not be unreasonably withheld or delayed. Confidential Information does not include information that: (i) at the time of disclosure, is already known by the receiving party; (ii) is or becomes publicly known other than through a wrongful act or omission of the receiving party or any of its partners, officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, or any other Person subject to a confidentiality agreement or other obligation to hold such information in confidence, whether contractual, fiduciary or otherwise; (iii) is rightfully received from a third party without similar restriction provided that the third party did not come into possession of the Confidential

- 101 Information as a result, directly or indirectly, of a breach of an obligation of confidentiality owed by any Person to the disclosing party; or (iv) is independently developed by or on behalf of the receiving party without disclosure of or recourse to the Confidential Information. Notwithstanding the foregoing, a receiving party may disclose, reveal, divulge or permit the use of Confidential Information: 12.7.1 in the case of any party, to or by the Province or any representative thereof solely

in its or his capacity as a shareholder of that party, or any Affiliate of that party, as required by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; 12.7.2 in the case of any party, to or by its wholly-owned subsidiaries and its and its

wholly-owned subsidiaries respective officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, provided that such Persons have been informed of that partys confidentiality obligations hereunder; 12.7.3 as required by any Governmental Authority (other than the Province in its

capacity as a shareholder of the Buyer, NB Power Holdco or the Seller or any Affiliate of the Buyer, NB Power Holdco or the Seller) or Applicable Law; provided that where circumstances permit, and where such disclosure is not made in the ordinary course to such Governmental Authorities, prior to any disclosure, the disclosing party shall be notified by the receiving party of the proposed disclosure and the receiving party shall, at the disclosing partys request, take reasonable steps to allow the disclosing party, at its sole expense, to contest the requirement for disclosure or to obtain an order or ruling to preserve the confidentiality of such Confidential Information; 12.7.4 as necessary in connection with any dispute resolution commenced pursuant to

this Agreement so long as such disclosure is made in accordance with paragraph 32 of Schedule 12.2 or as necessary in connection with any Third Party Claim in respect of this Agreement; 12.7.5 to the extent necessary, to or by any financial institution or other Person (from

whom financing is being sought) or to advisors to any such financial institution or other

- 102 Person, provided that any such financial institution, Person or advisor has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby; 12.7.6 to the extent necessary, to or by any Person providing services to the receiving

party to enable the receiving party to perform any of its obligations or exercise any of its rights under this Agreement, provided that such Person has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby; or 12.7.7 to the extent necessary, to or by a credit rating agency as required to establish or

maintain a credit rating with that agency, provided that such agency has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby. 12.8 Agency Each of the Buyer, NB Power Holdco and the Seller shall be entitled to appoint any Person to act on its behalf as its agent, and to perform its obligations, under this Agreement. Until the Buyer has notified the Seller and NB Power Holdco otherwise, the Buyer hereby appoints NB Power Genco as agent for the Buyer for the purposes of providing Scheduling instructions to the Seller and fuel to the Seller pursuant to section 2.1.2. The parties shall treat any notice or communication from an agent duly appointed by the other party, including NB Power Genco, or the Buyer or its agent in its capacity as Market Participant for the Unit Generators and the Facilities pursuant to section 2.1.12, as having been made by that other party directly and shall act on such notice or communication to the extent the party would have been required to act on such notice or communication had it been made directly by the other party, provided that any such notice or communication is within the scope of the agency created. Notwithstanding the foregoing, a party shall remain liable under this Agreement for all acts or omissions of any of its agents, as if the party itself had performed such acts or made such omissions; provided that any such acts or omissions were within the scope of the agency created. For greater certainty, any breach of the terms or conditions of this Agreement by any of its agents, shall be deemed to be a breach of the terms or conditions of this Agreement by that party and any acts or omissions of any such agent shall be deemed for purposes of this Agreement to

- 103 be acts or omissions of such party, provided that such breaches, acts or omissions are within the scope of the agency created. 12.9 Time of the Essence Time shall be of the essence in this Agreement. 12.10 Counterparts This Agreement may be signed in counterparts and each of such counterparts shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument.

- 104 IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement by the undersigned duly authorized representatives as of the date first stated above. NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION by: Name: Leon Furlong

NEW BRUNSWICK POWER COLESON COVE CORPORATION by: Name: Leon Furlong

NEW BRUNSWICK POWER HOLDING CORPORATION by: Name: Leon Furlong

SCHEDULE 1.1.16 CAPACITY PAYMENT Definitions In this Schedule 1.1.16: (a) (b) Monthly Capital Payment means $6,708.33 per MW. Monthly Factor means: (i) (ii) (c) for January, February, June, July, August and December, 1.5; and for March, April, May, September, October and November, 0.5.

Monthly Operating Payment means: (i) for the period from the In-Service Date to March 31, 2006, $2,416,666.66; and (ii) for each Fiscal Year commencing after March 31, 2006, the Monthly Operating Payment for the immediately preceding Fiscal Year multiplied by the CPI Adjustment for the immediately preceding calendar year.

Calculation of Capacity Payment Beginning on the In-Service Date and subject to section 2.6, for each calendar month, the Capacity Payment shall equal (A) the product of (i) the Monthly Capital Payment, (ii) the Monthly Factor, and (iii) the Contracted Capacity, each in respect of that calendar month, plus (B) the product of (i) the Monthly Operating Payment and (ii) the Monthly Factor, each in respect of that calendar month.

Schedule 1.1.16 - Page i

SCHEDULE 1.1.25 CONTRACTED ENERGY PRICE Prior to In-Service Date The Contracted Energy Price for any hour prior to the In-Service Date shall equal $12 per MWh. On and After In-Service Date The Contracted Energy Price commencing on the In-Service Date shall be: 1. $2.36 per MWh, for the period commencing on the In-Service Date and ending on and including March 31, 2006. 2. For each Fiscal Year commencing after March 31, 2006, the product of (i) the Contracted Energy Price for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. The Contracted Energy Price shall be increased by $0.50 per MWh of Net Energy Scheduled by the Buyer with the SO to be delivered to the Buyer at the Point of Delivery during the period commencing on the date that the planned outage to complete the refurbishment of the Point Lepreau nuclear generating station commences and ending on the date that the Point Lepreau unit generator is completely commissioned and returned to service following completion of such refurbishment and all testing and inspections related thereto (including any such testing or inspections required by a Governmental Authority) so that the unit generator has been synchronized to the SO-Controlled Grid through its unit transformer and the unit generator is consistently delivering Electricity to the SO-Controlled Grid.

Schedule 1.1.25 - Page i

SCHEDULE 1.1.28 CPI ADJUSTMENT Definitions In this Schedule 1.1.28, CPI Factor means, in respect of any calendar year:
CPI (New Brunswick) for that calendar year minus CPI (New Brunswick) for the immediately preceding calendar year CPI (New Brunswick) for the immediately preceding calendar year

Calculation of CPI Adjustment The CPI Adjustment for any calendar year shall be calculated in accordance with the following: 1. If the CPI Factor for that calendar year is less than or equal to zero, the CPI Adjustment shall equal 1. 2. If the CPI Factor for that calendar year is greater than 0, the CPI Adjustment shall equal (i) 1, plus (ii) the CPI Factor.

Schedule 1.1.28 - Page i

SCHEDULE 1.1.55 FUEL SPECIFICATIONS

Heavy Fuel Oil Specifications(1)

Determination API Gravity at 60F Viscosity (SSF at 120F) Flash Point, Pensky Martens (F) Pour Point (F) Gross Heat of Combustion (BTU per Bbl) Sulphur (% by wt.): Any one delivery Avg. for calendar quarter Ash (% by wt.) B.S. & W. (% by vol.) Water + Sediment (% by vol.) Water by distillation (% by vol.) Sediment by extraction (% by wt.) Vanadium (PPM by wt. as V) Sodium (PPM by wt. as Na) Asphaltene (% by wt.) Carbon (% by wt.) Hydrogen (% by wt.) Nitrogen (% by wt.) Aluminum (PPM) Silicon (PPM) Stability Magnesium Calcium H2S (PPM)
Notes: (1) Heavy fuel oil must not contain any chemicals, tar bottoms, styrenes, olefins, matter foreign to No. 6 fuel oil, or any undesirable odor. (2) The latest version of the A.S.T.M. Test No. shall be used.

Product 6 min. 350 max. 150 min. 70 max. 6,300,000 min. 3.0 max. 2.75 max. 0.15 max. 1.00 max. 1.00 max. 1.00 max. 0.25 max. 300 max. 50 max. Report Report Report Report Report Report Report Report Report Report

A.S.T.M. Test No.(2) D287 D445 & D2161 D93 D97 D240 & D70 & Table 26 D4294 D4294 D482 D1796 D95 D473 D473 D5863 D5863 D6560 D5291 D5291 D5291 D5184 D5184 D4740 D5863 D5863 Drager Detector

Schedule 1.1.55 - Page i

ORIMULSION Specifications

Schedule 1.1.55 - Page ii

SCHEDULE 1.1.64 HEAT RATE TEST 1. The heat rate is the ratio of total heat input and Electricity output of a Unit Generator at a specific load. The heat rate characteristic will be represented by a quadratic equation. Y = a + bP + cP2
= fuel input (MMBTU/hr) for a Unit Generator = Electricity output for a Unit Generator (MW) after deducting a pro rata share of Common Service Load and its Unit Generator Load a, b, c = coefficients specific for each Unit Generator Y P

2. 3.

The operating heat rate must exclude the fuel consumption associated with Start-Ups. Heat Rate Tests are done under normal operating conditions and do not include complete isolation of the system. This method measures the fuel consumption and net Electricity output over the test period. The calculated heat rates are adjusted for variations in operating target values. The net Electricity output is measured at the Point of Delivery. The meters measuring fuel flow are calibrated prior to the test and are used to measure the fuel consumption during the test period.

4.

Heat Rate Tests are corrected to an auxiliary steam consumption which would be the amount required when the ambient temperature is 10C (50F). This means that no building heating steam is included. Heating for oil tank and steam coil air heaters is part of the auxiliary steam consumption.

5.

The Heat Rate Tests will be made at five load points. Corrections are applied to each test for deviations from target operating parameters, established from a combination of design, operating, and optimization experiences. The test points employed to define the shape of the heat rate curve are the high operating limit, the low operating limit and three equally spaced points in-between.

6.

Each Heat Rate Test should be conducted for a minimum duration of 2 hours and only after satisfactory stable operating conditions have been established.

Schedule 1.1.64 - Page i

7.

Since the heat rate curve is determined under ideal conditions, the heat rate based upon this curve will differ as a result of actual operating conditions varying from ideal operating conditions. The Seller shall complete a boiler wash for the boiler associated with a Unit Generator prior to conducting Heat Rate Tests in respect of that Unit Generator, unless the Buyer consents to the Seller not completing a boiler wash, which consent shall not be unreasonably withheld or delayed. An operating factor is used to adjust the heat rate curve to account for actual operating conditions. Such operating factor will reflect the capability of a Unit Generator under normal operating conditions over an extended period of time.

Schedule 1.1.64 - Page ii

SCHEDULE 1.1.107 REFURBISHMENT DESCRIPTION The Refurbishment shall include, among other things: 1. 2. the installation of a scrubber to lower sulphur dioxide emissions; the installation of a wet electrostatic precipitator to lower fine particulate emissions, including sulphur trioxide emissions that contribute to the visible plume from the stack; 3. 4. burner modifications to lower nitrogen oxide emissions; and the installation of a new wastewater treatment plant.

Schedule 1.1.107 - Page i

SCHEDULE 2.1.4 SCHEDULING PROCEDURES 1. The Seller shall promptly declare to the Buyer, in good faith and from time to time, any change to its maximum bona fide availability from the Unit Generators. 2. Based on the Sellers declaration of availability, the Buyer shall provide both the SO and the Seller with a day ahead Net Energy schedule. 3. The Buyer shall Schedule Net Energy in such manner and in such quantities so as to (i) permit the Seller to comply with its obligations under section 5.1 of the Agreement and (ii) ensure that the Seller does not exceed any emission limits under Applicable Law, including any nitrogen oxide, sulphur dioxide and carbon dioxide emission limits, and/or any Emission Allowances or Emission Credits the Seller has in respect of the Facilities. In that regard, the Seller shall advise the Buyer from time to time as to the quantity or level of such limits and/or Emission Allowances or Emission Credits and the actual emissions from the Facilities. If the Buyer does not Schedule Net Energy in accordance with the requirements of this paragraph 3, then, in addition to any other remedies that the Seller may have under this Agreement, the Buyer shall (i) reduce Net Energy Scheduled, as directed by the Seller, and/or (ii) reimburse the Seller for any additional costs incurred by the Seller to acquire additional Emission Allowances and/or Emission Credits, in each case as necessary so that Net Energy is Scheduled in accordance with the requirements of this paragraph 3. 4. 5. The Seller shall comply with all dispatch and other instructions issued by the SO. Each of the Buyer and the Seller shall comply with all applicable Market Rules with respect to Scheduling. 6. Each of the Buyer and the Seller shall provide to the other party all information reasonably necessary for the other party to effectively meet or comply with, or cause to be met or complied with, its Scheduling obligations.

Schedule 2.1.4 - Page i

SCHEDULE 2.5 ADJUSTMENTS TO CAPACITY PAYMENT FORMULA If (i) the Buyer chooses to reimburse the Seller for Environmental Costs or deemed Environmental Costs pursuant to section 2.14.2 which are capital costs in nature by adjusting the Monthly Capital Payment pursuant to section 2.7.6, or (ii) the Seller incurs New Fuel Capital Costs in order to permit it to accept and use a fuel provided by the Buyer or NB Power Holdco, as the case may be, that is not heavy fuel oil to generate Electricity from the Unit Generators, the following formula shall be used to calculate the adjustment to the Monthly Capital Payment in effect for the Fiscal Year in which (a) the applicable change in Environmental Law becomes effective, or (b) New Fuel Capital Costs are incurred or expended by the Seller in order to permit the Seller to accept a fuel that is not heavy fuel oil to generate Electricity from the Unit Generators, or (c) the construction of the landfill or landfills is completed, or other capital costs deemed to be Environmental Costs pursuant to section 2.14.2 are incurred, respectively: M = (PMT + OC) / (12 x Contracted Capacity in the most recently completed calendar month prior to the adjustment taking effect), where: The adjustment to the Monthly Capital Payment, expressed in $/MW. Subject to section 2.7.4, the amount of such Environmental Costs, expressed in dollars of the Fiscal Year in which the adjustment to the Monthly Capital Payment is to become effective, or the New Fuel Capital Costs, expressed in dollars of the Fiscal Year in which the adjustment to the Monthly Capital Payment is to become effective. The levelizing factor, which for purposes of this Agreement shall equal w/(1-(1/(1+w)n)). The tax rate applicable to the Seller as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals. The period in years from the date the adjustment is to become effective to the Operating Period End Date at that time, or in the case of one or more landfills for gypsum and ash, the earlier of the Operating Period End Date at that time and the time when the last landfill is expected to become full at that time. The pre-tax weighted average cost of capital, which for purposes of this Agreement shall equal d x DR + (r/(1-t)) x ER. The Sellers reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals.
Schedule 2.5 - Page i

M equals: I equals:

L equals: t equals: n equals:

w equals: d equals:

DR equals: r equals: ER equals: PMT equals: OC equals:

The Sellers debt ratio, which for purposes of this Agreement shall equal 0.65. The Sellers rate of return on equity, which for purposes of this Agreement shall equal 0.11. The Sellers equity ratio, which for purposes of this Agreement shall equal 0.35. IxL The projected negative change in annual operations and maintenance costs resulting from or associated with I, if any. The Monthly Capital Payment for subsequent Fiscal Years will then be calculated

pursuant to Schedule 1.1.16 with the Monthly Capital Payment for the Fiscal Year in which the change in Environmental Law becomes effective, or the Seller has completed the construction or development required to allow it to accept a fuel that is not heavy fuel oil, or the construction of the landfill or landfills is completed, as the case may be, being calculated to include the applicable addition pursuant to the above formula. EXAMPLE The following example sets forth how the formula shall be used to calculate increases to the Monthly Capital Payment in circumstances where the Buyer chose to reimburse the Seller for Environmental Costs which are capital costs in nature by adjusting the Monthly Capital Payment. For purposes of these examples, it is assumed that: (i) (ii) (iii) the Operating Period End Date is March, 2020; I = $100,000,000 in the Fiscal Year ended March, 2005; Contracted Capacity in the most recently completed calendar month prior to the adjustment taking effect equals 978 MW; (iv) the Sellers reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective is 7% and therefore for the purposes of this example only d equals 0.07; (v) the tax rate applicable to the Seller as of the Fiscal Year in which the adjustment becomes effective is 35.12% and therefore for the purposes of this example only t equals .3512; and
Schedule 2.5 - Page ii

(vi) w = = = = = = = = = =

OC equals zero.

d x DR + (r/(1-t)) x ER 0.07 x 0.65 + (0.11/(1 - 0.3512)) x 0.35 0.0455 + 0.0593 = 0.1048 or 10.48% w/(1-(1/(1+w)n)) 0.1048/(1 - (1/(1 + 0.1048)15)) 0.1048/(1 - (1/(4.4592)) 0.1048/(1 - 0.2243) = 0.1350 $100,000,000 x 0.1350 = $13.50 million ($13.50 million + 0)/(978 MW x 12) $1,150/MW per month

PMT M

Schedule 2.5 - Page iii

SCHEDULE 2.9.4 HEAT RATE ADJUSTMENT AND START-UP FEES Definitions 1. In this Schedule 2.9.4: (a) Actual Fuel Consumption means, in a calendar month and measured in MMBTU, the actual amount of fuel used by the Seller to generate Electricity, excluding, for greater certainty, light fuel oil required for Start-Ups. (b) Adjustment Cost means, for the Fiscal Year ending March 31, 2005, U.S.$2.00 per MMBTU, and for each subsequent Fiscal Year, the Adjustment Cost for the previous Fiscal Year multiplied by the CPI Adjustment for the previous calendar year. (c) Heavy Oil Fuel Cost means The New York Harbor Fuel Price, in U.S. dollars per Bbl, plus U.S. $1.00, divided by 6.3. The New York Harbor Fuel Price for a calendar month in U.S. dollars per Bbl shall be the daily average of the high and low quotations for cargo delivery of 3% Sulphur Max No. 6 residual oil into New York Harbor, as reported in the Platts Oilgram U.S. Marketscan. A minimum change of plus or minus US$0.25 per Bbl in the New York Harbor Fuel Price will be required before a change is made to the then current Heavy Oil Fuel Cost. If Platts Oilgram U.S. Marketscan is no longer published, the Operating Committee shall determine an appropriate replacement index for the purposes of the definition of Heavy Oil Fuel Cost and whether any additional adjustments are required to the definition of Heavy Oil Fuel Cost, including amounts reflecting transportation costs, and such adjusted definition of Heavy Oil Fuel Cost shall be deemed to be the definition of Heavy Oil Fuel Cost for the purposes of this Schedule 2.9.4. (d) Hourly Target MMBTU means, for each hour in respect of a Unit Generator, the product of (i) the average Electricity output for that Unit Generator during that hour after deducting that Unit Generators pro rata share of the Common Service

Schedule 2.9.4 - Page i

Load and its Unit Generator Load during that hour, and (ii) the applicable heat rate from the Target Heat Rate Curve for that Unit Generator. (e) Monthly Target MMBTU means, in respect of a calendar month, the sum of the Hourly Target MMBTUs for each Unit Generator and each hour during that calendar month. Heat Rate Adjustment The Heat Rate Adjustment means for each calendar month, an amount equal to the product of (i) the Monthly Target MMBTU for that calendar month minus the Actual Fuel Consumption for that calendar month, and (ii) where heavy fuel oil is being delivered by the Buyer or its agent to the Seller pursuant to section 2.1.2, the Heavy Oil Fuel Cost, and in all other cases, the Adjustment Cost. Start-Up Fee Start-Up Fee means (i) where heavy fuel oil is being delivered by the Buyer or its agent to the Seller pursuant to section 2.1.2, the product of (a) the Start-Up Fuel and (b) the Heavy Oil Fuel Cost, and (ii) in all other cases, the product of (c) the Start-Up Fuel and (d) the Adjustment Cost.

Schedule 2.9.4 - Page ii

SCHEDULE 5.1 COLESON COVE OPERATING CHARACTERISTICS

Characteristic Automatic Generation Control (AGC) Automatic Voltage Regulation (AVR) Minimum Up Time Low Operating Limit High Operating Limit Ramp Rate Definition The capability of a unit to be remotely controlled by the NBSO. The capability of a unit to provide reactive power over a specified range. The minimum time that needs to pass after a Unit Generator is synchronized to the grid before it can be desynchronized from the grid. The minimum generation level at which a Unit Generator can be operated. The maximum generation level at which a Unit Generator can be operated. The rate of change in load per minute assuming that the unit is operating above its Low Operating Limit Capability Yes -98 to + 160 MVARS 8 hrs 80 MW 350 MW less than or equal to 150 MW = 3 MW/min greater than 150 MW and less than 300 MW = 6 MW/min equal to or greater than 300 MW = 3 MW/min Start Time The time measured from the moment the SO notifies the Seller that a Unit Generator is to be started to the moment the Unit Generator is synchronized to the grid. The Start Time assuming that the Unit Generator has been desynchronized for 72 hours or more. The Start Time assuming that the Unit Generator has been desynchronized for 16 hours or less. The Start Time assuming that the Unit Generator has been desynchronized for more than 16 hours but less than 72 hours. The aggregate MMBTUs (high heating value) contained in the fuel used by a Unit Generator for a Start-Up. The Start-Up Fuel required during Start-Up where the Unit Generator has been desynchronized for 72 hours or more. The Start-Up Fuel required during Start-Up where the Unit Generator has been desynchronized for 16 hours or less. The Start-Up Fuel required during Start-Up where the Unit Generator has been desynchronized for greater than 16 hours but less than 72 hours. N/A

Start Time (Cold) Start Time (Hot) Start Time (Warm) Start-Up Fuel Start-Up Fuel (Cold) Start-Up Fuel (Hot) Start-Up Fuel (Warm)

24 hrs (max) 4 hrs (max) greater than 4 hrs and less than 24 hrs N/A 1500 MMBTU 800 MMBTU 1200 MMBTU

Schedule 5.1 - Page i

SCHEDULE 12.2 ARBITRATION PROCEDURES Definitions 1. In this Schedule: (a) Arbitration Act has the meaning attributed to such term in paragraph 2 of this Schedule; (b) Arbitrator means the arbitrator appointed pursuant to paragraph 6 of this Schedule; (c) Claimant means any Party that commences an arbitration pursuant to paragraph 4 of this Schedule; (d) Disputes has the meaning attributed to such term in section 12.1 of this Agreement; (e) Document has the meaning set out in Rule 31.01 of the New Brunswick Rules of Court; (f) (g) (h) Party means a party to a Dispute; paragraph means a paragraph of this Schedule; and Respondent means a Party who is not the Claimant, and the term Respondents shall, where there is only one Respondent, refer to that Respondent. General 2. All Disputes which are to be determined according to the terms of this Schedule pursuant to section 12.2 of this Agreement shall be arbitrated in accordance with the provisions of the Arbitration Act (New Brunswick) (the Arbitration Act) except to the extent that those provisions are modified by the provisions of this Agreement and this Schedule.
Schedule 12.2 - Page i

3.

No individual shall be appointed to arbitrate a Dispute pursuant to this Schedule unless he or she agrees in writing to be bound by the provisions of this Schedule.

Commencement of Arbitration 4. A Party may commence an arbitration as Claimant by delivering a written notice of arbitration (the Notice of Arbitration) to each of the Respondents in the manner described in section 10.3 of this Agreement. 5. The Notice of Arbitration shall include in the text or in one or more attachments: (a) (b) (c) (d) (e) Arbitration 6. The arbitrator nominated by the Claimant shall be appointed as the Arbitrator to resolve the Dispute unless, within 10 days after the receipt or deemed receipt of the Notice of Arbitration by all the Respondents, one or more of the Respondents, by notice to the Claimant, objects to the Claimants nominee and proposes an alternative to act as arbitrator (the Objection). In the event that the Claimant and the Respondents do not agree within 10 days of the date of the Objection as to who shall act as arbitrator, any Party may apply to a judge of the Court of Queens Bench of New Brunswick (the Court), on notice to each other Party, for the appointment of the Arbitrator. The costs of such application, if any, will be determined by the Court. the full names, descriptions and addresses of the Parties; a demand that the Dispute be referred to arbitration pursuant to this Schedule; a general description of the Dispute; the relief or remedy sought; and the name of the person the Claimant nominates as the arbitrator.

Schedule 12.2 - Page ii

7.

Subject to the Arbitration Act, the Agreement and this Schedule, the Arbitrator may conduct the arbitration in such manner as the Arbitrator considers appropriate.

Interim Relief 8. Prior to the appointment of the Arbitrator, the Parties may apply to the Court for interim relief. A request for interim relief by a Party to the Court shall not be considered to be incompatible with section 12.2 of this Agreement, or as a waiver of that provision. 9. At the request of any Party, the Arbitrator may direct a Party to take such interim measures as the Arbitrator considers necessary in respect of the Dispute and any measures for the preservation of assets, the conservation of goods or the sale of perishable goods. The Arbitrator may require a Party to provide security for the costs of such measures. Pleadings 10. The following shall apply to the arbitration of any Dispute: (a) within 10 days of the appointment of the Arbitrator, the Claimant shall deliver to all the Respondents and the Arbitrator a written statement (the Statement) concerning the Dispute setting forth, with particularity, the Claimants position with respect to the Dispute and the material facts upon which the Claimant intends to rely; (b) within 20 days after the delivery of the Statement, each Respondent shall deliver to the Claimant and the Arbitrator a written response (an Answer) to the Statement setting forth, with particularity, the Respondents position on the Dispute and the material facts upon which the Respondent intends to rely; (c) if any Respondent fails to deliver an Answer within the time limit in paragraph 10(b), that Respondent shall be deemed to have waived any right to
Schedule 12.2 - Page iii

provide an Answer to the Statement and the arbitration may continue without further notice to that Respondent; (d) subject to paragraph 10(c), within 15 days after the earlier of: (i) the day all Answers have been delivered, and (ii) the twentieth day referred to in paragraph 10(b), the Claimant may deliver to all the Respondents and the Arbitrator a written reply (a Reply) to the Answer of each Respondent, setting forth, with particularity, the Claimants response, if any, to the Answer; (e) within the time limit in paragraph 10(b), a Respondent may also deliver to the Claimant, each other Respondent and the Arbitrator a counter-statement (a Counter-Statement) setting forth, with particularity, any additional Dispute for the Arbitrator to decide. Within 15 days of the delivery of a Counter-Statement, the Claimant shall deliver to each Respondent and the Arbitrator an Answer to the Counter-Statement. If the Claimant fails to deliver an Answer to the

Counter-Statement within such 15 day period, the Claimant shall be deemed to have waived any right to provide an Answer to the Counter-Statement. Within 15 days after the delivery of an Answer to the Counter-Statement, the Respondents may deliver to the Claimant and the Arbitrator a Reply to such Answer. Any Dispute submitted to arbitration in accordance with this

paragraph 10(e) shall be governed by, and dealt with as if it were the subject of a Statement in accordance with, this Schedule, except that it shall be decided by the Arbitrator already appointed, and shall be determined by the Arbitrator accordingly; and (f) the time limits referred to in paragraphs 10(a) to (e) may be extended by the Arbitrator for such period and for such reasons as the Arbitrator in the Arbitrators discretion may determine upon application in writing made to the Arbitrator by the Claimant or any Respondent on notice to each other Party to the arbitration, either before or within 2 days after the expiry of the relevant time
Schedule 12.2 - Page iv

limits and, in the event that the other Party or Parties opposes the application, the other Party or Parties shall be given an opportunity to make submissions on the application. Discovery 11. Unless otherwise directed by the Arbitrator or agreed between the Parties, the Parties shall exchange the documents in each Partys possession, power or control which are not privileged and are relevant to any issue in the Dispute by no later than 10 days after the expiry of the last of the relevant time limits for the exchange of statements prescribed in paragraphs 10(a) to 10(e). 12. Unless otherwise directed by the Arbitrator or agreed between the Parties, each Party shall be entitled to conduct an examination for discovery of a representative of any adverse Party. Subject to the discretion of the Arbitrator, the examining party shall be entitled to name the representative to be examined. Case Conferences 13. At any time after the appointment of the Arbitrator, any Party may apply in writing to the Arbitrator to convene a case conference for the determination of any preliminary or interlocutory matter or to provide for planning and scheduling of the arbitration. The Arbitrator shall convene the case conference on the date specified in the application or such other date in the discretion of the Arbitrator. 14. Issues to be determined at the first case conference after the completion of the steps prescribed by paragraphs 10(a) to 10(e) or the expiry of the time limit for any mandatory step not taken by such time may include the following: (a) any request for an adjournment of the case conference and the terms, if any, of any adjournment;

Schedule 12.2 - Page v

(b) (c)

the identification and narrowing of the issues in the arbitration; the desirability of the Parties engaging in further settlement negotiations or some other dispute resolution process, with or without the assistance of a mediator;

(d)

the necessity for, timing of, and restrictions applicable to oral examination for discovery;

(e)

the fixing of a date, time and place for the Hearing (as defined in paragraph 15 of this Schedule); and

(f) The Hearing 15.

the manner of presentation of evidence at the Hearing.

At the date, time and place fixed at a case conference or, if no case conference has been held, at a date, time and place fixed by the Arbitrator which date shall be within 120 days of the appointment of the Arbitrator, the Arbitrator shall convene a hearing (the Hearing). If there has been no case conference, the Hearing shall be convened by delivery by the Arbitrator of notice of the date, time and place of the Hearing to each Party to the arbitration at least 45 days before the date of the Hearing.

16.

Either prior to or at the conclusion of the Hearing, the Arbitrator may require the delivery of a written statement of fact, law and argument to the Arbitrator and to each other Party. The timing for the delivery of this statement is at the discretion of the Arbitrator.

17.

At least 10 days prior to the commencement of the Hearing, each Party shall deliver to the Arbitrator and each other Party all sworn statements or transcripts or portions of transcripts on which the Party intends to rely at the Hearing.

18.

At the Hearing, the Arbitrator shall consider any evidence as would be admissible in a court of law and any other evidence the Arbitrator considers appropriate to determine the Dispute. Evidence may be presented by affidavit or by oral sworn testimony as the Party
Schedule 12.2 - Page vi

presenting the evidence considers appropriate, provided that no affidavit of any witness shall be accepted by the Arbitrator unless each other adverse Party has been given an opportunity at the Hearing to cross-examine the witness on the information contained in the affidavit. The Arbitrator shall determine the applicability of any privilege or

immunity and the admissibility, relevance, materiality and weight of any evidence offered. 19. A Party who intends to call an expert witness at the Hearing or file an affidavit from an expert witness at the Hearing shall, not less than 20 days before the commencement of the Hearing, deliver to every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed evidence. 20. A Party who intends to call an expert witness at the Hearing or file an affidavit from an expert witness to respond to the expert witness of another Party shall, not less than 10 days before the commencement of the hearing, serve on every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed testimony. 21. An expert witness may not give evidence at the Hearing except with leave of the Arbitrator unless the substance of his or her evidence is set out in a report delivered pursuant to paragraphs 19 and 20, as the case may be, or in a supplementary report delivered on every other Party not less than 5 days before the commencement of the Hearing. 22. The Arbitrator shall have the right to exclude any witness from the Hearing during the testimony of any other witness. 23. Despite subsection 28(1) of the Arbitration Act, the Arbitrator shall not, without the written consent of all Parties, retain any expert.

Schedule 12.2 - Page vii

Awards 24. The Arbitrator may make final, interim, interlocutory and partial awards. Any award shall be considered to be validly made if it is approved by the Arbitrator. An award may grant any remedy or relief which the Arbitrator considers just and equitable and consistent with the intentions of the Parties under this Agreement and the laws of the Province of New Brunswick and Canada applicable therein. The Arbitrator shall state in the award whether the Arbitrator views the award as final or interim, for purposes of any judicial proceedings in connection with such award. Subject to section 39 of the

Arbitration Act, the Arbitrators final award shall be made within 30 days of the conclusion of the Hearing. 25. All awards for the payment of money shall include prejudgment and post judgment interest in accordance with sections 45 and 46 of the Judicature Act (New Brunswick), with necessary modifications. 26. 27. All awards shall be in writing and shall state reasons. Subject to any agreement among the Parties, the Arbitrator may apportion the costs of the arbitration, including the reasonable fees and disbursements of the Arbitrator and the legal costs and disbursements of the Parties, between or among the Parties in such manner as the Arbitrator considers reasonable. In determining the allocation of these costs, the Arbitrator shall invite submissions as to costs and may consider, among other things, any offer of settlement made by any Party during the course of the arbitration. 28. Executed copies of all awards shall be delivered by the Arbitrator to the Parties as soon as is reasonably possible. 29. Subject to section 44 of the Arbitration Act, all awards of the Arbitrator shall be final and binding on the Parties, and there shall be no appeal of any such award whatsoever. The Parties undertake to satisfy any award without delay.
Schedule 12.2 - Page viii

Additional Matters 30. All case conferences and Hearings shall be conducted in Fredericton, New Brunswick in the English language. 31. All notices or other communications required or permitted to be given under this Schedule to a Party shall be given in the manner specified in section 10.3 of this Agreement. All notices or other communications and all other documents required or permitted by this Schedule to be given by the Parties to the Arbitrator shall be given in accordance with the Arbitrators instructions. 32. The Parties desire that any Dispute should be conducted in strict confidence and that, subject to the exceptions set out in this paragraph, there shall be no disclosure to any person of the existence of the Dispute or any aspect of the Dispute except as is necessary for the resolution of the Dispute or as required by Applicable Law. Any case conference or Hearing shall be attended only by counsel and by those persons whose presence, in the opinion of any Party or the Arbitrator, is reasonably necessary for the resolution of the Dispute. All matters relating to, all evidence presented at and all submissions made in the course of an arbitration, and all documents produced in accordance with this Schedule or any order of the Arbitrator or created in the course of or for the purposes of an arbitration, as well as any arbitral award, shall be kept confidential and shall not be disclosed to any person without the prior written consent of all of the Parties except as is necessary for the resolution of the Dispute, as required in connection with an application of a Party under section 46 of the Arbitration Act, as required to enforce the arbitral award, or as required by Applicable Law or by an order of an Arbitrator made pursuant to a motion or application on notice to all Parties. Despite the foregoing, a Party may disclose such confidential information: (a) in the case of the Buyer or NB Power Holdco, to the Province or any representative thereof solely in its or his capacity as a shareholder of the Buyer or NB Power Holdco or any Affiliate of the Buyer or NB Power Holdco, as required
Schedule 12.2 - Page ix

by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; (b) in the case of the Buyer, NB Power Holdco and the Seller, to its wholly-owned subsidiaries and its and its subsidiaries respective officers, directors, employees, agents, consultants, and advisors, provided that such Persons have been informed of the Partys confidentiality obligations hereunder; (c) in the case of the Seller, to the Province or any representative thereof solely in its or his capacity as a shareholder of the Seller or any Affiliate of the Seller, as required by Applicable law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; and (d) to the extent necessary, to any financial institution or other Person (from whom financing is being sought) or to advisors to any such financial institution or other Person, provided that any such financial institution, Person or advisor has been informed of the Partys confidentiality obligations hereunder and has agreed to be bound similarly thereby. 33. In the computation of time under this Schedule or an order or direction given by the Arbitrator pursuant to this Schedule, except where a contrary intention appears or the parties otherwise agree: (a) where there is a reference to a number of days between two events, those days shall be counted by excluding the day on which the first event happens and including the day on which the second event happens, even if they are described as clear days or the words at least are used; (b) where the time for doing any act under this Schedule or any order or direction given by the Arbitrator expires on any day other than a Business Day, the time for doing that act shall be extended to the next Business Day; and
Schedule 12.2 - Page x

(c)

service of a document or notice provided for in this Schedule or any order or direction given by the Arbitrator made after 4:00 p.m. (New Brunswick time) or at any time on any day other than a Business Day, shall be deemed to have been made on the next Business Day.

Schedule 12.2 - Page xi

EXECUTION COPY

NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION

and

NEW BRUNSWICK POWER NUCLEAR CORPORATION

POWER PURCHASE AGREEMENT POINT LEPREAU NUCLEAR GENERATING STATION

October 1, 2004

TABLE OF CONTENTS ARTICLE 1 INTERPRETATION......................................................................................................... 3 1.1 Definitions ................................................................................................................ 3 1.2 Headings and Table of Contents............................................................................. 21 1.3 Gender, Number and Grammatical Changes .......................................................... 21 1.4 Business Days ......................................................................................................... 21 1.5 Currency.................................................................................................................. 21 1.6 Calculation of Interest............................................................................................. 21 1.7 Statutes.................................................................................................................... 21 1.8 Invalidity of Provisions........................................................................................... 22 1.9 Entire Agreement.................................................................................................... 22 1.10 Waiver..................................................................................................................... 22 1.11 Amendment............................................................................................................. 23 1.12 Governing Law ....................................................................................................... 23 1.13 Technical Terms ..................................................................................................... 23 1.14 Schedules ................................................................................................................ 24 ARTICLE 2 PURCHASE AND SALE OF ELECTRICITY AND CAPACITY ............................ 25 2.1 Characteristics of Delivered Electricity.................................................................. 25 2.2 Purchase and Sale of Electricity ............................................................................. 25 2.3 Committed Capacity ............................................................................................... 28 2.4 Standby Diesel Generators...................................................................................... 28 2.5 Demonstrated Net Capability (DNC) ..................................................................... 28 2.6 Buyers Failure to Purchase Delivered Electricity ................................................. 29 2.7 Station Service Load............................................................................................... 31 2.8 Title and Risk of Loss............................................................................................. 32 2.9 Transmission and Related Costs ............................................................................. 32 2.10 Adjustments for Environmental and Certain Regulatory Costs.............................. 33 2.11 Decommissioning and Nuclear Waste.................................................................... 39 2.12 Changes to the Refurbishment................................................................................ 41 2.13 Additional Capacity ................................................................................................ 41 2.14 Emission Credits and Other Environmental Attributes .......................................... 43 2.15 Maritime Electric Agreement ................................................................................. 43 2.16 Taxes....................................................................................................................... 44 2.17 Metering.................................................................................................................. 45

ARTICLE 3 OUTAGES ....................................................................................................................... 47 3.1 Planned Outage Schedule ....................................................................................... 47 3.2 Changes to Planned Outage Schedule .................................................................... 47 3.3 Forced Outages ....................................................................................................... 49 3.4 Maintenance Outages.............................................................................................. 50 3.5 Cost of Changes ...................................................................................................... 50 3.6 Scheduling .............................................................................................................. 51 ARTICLE 4 ANCILLARY SERVICES.............................................................................................. 52 4.1 Self-Supply by Disco .............................................................................................. 52 4.2 Payment for Ancillary Services .............................................................................. 52 4.3 Additional Operating Reserves............................................................................... 53 ARTICLE 5 COVENANTS.................................................................................................................. 54 5.1 Operation, Repair and Maintenance ....................................................................... 54 5.2 Information ............................................................................................................. 54 5.3 Inspection................................................................................................................ 55 5.4 Insurance................................................................................................................. 55 5.5 Damage, Destruction and Repair ............................................................................ 56 5.6 Derations................................................................................................................. 57 5.7 Regulatory Compliance .......................................................................................... 57 5.8 Notification of Actions ........................................................................................... 57 ARTICLE 6 BILLING, PAYMENT, AUDIT AND CREDIT........................................................... 58 6.1 Billing ..................................................................................................................... 58 6.2 Payments and Interest ............................................................................................. 60 6.3 Adjustments ............................................................................................................ 60 6.4 Disputed Bills ......................................................................................................... 60 6.5 Audit ....................................................................................................................... 61 6.6 Credit and Collateral Requirements........................................................................ 63 ARTICLE 7 REPRESENTATIONS AND WARRANTIES ............................................................. 65 7.1 Representations and Warranties of the Seller ......................................................... 65 7.2 Representations and Warranties of the Buyer......................................................... 66

- ii -

ARTICLE 8 TERM, DEFAULT AND TERMINATION.................................................................. 68 8.1 Term........................................................................................................................ 68 8.2 Events of Default by Buyer .................................................................................... 69 8.3 Termination by Seller ............................................................................................. 70 8.4 Events of Default by Seller..................................................................................... 71 8.5 Termination by the Buyer ....................................................................................... 74 8.6 Termination and Survival ....................................................................................... 75 ARTICLE 9 LIABILITY AND INDEMNIFICATION ..................................................................... 76 9.1 Limitation of Liability ............................................................................................ 76 9.2 Liquidated Damages ............................................................................................... 76 9.3 Indemnification by Seller........................................................................................ 77 9.4 Indemnification by the Buyer ................................................................................. 78 9.5 Indemnification for a Nuclear Incident by the Seller ............................................. 79 9.6 Sole Remedies and Injunctive Relief...................................................................... 79 9.7 Defence of Claims .................................................................................................. 80 ARTICLE 10 CONTRACT OPERATION AND ADMINISTRATION............................................ 85 10.1 Operating Committee.............................................................................................. 85 10.2 Record Retention .................................................................................................... 85 10.3 Notices .................................................................................................................... 86 ARTICLE 11 FORCE MAJEURE ........................................................................................................ 88 11.1 Effect of Invoking Force Majeure and Notice ........................................................ 88 11.2 Definition of Force Majeure ................................................................................... 89 11.3 Prolonged Force Majeure........................................................................................ 90 ARTICLE 12 MISCELLANEOUS PROVISIONS .............................................................................. 91 12.1 Informal Dispute Resolution Procedures................................................................ 91 12.2 Arbitration Procedures............................................................................................ 91 12.3 Legal Relationship .................................................................................................. 92 12.4 Assignment ............................................................................................................. 92 12.5 Set-off ..................................................................................................................... 95 12.6 Further Assurances ................................................................................................. 96 12.7 Confidentiality ........................................................................................................ 97 - iii -

12.8 Agency .................................................................................................................... 99 12.9 Time of the Essence................................................................................................ 99 12.10 Counterparts.......................................................................................................... 100 SCHEDULES Schedule 1.1.22 Schedule 1.1.26 Schedule 1.1.101 Schedule 2.4 Schedule 2.10 Schedule 2.17 Schedule 3.1 Schedule 12.2 Prices CPI Adjustment Refurbishment SG Operating Characteristics Adjustments to Contract Price Metering Points Planned Outage Schedule Arbitration Procedures

- iv -

POWER PURCHASE AGREEMENT

THIS POWER PURCHASE AGREEMENT is made effective this 1st day of October, 2004, B E T W E E N: NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (the Buyer) and NEW BRUNSWICK POWER NUCLEAR CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (the Seller) RECITALS: A. The Buyer and the Seller are the successors to the distribution business and nuclear electricity generation business, respectively, of New Brunswick Power Corporation. B. New Brunswick Power Corporation was restructured as a result of the proclamation of the Electricity Act on the date hereof and its assets and liabilities were transferred, in part, to five corporations, two of which are the Buyer and the Seller. C. Point Lepreau is considered a heritage asset and therefore the output from the Unit Generator will be used in accordance with the terms of this Agreement to serve the load requirements in New Brunswick.

- 2 D. The Seller is currently considering whether to refurbish Point Lepreau in order to extend its operating life for a period of 25 to 30 years. Because no final decision has yet been made in this regard, the Buyer and the Seller have prepared this Agreement to contemplate both the possibility that the Refurbishment will be completed and that the Refurbishment will not be completed. E. In addition to the transactions contemplated by this Agreement, the Buyer provides the Seller with Electricity at several delivery points at voltages of 12.47 kV or lower. The provision of this Electricity by the Buyer to the Seller does not form part of this Agreement. F. The Seller may assign, transfer, pledge or otherwise dispose of all or part of its rights and interests under this Agreement pursuant to section 12.4.1.2 upon a Transfer of all or part of the Facilities to which the Province has consented, and upon the assignee, transferee, pledgee or other acquiror assuming the Sellers liabilities and obligations hereunder, the Seller shall be freed and relieved from such liabilities and obligations pursuant to section 12.4.3. NOW THEREFORE in consideration of the mutual covenants set forth herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:

- 3 -

ARTICLE 1 INTERPRETATION 1.1 Definitions In this Agreement and the recitals to this Agreement: 1.1.1 Affiliate means, with respect to any Person, any other Person that, directly or

indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under the common Control of a third Person. 1.1.2 After-Tax ROE means an after-tax, rate of return on equity equal to 17%,

assuming for the purposes of the calculation that the Seller has a debt to equity ratio equal to 50:50. 1.1.3 Agreement means this power purchase agreement and all Schedules attached to

this power purchase agreement, in each case as they may be amended, restated or replaced from time to time, and unless otherwise indicated, references to Articles, recitals, sections and Schedules are references to articles, recitals, sections and schedules in this power purchase agreement. 1.1.4 Ancillary Services means services and products necessary to maintain the

reliability of the SO-Controlled Grid, including frequency control, voltage control, reactive power and operating reserve. 1.1.5 Ancillary Services Agreement means the ancillary services agreement

between the SO and the Seller in respect of the Facilities effective as of October 1, 2004, as amended, restated or replaced from time to time. 1.1.6 Applicable Law means, collectively, all applicable laws, statutes, ordinances,

decrees, rules, regulations, by-laws, legally enforceable policies, codes and guidelines, the Market Rules, judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, decisions, directives, rulings and awards, and conditions of any grant of

- 4 approval, permission, certification, consent, registration, authority or licence by any court, statutory body, self-regulatory authority, stock exchange or other Governmental Authority. 1.1.7 1.1.8 1.1.9 Bill has the meaning attributed to that term in section 6.1.1. Billing Month has the meaning attributed to that term in section 6.1.1. Business Day means any day, other than a Saturday, Sunday, any statutory

holiday in the Province of New Brunswick, or any day on which banking institutions in Fredericton, New Brunswick are not open for the transaction of business. 1.1.10 Buyer means New Brunswick Power Distribution and Customer Service

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Distribution and Customer Service Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Distribution and Customer Service Corporation or any continuance under the laws of another jurisdiction. 1.1.11 1.1.12 1.1.13 1.1.14 Buyer Event of Default has the meaning attributed to that term in section 8.2. Buyer Indemnitee has the meaning attributed to that term in section 9.3.1. Capacity Factor has the meaning attributed to that term in Schedule 1.1.22. Capital Threshold means: 1.1.14.1 for the Fiscal Year ending March 31, 2005, $5,000,000; and 1.1.14.2 for each Fiscal Year thereafter, the product of (i) the Capital Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. 1.1.15 Change of Control means the occurrence of any change in the Control or For greater certainty, a change in either the equity

Effective Control of a Person.

ownership or the voting control of a Person which results in a decrease in the beneficial ownership of or control over the equity value or voting rights or interests, respectively, of

- 5 that Person from more than 50% to 50% or less of the outstanding equity value or voting rights or interests, respectively, shall be considered a Change of Control for the purposes of this Agreement. 1.1.16 CNSC means the Canadian Nuclear Safety Commission, and includes any

successor agency, board or commission thereto. 1.1.17 Collection Period means the period in days commencing on the first day of a

Billing Month and ending on the date that is 30 days after the Payment Date for that Billing Month. 1.1.18 Commercially Reasonable Efforts means efforts which are designed to enable

a party, directly or indirectly, to satisfy or perform its obligations under this Agreement or to otherwise assist in the consummation of the transactions contemplated by this Agreement and which do not require the performing party to expend any funds or assume liabilities other than expenditures or liabilities which are reasonable in nature and amount in the context of such obligations or transactions or, where applicable, usual commercial practice. 1.1.19 Committed Capacity means 100% of the DNC of the Unit Generator, subject

to section 2.13.2 and the Sellers obligation to deliver capacity pursuant to the Maritime Electric Agreement, but only to the extent set out in section 2.15. 1.1.20 Common Facilities means that part of the Facilities and the Other Facilities

which also serve or will serve other electrical generating units constructed at Point Lepreau in the future, including, if applicable, the fresh water supply system, auxiliary service building, circulating water intake and discharge tunnels, fresh water pumphouses, administrative buildings, heavy water upgrading systems, Nuclear Waste storage structures, spare fuelling machine, emergency power supply system, health physics equipment, water treatment equipment, fire water pumps, warehouse equipment, service water systems, and the stores equipment. 1.1.21 Confidential Information has the meaning attributed to that term in

section 12.7.

- 6 1.1.22 1.1.23 Contract Price has the meaning attributed to that term in Schedule 1.1.22. Control means: 1.1.23.1 when applied to the relationship between a Person and a corporation, the beneficial ownership by such Person at the relevant time of shares of the corporation: (i) carrying more than 50% of the voting rights ordinarily

exercisable at meetings of shareholders of the corporation, and (ii) representing more than 50% of the equity value of the corporation; 1.1.23.2 when applied to the relationship between a Person and a partnership or joint venture, (i) the beneficial ownership by such Person at the relevant time of: (a) more than 50% of the voting interests of the partnership or joint venture, and (b) partnership or joint venture interests representing more than 50% of the equity value of the partnership or joint venture, and (ii) it can reasonably be expected that the Person directs the affairs of the partnership or joint venture; 1.1.23.3 when applied to the relationship between a Person and a limited partnership, the beneficial ownership by such Person at the relevant time of: (i) shares of the general partner or general partners of the limited partnership carrying more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of such general partner or general partners such that it can reasonably be expected that the Person directs the affairs of the limited partnership, and (ii) partnership interests representing more than 50% of the equity value of the limited partnership; or 1.1.23.4 when applied to the relationship between a Person and another Person that is not a corporation, partnership, joint venture or limited partnership, (i) the beneficial ownership by such Person at the relevant time of more than 50% of any equity, participating and any other ownership interests of that other Person, and (ii) it can reasonably be expected that the Person directs the affairs of that other Person; and

- 7 the term Controlled by has a corresponding meaning; provided that a Person (the first-mentioned Person) who Controls a corporation, partnership, limited partnership, joint venture or other Person (the second-mentioned Person) shall be deemed to Control a corporation, partnership, limited partnership, joint venture or other Person which is Controlled by the second-mentioned Person and so on. 1.1.24 Cost Estimate Difference has the meaning attributed to that term in

section 2.12. 1.1.25 CPI (New Brunswick) means the Consumer Price Index for New Brunswick,

All-items (Not Seasonally Adjusted), 1992=100, or any index published in substitution therefor if the Consumer Price Index for New Brunswick, All-items (Not Seasonally Adjusted), 1992=100, is no longer published, or any other replacement index designated by the Buyer and acceptable to the Seller, acting reasonably, published by Statistics Canada (or any successor thereof or any other Governmental Authority) from time to time. 1.1.26 1.1.27 CPI Adjustment has the meaning attributed to that term in Schedule 1.1.26. Decommissioning means the complete retirement and removal of the Facilities

and the Other Facilities from service and the restoration of the Point Lepreau site, as well as any planning and administrative activities incidental thereto, including (i) the dismantlement, decontamination, storage and/or entombment of the Facilities and the Other Facilities, in whole or in part, and any reduction or removal, conducted pursuant to CNSC decommissioning licences, and (ii) all activities necessary for the retirement, dismantlement, entombment and/or decontamination of the Facilities and the Other Facilities to comply with Applicable Law, including applicable Nuclear Law and Environmental Law, including the applicable requirements of the Nuclear Safety and Control Act (Canada) and the rules, regulations, policies, guidelines, orders and pronouncements thereunder, the CNSC licences, permits, consents and approvals for the Facilities and the Other Facilities, and any related decommissioning plan for the Facilities, the Other Facilities and the Point Lepreau site under which the Seller or any other Person is operating, and (iii) the preparation of any decommissioning reports and environmental

- 8 assessment documentation relating thereto, including any associated consulting and legal services. 1.1.28 1.1.29 Deficiency has the meaning attributed to that term in section 2.6.1. Delivered Electricity means, subject to section 2.13, Net Electricity less the

Net Electricity required to be delivered pursuant to the Maritime Electric Agreement, but only to the extent set out in section 2.15. 1.1.30 1.1.31 1.1.32 1.1.33 1.1.34 Direct Claim has the meaning attributed to that term in section 9.7.8. Disputes has the meaning attributed to that term in section 12.1. Disputes Committee has the meaning attributed to that term in section 12.1. DNC has the meaning attributed to that term in section 2.5. Effective Control means control in fact by one Person, together with its

Affiliates and those with whom it is acting in concert, exercising effective control over another Person or over the decision-making of that other Person, either directly or indirectly, whether through the holding of shares of a corporation or through the holding of a significant portion of any class of shares of a corporation or through the holding of units in a partnership or limited partnership or through the holding of outstanding debt of a corporation, partnership or limited partnership or of any shareholder or member of a corporation, partnership or limited partnership or by any other means; any Person which holds voting or equity securities (as defined in the Securities Act (Ontario)) representing, in the aggregate, 50% or more of the outstanding securities of any class of the Person shall be deemed for the purposes of this Agreement to have Effective Control of that Person. 1.1.35 Electricity means electrical power and energy measured in MW or MWh, as

applicable. 1.1.36 Electricity Act means the Electricity Act (New Brunswick).

- 9 1.1.37 Electric Finance Corporation means New Brunswick Electric Finance

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Electric Finance Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Electric Finance Corporation or any continuance under the laws of another jurisdiction. 1.1.38 Emission Credits means any credits issued, allocated or granted under

Applicable Law which are associated with an amount of emissions into the Environment which have been avoided or reduced. 1.1.39 Environment means the air, water (including surface water and underground

water) and land. 1.1.40 Environmental and Regulatory Costs has the meaning attributed to that term

in section 2.10.1. 1.1.41 Environmental Law means all Canadian federal, provincial and municipal

laws, statutes, ordinances, decrees, regulations, by-laws, decisions and rules, and any legally enforceable orders, codes, policies and guidelines of any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any permits, certificates, approvals, consents, authorizations, registrations or licences issued by any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any requirements or obligations arising under Canadian common law, relating specifically to the Environment, the Release and/or threatened Release of Hazardous Substances into the Environment, and/or the manufacture, processing, distribution, use, treatment, storage, transport, disposal and/or handling of Hazardous Substances, including the Canadian Environmental Assessment Act (Canada), the Canadian Environmental Protection Act, 1999 (Canada), the Fisheries Act (Canada), the Pest Control Products Act (Canada), the Transportation of Dangerous Goods Act, 1992 (Canada), the Clean Air Act (New Brunswick), the Clean Environment Act (New Brunswick), the Clean Water Act (New Brunswick), and the Transportation of Dangerous Goods Act (New Brunswick), and the

- 10 respective regulations thereunder and any municipal noise or sewer use by-law, but excluding Nuclear Law. 1.1.42 Estimated Collection Value means an estimated amount payable for a

Collection Period by the Buyer to the Seller equal to the product of the estimated aggregate Delivered Electricity that is expected to be Scheduled with the SO to be delivered by the Seller to the Buyer at the Point of Delivery during the Collection Period and the Contract Price applicable during the Collection Period. The Estimated Collection Value shall be determined by the Seller, acting reasonably, by reference to the estimated availability of the Unit Generator to generate Delivered Electricity during the Collection Period. 1.1.43 1.1.44 Event of Default means a Buyer Event of Default or a Seller Event of Default. Facilities means the plant, facilities, buildings, equipment, supplies and

improvements owned or leased by the Seller and located at, on, in, upon, over, across, under or within Point Lepreau. 1.1.45 Final Hourly Balanced Schedule has the meaning attributed to that term in the

Market Rules. 1.1.46 1.1.47 Firm Estimate has the meaning attributed to that term in section 2.10.4. First Threshold Price has the meaning attributed to that term in

Schedule 1.1.22, as adjusted pursuant to section 2.10.6 or 2.12. 1.1.48 Fiscal Year means the 12 month period from April 1 in one year to March 31

in the next year, inclusive. 1.1.49 1.1.50 Force Majeure has the meaning attributed to that term in section 11.2. Forced Outage means an unplanned Unit Generator outage, including an

unplanned Unit Generator outage that is a result of: 1.1.50.1 automatic action of equipment without any action of the operator;

- 11 1.1.50.2 action of the operator where such operator reasonably believes that such action is necessary to avoid: (i) compromising the health or safety of any Person, (ii) compromising the integrity of the Environment, (iii) damage to material plant or facilities, or (iv) breaching the provisions of Applicable Law; 1.1.50.3 action of the operator where such operator reasonably believes that such action is necessary to avoid an automatic disconnection of a Unit Generator that would have occurred shortly after the intentional disconnection of a Unit Generator by the operator; or 1.1.50.4 Force Majeure. 1.1.51 Forced Outage Work Plan has the meaning attributed to that term in

section 3.3.2. 1.1.52 Generation Interconnection Agreement means the generation interconnection

agreement between the Seller and NB Power Transco, as amended, restated or replaced from time to time. 1.1.53 Good Utility Practices means, as applicable to the party obliged to use Good

Utility Practices hereunder, any of the practices, methods and activities adopted by a significant portion of the North American nuclear electric utility industry as good practices applicable to facilities of similar design, size and capacity to Point Lepreau or any of the practices, methods or activities which, in the exercise of skill, diligence, prudence, foresight and reasonable judgment by a prudent operator in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, expedition and Applicable Law. Good Utility Practices are not intended to be limited to the optimal practices, methods or acts to the exclusion of all others, but rather to be practices, methods or acts generally accepted in the North American nuclear electric utility industry. 1.1.54 Governmental Authority means any federal, provincial, municipal or local

government, parliament or legislature, or any regulatory authority, agency, tribunal, commission, board or department of any such government, parliament or legislature, or

- 12 any court or other law, regulation or rule-making entity, or any arbitrator, each having or reasonably purporting to have jurisdiction in the relevant circumstances, including, for greater certainty, the SO, the CNSC or any Person acting or reasonably purporting to act under the authority of any such Governmental Authority. 1.1.55 1.1.56 GST means all tax payable under Part IX of the Excise Tax Act (Canada). Guarantee means a guarantee in a form satisfactory to the Seller, acting

reasonably, as provided by a Guarantor pursuant to section 6.6.1.1 or replaced pursuant to section 6.6.4. 1.1.57 Guarantor has the meaning attributed to that term in section 6.6.1.1 and

includes a Guarantors permitted assignee pursuant to section 6.6.4. 1.1.58 Hazardous Substances means: 1.1.58.1 any chemicals, materials or substances defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, hazardous constituents, restricted hazardous materials, extremely hazardous substances, toxic substances, deleterious substances, contaminants, pollutants, toxic pollutants or words of similar meaning and regulatory effect under any applicable Environmental Law or Nuclear Law, including any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls waste; and 1.1.58.2 any other material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law or Nuclear Law. 1.1.59 HST means all tax payable under the Harmonized Sales Tax Act (New

Brunswick) and under Part IX of the Excise Tax Act (Canada). 1.1.60 including, included and include means including, included or include,

each without limitation.

- 13 1.1.61 1.1.62 Indemnifiable Loss has the meaning attributed to that term in section 9.3.1. Indemnifying Party means a Person required to provide indemnification under

this Agreement. 1.1.63 be. 1.1.64 1.1.65 Initial Term has the meaning attributed to that term in section 8.1.3. In-Service Date means the date that the Unit Generator is completely Indemnitee means a Seller Indemnitee or a Buyer Indemnitee, as the case may

commissioned and returned to service following completion of the Refurbishment and all testing and inspections related thereto (including any such testing or inspections required by a Governmental Authority) so that the Unit Generator has been synchronized to the SO-Controlled Grid through the Unit Transformer and the Unit Generator is consistently delivering Electricity to the SO-Controlled Grid. 1.1.66 Insolvency Legislation means the Bankruptcy and Insolvency Act (Canada),

the Companies Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act (Canada) and any other similar legislation, statutes, regulations and rules. 1.1.67 Interest Rate means, for any day, the annual rate of interest equal to the rate

which the Bank of Montreal establishes at its principal office in Fredericton, New Brunswick as the reference rate of interest to determine interest rates it will charge on such day for commercial loans in Canadian dollars made to its customers in Canada and which it refers to as its prime rate of interest, plus 1%. 1.1.68 Knowledge of any Person means the actual knowledge of the corporate officers

of that Person charged with responsibility for the particular function. 1.1.69 1.1.70 kV means kilovolt. Letter of Credit means one or more irrevocable, standby letters of credit issued

by a Canadian commercial bank or foreign bank with a Canadian branch having an S&P debt rating in respect of its most senior unsecured debt of at least A or another debt rating

- 14 at least equivalent to the foregoing S&P rating in respect of its most senior unsecured debt, and in a form acceptable to the Seller, acting reasonably. 1.1.71 Maintenance Outage means an unplanned Unit Generator outage which is

required as a result of equipment failure, an order from a Governmental Authority, or any other event or condition which, without a Unit Generator outage, would reduce safety or materially reduce unit reliability, and the operator has some discretion to schedule the outage (as opposed to a Forced Outage where the operator has no such discretion). 1.1.72 Maritime Electric Agreement means the unit participation agreement dated as

of March 29, 1994 between Maritime Electric Company, Limited and New Brunswick Power Corporation, as amended by agreements dated as of May 12, 1994, August 29, 1995, October 31, 1996 and October 31, 1996, which unit participation agreement, as so amended, has, by operation of the Electricity Act, been transferred to the Seller as of the date hereof, as such agreement is further amended, restated or replaced from time to time in accordance with section 2.15. 1.1.73 Rules. 1.1.74 1.1.75 1.1.76 1.1.77 Market Rules means the rules made under section 58 of the Electricity Act. MECL has the meaning attributed to that term in section 2.15.1. MECL Entitlement has the meaning attributed to that term in section 2.15.1. Metering Installation means any apparatus used to measure electrical Market Participant has the meaning attributed to that term in the Market

quantities. 1.1.78 Minimum Credit Rating has the meaning attributed to that term in

section 6.6.3. 1.1.79 1.1.80 MW means megawatt. MWh means megawatt hour.

- 15 1.1.81 NB Power means New Brunswick Power Holding Corporation, a corporation

continued under the laws of New Brunswick, and includes any successor to New Brunswick Power Holding Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Holding Corporation or any continuance under the laws of another jurisdiction. 1.1.82 NB Power Genco means New Brunswick Power Generation Corporation, a

corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Generation Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Generation Corporation or any continuance under the laws of another jurisdiction. 1.1.83 NB Power Transco means New Brunswick Power Transmission Corporation, a

corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Transmission Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Transmission Corporation or any continuance under the laws of another jurisdiction. 1.1.84 Net Electricity means the total amount of Electricity measured in MWh

produced by the Unit Generator less the Station Service Load. Net Electricity shall be calculated by: 1.1.84.1 determining the total amount of Electricity measured in MWh at the Unit Generator Metering Point, as adjusted to reflect the total amount of Electricity that would be measured by a Metering Installation at the Point of Delivery; and 1.1.84.2 subtracting the total amount of Electricity measured in MWh at the System Service Metering Point, as adjusted to reflect the total amount of Electricity that would be measured by a Metering Installation at the high voltage bushings of the System Service Transformer; provided that if Net Electricity is a negative amount, Net Electricity shall be deemed to be zero.

- 16 1.1.85 Notice of Informal Resolution has the meaning attributed to that term in

section 12.1. 1.1.86 Nuclear Law means all Canadian federal statutes, regulations, by-laws,

permits, licences, orders, decisions, and rules, and any legally enforceable policies or guidelines of any Canadian Governmental Authority (whether federal, provincial, municipal or local) relating specifically to the regulation of nuclear power plants and/or uranium (enriched or otherwise) and/or any other radioactive material and/or Nuclear Waste, including the Nuclear Energy Act (Canada), the Nuclear Liability Act (Canada), the Nuclear Safety and Control Act (Canada), the Nuclear Fuel Waste Act (Canada) and the respective regulations thereunder. 1.1.87 Nuclear Waste means, collectively, Low Level Waste, Intermediate Level

Waste and Used Fuel, which terms have the following meanings: 1.1.87.1 Low Level Waste means any waste which is minimally radioactive but which does not require radiation shielding, examples of which are mop-heads, rags, paper towels, floor sweepings and protective clothing. 1.1.87.2 Intermediate Level Waste means any waste (other than Used Fuel) which requires radiation shielding, examples of which are ion-exchange resins and filters used to clean reactor water systems and equipment or components, such as pressure tubes, which are periodically removed from reactors. 1.1.87.3 Used Fuel means any nuclear fuel which has been withdrawn from a reactor following irradiation. 1.1.88 O&M Threshold means: 1.1.88.1 for the Fiscal Year ending March 31, 2005, $500,000; and 1.1.88.2 for each Fiscal Year thereafter, the product of (i) the O&M Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year.

- 17 1.1.89 1.1.90 Operating Committee has the meaning attributed to that term in section 10.1. Operating Period End Date means, at any given time, the date, determined as

of that time, when the Unit Generator is expected to be shut down, to stop generating Electricity on a permanent basis and to eventually be Decommissioned, such date to be agreed to by the parties or, failing such agreement, to be determined in accordance with section 12.1 and, if required, section 12.2. 1.1.91 Other Facilities means all plant, facilities, buildings, equipment, supplies and

improvements, other than the Facilities, related to, or used in connection with, the generation of Net Electricity which are owned or leased by the Seller or which the Seller is permitted to use, including the fresh water supply building, structures, equipment, and piping located at and between Hanson Stream and Point Lepreau. 1.1.92 1.1.93 1.1.94 Payee has the meaning attributed to that term in section 6.1.4. Payment Date has the meaning attributed to that term in section 6.2. Payor, except in section 2.16 where such term is separately defined, has the

meaning attributed to that term in section 6.1.4. 1.1.95 Person means any individual, partnership, limited partnership, joint venture,

syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, Governmental Authority or entity however designated or constituted. 1.1.96 Planned Outage means any Unit Generator outage other than a Maintenance

Outage or a Forced Outage. For greater certainty, a Planned Outage may arise because work is being conducted on the Facilities which requires a Unit Generator outage, even though work is not being performed on the Unit Generator. 1.1.97 Planned Outage Schedule has the meaning attributed to that term in

section 3.1.

- 18 1.1.98 Point Lepreau means the Point Lepreau nuclear generating station located at

Point Lepreau, New Brunswick. 1.1.99 Point of Delivery means the 345 kV bushings of the Unit Transformer.

1.1.100 Province means Her Majesty the Queen in right of New Brunswick. 1.1.101 Refurbishment means the refurbishment of the Facilities in accordance with the criteria set out in Schedule 1.1.101. 1.1.102 Release means any spilling, leaking, pumping, pouring, emitting, venting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the Environment. 1.1.103 S&P has the meaning attributed to that term in section 6.6.3. 1.1.104 Schedule, Scheduled and Scheduling means all acts necessary pursuant to and in accordance with the Scheduling Procedures and the Market Rules for the parties, or either one of them, to schedule, dispatch and deliver, or to cause to be scheduled, dispatched and delivered, capacity and Net Electricity to the Point of Delivery, including, if applicable, (i) the submission or re-submission of all dispatch data or bilateral contract data to, and (ii) the receipt of dispatch communications or instructions from, the SO. 1.1.105 Scheduling Procedures means any procedures for Scheduling adopted or approved by the Operating Committee from time to time pursuant to and in accordance with section 2.2.2, which procedures shall comply with all applicable Market Rules. 1.1.106 Seller means New Brunswick Power Nuclear Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Nuclear Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Nuclear Corporation or any continuance under the laws of another jurisdiction. 1.1.107 Seller Event of Default has the meaning attributed to that term in section 8.4.

- 19 1.1.108 Seller Indemnitee has the meaning attributed to that term in section 9.4.1. 1.1.109 SG Adder has the meaning attributed to that term in Schedule 1.1.22. 1.1.110 SG Electricity means the total amount of Electricity measured in MWh produced by the Standby Diesel Generators. 1.1.111 SG Metering Point means the location of the Metering Installation for Electricity generated by the Standby Diesel Generators. 1.1.112 SG Price has the meaning attributed to that term in Schedule 1.1.22. 1.1.113 SO means the New Brunswick System Operator established under section 40 of the Electricity Act, and includes any successor thereto. 1.1.114 SO-Controlled Grid means the transmission systems with respect to which, pursuant to Applicable Law, the SO has authority to direct operations. 1.1.115 Standby Diesel Generators means the two standby diesel electrical generating units associated with the Unit Generator. 1.1.116 Station Service Load means the total amount of Electricity measured in MWh consumed (i) on the Unit Generator side of the Point of Delivery, or (ii) on the load side of the System Service Transformer. For greater certainty, Station Service Load includes the Unit Transformer losses and the System Service Transformer losses. 1.1.117 System Service Metering Point means the location of the Metering Installation designated as the System Service Metering Point on Schedule 2.17. 1.1.118 System Service Transformer means the 42/70 MVA; 345-13.8 kV

transformer, presently numbered as 471 and designated as SST1 on Schedule 2.17. 1.1.119 Taxes means all sales taxes, including HST, GST, use taxes, ad valorem taxes, value added taxes, excise taxes, and any similar taxes, whether enacted before or after the date of this Agreement, but excluding taxes based on excess profits, profits, net income,

- 20 income, taxable income or net worth, capital taxes, and any similar taxes and any payments in lieu of any such taxes. 1.1.120 Term has the meaning attributed to that term in section 8.1. 1.1.121 Termination Date has the meaning attributed to that term in section 8.1. 1.1.122 Third Party Claim has the meaning attributed to that term in section 9.7.1. 1.1.123 Transfer means a sale, assignment, lease, sublease, mortgage, encumbrance, disposition, licence, tolling, or any other transaction whereby ownership of, or the right to control, use, occupy or operate all or part of, the Facilities has been transferred to, or conferred on, any Person. Transferred has a corresponding meaning. 1.1.124 Transmission and Related Costs means all costs applicable to, or incurred by a party in relation to, the transmission of Electricity, including, if applicable, Ancillary Services costs, transmission charges and transmission losses. 1.1.125 Transmission Tariff means the tariff approved under Part V of the Electricity Act. 1.1.126 Unit Generator means the electrical generating unit located at Point Lepreau designated as Unit Generator 1. 1.1.127 Unit Generator Metering Point means the location of the Metering Installation designated as the Unit Generator Metering Point on Schedule 2.17. 1.1.128 Unit Transformer means three, single phase 152/252 MVA; 345-26 kV transformers, presently numbered 639, 640, 641, and designated as UT1 on Schedule 2.17. 1.1.129 Vesting Energy Price has the meaning attributed to that term in Schedule 1.1.22

- 21 1.2 Headings and Table of Contents The inclusion of headings and a table of contents in this Agreement is for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.3 Gender, Number and Grammatical Changes In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. 1.4 Business Days If any payment is required to be made pursuant to this Agreement on a day which is not a Business Day, then such payment shall be made on the next Business Day. 1.5 Currency Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency. 1.6 Calculation of Interest Any interest to be calculated pursuant to this Agreement shall be calculated based on the amount upon which interest is payable multiplied by the product of the specified rate of interest and the total number of days lapsed for which interest is payable divided by 365 (366 in a leap year). For any period of time, the first day of such period shall be included and the last day of such period shall be excluded. 1.7 Statutes Any reference in this Agreement to a statute or to a regulation or rule promulgated under a statute or to any provision of a statute, regulation or rule shall be a reference to the statute, regulation, rule or provision, as amended, re-enacted or replaced from time to time.

- 22 1.8 Invalidity of Provisions Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction or an arbitrator shall not affect the validity or enforceability of any other provision of this Agreement. To the extent permitted by Applicable Law, the parties waive any provision of Applicable Law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the legal and economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.9 Entire Agreement This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by a party to this Agreement or its partners, shareholders, directors, officers, employees or agents, to the other party to this Agreement or its partners, shareholders, directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and no party to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.10 Waiver No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing

- 23 waiver or operate as a waiver of, or estoppel with respect to, any subsequent failure to comply, unless otherwise expressly provided. 1.11 Amendment Except as expressly provided in this Agreement, no amendment of this Agreement shall be binding unless executed in writing by both parties. Notwithstanding the foregoing and sections 12.1 and 12.2, for so long as the Buyer and the Seller remain directly or indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the Province, either party may submit in writing any concerns or issues relating to the terms of this Agreement to the board of directors of the Electric Finance Corporation (the Board) for its consideration, provided that such party provides a copy of any such submission to the other party at the same time it is provided to the Board. Provided that the other party is permitted to deliver a reply submission to the Board and that both parties are given a reasonable opportunity in the circumstances to provide the Board with additional written or oral submissions with respect to the concerns or issues raised, the parties acknowledge and agree that the Board may, in its sole discretion, amend the terms of this Agreement to protect the financial integrity of the parties, to prevent undue hardship for consumers, or to facilitate a third party investment in or Transfer of the Facilities and/or the Other Facilities. If the Board amends the terms of this Agreement, each party shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, agreements, written amendments, assurances and things as may be reasonably required for the purpose of giving effect to the amended terms directed by the Board and shall take all such steps as may be reasonably within its power to implement to their full extent the terms of any amendment made by the Board. 1.12 Governing Law This Agreement and any Disputes shall be governed by and construed in accordance with the laws of the Province of New Brunswick and the laws of Canada applicable therein. 1.13 Technical Terms Words or abbreviations that have well known technical or trade meanings are used in this Agreement in accordance with their recognized meanings.

- 24 1.14 Schedules The following are the Schedules attached to this Agreement: Schedule 1.1.22 Schedule 1.1.26 Schedule 1.1.101 Schedule 2.4 Schedule 2.10 Schedule 2.17 Schedule 3.1 Schedule 12.2 Prices CPI Adjustment Refurbishment SG Operating Characteristics Adjustments to Contract Price Metering Points Planned Outage Schedule Arbitration Procedures

- 25 -

ARTICLE 2 PURCHASE AND SALE OF ELECTRICITY AND CAPACITY 2.1 Characteristics of Delivered Electricity All Delivered Electricity shall be three phase, sixty cycle nominal, alternating current at a nominal voltage of 345 kV between phases, or in such other characteristics as required by the owner or operator of the SO-Controlled Grid from time to time. 2.2 Purchase and Sale of Electricity The Seller shall sell and deliver, and the Buyer shall purchase and receive, at the Point of Delivery, Delivered Electricity and SG Electricity Scheduled with the SO to be sold and delivered by the Seller to the Buyer in accordance with the following: 2.2.1 The Sellers obligation to sell, deliver and Schedule (as applicable), and the

Buyers obligation to purchase, receive and Schedule (as applicable), such Delivered Electricity and SG Electricity shall commence immediately on the date hereof and shall terminate at 24:00 hours on the Termination Date or such earlier date on which this Agreement may be terminated. 2.2.2 The Seller shall declare to the Buyer, in good faith, its maximum bona fide

availability from the Unit Generator and the Standby Diesel Generators, such maximum bona fide availability to be based solely on the Sellers reasonable assessment of the Unit Generators or the Standby Diesel Generators technical capability to deliver Delivered Electricity or SG Electricity, as the case may be, and shall promptly declare to the Buyer, in good faith and from time to time, any change to its maximum bona fide availability from the Unit Generator and the Standby Diesel Generators. Based on the Sellers declaration of bona fide availability, the Buyer shall provide both the SO and the Seller with a day ahead Delivered Electricity and SG Electricity schedule. Each hour, the Buyer shall Schedule the Seller with the SO to its maximum bona fide availability from the Unit Generator based on the Sellers declaration of bona fide availability from the Unit Generator which exists at the time the Buyer submits its Final Hourly Balanced Schedule to the SO in respect of that hour, as described in section 2.2.6. For greater certainty, if the

- 26 Seller declares to the Buyer a change in its maximum bona fide availability from the Unit Generator, the Buyer shall be required to amend its Final Hourly Balanced Schedule to reflect such change only in circumstances where it is permitted to do so under the Market Rules. The Buyer and the Seller shall also Schedule Delivered Electricity and SG

Electricity in accordance with, and perform their respective obligations under, the Market Rules and as otherwise required by the SO. The Seller shall comply with all dispatch and other instructions issued by the SO. Each of the parties shall provide to the other party all information reasonably necessary for the other party to effectively meet or comply with, or cause to be met or complied with, its Scheduling obligations. The Operating Committee shall, as soon as possible after the date hereof, establish the Scheduling Procedures for, among other things, the communication of Scheduling information between the parties. Each of the parties shall Schedule Delivered Electricity and SG Electricity in accordance with, and perform its respective obligations set forth in, any Scheduling Procedures so established. 2.2.3 If, contrary to section 2.2.2, the Seller at any time does not in good faith declare to

the Buyer its maximum bona fide availability from the Unit Generator and the Standby Diesel Generators, and without limitation to any other remedy the Buyer may have hereunder (including pursuant to section 8.5) or under Applicable Law, including general principles of common law and equity, the Seller shall pay to the Buyer any net amounts or net payments received by the Seller from the SO or any other Person (including the Buyer) in respect of or as a result of such false declaration. 2.2.4 Subject only to section 2.13.2 and the Sellers obligations to deliver Net

Electricity and SG Electricity pursuant to the Maritime Electric Agreement as set out in section 2.15: 2.2.4.1 each hour, the Seller shall sell and deliver to the Buyer at the Point of

Delivery all Delivered Electricity and SG Electricity Scheduled with the SO to be sold and delivered by the Seller to the Buyer during that hour; and

- 27 2.2.4.2 the Seller shall not sell or deliver Delivered Electricity or SG

Electricity to any Person other than the Buyer, except as provided for in section 2.6.1 or as the Seller is otherwise instructed or dispatched by the SO. 2.2.5 Each hour, the Buyer shall purchase and receive all Delivered Electricity up to the

amount of Delivered Electricity Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer during that hour, and the Buyer shall pay the Seller monthly for all such Delivered Electricity Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer in each calendar month an amount equal to the product of (i) such Scheduled Delivered Electricity, and (ii) the applicable Contract Price. 2.2.6 Notwithstanding any other provision of this Agreement, any reference in this

Agreement to an amount of Delivered Electricity or SG Electricity Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer for each hour shall mean that amount of Delivered Electricity or SG Electricity, as the case may be, Scheduled with the SO in the last balanced hourly schedule submitted by the Buyer or its agent to the SO, being the Final Hourly Balanced Schedule, in respect of that hour and not, for greater certainty, the amount of Delivered Electricity or SG Electricity ultimately dispatched by the SO or delivered or generated by the Seller, to the extent the amounts are different. For greater certainty, the Buyer shall pay the Seller for each MWh included in the Final Hourly Balanced Schedule submitted by the Buyer or its agent for each hour regardless of the amount of Delivered Electricity or SG Electricity ultimately dispatched by the SO or delivered or generated by the Seller during that hour; and the Buyer shall purchase and receive Delivered Electricity in any hour up to the amount of Delivered Electricity or SG Electricity included in such Final Hourly Balanced Schedule for that hour and the purchase of and payment for any Delivered Electricity or SG Electricity in excess of the amounts included in such Final Hourly Balanced Schedule for that hour shall, subject to section 2.2.3, be settled directly between the SO and the Market Participant for the Unit Generator and the Facilities.

- 28 2.3 Committed Capacity The Seller shall make the Committed Capacity exclusively available to the Buyer for no additional consideration payable hereunder. 2.4 Standby Diesel Generators Subject to section 2.15, the Seller shall make the capacity of the Standby Diesel Generators exclusively available to the Buyer for no additional consideration payable hereunder. Subject to section 2.15, the Seller shall, when instructed by the Buyer, Schedule, generate and deliver to the Buyer at the Point of Delivery SG Electricity, provided that such instructions comply with the operating characteristics included in Schedule 2.4. The Buyer shall pay the Seller monthly, for each MWh of SG Electricity Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer at the Point of Delivery hereunder, an amount equal to the SG Price. The Buyer shall pay the Seller monthly, for each MWh of SG Electricity

Scheduled by the Buyer with the SO to be sold and delivered by the Seller to the Buyer at the Point of Delivery as a result of the Seller testing one or more of the Standby Diesel Generators, an amount equal to the applicable Contract Price. 2.5 2.5.1 Demonstrated Net Capability (DNC) Subject to section 2.5.2, the DNC of the Unit Generator means the Unit

Generators demonstrated net maximum capability to deliver Net Electricity to the Point of Delivery, as declared from time to time by the Seller and acceptable to the Buyer, acting reasonably, provided that if the SO determines, establishes or audits the demonstrated net maximum capability of the Unit Generator, the Unit Generators DNC for the purposes of this Agreement shall equal such demonstrated net maximum capability determined, established or audited by the SO from time to time. For greater certainty, the Unit Generators DNC shall be calculated net of the Station Service Load. 2.5.2 Notwithstanding section 2.5.1, for the purposes of this Agreement, the Unit

Generators DNC shall be 635 MW unless: 2.5.2.1 if a decision is made to complete the Refurbishment, the DNC of the

Unit Generator shall be re-established in accordance with section 2.5.1 on or

- 29 about the In-Service Date and, subject to section 2.5.2.2, shall remain for purposes of this Agreement at that quantity so established until the Termination Date or such earlier date on which this Agreement may be terminated; or 2.5.2.2 if the Refurbishment is completed and additional investments are made

or improvements are implemented after the In-Service Date which increase the capability of the Unit Generator beyond the original design capability, the DNC of the Unit Generator shall be adjusted to reflect such increase in capability, and shall thereafter be adjusted from time to time, as required pursuant to section 2.5.1 to reflect the actual DNC of the Unit Generator from time to time, provided that in no circumstances shall the DNC of the Unit Generator for purposes of this Agreement be less than that established pursuant to section 2.5.2.1. 2.6 Buyers Failure to Purchase Delivered Electricity Subject to section 2.15 and unless excused or relieved from performance hereunder by Force Majeure, if the Buyer fails to Schedule the Seller with the SO to its maximum bona fide availability from the Unit Generator to generate Delivered Electricity based on the Sellers declaration pursuant to section 2.2.2 of such bona fide availability (provided that, for greater certainty, if the Seller declares to the Buyer a change in its maximum bona fide availability, the Buyer shall be required to amend its Final Hourly Balanced Schedule to reflect such change only in circumstances where it is permitted to do so under the Market Rules) and the Buyer was not prevented from so Scheduling the Seller due to Applicable Law or a Governmental Authority, or because of the Sellers inability to deliver such Scheduled Delivered Electricity to the Point of Delivery, including, for greater certainty, circumstances where the Seller has validly claimed Force Majeure has prevented it from delivering such Scheduled Delivered Electricity to the Point of Delivery, the following provisions shall apply: 2.6.1 For each such MWh of Electricity so declared available by the Seller which is not

so Scheduled with the SO by the Buyer to be sold and delivered by the Seller to the Buyer (the Deficiency), the Buyer shall pay the Seller as liquidated damages, and not as a penalty, an amount equal to the positive difference, if any, between (i) the Contract Price then in effect, and (ii) the sale price the Seller obtains for the Deficiency, if any, less the

- 30 aggregate direct, out-of-pocket costs and expenses (calculated as a per MWh amount and excluding Transmission and Related Costs) reasonably incurred by the Seller in effecting the sale of the Deficiency, as adjusted to reflect differences in actual Transmission and Related Costs incurred as compared to such Transmission and Related Costs which would have been incurred by the Seller had the Buyer Scheduled the Deficiency under section 2.2; provided, however, that the Seller shall have taken Commercially Reasonable Efforts to mitigate its damages and the Seller shall not recover Transmission and Related Costs from the Buyer if it incurs such costs but subsequently recovers them from third party purchasers of the Deficiency. For the purposes of calculating the Capacity Factor and the Contract Price pursuant to Schedule 1.1.22, all Deficiency shall be considered Scheduled Delivered Electricity, provided, however, that the Buyer shall not be required to pay the Seller the Contract Price in respect of such Deficiency in addition to liquidated damages payable by the Buyer pursuant to this section 2.6.1. 2.6.2 If such failure of the Buyer to Schedule the Seller with the SO to its maximum

bona fide availability from the Unit Generator to generate Delivered Electricity results in the SO dispatching the Unit Generator to 0 MW, the Buyer shall: 2.6.2.1 for each MWh the Seller is thus as a result unable to generate to meet

its Station Service Load requirements, pay the Seller as liquidated damages, and not as a penalty, the incremental costs reasonably incurred by the Seller to supply such Station Service Load requirements, or at the option and cost of the Buyer, make available to the Seller sufficient Electricity to enable the Seller to meet such Station Service Load requirements; provided, however, that the Seller shall have taken Commercially Reasonable Efforts to mitigate its damages; and 2.6.2.2 pay to the Seller as liquidated damages, and not as a penalty, the

incremental costs reasonably incurred by the Seller to shutdown and restart the Unit Generator, provided, however, that the Seller shall have taken Commercially Reasonable Efforts to mitigate its damages. For greater certainty, any amounts payable by the Buyer to the Seller under this section 2.6.2 or any replacement Electricity delivered by the Buyer to the Seller in lieu of

- 31 such amounts shall be less all non-capital costs or variable costs which can be avoided by the Seller as a result of the Seller not generating Electricity. 2.6.3 The right to receive liquidated damages or replacement Electricity under this

section 2.6 shall be the Sellers sole and exclusive remedy for any and each failure of the Buyer to Schedule the Seller with the SO to its maximum bona fide availability, and all other damages and remedies are hereby waived by the Seller. For greater certainty and notwithstanding section 8.3, it shall not be considered a Buyer Event of Default, nor shall the Seller have the termination rights or other remedies contained in section 8.3 or elsewhere in this Agreement, in circumstances where the Buyer has failed to Schedule the Seller with the SO to its maximum bona fide availability, but the Buyer has paid the Seller the payments set out in section 2.6.1 and, if applicable, section 2.6.2, in respect thereof or delivered replacement Electricity as set out in section 2.6.2, all in accordance with this section 2.6. 2.7 2.7.1 Station Service Load The parties acknowledge and agree that, except if, and only to the extent that, a

Forced Outage, Planned Outage or Maintenance Outage of the Unit Generator is occurring, the Seller is responsible for supplying its Station Service Load. If a Forced Outage, Planned Outage or Maintenance Outage of the Unit Generator occurs, the Buyer shall supply the Seller with Electricity at the Point of Delivery in sufficient quantities to supply the Station Service Load requirements, unless and until the Seller has notified the Buyer, with 12 months prior notice, that it no longer requires this supply of Electricity from the Buyer. 2.7.2 Subject to section 2.7.3, the Seller shall pay the Buyer, for each MWh of

Electricity Scheduled with the SO to be delivered to the Seller by the Buyer pursuant to section 2.7.1, an amount equal to the average Contract Price for the Fiscal Year during which such Electricity is delivered. 2.7.3 The Seller shall pay the Buyer, for each MWh of Electricity Scheduled with the

SO to be delivered to the Seller by the Buyer pursuant to section 2.7.1 during the Planned Outage to complete the Refurbishment, an amount equal to $53.83.

- 32 2.8 2.8.1 Title and Risk of Loss Each hour, property, title and risk of loss relating to Delivered Electricity and all

other Electricity delivered and sold by the Seller to the Buyer hereunder during that hour, up to the amount Scheduled with the SO to be delivered and sold by the Seller to the Buyer during that hour, shall pass from the Seller to the Buyer at the Point of Delivery. The Seller warrants that it will deliver to the Buyer Delivered Electricity and all other Electricity delivered and sold by the Seller to the Buyer hereunder free and clear of all liens, security interests, claims and encumbrances of any kind by any Person arising prior to the Point of Delivery. 2.8.2 Each hour, property, title and risk of loss relating to Station Service Load supplied

by the Buyer to the Seller and all other Electricity delivered by the Buyer to the Seller hereunder during that hour, up to the amount Scheduled with the SO to be delivered and/or sold by the Buyer to the Seller during that hour, will pass from the Buyer to the Seller at the Point of Delivery. The Buyer warrants that it will deliver to the Seller all Station Service Load supplied by the Buyer to the Seller and all other Electricity delivered by the Buyer to the Seller hereunder free and clear of all liens, security interests, claims and encumbrances of any kind by any Person arising prior to the Point of Delivery. 2.9 Transmission and Related Costs Save and except for charges payable by the Seller under the Generation Interconnection Agreement for equipment and facilities after the Point of Delivery, the Buyer shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable after the Point of Delivery in respect of Delivered Electricity delivered and sold to the Buyer at the Point of Delivery and all other Electricity delivered and sold by the Seller to the Buyer hereunder during each hour up to the amount Scheduled by the Buyer with the SO to be delivered and sold by the Seller to the Buyer during that hour. The Seller shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable (i) prior to the Point of Delivery in respect of Delivered Electricity delivered and sold to the Buyer at the Point of Delivery, (ii) in respect of Net Electricity sold or delivered pursuant to the Maritime Electric Agreement or to any Person other than the Buyer, or (iii) in respect of Station Service Load. The

- 33 Buyer shall be responsible for obtaining or arranging all transmission rights necessary or required to permit the Delivered Electricity and all other Electricity delivered and sold by the Seller to the Buyer hereunder to be transmitted from the Point of Delivery up to the amount of such Delivered Electricity and other Electricity Scheduled by the Buyer with the SO to be delivered and sold by the Seller to the Buyer. The Seller shall be responsible for obtaining or arranging all transmission rights necessary or required to permit Electricity to be delivered to the Seller at the Point of Delivery pursuant to section 2.7.1. 2.10 2.10.1 Adjustments for Environmental and Certain Regulatory Costs Subject to section 2.11, the Seller shall promptly notify the Buyer, in writing, if it

becomes aware of a change or proposed change in Environmental Law or Nuclear Law which applies generally to nuclear or other electricity generators in New Brunswick, or in Canada if the change is imposed at the federal level, and not specifically to the Seller, and which results, or would result if the proposed change was enacted, in the Seller being required to make additional capital expenditures and/or to incur additional operations and maintenance costs (collectively, Environmental and Regulatory Costs) in order to be able to generate and deliver Net Electricity to the Point of Delivery. Together with such notice, the Seller shall also indicate to the Buyer: 2.10.1.1 each of the possible methods for addressing the change or proposed change in Environmental Law or Nuclear Law; and 2.10.1.2 the Sellers best estimate of the amount of such Environmental and Regulatory Costs in respect of the least cost method for addressing the change or proposed change in Environmental Law or Nuclear Law, setting out separately such Environmental and Regulatory Costs which are capital costs in nature and those which are operations and maintenance costs in nature. 2.10.2 Upon receipt of a notice pursuant to section 2.10.1 of a change in Environmental

Law or Nuclear Law (but not, for greater certainty, notice of a proposed change in Environmental Law or Nuclear Law), the Buyer shall, in its sole discretion and within a reasonable amount of time in the circumstances and upon written notice to the Seller, determine whether the Buyer will reimburse the Seller for making or incurring such

- 34 Environmental and Regulatory Costs. In this regard, the Seller shall assist the Buyer in making such determination, including by providing the Buyer and its agents, representatives and advisors, with all information, data, books and records, and access to the Facilities and the Other Facilities and all directors, officers, employees, agents, representatives and advisors of the Seller, that the Buyer may request. Further, the Seller shall, upon the request of the Buyer, use reasonable efforts to challenge or dispute the necessity of the change or proposed change in Environmental Law or Nuclear Law and/or the requirement to make or incur such Environmental and Regulatory Costs. The Buyer shall be responsible for and/or shall reimburse the Seller for all reasonable costs incurred by the Seller in carrying out any such challenge or dispute requested by the Buyer. 2.10.3 If the Buyer does not agree that the Seller has selected the least cost method for

addressing the change in Environmental Law or Nuclear Law or that the Sellers best estimate of the amount of such Environmental and Regulatory Costs is reasonable and appropriate in the circumstances, the parties shall discuss and negotiate in good faith the method to be used and such Environmental and Regulatory Costs in order that agreement between the parties can be reached as to the method to be used and a reasonable and appropriate estimate of the costs thereof. If the parties cannot agree on a reasonable and appropriate estimate of such Environmental and Regulatory Costs, the estimate shall be determined in accordance with the provisions of section 12.1 and, if required, section 12.2. The least cost method for addressing the change in Environmental Law or Nuclear Law shall be used unless the Buyer agrees otherwise. 2.10.4 Once the method for addressing the change in Environmental Law or Nuclear

Law and the estimate of such Environmental and Regulatory Costs has either been agreed between the Buyer and the Seller or determined in accordance with the provisions of section 12.1 and, if required, section 12.2 (such cost estimate to be referred to as the Firm Estimate), the Buyer shall determine, at its sole option and in its sole discretion and upon notice to the Seller, whether it shall reimburse the Seller for such Environmental and Regulatory Costs, provided that if the Buyer determines that it shall so reimburse the Seller, the following provisions shall apply, subject to section 2.15:

- 35 2.10.4.1 The Buyers obligation to reimburse the Seller for such Environmental and Regulatory Costs which are capital costs in nature shall be capped at the Firm Estimate in respect thereof plus 50% of all actual Environmental and Regulatory Costs incurred or made (the Actual Capital Costs) in excess of the Firm Estimate in respect thereof. For greater certainty, the Seller shall be solely

responsible for 50% of the Actual Capital Costs in excess of the Firm Estimate in respect thereof. 2.10.4.2 If ultimately the Actual Capital Costs are less than the Firm Estimate in respect thereof, the Buyer shall be responsible for reimbursing the Seller in aggregate for the amount of (i) the Firm Estimate in respect thereof, less (ii) 50% of the difference between the Firm Estimate in respect thereof and the Actual Capital Costs. 2.10.4.3 The Firm Estimate shall include an estimate of the Environmental and Regulatory Costs which are operations and maintenance costs in nature for the Fiscal Year in which the change will take effect and each Fiscal Year thereafter and the Buyers obligation to reimburse the Seller for such Environmental and Regulatory Costs in respect of each such Fiscal Year shall be capped at the Firm Estimate thereof. For greater certainty, the Seller shall be solely responsible for any such Environmental and Regulatory Costs incurred by the Seller in a Fiscal Year in excess of the Firm Estimate of such Environmental and Regulatory Costs in respect of that Fiscal Year. 2.10.5 Subject to the limits set forth in section 2.10.4, if the Buyer determines that the

Seller shall be reimbursed by the Buyer for making or incurring such Environmental and Regulatory Costs, then, subject to section 2.15: 2.10.5.1 in respect of such Environmental and Regulatory Costs which are capital costs in nature, the Buyer shall, at its sole option and upon notice to the Seller, either:

- 36 2.10.5.1.1 reimburse the Seller in arrears, pursuant to monthly Bills,

for such Environmental and Regulatory Costs actually incurred or made during the applicable Billing month; or 2.10.5.1.2 adjust the First Threshold Price in accordance with

section 2.10.6; and 2.10.5.2 in respect of such Environmental and Regulatory Costs which are operations and maintenance costs in nature, the Buyer shall reimburse the Seller in arrears pursuant to monthly Bills for such Environmental and Regulatory Costs incurred or made during the applicable Billing Month. 2.10.6 If the Buyer chooses to reimburse the Seller for such Environmental and

Regulatory Costs which are capital costs in nature by adjusting the First Threshold Price, the First Threshold Price shall be adjusted as set forth in Schedule 2.10. 2.10.7 Notwithstanding any of the other provisions of this section 2.10, but subject to

section 2.10.11, the Buyer shall not be obligated to reimburse the Seller for Environmental and Regulatory Costs which are capital costs in nature unless all of such Environmental and Regulatory Costs arising from a change in Environmental Law or Nuclear Law in aggregate exceed the Capital Threshold at the time of the change in Environmental Law or Nuclear Law. Notwithstanding any of the other provisions of this section 2.10, but subject to section 2.10.11, the Buyer shall not be obligated to reimburse the Seller for Environmental and Regulatory Costs which are operations and maintenance costs in nature unless all of such Environmental and Regulatory Costs arising in a Fiscal Year from a change in Environmental Law or Nuclear Law in aggregate exceed the O&M Threshold for that Fiscal Year. For greater certainty, for purposes of this section 2.10.7, all changes to Environmental Law or Nuclear Law related to one another and implemented at the same time as part of a series or package of changes shall be considered a change in Environmental Law or Nuclear Law. 2.10.8 If the Buyer decides to reimburse the Seller for making or incurring such

Environmental and Regulatory Costs, the Seller shall complete the project under which

- 37 such costs will be incurred or such expenditures will be made and the Buyer shall be permitted to monitor the project. The Seller shall follow its normal practices to solicit bids or expressions of interest in respect of such project through a competitive process so that such costs or expenditures are minimized and competitive in relation to similar projects. The Seller shall provide the Buyer with all details related to any such competitive process, including copies of all bids or expressions of interest provided to the Seller. To the extent possible, the Seller shall enter into fixed-price or guaranteed maximum contracts in respect of such costs or expenditures or projects. The Seller shall consult with the Buyer about any material deviation in or amendment to the scope or schedule or costs of the project. The Seller shall regularly update the Buyer, and provide written reports upon the request of the Buyer in reasonable detail, with respect to the progress, details and costs of any such project. The Seller shall promptly notify the Buyer in writing if it reasonably expects that any such project will be delayed or the costs thereof will exceed the Firm Estimate thereof. 2.10.9 If the Buyer determines that the Seller shall not be reimbursed by the Buyer for

making or incurring such Environmental and Regulatory Costs, and provided that the Environmental and Regulatory Costs are in excess of the Capital Threshold or the O&M Threshold, as applicable, then: 2.10.9.1 notwithstanding any other provision of this Agreement, the Seller shall not be liable for failing to Schedule or deliver all or part of Delivered Electricity to the Point of Delivery to the extent such failure arises because the Seller has not made or incurred such Environmental and Regulatory Costs; and 2.10.9.2 until the Termination Date or such earlier date on which this Agreement may be terminated, the Buyer shall pay the Seller in respect of each MWh of Delivered Electricity that the Seller is not capable of Scheduling or delivering to the Buyer at the Point of Delivery as a result of the Seller failing to make or incur such Environmental and Regulatory Costs, an amount equal to the Contract Price less all non-capital costs or variable costs which can be avoided as a result of the MWh not being generated and delivered to the Buyer at the Point of

- 38 Delivery, and less all costs, expenses or damages which have been mitigated by the Seller. The Seller shall use Commercially Reasonable Efforts to mitigate its costs, expenses and damages and assist the Buyer with minimizing all costs, expenses and damages, which may arise as a result of the Buyers determination not to reimburse the Seller for making or incurring such Environmental and Regulatory Costs, including, upon the request of the Buyer, attempting to cancel all or part of any fuel contract. For the purposes of calculating the Delivered Electricity not able to be Scheduled or delivered by the Seller to the Buyer at the Point of Delivery as a result of the Buyers determination, the forecasted Delivered Electricity that could have been Scheduled or delivered shall be based upon the then current projections of Capacity Factor for the Unit Generator for each year until the Operating Period End Date or the expected Termination Date, whichever is earlier, determined as of the date of notification of the Buyers decision not to reimburse the Seller for making or incurring such Environmental and Regulatory Costs. 2.10.10 Notwithstanding any of the foregoing provisions in this section 2.10, if the Buyer decides not to reimburse the Seller for such Environmental and Regulatory Costs which are in excess of the Capital Threshold or the O&M Threshold, as applicable, and, in such circumstances, the Unit Generator would be required to be shut down permanently, the Seller, on its own accord and at its sole expense, may decide to make or incur such Environmental and Regulatory Costs. In such circumstances, the Seller shall not be

required to Schedule, sell and deliver Delivered Electricity to the Buyer hereunder and the Buyer shall be relieved from its obligation to pay the Seller pursuant to section 2.10.9.2 for Delivered Electricity that the Seller is not capable of Scheduling or delivering to the Buyer at the Point of Delivery to the extent that revenue received by the Seller for Net Electricity after the Seller incurs or makes such Environmental and Regulatory Costs exceeds such Environmental and Regulatory Costs plus the After-Tax ROE on such Environmental and Regulatory Costs, amortized over the period from the date such costs and expenditures are incurred or made until the Operating Period End Date at that time.

- 39 2.10.11 Notwithstanding the foregoing provisions of this section 2.10, if, as a result of any Environmental and Regulatory Costs being incurred or being required to be made, the Sellers projected annual operations and maintenance costs will decrease, the Buyers obligations to reimburse the Seller pursuant to this section 2.10 shall correspondingly decrease. Any such decrease pursuant to this section 2.10.11 to the Buyers obligation to reimburse the Seller pursuant to this section 2.10 shall be considered and reflected in determining whether the Capital Threshold or the O&M Threshold, as applicable, has been exceeded pursuant to section 2.10.7. For greater certainty, the parties acknowledge that if the Buyer chooses to reimburse the Seller for Environmental and Regulatory Costs by adjusting the First Threshold Price pursuant to section 2.10.6, the formula set out in Schedule 2.10 already contemplates an adjustment to reflect a decrease in annual operations and maintenance costs. 2.11 2.11.1 Decommissioning and Nuclear Waste Section 2.10 shall not apply to changes or proposed changes in Environmental

Law or Nuclear Law or Environmental and Regulatory Costs relating to Decommissioning or the long-term storage or permanent storage or disposal of Nuclear Waste. For greater certainty, section 2.10 shall apply to any change or proposed change in Environmental Law or Nuclear Law or Environmental and Regulatory Costs relating to interim storage of Nuclear Waste at the Facilities or on the Point Lepreau site while the Unit Generator is operating. However, if on-site storage at the Point Lepreau site is chosen as the long-term storage or permanent disposal method for Nuclear Waste or any part thereof, section 2.10 shall not apply in respect of any change or proposed change in Environmental Law or Nuclear Law or Environmental and Regulatory Costs relating to that choice or the implementation of such method. 2.11.2 The Sellers cost estimate at any time and from time to time for Decommissioning

and the long-term storage or permanent storage or disposal of Nuclear Waste generated or produced at the Facilities and the Other Facilities shall be based on Canadian Good Utility Practices and shall be that cost estimate that has been approved by the CNSC at the relevant time. The Seller shall give the Buyer as much advance notice as is reasonable in the circumstances of any changes to the Sellers cost estimate and, in any event, shall give

- 40 the Buyer at least six months prior notice of any such changes, together with a copy of the proposed revised cost estimate and all underlying or supporting information, assumptions, data, and calculations requested by the Buyer. For greater certainty, any such cost

estimates and the assumptions, information, calculations and methodologies supporting such cost estimates are subject to review by the Buyer pursuant to section 6.5 and, subject to section 6.4, the Buyer shall be entitled to dispute under section 12.1 and, if required, section 12.2 whether any such cost estimates comply with this section 2.11.2. 2.11.3 The parties acknowledge that the Seller currently pays an annual income

statement charge in respect of liabilities relating to Decommissioning and the long-term storage or permanent storage or disposal of Nuclear Waste generated or produced at the Facilities and the Other Facilities, which annual income statement charge is derived from the Sellers cost estimate for Decommissioning and the long-term storage or permanent storage or disposal of such Nuclear Waste. The portion of the annual income statement charge relating to Decommissioning is calculated so that funds are collected from the Seller evenly over the Unit Generators operating life so that, together with interest earned on such funds, there will be sufficient funds to pay for the costs of Decommissioning (including the long-term storage or permanent storage or disposal of Low Level Waste and Intermediate Level Waste) as they are incurred. The portion of the annual income

statement charge relating to the long-term storage or permanent storage or disposal of Used Fuel is calculated so that each year funds are collected from the Seller so that, together with interest earned on such funds, there will be sufficient funds to pay for the costs of the long-term storage or permanent storage or disposal of Used Fuel generated or produced during that year. Subject to section 2.15 and until the Termination Date or such earlier date on which this Agreement may be terminated, the Buyer shall be responsible for reimbursing the Seller for any increases to the Sellers annual income statement charge, as compared to the Sellers annual income statement charge which exists at the date hereof (whether such increases result from a change in Environmental Law or Nuclear Law or otherwise), which arise prior to the Termination Date or such earlier date upon which this Agreement may be terminated. For greater certainty, after the Termination Date or such earlier date on which this Agreement may be terminated, the Seller shall be responsible for all increases to the Sellers annual income statement charge. Correspondingly and subject

- 41 to section 2.15 and until the Termination Date or such earlier date on which this Agreement may be terminated, the Buyer shall be entitled to receive the benefits of, and the Seller shall pay the Buyer in respect of, any decreases to the Sellers annual income statement charge, as compared to the Sellers current annual income statement charge which exists at the date hereof (whether such decreases result from a change in Environmental Law or Nuclear Law or otherwise), which arise prior to the Termination Date or such earlier date upon which this Agreement may be terminated. For greater certainty, after the Termination Date or such earlier date on which this Agreement may be terminated, the Seller shall be entitled to retain the benefits of any decreases to the Sellers annual income statement charge. 2.12 Changes to the Refurbishment At the time the Province and the Seller decide to proceed with the Refurbishment, the Seller shall provide the Buyer with a copy of the as-built cost estimate to complete the Refurbishment which formed the basis for the decision. If the estimated as-built costs in that cost estimate are different from the estimated as-built costs included in Schedule 1.1.101 (such difference in as-built costs to be referred to as the Cost Estimate Difference), then the First Threshold Price payable until the Termination Date or such earlier date on which this Agreement may be terminated for Scheduled Delivered Electricity shall be adjusted in accordance with Schedule 2.10 as of the In-Service Date. For greater certainty, this section 2.12 may result in increases or decreases to the First Threshold Price. In addition, if, as a result of the

Refurbishment, the DNC of the Unit Generator established pursuant to section 2.5.2.1 exceeds 635 MW, the First Threshold Price payable from the In-Service Date until the Termination Date or such earlier date on which this Agreement may be terminated for Scheduled Delivery Electricity shall be decreased by 0.2% for every one MW by which such DNC exceeds 635 MW. 2.13 2.13.1 Additional Capacity This Agreement shall not affect the Sellers right to construct, install and operate,

at its sole option and cost, additional generating units at the Point Lepreau site, provided that additional facilities shall not be so installed and operated so as to unreasonably interfere with or burden or disrupt the operation of the Unit Generator. If the Seller elects

- 42 to construct, install and operate additional generating units at the Point Lepreau site, the Seller shall notify the Buyer in writing of such election. In such circumstances, the Seller shall have the right to relocate the Facilities and the Other Facilities previously installed, provided that the entire cost of such relocation shall be borne by the Seller and such relocation shall not unreasonably interfere with or burden or disrupt the operation of the Unit Generator. The Seller shall also have the right to use any of the Facilities and the Other Facilities jointly in connection with the installation and operation of any such additional generating unit, and to modify the Facilities and Other Facilities for such use, provided that such use and modification do not unreasonably interfere with or burden or disrupt the operation of the Unit Generator and that the costs of any such use and modification are entirely borne by the Seller. If by relocating, using or modifying the Facilities or the Other Facilities in connection with the construction, installation or operation of any such additional generating unit, the Seller delivers and sells to the Buyer less Delivered Electricity than it otherwise would have absent such relocation, use or modification, the Seller shall be responsible for procuring and delivering to the Buyer replacement Electricity, at the Sellers cost, in a quantity sufficient to replace such shortfall in Delivered Electricity. Upon the Seller obtaining all approvals required under Applicable Law to commence construction of an additional generating unit and construction so commencing, the Contract Price shall be decreased to reflect that the Common Facilities will be used by other generating units in addition to the Unit Generator and that the employees of the Seller will also work on the additional generating unit, and, accordingly, the Buyer should not be effectively compensating the Seller for the entire costs and expenses associated with the Common Facilities and such employees. The parties shall discuss and negotiate in good faith what such decrease to the Contract Price should be. If the parties cannot agree on the appropriate decrease to the Contract Price, the appropriate decrease shall be determined in accordance with the provisions of section 12.1 and, if applicable, section 12.2. 2.13.2 If, subsequent to the completion of the Refurbishment, the Seller, at its own cost

and option, elects to undertake investments or improvements which result in the DNC of the Unit Generator exceeding the DNC of the Unit Generator re-established on or about the In-Service Date pursuant to section 2.5.2.1, the Buyer shall have the option to (i) subject to

- 43 section 2.15, purchase at the Contract Price the additional Net Electricity Scheduled and generated by virtue of the increased DNC or (ii) permit the Seller to Schedule and sell such Net Electricity, at its own risk and for its own benefit, to other Persons. For greater certainty, in no circumstances shall the Buyer be responsible for (a) reimbursing the Seller for the costs and expenses of any such investment or improvement, (b) supplying or paying for any additional operating reserve in connection with such increase in the DNC of the Unit Generator, and (c) any other costs or expenses relating to or attributable or allocable to such increase in the DNC of the Unit Generator. 2.14 Emission Credits and Other Environmental Attributes Subject to section 2.15 and for no additional consideration payable to the Seller, the Buyer shall be entitled to, and the Seller shall assign, convey, transfer and deliver to the Buyer, all Emission Credits and all other environmental grants, credits or benefits allocated to, or in respect of, Point Lepreau, the Facilities, the Unit Generator and/or Delivered Electricity. 2.15 2.15.1 Maritime Electric Agreement The parties acknowledge that the Seller has certain pre-existing obligations to

deliver power and energy to Maritime Electric Company, Limited (MECL) under the Maritime Electric Agreement, a copy of which has been provided to the Buyer by the Seller. MECL is entitled under the Maritime Electric Agreement to receive a specified percentage (the MECL Entitlement) of power and energy generated by the Unit Generator and the Standby Diesel Generators and other benefits associated with the Unit Generator (including benefits arising as a result of decreases in the Sellers annual income statement charge in respect of Decommissioning and long-term storage or permanent storage or disposal of Nuclear Waste), and, correspondingly MECL is required to pay a specified percentage of costs associated with the Unit Generator and the Standby Diesel Generators equal to the MECL Entitlement. The MECL Entitlement is defined as the lesser of (i) the percentage that 30 MW is of the actual DNC of the Unit Generator from time to time, or (ii) 4.72%. The Seller shall not amend the Maritime Electric Agreement to increase the MECL Entitlement without the Buyers written consent, which consent shall be in the sole discretion of the Buyer.

- 44 Accordingly and notwithstanding any other provision of this Agreement, the Sellers obligation to Schedule and deliver Net Electricity, capacity and Ancillary Services to the Buyer is subject to MECLs right to receive the MECL Entitlement of power and energy generated by the Unit Generator and the Buyer is not entitled to receive Emission Credits and other environmental grants, credits or benefits pursuant to section 2.14 in respect of the Net Electricity delivered to Maritime Electric. In addition and notwithstanding any other provision of this Agreement but subject to section 2.15.2, the Buyer shall not be required to reimburse or pay the Seller for that percentage equal to the MECL Entitlement of any costs or expenses of the Seller which, by the terms of this Agreement, are to be paid or reimbursed by the Buyer, including, for greater certainty: 2.15.1.1 Environmental and Regulatory Costs pursuant to section 2.10; and 2.15.1.2 increases to the Sellers annual income statement charge in respect of Decommissioning and long-term storage or permanent storage or disposal of Nuclear Waste pursuant to section 2.11. That is, the Buyer shall not be responsible for paying or reimbursing the Seller for the percentage of these costs and expenses that is equal to the MECL Entitlement. 2.15.2 Notwithstanding section 2.15.1, if the Buyer reimburses the Seller for any costs

and expenses pursuant to section 2.10 or section 2.12 through an adjustment to the First Threshold Price, in calculating the adjustment to the First Threshold Price, 100% of such costs and expenses shall be considered in recognition of the fact that the Buyer and MECL shall pay their respective shares of the costs through the purchase of Scheduled Delivered Electricity and Net Electricity, respectively. 2.16 2.16.1 Taxes The Contract Price and all other amounts payable, set-off or reimbursed under this

Agreement are exclusive of all Taxes and where any such amounts are deemed under Applicable Law to be inclusive of Taxes, the parties shall ensure that such amounts are appropriately increased to take into account such deeming factor, and shall reflect such increase in any Bills provided under this Agreement. For greater certainty, all HST and

- 45 GST payable in respect of the Contract Price and such other amounts shall, as required by Applicable Law, be borne and payable by the party (the payor for purposes of this section 2.16) paying such payment or paying, setting off or reimbursing such amount under this Agreement, and shall be collected and remitted by the other party (the recipient for purposes of this section 2.16). If, contrary to this section 2.16 and subject to any joint tax election the parties may make under section 156 of the Excise Tax Act (Canada), the payor does not pay HST or GST to the recipient, such HST or GST shall be deducted by the recipient from any amounts becoming due to the payor hereunder. Each party shall provide the other with its HST or GST registration number upon request therefor. 2.16.2 For greater certainty, each party is responsible for its own income taxes or taxes

based on excess profits, profits, net income, taxable income or net worth, capital taxes, and any similar taxes and any payments in lieu of any such taxes. 2.16.3 Each party shall act reasonably in considering a request by the other party to file

any joint tax election that may be available from time to time and shall agree to do so where filing the joint tax election is of net benefit or not adverse to the party receiving the request. 2.17 Metering All metering shall be in accordance with the Market Rules and any metering procedures adopted or approved by the Operating Committee from time to time, provided that, in all circumstances: 2.17.1 all Metering Installations used in connection with this Agreement, with the

exception of the Metering Installations located at the SG Metering Point, shall be certified as meeting the requirements of Measurement Canada or any successor thereof or any other applicable Governmental Authority, including, if applicable, the SO; 2.17.2 if the SO develops validation, estimation or other metering procedures to produce

final metering data or to replicate missing metering data, any metering procedures adopted or approved by the Operating Committee shall be consistent with, and not contradict, any such metering procedures of the SO; and

- 46 2.17.3 the Seller agrees to authorize the SO to provide the Buyer and its agents, advisors

and representatives with access to metering data controlled by the SO as reasonably required by the Buyer from time to time. The parties acknowledge and agree that the condition of the Metering Installations currently located at the SG Metering Point is sufficient for purposes of this Agreement.

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ARTICLE 3 OUTAGES 3.1 Planned Outage Schedule The parties have agreed to a schedule of Planned Outages (the Planned Outage Schedule) that includes the expected starting date and ending date of each Planned Outage during the period commencing on the date of this Agreement and ending on March 31, 2006. The Planned Outage Schedule is attached hereto as Schedule 3.1. Subject to first complying with the provisions of section 3.2, the Seller shall provide a revised Planned Outage Schedule to the Buyer by October 1 of each calendar year, or sooner if required by the Buyer to meet any requirements under Applicable Law, that includes details with respect to Planned Outages from the date of such revised Planned Outage Schedule until the end of the next Fiscal Year. Any such revised Planned Outage Schedule shall be (i) prepared in accordance with section 3.2, (ii) attached hereto as Schedule 3.1, and (iii) deemed to amend and replace the then current Planned Outage Schedule. The Seller shall schedule its Planned Outages with the SO at any time pursuant to and only in accordance with the then current Planned Outage Schedule at that time. 3.2 3.2.1 Changes to Planned Outage Schedule Changes to the Planned Outage Schedule for the purposes of (i) including the next

Fiscal Years Planned Outages, (ii) adding or removing Planned Outages, or (iii) changing the timing or duration of Planned Outages identified in the then current Planned Outage Schedule, may be initiated by either party and shall be made only in accordance with the following: 3.2.1.1 The parties shall co-operate to amend the then current Planned Outage

Schedule, but, subject to the remaining provisions in this section 3.2, no such changes to such Planned Outage Schedule shall be made by a party without the other partys prior written consent, which consent shall not be unreasonably withheld or delayed. For greater certainty, it will be reasonable for the Buyer to withhold its consent to a change in a Planned Outage identified in the then current Planned Outage Schedule if the costs to the Buyer, including replacement

- 48 Electricity costs and additional reserve costs, are likely to increase as a result of the proposed change. 3.2.1.2 Notwithstanding any provision to the contrary in this section 3.2, the

Seller may amend the then current Planned Outage Schedule without the Buyers consent if the Seller is so required by the SO or the CNSC, provided that the Seller shall not initiate with the SO or the CNSC any amendment to the Planned Outage Schedule not in compliance with the other provisions in this section 3.2. If the Seller amends the then current Planned Outage Schedule pursuant to this section 3.2.1.2, the Seller shall co-operate with the Buyer to minimize the adverse impacts on the Buyer of such amendment to the Planned Outage Schedule. 3.2.1.3 Except for a Planned Outage to complete the Refurbishment, the Seller

shall use Commercially Reasonable Efforts to schedule all of its Planned Outages in April, May and June and to avoid scheduling any part of a Planned Outage during July or August. No Planned Outages shall be scheduled to occur in whole or in part during January, February, March, November or December (each, an Excluded Month and collectively, the Excluded Months), and the timing of any Planned Outage included in the Planned Outage Schedule shall not be changed in a manner which results in any part of such Planned Outage being scheduled to be conducted in whole or in part during an Excluded Month, even if such Planned Outage was already scheduled to occur in whole or in part during one or more Excluded Months, without the Buyers prior written consent, which consent shall be in the sole discretion of the Buyer. 3.2.1.4 Extensions to the duration of a Planned Outage already underway are

permitted to address safety or Unit Generator reliability issues discovered during the Planned Outage. 3.2.1.5 Any changes made in accordance with this section 3.2 shall be reflected

in a revised Planned Outage Schedule and such revised schedule shall be attached hereto as Schedule 3.1 and shall be deemed to amend and replace the then current Planned Outage Schedule.

- 49 3.3 Forced Outages Forced Outages of the Unit Generator may be taken by the Seller as they arise and, in any event, in the Sellers sole discretion, provided that: 3.3.1 the Seller shall use Commercially Reasonable Efforts to terminate or end a Forced

Outage of the Unit Generator as soon as possible; 3.3.2 the Seller maintains a plan of work to be carried out during a Forced Outage (the

Forced Outage Work Plan) that contains both operating and maintenance activities which would be prudent to carry out in the best interest of Unit Generator reliability, safety and which are otherwise consistent with Good Utility Practices, which Forced Outage Work Plan shall be updated regularly by the Seller and communicated to the Buyer in accordance with a procedure to be identified and agreed upon by the Operating Committee; and 3.3.3 during a Forced Outage of the Unit Generator, the Seller shall undertake to

complete the work identified in the Forced Outage Work Plan unless, through the Operating Committee, the Buyer requests adjustments of the Forced Outage Work Plan to remove or reduce work that could extend the length or duration of the Forced Outage, and after appropriate and reasonable consideration of the Buyers request by the Seller, the adjustments have been agreed upon by the parties and incorporated into the Forced Outage Work Plan. Notwithstanding the foregoing, the Seller may make adjustments, additions or deletions to the Forced Outage Work Plan as necessary upon the occurrence of a Forced Outage provided such adjustments, additions, or deletions (i) can be undertaken without extending the length or duration of the Forced Outage, or (ii) are required for the purpose of safety or Unit Generator reliability to be carried out before the next Planned Outage. The Seller will inform the Buyer of such changes and, in respect of (ii), the anticipated impact on the Forced Outage length or duration, at the earliest opportunity and as specified by the Operating Committee.

- 50 3.4 3.4.1 Maintenance Outages Maintenance Outages of the Unit Generator shall be scheduled, to the extent

possible, in conjunction with the Buyer, and in any event, the Seller shall, in scheduling a Maintenance Outage, use Commercially Reasonable Efforts to: 3.4.1.1 consider the Buyers alternate generation sources, the cost to the Buyer

of replacement Electricity, and the Buyers forecasted load in order to minimize the impact on the Buyer; and 3.4.1.2 3.4.2 schedule the Maintenance Outage outside of an Excluded Month.

In the event that the Buyer and the Seller are unable to reach an agreement as to

the scheduling of a Maintenance Outage, the Seller, using Good Utility Practices, shall have the right to unilaterally schedule the Maintenance Outage in order to protect its investment in the Unit Generator by avoiding additional equipment maintenance that would be in excess of normal maintenance requirements, provided that the Seller: 3.4.2.1 considers the Buyers alternate generation sources, the cost to the

Buyer of replacement Electricity, and the Buyers forecasted load in an attempt to minimize the impact on the Buyer; and 3.4.2.2 to the best of its abilities, schedules the Maintenance Outage outside of

an Excluded Month. 3.4.3 The provisions in section 3.3 relating to Forced Outage Work Plans shall apply

mutatis mutandis to a Maintenance Outage. 3.4.4 The Seller shall use Commercially Reasonable Efforts to terminate or end a

Maintenance Outage of the Unit Generator as soon as possible. 3.5 Cost of Changes Except in the case of a change to the Planned Outage Schedule pursuant to section 3.2.1.2, the party initiating a change in a Planned Outage identified in the then current Planned Outage Schedule shall pay the other partys reasonable out-of-pocket incremental costs

- 51 and expenses resulting from any such change that is ultimately made to the Planned Outage Schedule; provided, however, that unless otherwise agreed by the parties the cost of replacement Electricity and additional operating reserves shall not be included in such incremental costs and expenses. In the case of a change in a Planned Outage identified in the then current Planned Outage Schedule pursuant to section 3.2.1.2, each party shall bear and be responsible for its own costs and expenses resulting from any such change. 3.6 Scheduling Each of the parties shall participate in any Maintenance Outage or Planned Outage co-ordination meetings of Electricity generators in New Brunswick, including any such meetings arranged or required by the SO. In addition, the Operating Committee will develop outage procedures to govern the communications between the parties relating to the scheduling, duration, conduct and termination of Planned Outages, Maintenance Outages and Forced Outages, and each of the parties shall comply with any such procedures so developed and adopted by the Operating Committee. For the purposes of financial planning, at the time each Planned Outage Schedule is determined annually, the parties shall also discuss and set out, for information only, the Planned Outage requirements for at least one additional Fiscal Year beyond the Planned Outage Schedule then being determined.

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ARTICLE 4 ANCILLARY SERVICES 4.1 Self-Supply by Disco The parties acknowledge that the Seller has an obligation to provide Ancillary Services to the Buyer under this Agreement. Subject to the Market Rules and the Transmission Tariff, the Buyer may, at its option, and for no additional consideration, instruct the Seller to offer to supply Ancillary Services from the Unit Generator to the SO in connection with the Buyers self-supply of Ancillary Services, so long as such instructions are consistent with Good Utility Practices. The Seller shall follow such instructions from the Buyer and supply such Ancillary Services from the Unit Generator to the SO in connection with the Buyers self-supply of Ancillary Services. 4.2 4.2.1 Payment for Ancillary Services If the Seller receives a payment in any form for any Ancillary Services provided

by the Seller under the Ancillary Services Agreement or any other agreement or arrangement the Seller may have in respect of the Unit Generator (other than payments received for out-of-order dispatch), the Seller shall forthwith notify the Buyer of such payment and the Buyers obligation to make payments to the Seller under this Agreement shall be reduced by the amount or value of such payment to the Seller in respect of the Unit Generator under the Ancillary Services Agreement or any such other agreement or arrangement. 4.2.2 The parties respective obligations for imbalance charges are as follows: 4.2.2.1 the Buyer is responsible for and shall pay any charges levied by the SO

relating to an imbalance associated with or caused by a load forecast error other than load forecast errors relating to Station Service Load; and 4.2.2.2 the Seller is responsible for and shall pay any charges levied by the SO

relating to an imbalance associated with or caused by the Unit Generator or a

- 53 Standby Diesel Generator being off schedule or associated with or caused by an error relating to Station Service Load. 4.2.3 For greater certainty, the Seller is entitled to retain any out-of-order dispatch

payments from the SO. 4.3 4.3.1 Additional Operating Reserves Subject to sections 2.13.2 and 4.3.2, the Buyer is responsible for providing, at its

sole cost and expense, the additional operating reserves the Seller is required by the SO to provide as a result of the DNC exceeding the maximum nominal contingency size specified in the Market Rules. The parties anticipate that this maximum nominal

contingency size will be established in the Market Rules at 500 MW, but it may be revised from time to time. 4.3.2 Notwithstanding section 4.3.1, the Buyer shall not be responsible for providing

that percentage of such additional operating reserves described in section 4.3.1 equal to the MECL Entitlement upon the earlier to occur of the following: 4.3.2.1 the date the Seller amends, restates or replaces the Maritime Electric

Agreement with the result that it is the responsibility of MECL to provide, or pay the costs of, the proportion of such additional operating reserves equal to the MECL Entitlement; or 4.3.2.2 March 31, 2010.

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ARTICLE 5 COVENANTS 5.1 Operation, Repair and Maintenance The Seller shall operate, repair, maintain and rehabilitate (or cause to be operated, repaired, maintained and rehabilitated) (i) the Unit Generator, (ii) the Facilities, and (iii) the Other Facilities, in accordance with Good Utility Practices and all Applicable Laws and in a manner that (a) permits the Seller to satisfy and perform its obligations under this Agreement, and (b) allows the Seller to achieve an annual Capacity Factor consistent with the North American nuclear industry average. In doing so, the Seller shall ensure that it carries out (or causes another Person to carry out) such operation, repair, maintenance and rehabilitation in a manner and to the extent necessary to comply with the requirements specified in any insurance policy relating to Point Lepreau and/or the Facilities and/or the Other Facilities required to be held by the Seller under this Agreement. To the extent possible, the Seller shall notify the Buyer of the date the Seller expects the Unit Generator will stop generating Electricity on a permanent basis and be permanently shut down with the intention that it will be eventually Decommissioned and not restarted, such notification to be made at least five years prior to that date. 5.2 Information The Seller shall: 5.2.1 within a reasonable period after a written request by the Buyer, provide to the

Buyer information on the state of repair, condition and operation of any part of the Facilities or the Other Facilities, which request shall not, unless the circumstances require, be made more frequently than annually; 5.2.2 promptly provide to either the Buyer or the SO, upon request, incremental cost

and production efficiency data necessary to economically dispatch the Unit Generator; and 5.2.3 promptly notify the Buyer of any material loss or any material damage to the

Facilities or the Other Facilities or any portion thereof, including those situations in which

- 55 the Seller is obliged to give notice to a Governmental Authority or to an insurer under a policy of insurance required to be maintained under this Agreement, provided that the Operating Committee may specify which such notices to a Governmental Authority are to be provided to the Buyer. 5.3 Inspection Upon the Buyer giving the Seller reasonable prior notice, the Seller will permit the Buyer and its authorized representatives and advisors, at all reasonable times, to inspect at its own expense the Facilities and the Other Facilities for the purposes of determining whether the Seller is complying with its obligations under this Agreement. In conducting such inspections, the Buyer and its authorized representatives and advisors shall not unduly interfere with the operations of the Seller and will be subject to the same limitations and conditions of access as are applied to the Seller and its employees. 5.4 5.4.1 Insurance The Seller shall, until the Termination Date or such earlier date on which this

Agreement may be terminated and at its sole expense, take out and maintain in full force and effect in the name of the Seller such insurance (including re-insurance, where appropriate) from reputable insurance companies against such risks and up to such limits as a prudent owner or tenant of premises such as the Facilities and the Other Facilities would procure (including, for greater certainty, full site property damage insurance, including nuclear decontamination, with coverage equal to and not less than the replacement cost, from time to time, of the Facilities and the Other Facilities), but in no event shall such insurance coverage be less than that required by Applicable Law. 5.4.2 Any commercial general liability insurance policy required by section 5.4.1 shall

also be in the name of the Buyer and shall (i) contain a waiver of subrogation in favour of the Seller and the Buyer, (ii) be for the mutual benefit of the Seller and the Buyer, and (iii) contain a provision for cross-liability and severability of interests. 5.4.3 The policies shall be primary and without rights of contribution to any other

insurance carried by or for the Seller relating to the Facilities and/or the Other Facilities or

- 56 by or for the Buyer in respect of any such policy required by section 5.4.1, and the amount of any deductible shall not exceed an amount that would be arranged by a prudent owner or tenant of premises such as the Facilities and the Other Facilities. The policies shall also provide that the insurer cannot cancel or materially alter any policy or permit its lapse so as to adversely affect the protection of the Seller or the Buyer, as the case may be, except after 60 days (or such lesser period if the insurers are unwilling after the Seller has used Commercially Reasonable Efforts to obtain a notice period of 60 days) prior written notice to the Buyer. 5.4.4 The Seller shall duly and punctually pay, or cause to be paid, all premiums and

other sums of money payable for maintaining any insurance required to be obtained and maintained pursuant to this section 5.4. The Seller will produce to the Buyer upon request evidence of payment of any premiums required for maintaining such insurance and shall, upon request of the Buyer and upon the Buyer providing reasonable notice to the Seller, provide access to certified copies of the insurance policies at the offices of the Seller and/or provide certificates of insurance in a form satisfactory to the Buyer. 5.5 Damage, Destruction and Repair In the event of any damage to or destruction of all or part of the Facilities or the Other Facilities, the Seller shall, at its sole cost and expense, repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Facilities or the Other Facilities which has been damaged or destroyed. The Seller shall use all insurance proceeds received as a result of such damage or destruction to repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Facilities or the Other Facilities which has been damaged or destroyed. Notwithstanding the foregoing, if, having complied with section 5.4, the Seller does not have the right to receive insurance proceeds, less the amount of any deductible, sufficient to cover such costs and expenses to repair, reconstruct or replace the damaged or destroyed part of the Facilities or the Other Facilities, the Seller shall be relieved of its obligations under this section 5.5, but only to the extent such costs and expenses are not so covered.

- 57 5.6 Derations The Seller shall use Commercially Reasonable Efforts to remedy or repair any abnormal operating condition giving rise to a deration as soon as reasonably possible and without a Maintenance Outage or Planned Outage of the Unit Generator if possible. The Seller shall give the Buyer prompt notice of the commencement and the termination of the abnormal operating condition and the corresponding deration. In addition, the Seller shall, as soon as reasonably practicable following the occurrence of the abnormal operating condition and from time to time thereafter, provide the Buyer with (i) access to all information, data, books and records about the abnormal operating condition, the effects thereof and the plans or proposals to remedy or repair the abnormal operating condition, and (ii) access to the Facilities and the Other Facilities to conduct inspections with respect to the abnormal operating condition. 5.7 Regulatory Compliance Each party shall be responsible for obtaining and maintaining all approvals, permits, certificates, consents, registrations, authorizations and licences of or from, and shall make or file all declarations, filings and registrations with, or notices to, Governmental Authorities required for or in respect of the performance of its respective obligations under this Agreement. Subject to sections 2.10 and 2.11, each party will be responsible for its own costs and fees in connection with its compliance with this section 5.7 and in connection with its compliance with any changes in Applicable Laws. In exercising its respective rights and

remedies under this Agreement, each party agrees that it shall do so only in compliance with Applicable Law. 5.8 Notification of Actions Each party (for the purposes of this section 5.8, the disclosing party) shall notify the other party as soon as reasonably practicable of any action, suit, proceeding or investigation by or before a Governmental Authority that would, in the opinion of the disclosing party, acting reasonably and taking into account the disclosing partys reasonable assessment of the likelihood of success of any such action, suit, proceeding or investigation, have a material adverse effect on the disclosing partys ability to perform its obligations under this Agreement if such action, suit, proceeding or investigation were determined adversely to the disclosing party.

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ARTICLE 6 BILLING, PAYMENT, AUDIT AND CREDIT 6.1 6.1.1 Billing The Seller shall render and deliver to the Buyer, in accordance with section 10.3,

a monthly billing statement (a Bill) promptly following each calendar month (a Billing Month) setting out: 6.1.1.1 the quantity of Delivered Electricity that was Scheduled by the Buyer

with the SO to be delivered and sold by the Seller to the Buyer during the Billing Month and the amount payable by the Buyer to the Seller for such Scheduled Delivered Electricity; 6.1.1.2 the amount of liquidated damages, if any, payable by the Buyer to the

Seller pursuant to section 2.6 in respect of the Billing Month; 6.1.1.3 the amount or value of any payments the Seller has received for

Ancillary Services provided by the Seller during the Billing Month; 6.1.1.4 the quantity of SG Electricity that was Scheduled by the Buyer with the

SO to be delivered and sold by the Seller to the Buyer during the Billing Month and the amount payable by the Buyer to the Seller for such Scheduled SG Electricity; 6.1.1.5 the quantity of Electricity to supply Station Service Load requirements

that was Scheduled by the Seller with the SO to be delivered and sold by the Buyer to the Seller during the Billing Month and the amount payable by the Seller to the Buyer for such Station Service Load; and 6.1.1.6 all other costs, expenses or amounts owed by the Buyer to the Seller or

the Seller to the Buyer pursuant to the Agreement in respect of the Billing Month. Together with each Bill, the Seller shall also provide the Buyer with the metering information and all other relevant data upon which the Bill is based.

- 59 6.1.2 In determining the Contract Price payable for Scheduled Delivered Electricity or

Scheduled Electricity to supply Station Service Load requirements during any Billing Month, the Seller shall assume a Capacity Factor equal to that included in its budget for the Fiscal Year in which the Billing Month falls. The Seller shall provide the Buyer with access to data, information, books and records necessary to verify such assumed Capacity Factor. Notwithstanding the foregoing, if, at any time during a Fiscal Year, it becomes apparent that such assumed Capacity Factor will not be achieved for that Fiscal Year, the Seller may amend its assumed Capacity Factor to be used for preparing Bills with the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed. The Seller shall include an adjustment in the Bill for March of each year (or the Bill for the last month of the relevant period) to reflect the actual Capacity Factor for the preceding Fiscal Year (or the preceding relevant period). Based on the actual Capacity Factor, the Seller shall recalculate the amounts that should have been paid for Delivered Electricity Scheduled by the Buyer with the SO to be delivered and sold by the Seller to the Buyer, and for Electricity to supply Station Service Load requirements Scheduled by the Seller with the SO to be delivered and sold by the Buyer to the Seller, during the preceding Fiscal Year (or the preceding relevant period) as compared to the amounts actually paid by the Buyer or the Seller, respectively, during such period in accordance with the assumed Capacity Factor(s). Any overpayment or underpayment shall be paid in accordance with the Bill for such Billing Month and shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or payment thereof. 6.1.3 In each Bill, the Seller shall net the amounts payable by the Seller to the Buyer

against the amounts payable by the Buyer to the Seller to determine the aggregate amount payable by either the Buyer or the Seller pursuant to the Bill. 6.1.4 Amounts payable by a party (the Payor) pursuant to a Bill shall, subject to

sections 6.3 and 6.4, be paid by the Payor to the other party (the Payee). Notwithstanding section 6.2, if a Bill is a negative amount, the Seller shall pay the absolute value of such amount to the Buyer at the time the Bill is delivered.

- 60 6.2 Payments and Interest Subject to section 6.4, the Payor shall remit to the Payee full payment in respect of a Bill by the later of (i) 10 days after receipt of the Bill by the Buyer, or (ii) the 20th day of the calendar month immediately following the Billing Month in respect of which the Bill was issued (such later date being the Payment Date). All payments hereunder shall be made by wire transfer to an account designated by the Payee or in such other manner as is agreed by the Payor and the Payee. Interest on unpaid amounts shall be paid by the Payor and shall accrue daily at the Interest Rate from and including the date such payment is due until the date it is paid. 6.3 Adjustments If the Seller renders a Bill on an estimated basis, the Seller shall concurrently provide the Buyer with the basis of such estimate. Any adjustment for estimated amounts shall be made in the Bill delivered by the Seller following the date the actual information becomes available. Each Bill shall also be subject to adjustment for errors in arithmetic, computation, meter readings, or other errors until 24 months after the date the Bill has been rendered, after which time the Bill shall be final and conclusive for all purposes of this Agreement unless the Bill has been disputed in accordance with section 6.4. If it is determined that a Bill should be adjusted for any such errors, the Seller will include such adjustment in the next Bill delivered to the Buyer. Any overpayment or underpayment relating to an adjustment in a Bill shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or payment thereof. 6.4 Disputed Bills If the Buyer disputes a Bill or any portion thereof, the Payor shall pay both the disputed and undisputed portions of the Bill payable by it. The Buyer shall provide written notice to the Seller setting out the portions of the Bill that are in dispute, an explanation of the dispute and the amount that the Buyer believes is the correct amount. If it is subsequently determined through arbitration or agreed that an adjustment to the disputed Bill is appropriate or that the disputed portion of the Bill should not have been paid, the Seller shall include such adjustment in the next Bill delivered to the Buyer. Following a determination or agreement as set out above, any overpayment or underpayment in connection with the disputed Bill and the

- 61 adjustment in respect thereof shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment in respect of the disputed Bill to the date of the refund or payment thereof. If a Bill dispute has not been resolved between the parties within 30 days after receipt of written notice of the dispute by the Seller, the dispute may be submitted to the Disputes Committee by either party in accordance with section 12.1. 6.5 6.5.1 Audit The Seller shall provide the Buyer and its internal auditors and professional

advisors with access to the Facilities, including the Point of Delivery, the Other Facilities, and to any books, records and information, including the station log and Metering Installation readings, as may be reasonably required by the Buyer or such auditors or advisors to (i) confirm and verify Net Electricity, Delivered Electricity, SG Electricity and/or Station Service Load; (ii) audit the accuracy of any Bill or any charge or computation or calculation made hereunder or thereunder; (iii) audit the basis for any claim by the Seller for liquidated damages hereunder; (iv) audit the basis for any claim by the Seller of Force Majeure; (v) audit the DNC or the maximum bona fide availability declared by the Seller for the Unit Generator or the Standby Diesel Generators from time to time; (vi) audit the actual Capacity Factor determined by the Seller for the Unit Generator from time to time; (vii) audit the accuracy of or basis for Environmental and Regulatory Costs; or (viii) otherwise confirm and verify compliance by the Seller with the terms of this Agreement, and shall provide the Buyer and such auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications. 6.5.2 The Buyer shall provide the Seller and its internal auditors and professional

advisors with access to any books, records and information as may be reasonably required by the Seller or such auditors or advisors to (i) audit the calculation of the Vesting Energy Price; (ii) audit the basis for any claim by the Buyer of Force Majeure; or (iii) otherwise confirm and verify compliance by the Buyer with the terms of this Agreement, and shall provide the Seller and such auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications.

- 62 6.5.3 Any audit, confirmation or verification (which shall collectively be referred to as

audits for the purposes of this section 6.5.3) shall be conducted in accordance with the following: 6.5.3.1 audits shall be made at reasonable times and on at least five Business

Days prior notice; 6.5.3.2 the Buyer shall not commence an audit of a Bill later than 24 months

after the receipt of the Bill; 6.5.3.3 audits shall be made without unreasonably interfering with the

operations of either party; 6.5.3.4 each party shall provide copies of and review and discuss with the other

party the results and findings of any audit conducted pursuant to this section 6.5 prior to the finalization thereof, and the other party may prepare and submit a response to such results and findings within 15 days of receipt thereof from the auditing party; and 6.5.3.5 any fees, costs and expenses incurred by a party in connection with an

audit shall be solely for its account. 6.5.4 For greater certainty and without limiting section 6.5.1, the Seller shall provide

the Buyer with access to the Facilities so that the Buyer can read meter data from the Metering Installations at Point Lepreau in order to permit the Buyer to conduct the audits, confirmations or verifications described in section 6.5.1. In addition, and for the purposes of this section 6.5.4, the Seller shall, when requested by the Buyer, arrange, in conjunction with the SO, to test the accuracy of such Metering Installations, at the Sellers sole cost and expense, and to provide the Buyer with access to the results of any tests of the accuracy of such Metering Installations performed by the Seller or any other Person if the Seller has access to the results of such tests.

- 63 6.6 6.6.1 Credit and Collateral Requirements The Buyer shall provide to the Seller one of the following forms of security for so

long as it does not have a Minimum Credit Rating: 6.6.1.1 a Guarantee from the Person or Persons that ultimately Controls or

Control the Buyer, provided that such Person or Persons has or have a Minimum Credit Rating (the Guarantor); 6.6.1.2 6.6.1.3 a Letter of Credit; or an equivalent form of security satisfactory to the Seller, acting

reasonably; each in an amount equal to the Estimated Collection Value from time to time. Except as otherwise provided for in this section 6.6, the Buyer shall have the sole discretion to select which of the above forms of security it will provide to the Seller. 6.6.2 The Buyer shall provide security pursuant to section 6.6.1 within five Business

Days of it failing to have a Minimum Credit Rating. 6.6.3 The Buyer will be considered to have a Minimum Credit Rating if its credit

rating is rated (i) by Standard & Poors (S&P) as BBB or above, (ii) by Dominion Bond Rating Service as BBB or above, or (iii) by Moodys Investors Service as Baa2 or above. 6.6.4 If the Buyer has delivered a Guarantee to the Seller, the Seller agrees that the

Guarantor may assign its obligations under the Guarantee to an Affiliate of the Guarantor or to any other Person that has (i) a credit rating equal to or better than the Minimum Credit Rating, and (ii) substantial assets in Canada. Such assignment shall be effective only when the assignee has delivered to the Seller a replacement guarantee in a form satisfactory to the Seller, acting reasonably. Upon delivery of the replacement guarantee, such guarantee shall be deemed to be the Guarantee and such assignee shall be deemed to be the Guarantor for all purposes of this Agreement.

- 64 6.6.5 If the Buyer delivers one form of security pursuant to this section 6.6 or if the

Buyer obtains or restores a Minimum Credit Rating, the Seller shall concurrently release any form of security, if any, previously delivered by the Buyer. 6.6.6 Subject to section 6.6.4, if the Buyer has delivered a Guarantee to the Seller and

the Guarantor, at any time, fails to have a Minimum Credit Rating, the Buyer shall provide to the Seller within five Business Days of such failure a Letter of Credit in an amount equal to the Estimated Collection Value from time to time. 6.6.7 The cost of any Letter of Credit or equivalent form of security shall be borne by

the Buyer.

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ARTICLE 7 REPRESENTATIONS AND WARRANTIES 7.1 Representations and Warranties of the Seller The Seller represents and warrants to the Buyer as follows and acknowledges that the Buyer is relying on such representations and warranties in entering into this Agreement: 7.1.1 The Seller is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 7.1.2 This Agreement has been duly authorized, executed and delivered by the Seller

and is a valid and binding obligation of the Seller enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 7.1.3 The execution and delivery of this Agreement by the Seller and the performance

by the Seller of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of the Seller under: 7.1.3.1 any contract or obligation to which the Seller is a party or by which it

or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on the Sellers ability to fulfil or perform its obligations and covenants under this Agreement; 7.1.3.2 the articles, by-laws or other organizational or constating documents of

the Seller; or 7.1.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit,

certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to the Seller.

- 66 7.1.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation or other similar proceedings pending against the Seller or being contemplated by the Seller or, to the Knowledge of the Seller, threatened against the Seller. 7.1.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which this Agreement may be terminated. 7.2 Representations and Warranties of the Buyer The Buyer represents and warrants to the Seller as follows and acknowledges that the Seller is relying on such representations and warranties in entering into this Agreement: 7.2.1 The Buyer is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 7.2.2 This Agreement has been duly authorized, executed and delivered by the Buyer

and is a valid and binding obligation of the Buyer enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 7.2.3 The execution and delivery of this Agreement by the Buyer and the performance

by the Buyer of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of the Buyer under: 7.2.3.1 any contract or obligation to which the Buyer is a party or by which it

or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on the Buyers ability to fulfil or perform its obligations and covenants under this Agreement; 7.2.3.2 the articles, by-laws or other organizational or constating documents of

the Buyer; or

- 67 7.2.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit,

certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to the Buyer. 7.2.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation, or other similar proceedings pending against the Buyer or being contemplated by the Buyer or, to the Knowledge of the Buyer, threatened against the Buyer. 7.2.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which this Agreement may be terminated.

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ARTICLE 8 TERM, DEFAULT AND TERMINATION 8.1 Term The term of this Agreement (the Term) shall commence upon the date hereof and, subject to sections 8.3, 8.5, 8.6 and 11.3, shall include all days up to and including the earliest of the following to occur (the Termination Date): 8.1.1 March 31, 2010, provided that, and only if, the Province and the Seller have

decided on or prior to that date not to complete the Refurbishment; 8.1.2 the date upon which the Unit Generator stops generating Electricity on a

permanent basis and is permanently shut down with the intention that it will eventually be Decommissioned and not restarted; or 8.1.3 the date that is 25 years following the In-Service Date (such period to be referred

to as the Initial Term); provided that: 8.1.4 if the Agreement has not terminated pursuant to section 8.1.1 or 8.1.2, the Buyer

may renew the Term for successive one year periods following expiration of the Initial Term by providing written notice of its renewal no later than five years prior to the expiration of the Initial Term or the applicable successive one-year period, as the case may be. Subject to sections 8.3, 8.5, 8.6 and 11.3, this Agreement and the parties respective obligations hereunder shall terminate on the Termination Date and be of no further force and effect.

- 69 8.2 Events of Default by Buyer Subject to section 2.6.3, each of the following will constitute an event of default by the Buyer (each, a Buyer Event of Default): 8.2.1 The Buyer fails to make any payment required to be made by the Buyer under this

Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by the Buyer of written notice of the failure from the Seller. 8.2.2 Other than a failure referred to in section 8.2.1, the Buyer fails to perform in all

material respects or is otherwise in material breach of its obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by the Seller to perform, or a breach by the Seller of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) the Buyer fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by the Buyer of written notice of the failure or breach from the Seller, or (b) the Buyer, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach within 90 days after receipt of such written notice. 8.2.3 Any representation or warranty made by the Buyer contained in this Agreement is

or becomes untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be terminated and, if the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by the Buyer within 30 days after receipt by the Buyer of written notice from the Seller that the representation and warranty is untrue or incorrect. 8.2.4 An effective resolution is passed for, or documents are filed in good faith with an

office of public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of the Buyer, unless there has been a valid assignment of this Agreement by the Buyer under section 12.4 to a Person that is not dissolving, terminating its existence, liquidating or winding up and the Buyer has been relieved from all of its liabilities and obligations hereunder.

- 70 8.2.5 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of the Buyer or of any of its assets, undertaking or property is appointed by a Canadian Governmental Authority (whether federal, provincial, municipal or local) or pursuant to the terms of a debenture or a similar instrument. 8.2.6 By judgment, order or decree of a Canadian Governmental Authority (whether

federal, provincial, municipal or local), the Buyer is adjudicated bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing is made or filed against the Buyer in good faith pursuant to any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 8.2.7 The Buyer makes an assignment for the benefit of its creditors generally under the

provisions of any Canadian Insolvency Legislation (whether federal or provincial), consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal, application or filing pursuant to any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized or shall have taken advantage of any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) in respect of its own debts. 8.3 8.3.1 Termination by Seller If a Buyer Event of Default occurs, then, without prejudice to any other rights that

the Seller has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, the Seller may at its option and in its sole discretion: 8.3.1.1 subject to section 8.3.2, upon written notice to the Buyer immediately

terminate this Agreement and, subject to section 8.6, the parties respective obligations hereunder; and/or

- 71 8.3.1.2 submit a claim to be resolved in accordance with section 12.2 (without

first having to comply with section 12.1) against the Buyer for Indemnifiable Losses asserted against or suffered by the Seller where the Event of Default has arisen as a result of a breach by the Buyer of a covenant or agreement or a representation and warranty of the Buyer contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 8.3.2 Notwithstanding section 8.3.1.1, if the Buyer disputes whether the Buyer Event of

Default has occurred, the Seller shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 12.2 (without first having to comply with section 12.1) and it has been determined or agreed that the Buyer Event of Default occurred, provided that if the dispute is resolved in favour of the Seller such that it is determined or agreed that the Buyer Event of Default had occurred and the Seller should have been able to terminate this Agreement immediately, the Buyer shall be liable to the Seller for all additional Indemnifiable Losses incurred or suffered by the Seller as a result of the delayed termination of this Agreement, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement. 8.4 Events of Default by Seller Each of the following will constitute an event of default by the Seller (each, a Seller Event of Default): 8.4.1 The Seller fails to make any payment required to be made by the Seller under this

Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by the Seller of written notice of the failure from the Buyer. 8.4.2 The Seller fails to make the Committed Capacity exclusively available to the

Buyer in accordance with section 2.3 or, with the exception of Net Electricity sold and delivered pursuant to the Maritime Electric Agreement or pursuant to section 2.6.1 or section 2.13.2, the Seller sells, delivers or Schedules Net Electricity to any Person other than to the Buyer, unless the Seller has been instructed to do so by the SO.

- 72 8.4.3 The Seller fails or ceases to hold any material licence, permit, approval,

permission, certification, consent, registration or authority required under Applicable Law to permit the Seller to perform its obligations under this Agreement and the failure or cessation was not excused by Force Majeure and, if the failure or cessation is capable of being corrected, and provided that the Seller uses Commercially Reasonable Efforts to correct the failure or cessation, the failure or cessation is not corrected within three years after the failure or cessation. 8.4.4 Other than a failure referred to in section 8.4.1, 8.4.2 or 8.4.3, the Seller fails to

perform in all material respects or is otherwise in material breach of its other obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by the Buyer to perform, or a breach by the Buyer of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) the Seller fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by the Seller of written notice of the failure or breach from the Buyer, or (b) the Seller, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach by the Seller within 90 days after receipt of such written notice. For the purposes of this section 8.4.4, the failure of the Seller to achieve a Capacity Factor consistent with the North American nuclear industry average as specified in section 5.1 shall not be considered a material breach of the Sellers obligations unless the Capacity Factor achieved by the Unit Generator is less than 60% in each year of any five consecutive year period. 8.4.5 Any representation or warranty made by the Seller in this Agreement is or

becomes untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be terminated and, if the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by the Seller within 30 days after receipt by the Seller of written notice from the Buyer that the representation and warranty is untrue or incorrect.

- 73 8.4.6 An effective resolution is passed for, or documents are filed in good faith with an

office of public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of the Seller, unless there has been a valid assignment of this Agreement by the Seller under section 12.4 to a Person that is not dissolving, terminating its existence, liquidating or winding up and the Seller has been relieved from all of its liabilities and obligations hereunder. 8.4.7 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of the Seller or of any of its assets, undertaking or property is appointed by a Canadian Governmental Authority (whether federal, provincial, municipal or local) or pursuant to the terms of a debenture or a similar instrument. 8.4.8 By judgment, order or decree of a Canadian Governmental Authority (whether

federal, provincial, municipal or local), the Seller is adjudicated bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing is made or filed against the Seller in good faith pursuant to any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) seeking to have it declared bankrupt or insolvent or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 8.4.9 The Seller makes an assignment for the benefit of any of its creditors generally

under the provisions of any Canadian Insolvency Legislation (whether federal or provincial), consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal application or filing pursuant to any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized, or shall have taken advantage of any of the provisions of any Canadian Insolvency Legislation (whether federal or provincial) in respect of its own debts.

- 74 8.4.10 If any material execution, attachment or similar process shall be issued against the

Seller, or any encumbrancer shall take any action or proceeding which is not being diligently defended by appropriate proceedings by the Seller, whereby Point Lepreau or the Facilities or the Other Facilities, or any portion thereof, shall be taken or attempted to be taken by someone (other than the Seller), unless such execution, attachment or similar process, action or proceeding is set aside, vacated, discharged or abandoned within 30 days after its commencement. 8.4.11 The Seller makes a sale in bulk of all or a substantial portion of its assets other

than in conjunction with an assignment, transfer, pledge or other disposition permitted by section 12.4 or consented to by the Buyer. 8.5 8.5.1 Termination by the Buyer If a Seller Event of Default occurs, then without prejudice to any other rights that

the Buyer has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, the Buyer may at its option and in its sole discretion: 8.5.1.1 subject to section 8.5.2, upon written notice to the Seller immediately

terminate this Agreement and, subject to section 8.6, the parties respective obligations hereunder; and/or 8.5.1.2 promptly submit a claim to be resolved in accordance with section 12.2

(without first having to comply with section 12.1) against the Seller for Indemnifiable Losses asserted against or suffered by the Buyer where the Event of Default has arisen as a result of a breach by the Seller of a covenant or agreement or a representation and warranty of the Seller contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 8.5.2 Notwithstanding section 8.5.1.1, if the Seller disputes whether the Seller Event of

Default has occurred, the Buyer shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 12.2 (without first having to comply with section 12.1) and it has been determined or agreed that the Seller Event of

- 75 Default occurred, provided that if the dispute is resolved in favour of the Buyer such that it is determined or agreed that the Seller Event of Default had occurred and the Buyer should have been able to terminate this Agreement immediately, the Seller shall be liable to the Buyer for all additional Indemnifiable Losses incurred or suffered by the Buyer as a result of the delayed termination of this Agreement, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement, including, for greater certainty, any payments made by the Buyer to the Seller pursuant to section 2.11 during the period between the date of the Seller Event of Default and the date of such determination or agreement that the Seller Event of Default had occurred. 8.6 Termination and Survival Neither the expiration of the Term nor the termination of this Agreement shall affect, prejudice or excuse any rights, obligations or liabilities that exist or have accrued or arisen under this Agreement prior to or upon such expiration or termination, and such rights, obligations and liabilities shall survive such expiration or termination of this Agreement. Without limiting the generality of the forgoing, the provisions of sections 1.12, 2.16, 8.3, 8.5, 8.6, 10.2, 12.1, 12.2, 12.4, 12.5, 12.6 and 12.7 and Article 9 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect indefinitely and each party shall be entitled to the full performance thereof by the other party without limitation as to time or amount (except as specifically set forth in this Agreement). The

provisions of sections 6.1, 6.2, 6.3, 6.4 and 6.5 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect for a period of two years, or such later period as is required in order that all Bills have been deemed to be final hereunder and all disputed Bills have been resolved, and shall thereafter terminate and be of no further force and effect, provided that the Seller shall not be required to render and deliver a Bill to the Buyer in respect of any Billing Month for which no amounts are payable.

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ARTICLE 9 LIABILITY AND INDEMNIFICATION 9.1 Limitation of Liability Notwithstanding any other provision in this Agreement, but except (i) for the payment of liquidated damages by the Buyer pursuant to section 2.6, (ii) in respect of a breach by a party of the obligations contained in section 12.7 or (iii) for the Sellers indemnity obligations in section 9.5 (none of which shall be limited by this section 9.1), in no event shall a party (including any Indemnitee) be entitled to recover from another party (including an Indemnifying Party), for any liabilities, damages, obligations, payments, losses, costs, expenses or Indemnifiable Losses under this Agreement, any amount in excess of the actual compensatory direct damages, court costs and reasonable lawyers and other advisor fees suffered or incurred by such party, and each party waives any right to recover: 9.1.1 9.1.2 punitive, indirect, incidental, exemplary or consequential damages; economic loss or damages in respect of loss of opportunity or loss of profit or loss

of use of any property; or 9.1.3 Indemnifiable Losses in respect of replacement Electricity or the costs thereof

unless the other party is specifically required under the terms of this Agreement to deliver replacement Electricity or pay the costs thereof, provided that the Seller shall be liable for any such Indemnifiable Losses if the Seller has failed at any time to declare in good faith the maximum bona fide availability from the Unit Generator or the Standby Diesel Generators; arising in connection with or with respect to this Agreement (or any performance or non-performance hereunder) under a statute, in tort or contract, under any indemnity provision or otherwise. 9.2 Liquidated Damages Nothing in this Article 9 shall reduce any claim by the Seller for liquidated damages pursuant to section 2.6. The parties agree that the liquidated damages payable pursuant

- 77 to section 2.6 are not penalties and are a reasonable and genuine pre-estimate and calculation of actual damages and the Buyer hereby irrevocably waives any right it may have to raise a defence that such damages are unreasonable, excessive or punitive. 9.3 9.3.1 Indemnification by Seller Subject to section 9.1, the Seller shall indemnify, defend and hold harmless the

Buyer, its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, a Buyer Indemnitee) from and against any and all claims, demands, losses, damages, liabilities, including liabilities for bodily injury to, or death of, persons, obligations, payments, costs and expenses and accrued interest thereon (including the costs and expenses of, and accrued interest in respect of, any and all actions, suits, and proceedings and assessments, judgments, settlements and compromises relating thereto and reasonable lawyers fees and reasonable disbursements in connection therewith) (each, an Indemnifiable Loss) asserted against or suffered by a Buyer Indemnitee relating to, in connection with, resulting from, or arising out of: 9.3.1.1 any negligence or wilful misconduct of the Seller, its employees or any

authorized representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, in performing the Sellers obligations under this Agreement; 9.3.1.2 any breach by the Seller of any representations and warranties or

covenants or agreements contained in this Agreement; or 9.3.1.3 the Sellers ownership, occupation or operation of the Facilities and the

Other Facilities, including in connection with the Refurbishment; except to the extent that the Indemnifiable Loss is caused by (i) the negligence or wilful misconduct of a Buyer Indemnitee or any authorized representative of the Buyer, including any of its third party contractors, subcontractors, consultants, agents or advisors, performing the Buyers obligations under this Agreement, or (ii) a breach by the Buyer of any representations and warranties or covenants or agreements contained in this Agreement.

- 78 9.3.2 It is the intention of the Seller to constitute the Buyer as trustee for the Buyer

Indemnitees that are not party to this Agreement of the covenants of the Seller in section 9.3.1 and the Buyer agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. 9.4 9.4.1 Indemnification by the Buyer Subject to sections 2.6 and 9.1 and to the extent permitted by and subject to the

restrictions on indemnification in the Nuclear Liability Act (Canada), the Buyer shall indemnify, defend and hold harmless the Seller, its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, a Seller Indemnitee) from and against any and all Indemnifiable Losses asserted against or suffered by a Seller Indemnitee relating to, in connection with, resulting from, or arising out of: 9.4.1.1 any negligence or wilful misconduct of the Buyer, its employees or any

authorized representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, in performing the Buyers obligations under this Agreement; or 9.4.1.2 any breach by the Buyer of any representations and warranties or

covenants or agreements contained in this Agreement; except to the extent that the Indemnifiable Loss is caused by (i) the negligence or wilful misconduct of a Seller Indemnitee or any authorized representative of the Seller, including any of its third party contractors, subcontractors, consultants, agents or advisors, performing the Sellers obligations under this Agreement, or (ii) a breach by the Seller of any representations and warranties or covenants or agreements contained in this Agreement. 9.4.2 It is the intention of the Buyer to constitute the Seller as trustee for the Seller

Indemnitees that are not party to this Agreement of the covenants of the Buyer in section 9.4.1 and section 9.5 and the Seller agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons.

- 79 9.5 9.5.1 Indemnification for a Nuclear Incident by the Seller Notwithstanding any other provision in this Agreement, including section 9.1, the

Seller shall indemnify, defend and hold harmless each Buyer Indemnitee from and against any and all injury to any Buyer Indemnitee or Seller Indemnitee, or damage to the property of a Buyer Indemnitee or Seller Indemnitee, resulting from a nuclear incident with respect to the Facilities and/or the Other Facilities in connection with or related to the performance by the Buyer of its obligations hereunder, provided that such injury or damages are not the result of unlawful acts or omissions of the Buyer or any of its representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, with the intention of causing injury or damage. 9.5.2 The Buyer shall not and shall require its representatives, including its third party

contractors, subcontractors, consultants, agents or advisors, not to hold any Supplier of the Seller liable for injury to the Buyer or such Persons, or damage to the property of the Buyer or such Persons, resulting from a nuclear incident. 9.5.3 For the purposes of this section 9.5, the terms damage, injury, nuclear

incident and property shall have the meanings ascribed thereto in the Nuclear Liability Act (Canada) and the term Supplier means any Person (regardless of tier in the case of contractors or subcontractors) that has furnished or is furnishing directly or indirectly, equipment, articles, information, materials or services for use at the Facilities and/or the Other Facilities. 9.6 9.6.1 Sole Remedies and Injunctive Relief Except to the extent otherwise provided in section 2.6, the parties agree that

sections 9.3, 9.4 and 9.5 set out the sole and exclusive manner by which a party may seek compensation or other monetary relief from the other party (other than the right of set-off contained in section 12.5), and is in lieu of any and all other rights and remedies which a party may have, for any matter in respect of which the party may make a claim for indemnification.

- 80 9.6.2 Each of the Seller and the Buyer acknowledges that a breach or threatened breach

by either party of any provisions of this Agreement, including, for greater certainty, the Sellers obligations hereunder to Schedule and deliver Delivered Electricity (unless the Seller is instructed to do otherwise by the SO) and make the Committed Capacity exclusively available to the Buyer, will result in the other party suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, each of the Seller and the Buyer is entitled to equitable relief,

including interim, interlocutory and permanent injunctive relief, specific performance, and other equitable remedies, in the event of any breach of the provisions of this Agreement, in addition to any other remedies available to the parties. 9.7 9.7.1 Defence of Claims If any Indemnitee receives notice of the assertion of any claim or of the

commencement of any claim, action or proceeding made or brought by any Person who is not an Indemnitee (a Third Party Claim) with respect to which indemnification is to be sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying Party reasonably prompt written notice thereof, but in any event such notice shall not be given later than 20 calendar days after the Indemnitees receipt of notice of such Third Party Claim. Such notice shall describe the nature of the Third Party Claim in reasonable detail and shall indicate the amount or, if the amount is not then determinable, an appropriate and reasonable estimate of the potential amount of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party will have the right to participate in or, by giving written notice to the Indemnitee, to elect to assume the defence of any Third Party Claim at such Indemnifying Partys expense and by such Indemnifying Partys own counsel; provided, however, that (i) counsel for the Indemnifying Party shall conduct the defence of such Third Party Claim in a manner reasonably satisfactory to the Indemnitee, and (ii) if the defendants to the Third Party Claim include both the Indemnifying Party and the Indemnitee, and the Indemnitee has reasonably concluded that there may be legal defences available to it which are different from, additional to or inconsistent with those available to the Indemnifying Party, the Indemnitee shall have the right to select separate counsel to participate in the defence of the Third Party Claim on

- 81 behalf of the Indemnitee and the reasonable fees and disbursements of such separate counsel shall be considered Indemnifiable Losses for the purposes of this Agreement. The Indemnitee shall co-operate in good faith with the Indemnifying Party in defence of the Third Party Claim at the Indemnitees own expense. If an Indemnifying Party elects not to assume control of the defence of any Third Party Claim, the Indemnitee shall be entitled to assume such control and may compromise or settle such Third Party Claim over the objection of the Indemnifying Party, which settlement or compromise shall conclusively establish the Indemnifying Partys liability pursuant to this Agreement and the Indemnifying Party shall be bound by the results obtained by the Indemnitee with respect to such Third Party Claim. 9.7.2 If, within 20 calendar days after an Indemnitee provides written notice to the

Indemnifying Party of any Third Party Claim, the Indemnitee receives written notice from the Indemnifying Party that the Indemnifying Party has elected to assume the defence of such Third Party Claim as provided in and subject to section 9.7.1, the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defence thereof unless the Indemnitee is permitted to select separate counsel pursuant to section 9.7.1(ii), provided, however, that if the Indemnifying Party shall fail to take reasonable steps necessary to defend diligently such Third Party Claim within 20 calendar days after receiving notice from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defence and the Indemnifying Party shall be liable for all reasonable expenses thereof. 9.7.3 Without the prior written consent of the Indemnitee, the Indemnifying Party shall

not enter into any settlement of any Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification under this Agreement. The Indemnifying Party shall not settle any Third Party Claim or conduct any legal or administrative proceeding in a manner which would, in the opinion of the Indemnitee, have a material adverse impact on the Indemnitee. If a final offer is made to settle a Third Party Claim and the offer creates no liability or financial or other obligation on the part of the Indemnitee

- 82 for which the Indemnitee is not entitled to indemnification under this Agreement and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such final offer within 20 calendar days after its receipt of such written notice, the Indemnifying Party shall be relieved of its obligations to defend such Third Party Claim and the Indemnitee may contest or defend such Third Party Claim. In such event, the maximum liability of the Indemnifying Party as to such Third Party Claim will be the amount of such settlement offer plus reasonable costs and expenses paid or incurred by the Indemnitee up to the date of such written notice. 9.7.4 In the event that any Third Party Claim is of a nature such that the Indemnitee is

required by Applicable Law to make a payment to any Person (a Third Party for the purposes of this section 9.7.4) with respect to such Third Party Claim before the completion of settlement negotiations or related legal proceedings, the Indemnitee may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount of any liability under the Third Party Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnitee, the Indemnitee shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Indemnifying Party. 9.7.5 Except in the circumstances contemplated by sections 9.7.1, 9.7.2 or 9.7.4 and

whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnitee shall not negotiate, settle, compromise or pay any Third Party Claim except with the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed). 9.7.6 The Indemnitee shall not permit any right of appeal in respect of any Third Party

Claim to terminate without giving the Indemnifying Party notice thereof and an opportunity to contest such Third Party Claim. 9.7.7 The Buyer and the Seller shall co-operate fully with each other with respect to

Third Party Claims, shall keep each other fully advised with respect thereto (including

- 83 supplying copies of all relevant documentation promptly as it becomes available) and shall each designate a senior officer who will keep himself informed about and be prepared to discuss the Third Party Claim with his counterparts and with counsel at all reasonable times. 9.7.8 Any claim by an Indemnitee on account of an Indemnifiable Loss which does not

result from a Third Party Claim (a Direct Claim) shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, stating the nature and factual basis of the Direct Claim in reasonable detail and indicating the amount, or if the amount is not then determinable, an approximate and reasonable estimate of the potential amount of the Direct Claim, but in any event such notice shall not be given later than 20 calendar days after the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party shall have a period of 20 calendar days within which to investigate and respond to such Direct Claim. For the purpose of such investigation, the Indemnitee shall make available to the Indemnifying Party the information relied upon by the Indemnitee to substantiate the Direct Claim. If the Indemnitee and the Indemnifying Party agree, at or prior to the expiration of such 20 calendar day period, to the validity and amount of the Direct Claim, the Indemnifying Party shall immediately pay to the Indemnitee the full agreed upon amount of the Direct Claim. If the Indemnifying Party does not respond within such 20 calendar day period, the Indemnifying Party shall be deemed to have accepted the Direct Claim. If the Indemnifying Party rejects the Direct Claim, the Indemnitee will be free to seek enforcement of its right to indemnification under this Agreement and shall be entitled to submit the Dispute to the dispute resolution procedure set out in section 12.2 (without first having to comply with section 12.1). 9.7.9 If the amount of any Indemnifiable Loss, at any time subsequent to the making of

an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by, from or against any other Person, the amount of such reduction, together with any interest earned on such amount, if applicable, less any deductibles, cost or expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party.

- 84 9.7.10 A failure to give timely notice as provided in this section 9.7 shall not affect the

rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party which was entitled to receive such notice was actually prejudiced.

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ARTICLE 10 CONTRACT OPERATION AND ADMINISTRATION 10.1 Operating Committee The Buyer and the Seller shall each appoint, from time to time, a representative to an operating committee (the Operating Committee) which representative shall be duly authorized to act on behalf of the party that has made the appointment, and with whom the other party may consult at all reasonable times, and whose instructions, requests, and decisions shall be binding on the appointing party as to all matters pertaining to this Agreement; provided, however, that the Operating Committee shall not have the authority to amend this Agreement. The Operating Committee shall meet from time to time as required and, in any event, at least once each calendar year. The Operating Committee shall address operating and administrative issues related to the Agreement, including the formulation, adoption and approval, if and as required, of the Scheduling Procedures, metering procedures and outage planning procedures, along with any and all other issues arising between the parties under the Agreement which either party may reasonably request the Operating Committee to address. The Seller shall provide through the Operating Committee all additional information relating to a Forced Outage, Planned Outage or Maintenance Outage of the Unit Generator reasonably requested by the Buyer. 10.2 Record Retention Each party (the disclosing party for purposes of this section 10.2) shall keep complete and accurate records and all other data required by either party for the purpose of the proper administration of this Agreement. All such records and data shall be maintained for a minimum of seven years after the creation of the record or data or for such longer period of retention as required by Applicable Law or a Governmental Authority. The disclosing party, on a confidential basis as provided for in section 12.7 and subject to the limitations of disclosure set forth in section 6.5, shall provide to the other party (the receiving party for purposes of this section 10.2) reasonable access to the relevant and appropriate records and data kept by the disclosing party which are required by the receiving party in order for the receiving party to be able to comply with its obligations to Governmental Authorities or under Applicable Law or in order to provide the receiving party with all relevant information required by the receiving party

- 86 in connection with this Agreement and the parties compliance herewith. A party may use its own employees for the purposes of any such review of records and data provided that those employees are advised of and bound by the confidentiality obligations provided for in section 12.7. 10.3 Notices Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be given by facsimile or other means of electronic communication or by mail, registered mail, courier, or hand-delivery as provided below. Any such notice or other communication, if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the sending or, if delivered by hand or courier, shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Any such notice or communication given by mail shall be deemed to have been delivered on the 5th Business Day following the deposit thereof in the mail and, if given by registered mail, shall be deemed to have been delivered on the 3rd Business Day following the deposit thereof in the mail. If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system which might affect the delivery of mail, any such demand, notice or other communication shall not be mailed but shall be given by personal delivery or by electronic communication. Notice of change of address shall also be governed by this section 10.3. Notices and other communications shall be addressed as follows: (i) (A) all Bills shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: Controller (506) 458-4000

- 87 (B) all other notices and other communications to the Buyer shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: (ii) Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

all notices and communications to the Seller shall be to: New Brunswick Power Nuclear Corporation P.O. Box 2050 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

Notwithstanding the foregoing, any notice or other communication required or permitted to be given by any party pursuant to or in connection with any arbitration procedures contained in this Agreement or in any Schedule to this Agreement may only be delivered by hand. A failure to provide a notice in the manner provided for in this section 10.3 shall not affect the rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party entitled to notice in such manner was actually prejudiced.

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ARTICLE 11 FORCE MAJEURE 11.1 Effect of Invoking Force Majeure and Notice A party shall be deemed to have invoked Force Majeure with effect from the commencement of the event or circumstances constituting Force Majeure when that party gives to the other party written or oral notice which is reasonably prompt in the circumstances (but if oral, promptly confirmed in writing in accordance with section 10.3) of the effects of the Force Majeure and reasonably full particulars of the cause thereof. Any Dispute between the parties as to whether a valid Force Majeure has occurred shall be resolved in accordance with section 12.1 and, if required, section 12.2. The party claiming Force Majeure shall use all reasonable efforts to remedy the situation and remove, so far as possible and with reasonable dispatch, the effects of the Force Majeure, provided however, that the settlement of labour disputes shall be within the discretion of such party. The party claiming Force Majeure shall give prompt notice to the other party of the termination of the event of Force Majeure. In addition, the party claiming Force Majeure shall, as soon as reasonably practicable following the occurrence of the Force Majeure and from time to time thereafter, provide the other party with (i) access to all information, data, books and records about the Force Majeure, the effects thereof, and the plans or proposals to remedy or remove the effects of the Force Majeure, reasonably requested by the other party, and access to the Facilities and the Other Facilities, if applicable, to conduct inspections with respect to the Force Majeure, and (ii) the opportunity, but not the obligation, to take, at its own cost, the steps it deems are reasonably necessary to remedy the effects of the delay or prevention of performance caused by the Force Majeure. If by reason of Force Majeure either party is unable, wholly or partially, to perform or comply with its obligations hereunder, then the party so affected by Force Majeure shall be excused and relieved from performing or complying with such obligations and shall not be liable for any liabilities, damages, losses, payments, costs, expenses or, for greater certainty, Indemnifiable Losses (but only to the extent such Indemnifiable Losses relate to breach of covenants or agreements contained in this Agreement in connection with the event of Force Majeure and not, for greater certainty, Indemnifiable Losses which relate to negligence or wilful misconduct, which arose prior to the event of Force Majeure, or which do not relate to the event of Force Majeure) to, or incurred or

- 89 made by, the other party in respect of or relating to (a) such Force Majeure and (b) such partys failure to so perform or comply during the continuance of such Force Majeure, to the extent of the inability so caused from and after the invocation of such Force Majeure and until the termination of such Force Majeure. 11.2 Definition of Force Majeure For the purposes of this Agreement, the term Force Majeure means and is limited to any circumstance, act, event, cause or condition that is beyond the party claiming Force Majeures reasonable control, that is not caused by such partys negligence, and that, by the exercise of all reasonable efforts, such party is unable to overcome or prevent, including: 11.2.1 11.2.2 11.2.3 an earthquake, tornado, severe storm, flood, fire, lightning or other act of God; an epidemic, plague or quarantine; an act of civil or military authorities, insurrection, war (whether declared or

undeclared), revolution, sabotage, invasion, blockade, occupation, civil disturbance, an act of public enemies or terrorists, riot or vandalism or a local, regional or national state of emergency, or explosion resulting from any of the foregoing; 11.2.4 an interruption, disruption or failure in the operation of electric lines or an

interruption, disruption or failure in the operation of transmission or distribution lines, systems, equipment or facilities, including any such interruption, disruption or failure caused by weather, an explosion or accident; 11.2.5 transmission restrictions, loss or deterioration of transmission or electric services,

or any transmitter or rotating loadcuts required by the SO; 11.2.6 11.2.7 a strike or other work stoppage or other labour dispute; or an order, judgment, decree, legislation, ruling or direction by a Governmental

Authority restraining a party from performing its obligations hereunder, provided that the affected party has not applied for or assisted in the application for, and has used

- 90 Commercially Reasonable Efforts to oppose, the order, judgment, decree, legislation, ruling or direction; but excluding: 11.2.8 11.3 subject to section 11.2.7 changes in Applicable Law. Prolonged Force Majeure If the delivery or receipt of Net Electricity at the Point of Delivery is interrupted due to Force Majeure, then the party not claiming Force Majeure may at its option and in its sole discretion and upon written notice to the party claiming Force Majeure, terminate this Agreement and, subject to section 8.6, the parties respective obligations hereunder, if: 11.3.1 the Force Majeure continues for a period of three years or more after the notice

described in section 11.1 is received by that party or if at any time it becomes impossible for the party claiming Force Majeure to remove or remedy the effects of the Force Majeure prior to the expiry of such three year period; or 11.3.2 at any time the party claiming Force Majeure is not using all reasonable efforts to

remedy the situation and remove, with all reasonable dispatch, the effects of the Force Majeure, provided, however, that the settlement of labour disputes shall be within the discretion of such party.

- 91 -

ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Informal Dispute Resolution Procedures Unless otherwise specifically provided for in this Agreement, all disputes, disagreements, controversies, questions or claims (including claims for indemnification) arising out of or relating to this Agreement, including with respect to its formation, execution, validity, application, interpretation, performance, breach, termination or enforcement (Disputes), shall first be submitted to a disputes committee (the Disputes Committee) for informal resolution. Either party may commence an informal resolution under this section 12.1 by delivering a written notice of informal resolution to the other party (the Notice of Informal Resolution). Once the Notice of Informal Resolution has been delivered, each party shall within five days appoint an executive officer to the Disputes Committee. If a nominee is unable to continue acting on the Disputes Committee or if a nominating party wishes to replace its nominee, the nominee shall be replaced by another executive officer of the nominating party. The Disputes Committee shall review the Dispute on a timely basis. If the Disputes Committee is unable to resolve the dispute within 30 days of the date of receipt of the Notice of Informal Resolution by the receiving party, then either party may commence arbitration proceedings in accordance with the provisions of section 12.2. 12.2 Arbitration Procedures Unless otherwise specifically provided for in this Agreement, any Dispute that is not resolved by the Disputes Committee pursuant to section 12.1 shall be determined in accordance with Schedule 12.2, which sets out the sole and exclusive procedure for the resolution of Disputes not resolved by the Disputes Committee. The resolution of Disputes pursuant to the terms of Schedule 12.2 shall be final and binding upon the parties to this Agreement, and there shall be no appeal therefrom, including any appeal to a court of law on a question of law, a question of fact, or a question of mixed fact and law. The application of subsection 7(2) of the Arbitration Act (New Brunswick) is expressly excluded. The arbitrator shall be authorized only to interpret and apply the provisions of this Agreement and shall have no power to modify or change the Agreement in any manner.

- 92 12.3 Legal Relationship None of the Persons employed by either party shall be considered employees, agents or authorized representatives of the other party for any purpose. Nothing in this

Agreement nor any action of a party shall create or be deemed to create a relationship of partners, joint venturers, fiduciary, principal and agent or any other relationship or association between the parties. 12.4 12.4.1 Assignment This Agreement and all of the provisions of this Agreement shall be binding upon

and shall enure to the benefit of the parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, but subject to Applicable Law: 12.4.1.1 the Seller or its permitted assignee may as security only assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing the Facilities and/or the Other Facilities, including such an assignment, transfer or other disposition upon or pursuant to the exercise of remedies by such Person with respect to such financing or refinancing; 12.4.1.2 the Seller or its permitted assignee may grant a security interest in or assign, transfer, pledge or otherwise dispose of (absolutely or as security) all or part of its rights and interests under this Agreement to any Person to which all or part of the Facilities have been Transferred, provided that the Province has consented to such Transfer and that if the Facilities are leased and the lease expires or is terminated prior to the Termination Date or such earlier date on which this Agreement may be terminated, this Agreement shall be assigned or transferred back to the Seller by such Person and the Seller shall assume all liabilities and obligations of such Person under this Agreement, other than pre-

- 93 existing liabilities and obligations of such Person which exist or which have accrued or arisen prior to such assignment or transfer back to the Seller; 12.4.1.3 the Buyer or its permitted assignee may as security only, assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing any of the Buyers assets, including such an assignment, transfer or other disposition upon or pursuant to the exercise of remedies by such Person with respect to such financing or refinancing; and 12.4.1.4 either the Buyer or the Seller (or any of their respective permitted assignees) may grant a security interest in or assign, transfer, pledge or otherwise dispose of (absolutely or as security) all or part of its rights and interests under this Agreement to the Province or an agent thereof; provided that: 12.4.1.5 as a condition of an assignment, transfer, pledge or other disposition as a security interest, the assignee, transferee, pledgee or other acquiror enters into and delivers an agreement in favour of the assignor and enforceable against the assignee, transferee, pledgee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor, other than pre-existing liabilities and obligations, under this Agreement from the time of the exercise of its remedies under the security until the assignment, transfer, sale or other disposition of its interest in this Agreement to another Person is made in accordance with the terms of this Agreement; 12.4.1.6 as a condition of an assignment, transfer or other disposition, other than as a security interest, or an assignment, transfer, sale or other disposition pursuant to the exercise of a secured partys remedies as contemplated in section 12.4.1.5, the assignee, transferee or other acquiror enters into and delivers an agreement in

- 94 favour of the other party and enforceable against the assignee, transferee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor under this Agreement, including pre-existing liabilities and obligations, from the date of the assignment, transfer or acquisition; and 12.4.1.7 subject to sections 12.4.3 and 12.4.4, none of the foregoing assignments, transfers, pledges, grants or other dispositions shall relieve or discharge the Seller or the Buyer from any of its obligations under this Agreement. 12.4.2 Notwithstanding section 12.4.1, for so long as the Buyer and the Seller remain

directly or indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the Province, no party shall assign any of its rights, interests or obligations under this Agreement pursuant to section 12.4.1 without first obtaining the prior written consent of the Electric Finance Corporation. 12.4.3 An assignment, transfer, pledge or disposition by the Seller as described in

section 12.4.1.2 or 12.4.1.4 shall free and relieve the Seller from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and the Buyer shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 12.4.4 An assignment, transfer, pledge or disposition by the Buyer as described in

section 12.4.1.4 shall free and relieve the Buyer from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and the Seller shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 12.4.5 Any Change of Control of the Seller shall be deemed to be an assignment of the

rights, interests or obligations of this Agreement by the Seller and, accordingly, subject to the provisions of section 12.4.1.

- 95 12.4.6 Each of the Buyer and the Seller agree, at the others expense, to execute and

deliver such documents as may be reasonably required to accomplish any such permitted assignment, transfer, pledge or other disposition of rights and interests under this Agreement by the other party so long as the Buyers or the Sellers, as the case may be, rights and interests under this Agreement are not thereby altered, amended, diminished or otherwise impaired. 12.4.7 The Seller shall deliver to the Buyer, at the written request of the Buyer at any

time and from time to time, a certificate of the Seller signed by a senior officer thereof (without personal liability) which states whether or not any Change of Control of the Seller has occurred since the date hereof and which sets out the relevant facts with respect to the Control and Effective Control of the Seller in sufficient detail to enable the Buyer to determine whether there has been any Change of Control of the Seller. 12.5 12.5.1 Set-off Any amount (the First Amount for purposes of this section 12.5) payable by

one party (the first party for the purposes of this section 12.5) to the other party (the second party for the purposes of this section 12.5) under this Agreement, in circumstances where an Event of Default has occurred with respect to the second party or the second party is in default of its obligations under any other agreement between the first party and the second party, shall, at the option of the first party, be reduced by or set-off against any amount (the Second Amount for purposes of this section 12.5) payable (whether at such time or in the future or upon the occurrence of a contingency) by the second party to the first party under (i) this Agreement, (ii) any other agreement between the second party and the first party, (iii) any instrument or undertaking issued or executed by the second party to, or in favour of, the first party, (iv) any arbitrators award or court order, or (v) any other legal obligation. The Second Amount will be discharged promptly and in all respects to the extent it is so set-off. 12.5.2 The first party will give notice to the second party of any set-off effected under Notwithstanding any other terms of this Agreement or any other

this section 12.5.

agreement between the first party and the second party, a set-off under this section 12.5

- 96 may be effected at any time before, upon and at any time after, the termination of this Agreement or any such other agreement. 12.5.3 If a Second Amount is unascertained, the first party may in good faith estimate

that amount and set-off in respect of the estimate, subject to the first party accounting to the second party when the obligation is ascertained. For greater certainty, the Second Amount includes any amounts payable (whether at such time or in the future or upon the occurrence of a contingency) under any indemnity including the indemnities set forth in sections 9.3, 9.4 and 9.5, and if the amount payable under these indemnities is unascertained, the first party may in good faith estimate that amount in accordance with the immediately preceding sentence. 12.5.4 If the First Amount and the Second Amount are denominated in different

currencies, then at the option of the second party, all or any portion of either amount may be converted by the second party into the currency in which the other is denominated at the rate of exchange at which the second party would be able, acting reasonably and in good faith, to purchase the relevant amount of that currency. 12.5.5 Nothing in this section 12.5 shall be effective to create a charge or other security

interest. This section 12.5 shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, agreement or otherwise). Further, this section 12.5 shall be without prejudice to any other rights that the parties have pursuant to this Agreement or Applicable Law, including general principles of common law or equity. 12.6 Further Assurances Each of the parties shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, documents, assurances and things as the other party may reasonably require from time to time for the purpose of giving effect to this Agreement and shall use Commercially Reasonable Efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement.

- 97 12.7 Confidentiality The terms of this Agreement, all information and knowledge relating to operations hereunder, including pricing and scheduling, any information provided pursuant to any provision of this Agreement (including any disclosure under section 6.5 or section 10.2) and all other information emanating from or pertaining to a partys business (in any form) that a party (the receiving party for purposes of this section 12.7) may acquire under the terms or otherwise as a result of this Agreement or by virtue of the relationship between the parties created by this Agreement (collectively, Confidential Information), shall be considered confidential and, except as otherwise permitted in this Agreement, shall not be used by, or disclosed, revealed or divulged to, any other Person, or published in any manner whatsoever, in a manner not specifically permitted by this Agreement without first obtaining the written consent of the other party (the disclosing party for purposes of this section 12.7), which consent shall not be unreasonably withheld or delayed. Confidential Information does not include information that: (i) at the time of disclosure, is already known by the receiving party; (ii) is or becomes publicly known other than through a wrongful act or omission of the receiving party or any of its partners, officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, or any other Person subject to a confidentiality agreement or other obligation to hold such information in confidence, whether contractual, fiduciary or otherwise; (iii) is rightfully received from a third party without similar restriction provided that the third party did not come into possession of the Confidential Information as a result, directly or indirectly, of a breach of an obligation of confidentiality owed by any Person to the disclosing party; or (iv) is independently developed by or on behalf of the receiving party without disclosure of or recourse to the Confidential Information. Notwithstanding the foregoing, a receiving party may disclose, reveal, divulge or permit the use of Confidential Information: 12.7.1 in the case of any party, to or by the Province or any representative thereof solely

in its or his capacity as a shareholder of that party or any Affiliate of that party, as required by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof;

- 98 12.7.2 in the case of any party, to or by its wholly-owned subsidiaries and its and its

wholly-owned subsidiaries respective officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, provided that such Persons have been informed of that partys confidentiality obligations hereunder; 12.7.3 in the case of the Seller, to or by other operators of CANDU reactors, provided

that (i) such Persons have been informed of the Buyers confidentiality obligations hereunder and have agreed to be bound similarly thereby, (ii) in no event shall the Seller be permitted to disclose, reveal or divulge information relative to pricing under this Agreement, and (iii) all information pertaining to Scheduling is disclosed, revealed or divulged by the Seller in such a manner as to minimize potentially detrimental effects to or on the Buyer; 12.7.4 as required by any Governmental Authority (other than the Province in its

capacity as a shareholder of the Buyer or the Seller or any Affiliate of the Buyer or the Seller) or Applicable Law; provided that where circumstances permit, and where such disclosure is not made in the ordinary course to such Governmental Authorities, prior to any disclosure, the disclosing party shall be notified by the receiving party of the proposed disclosure and the receiving party shall, at the disclosing partys request, take reasonable steps to allow the disclosing party, at its sole expense, to contest the requirement for disclosure or to obtain an order or ruling to preserve the confidentiality of such Confidential Information; 12.7.5 as necessary in connection with any dispute resolution commenced pursuant to

this Agreement so long as such disclosure is made in accordance with paragraph 32 of Schedule 12.2 or as necessary in connection with any Third Party Claim in respect of this Agreement; 12.7.6 to the extent necessary, to or by any financial institution or other Person (from

whom financing is being sought) or to advisors to any such financial institution or other Person, provided that any such financial institution, Person or advisor has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby;

- 99 12.7.7 to the extent necessary, to or by any Person providing services to the receiving

party to enable the receiving party to perform any of its obligations or exercise any of its rights under this Agreement, provided that such Person has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby; or 12.7.8 to the extent necessary, to or by a credit rating agency as required to establish or

maintain a credit rating with that agency, provided that such rating agency has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby. 12.8 Agency Each of the Buyer and the Seller shall be entitled to appoint any Person to act on its behalf as its agent under this Agreement. Until the Buyer has notified the Seller otherwise, the Buyer hereby appoints NB Power Genco as agent for the Buyer to act on its behalf solely with respect to the Scheduling of Delivered Electricity and SG Electricity under this Agreement. The parties shall treat any notice or communication from an agent duly appointed by the other party, including NB Power Genco, as having been made by that other party directly and shall act on such notice or communication to the extent the party would have been required to act on such notice or communication had it been made directly by the other party, provided that any such notice or communication is within the scope of the agency created. Notwithstanding the

foregoing, the parties shall remain liable under this Agreement for all acts or omissions of any of its agents, as if the party itself had performed such acts or made such omissions; provided that any such acts or omissions were within the scope of the agency created. For greater certainty, any breach of the terms or conditions of this Agreement by any of the agents of a party shall be deemed to be a breach of the terms or conditions of this Agreement by that party and any acts or omissions of any such agent shall be deemed for purposes of this Agreement to be acts or omissions of that party, provided that such breaches, acts or omissions were within the scope of the agency created. 12.9 Time of the Essence Time shall be of the essence in this Agreement.

- 100 12.10 Counterparts This Agreement may be signed in counterparts and each of such counterparts shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument.

- 101 IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement by the undersigned duly authorized representatives as of the date first stated above. NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION by: Name: Leon Furlong

NEW BRUNSWICK POWER NUCLEAR CORPORATION by: Name: Leon Furlong

SCHEDULE 1.1.22 PRICES I. DEFINITIONS In this Schedule 1.1.22: Capacity Factor means, for any period of time, the number, expressed as a percentage, obtained by dividing (i) the total amount of Delivered Electricity, expressed in MWh, Scheduled by the Buyer with the SO to be delivered to the Buyer during such period, by (ii) the product of (a) the weighted average Committed Capacity during such period, and (b) the number of hours in such period. First Period means the period under this Agreement from and including the hour ended 01:00 hours on October 1, 2004 up to and including the hour ended 24:00 hours on March 31, 2005. Vesting Energy Price means the Vesting Energy Price as defined in the Vesting Agreement between the Buyer, NB Power Genco and NB Power dated October 1, 2004, as amended, restated or replaced from time to time. The Buyer shall provide the Seller with the Vesting Energy Price as necessary. II. 1. CONTRACT PRICE October 1, 2004 to March 31, 2005 The Contract Price for all Delivered Electricity Scheduled by the Buyer with the SO to be delivered to the Buyer at the Point of Delivery during the First Period shall be: (a) $51.73 per MWh, for each MWh of such Scheduled Delivered Electricity during the First Period that in aggregate would result in a Capacity Factor for the First Period of less than or equal to 80% (the First Threshold Price); (b) $35.00 per MWh, for each MWh of such Scheduled Delivered Electricity during the First Period that, together with the Scheduled Delivered Electricity referred to in paragraph II.1(a), in aggregate would result in a Capacity Factor for the First
Schedule 1.1.22 - Page i

Period of greater than 80% and less than or equal to 89% (the Second Threshold Price); and (c) the aggregate of (i) the Second Threshold Price applicable during the First Period, and (ii) $5, for each MWh of such Scheduled Delivered Electricity during the First Period in excess of the Scheduled Delivered Electricity referred to in paragraphs II.1(a) and II.1(b). 2. April 1, 2005 to the In-Service Date/Termination Date The Contract Price for all Delivered Electricity Scheduled by the Buyer with the SO to be delivered to the Buyer at the Point of Delivery under this Agreement during each Fiscal Year commencing after March 31, 2005 and ending on the earlier to occur of (i) the InService Date or (ii) the Termination Date shall be equal to: (a) the product of (i) the First Threshold Price for the immediately preceding Fiscal Year and (ii) the CPI Adjustment for the immediately preceding calendar year (such price to be referred to as the First Threshold Price for that Fiscal Year), for each MWh of such Scheduled Delivered Electricity during that Fiscal Year that in aggregate would result in a Capacity Factor for that Fiscal Year of less than or equal to 80%; (b) the product of (i) the Second Threshold Price for the immediately preceding Fiscal Year, and (ii) 1.03, or 1.01 for the Fiscal Year commencing on April 1, 2009 (such price to be referred to as the Second Threshold Price for that Fiscal Year), for each MWh of such Scheduled Delivered Electricity during that Fiscal Year that, together with the Scheduled Delivered Electricity referred to in paragraph II.2(a) in respect of that Fiscal Year, in aggregate would result in a Capacity Factor for that Fiscal Year of greater than 80% and less than or equal to 89%; and (c) the aggregate of (i) the Second Threshold Price for that Fiscal Year, and (ii) $5, for each MWh of such Scheduled Delivered Electricity during that Fiscal Year in excess of the Scheduled Delivered Electricity referred to in paragraphs II.2(a) and II.2(b) in respect of that Fiscal Year.

Schedule 1.1.22 - Page ii

3.

After the In-Service Date As of and from the In-Service Date, the Contract Price for all Delivered Electricity Scheduled with the SO to be delivered to the Buyer at the Point of Delivery under this Agreement during each Fiscal Year shall be equal to: (a) the product of (i) the First Threshold Price for the immediately preceding Fiscal Year and (ii) the CPI Adjustment for the immediately preceding calendar year (such price to be referred to as the First Threshold Price for that Fiscal Year) for each MWh of such Scheduled Delivered Electricity during that Fiscal Year that in aggregate would result in a Capacity Factor for that Fiscal Year of less than or equal to 80%, provided that if the In-Service Date occurs during the Fiscal Year ending on March 31, 2010, the First Threshold Price for that Fiscal Year shall equal $67.60 per MWh and if the In-Service Date occurs after March 31, 2010, the First Threshold Price for the Fiscal Year in which the In-Service Date occurs shall equal the product of (x) $67.60 per MWh, and (y) the CPI Adjustment for each calendar year commencing with the calendar year ending December 31, 2009 and up to and including the last calendar year completed immediately prior to the date such Fiscal Year commenced; (b) the product of (i) the Second Threshold Price for the immediately preceding Fiscal Year, and (ii) 1.01 (such price to be referred to as the Second Threshold Price for that Fiscal Year), for each MWh of such Scheduled Delivered Electricity during that Fiscal Year that, together with the Scheduled Delivered Electricity referred to in paragraph II.3(a) in respect of that Fiscal Year, in aggregate would result in a Capacity Factor for that Fiscal Year of greater than 80% and less than or equal to 89%; and (c) the aggregate of (i) the Second Threshold Price for that Fiscal Year, and (ii) $5, for each MWh of such Scheduled Delivered Electricity during that Fiscal Year in excess of the Scheduled Delivered Electricity referred to in paragraphs II.3(a) and II.3(b) in respect of that Fiscal Year.

Schedule 1.1.22 - Page iii

4.

Commissioning Electricity Notwithstanding the foregoing, during the period commencing on the date the Planned Outage to complete the Refurbishment commences and ending on (and including) the day immediately prior to the In-Service Date, the Contract Price for all Scheduled Delivered Electricity shall equal the Vesting Energy Price applicable during that period.

5.

Partial Fiscal Years The calculations in paragraphs II.1, II.2, II.3 or II.4 above required to be made in respect of the partial Fiscal Year during which this Agreement was executed, the partial Fiscal Year immediately prior to the date the Planned Outage to complete the Refurbishment commences, the partial Fiscal Year immediately following the In-Service Date, and the partial Fiscal Year immediately prior to the Termination Date or such earlier date on which this Agreement may be terminated, shall be calculated as if the number of hours in the affected Fiscal Year equals the number of hours in that Fiscal Year prior to or after such date, as applicable.

III. 1.

SG PRICE April 1, 2004 to March 31, 2005 The SG Price during the First Period shall equal the sum of (i) the First Threshold Price applicable during the First Period, and (ii) $50 (the SG Adder).

2.

After March 31, 2005 The SG Price during each Fiscal Year after March 31, 2005 shall be equal to the sum of: (a) (b) the First Threshold Price applicable during that Fiscal Year; and the product of (i) the SG Adder for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year.

IV.

GENERAL All prices in this Schedule 1.1.22 shall be rounded to 1/10 of a cent, with the number 5 or more being rounded up to the next 1/10 of a cent.
Schedule 1.1.22 - Page iv

SCHEDULE 1.1.26 CPI ADJUSTMENT I. DEFINITIONS

In this Schedule 1.1.26, CPI Factor means, in respect of any calendar year: 1. the annual average CPI (New Brunswick) for that calendar year minus the annual average CPI (New Brunswick) for the immediately preceding calendar year; divided by 2. the annual average CPI (New Brunswick) for the immediately preceding calendar year;

calculated to four significant digits. II. A. CALCULATION OF CPI ADJUSTMENT Contract Price

For purposes of calculating the First Threshold Price, the CPI Adjustment for any calendar year shall be calculated in accordance with the following: 1. If the CPI Factor for that calendar year is less than or equal to zero, the CPI Factor shall equal zero. 2. Subject to paragraph II.A.3 below, the CPI Adjustment shall equal (i) 1, plus (ii) 0.01, plus (iii) 0.4 x (CPI Factor - 0.02). 3. Notwithstanding paragraph II.A.2 above, for the purposes of paragraph II.3 of Schedule 1.1.22, the CPI Adjustment shall equal (i) 1, plus (ii) 0.02, plus (iii) 0.4 x (CPI Factor - 0.02). B. All Other Adjustments

The CPI Adjustment for any calendar year for purposes of all other calculations under this Agreement other than the calculation of the First Threshold Price, including the calculation of the Capital Threshold, the O&M Threshold and the SG Adder, shall be calculated in accordance with the following:
Schedule 1.1.26 - Page i

1.

If the CPI Factor for that calendar year is less than or equal to zero, the CPI Adjustment shall equal 1.

2.

If the CPI Factor for that calendar year is greater than zero, the CPI Adjustment shall equal (i) 1, plus (ii) the CPI Factor.

Schedule 1.1.26 - Page ii

SCHEDULE 1.1.101 REFURBISHMENT Criteria 1. 2. The Refurbishment will extend the projected life of the Unit Generator by 25 to 30 years. The scope and the cost of the Refurbishment have been developed through a condition assessment undertaken in conjunction with Atomic Energy of Canada Limited (AECL). In particular, the scope and costs have been determined as follows: Scope: The scope of the Refurbishment has been described in the following agreements between AECL and NB Power: 0086-99-M24 Retube Agreement 0086-02-S34 Refurbishment Agreement

and have been further described in subsequent associated change orders to these agreements. Costs: Project costs include the following: project management team, financing, direct project activities and station activities directly associated with the capital project. These costs have been included in the Refurbishment as-built cost estimate. As-Built Cost Estimate: As of the date hereof, the estimated as-built costs for the Refurbishment are $954 million.

Schedule 1.1.101 - Page i

SCHEDULE 2.4 SG OPERATING CHARACTERISTICS In order to provide the SO-Controlled Grid with support and aid in maintaining the stability of same, the operation of one Standby Diesel Generator only is allowed for the purpose of peaking. The duration of this SO-Controlled Grid support is not to exceed 100 hours total per calendar year for both Standby Diesel Generators. The total hours remaining for Standby Diesel Generator peaking operation and the preferred Standby Diesel Generator for peaking operation will be shown on the Mandatory Testing Schedule which is issued as part of the Sellers Planning Departments Our Work Program document. During this peaking operation, the alternate Standby Diesel Generator must remain poised and available, otherwise the peaking operation is not permitted. Requests for this peaking operation will come from the Buyer or the SO, but the final decision for operation will rest with the Seller. Notwithstanding the foregoing, the Seller shall be permitted to amend this Schedule 2.4 as required by the CNSC and upon notice to the Buyer.

Schedule 2.4 - Page i

SCHEDULE 2.10 ADJUSTMENTS TO CONTRACT PRICE FORMULA If (i) the Buyer chooses to reimburse the Seller for Environmental and Regulatory Costs which are capital costs in nature by adjusting the First Threshold Price pursuant to section 2.10.6, or (ii) the First Threshold Price in effect for the Fiscal Year in which the In-Service Date occurs is required to be adjusted to reflect the Cost Estimate Difference pursuant to section 2.12, the following formula shall be used to calculate the adjustment to (a) the First Threshold Price in effect for the Fiscal Year in which the applicable change in Environmental Law or Nuclear Law becomes effective, or (b) the First Threshold Price in effect for the Fiscal Year in which the In-Service Date occurs, respectively: A = ((I x L) + OC)/B, where: A equals the adjustment to the First Threshold Price, expressed in $/MWh. I equals, subject to section 2.10.4, the amount of such Environmental and Regulatory Costs or Cost Estimate Difference, expressed in dollars of the Fiscal Year in which the adjustment to the First Threshold Price is to become effective. L equals the levelizing factor, which for purposes of this Agreement shall equal w/(1(1/(1+w)n)). n equals the period in years from the date the adjustment is to become effective to the Operating Period End Date at that time. w equals the pre-tax weighted average cost of capital, which for purposes of this Agreement shall equal d x DR + (r/(1-t)) x ER. d equals the Sellers reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals. t equals the tax rate applicable to the Seller as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals. DR equals the Sellers debt ratio, which for purposes of this Agreement shall equal 0.50. r equals the Sellers rate of return on equity, which for purposes of this Agreement shall equal 0.17. ER equals the Sellers equity ratio, which for purposes of this Agreement shall equal 0.50.

Schedule 2.10 - Page i

OC equals the projected negative change in annual operations and maintenance costs resulting from or associated with the expenditure of Environmental and Regulatory Costs or the Cost Estimate Difference, as the case may be, if any. B equals the projected annual production of Net Electricity, expressed in MWh, which for the purposes of this Agreement shall equal the product of (i) the greater of 635 MW and the DNC established pursuant to section 2.5.2.1, (ii) 8766 hours, and (iii) 0.80. The First Threshold Price for subsequent Fiscal Years will then be calculated pursuant to Schedule 1.1.22 with the First Threshold Price for the Fiscal Year in which the change in Environmental Law or Nuclear Law becomes effective or the In-Service Date occurs, as the case may be, being calculated to include the applicable addition or deletion pursuant to the above formula as of the date such change becomes effective or the In-Service Date, as the case may be. EXAMPLE The following table sets forth an example of how the formula shall be used to calculate an increase to the First Threshold Price in circumstances where the Buyer chose to reimburse the Seller for Environmental and Regulatory Costs which are capital costs in nature by adjusting the First Threshold Price. For the purpose of this example, it is assumed that: (i) the change in Environmental Law or Nuclear Law becomes effective in October 2019 and the Operating Period End Date is October 2034; (ii) the Sellers reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective is 9% and therefore for purposes of this example only d equals 0.09; (iii) the tax rate applicable to the Seller as of the Fiscal Year in which the adjustment becomes effective is 35.12% and therefore for purposes of this example only t equals .3512; (iv) (v) the DNC equals 635 MW; and OC equals 0.

Schedule 2.10 - Page ii

Formula w = d x DR + (r/(1-t)) x ER = 0.09 x 0.50 + (0.17/(1-0.3512)) x 0.50 = 0.045 + 0.1310 = 0.1760 = = = = w/(1- (1/(1+w)n)) 0.1760/(1-(1/(1+0.1760)15)) 0.1760/(1-0.0879) 0.1930

= 635 MW x 8766 hours x .80 = 4,453,128 MWh = ((I x L) + OC)/B = (($100,000,000 x 0.1930) + 0)/4,453,128 MWh = $4.33/MWh

Change in First Threshold Price

Fiscal Year in which applicable change in Environmental Law or Nuclear Law becomes effective Fiscal Year ending March 31, 2020 Amount of such Environmental and Regulatory Costs/Increase to the First Threshold Price $100,000,000/$4.33/MWh

Schedule 2.10 - Page iii

SCHEDULE 2.17 METERING POINTS

Schedule 2.17 - Page i

SCHEDULE 3.1 PLANNED OUTAGE SCHEDULE In accordance with section 3.1 of the Agreement, the Planned Outage Schedule for the period from October 1, 2004 to March 31, 2006 is as follows: 1. 2. 3. 4. 5. Date of Notification: Effective for Period: Date of Outage Start: Duration: Outage Scope Highlights: Significant maintenance on ECC (emergency core cooling) Pump Motor Overhaul/valves; Main steam system Boiler secondary side inspection (Boilers #2 and #4); Extensive on-reactor inspection of PHT Feeders; Two (2) PHT feeders being replaced contingency for an additional feeder; Maintenance on emergency water system; Moderator system maintenance/pump testing; Heat transport system (Power operated valves); Reactor controls significant maintenance on liquid zone control; Condenser work maintenance; Electrical normal maintenance on MCCs and Buses; and October 1, 2004 October 1, 2004 to March 31, 2006 April 16, 2005 27 days

Schedule 3.1 - Page i

Minor inspection program on Turbine Governor Valves, Emergency Stop Valves and Reheaters.

6.

Contingencies included in Plan: In the event that a feeder tube requires replacement, there is an allowance provided for in the current outage scope.

Schedule 3.1 - Page ii

SCHEDULE 12.2 ARBITRATION PROCEDURES Definitions 1. In this Schedule: (a) Arbitration Act has the meaning attributed to such term in paragraph 2 of this Schedule; (b) Arbitrator means the arbitrator appointed pursuant to paragraph 6 of this Schedule; (c) Claimant means any Party that commences an arbitration pursuant to paragraph 4 of this Schedule; (d) Disputes has the meaning attributed to such term in section 12.1 of this Agreement; (e) Document has the meaning set out in Rule 31.01 of the New Brunswick Rules of Court; (f) (g) (h) Party means a party to a Dispute; paragraph means a paragraph of this Schedule; and Respondent means a Party who is not the Claimant, and the term Respondents shall, where there is only one Respondent, refer to that Respondent. General 2. All Disputes which are to be determined according to the terms of this Schedule 12.2 pursuant to section 12.2 of this Agreement shall be arbitrated in accordance with the provisions of the Arbitration Act (New Brunswick) (the Arbitration Act) except to the

Schedule 12.2 - Page i

extent that those provisions are modified by the provisions of this Agreement and this Schedule. 3. No individual shall be appointed to arbitrate a Dispute pursuant to this Schedule unless he or she agrees in writing to be bound by the provisions of this Schedule. Commencement of Arbitration 4. A Party may commence an arbitration as Claimant by delivering a written notice of arbitration (the Notice of Arbitration) to each of the Respondents in the manner described in section 10.3 of this Agreement. 5. The Notice of Arbitration shall include in the text or in one or more attachments: (a) (b) (c) (d) (e) Arbitration 6. The arbitrator nominated by the Claimant shall be appointed as the Arbitrator to resolve the Dispute unless, within 10 days after the receipt or deemed receipt of the Notice of Arbitration by all the Respondents, one or more of the Respondents, by notice to the Claimant, objects to the Claimants nominee and proposes an alternative to act as arbitrator (the Objection). In the event that the Claimant and the Respondents do not agree within 10 days of the date of the Objection as to who shall act as arbitrator, any Party may apply to a judge of the Court of Queens Bench of New Brunswick (the Court), on notice to each other Party, for the appointment of the Arbitrator. The costs of such application, if any, will be determined by the Court. the full names, descriptions and addresses of the Parties; a demand that the Dispute be referred to arbitration pursuant to this Schedule; a general description of the Dispute; the relief or remedy sought; and the name of the person the Claimant nominates as the arbitrator.

Schedule 12.2 - Page ii

7.

Subject to the Arbitration Act, the Agreement and this Schedule, the Arbitrator may conduct the arbitration in such manner as the Arbitrator considers appropriate.

Interim Relief 8. Prior to the appointment of the Arbitrator, the Parties may apply to the Court for interim relief. A request for interim relief by a Party to the Court shall not be considered to be incompatible with section 12.2 of this Agreement, or as a waiver of that provision. 9. At the request of any Party, the Arbitrator may direct a Party to take such interim measures as the Arbitrator considers necessary in respect of the Dispute and any measures for the preservation of assets, the conservation of goods or the sale of perishable goods. The Arbitrator may require a Party to provide security for the costs of such measures. Pleadings 10. The following shall apply to the arbitration of any Dispute: (a) within 10 days of the appointment of the Arbitrator, the Claimant shall deliver to all the Respondents and the Arbitrator a written statement (the Statement) concerning the Dispute setting forth, with particularity, the Claimants position with respect to the Dispute and the material facts upon which the Claimant intends to rely; (b) within 20 days after the delivery of the Statement, each Respondent shall deliver to the Claimant and the Arbitrator a written response (an Answer) to the Statement setting forth, with particularity, the Respondents position on the Dispute and the material facts upon which the Respondent intends to rely; (c) if any Respondent fails to deliver an Answer within the time limit in paragraph 10(b), that Respondent shall be deemed to have waived any right to provide an Answer to the Statement and the arbitration may continue without further notice to that Respondent;

Schedule 12.2 - Page iii

(d)

subject to paragraph 10(c), within 15 days after the earlier of: (i) the day all Answers have been delivered, and (ii) the twentieth day referred to in paragraph 10(b), the Claimant may deliver to all the Respondents and the Arbitrator a written reply (a Reply) to the Answer of each Respondent, setting forth, with particularity, the Claimants response, if any, to the Answer;

(e)

within the time limit in paragraph 10(b), a Respondent may also deliver to the Claimant, each other Respondent and the Arbitrator a counter statement (a Counter Statement) setting forth, with particularity, any additional Dispute for the Arbitrator to decide. Within 15 days of the delivery of a Counter Statement, the Claimant shall deliver to each Respondent and the Arbitrator an Answer to the Counter Statement. If the Claimant fails to deliver an Answer to the Counter Statement within such 15 day period, the Claimant shall be deemed to have waived any right to provide an Answer to the Counter Statement. Within 15 days after the delivery of an Answer to the Counter Statement, the Respondents may deliver to the Claimant and the Arbitrator a Reply to such Answer. Any Dispute submitted to arbitration in accordance with this paragraph 10(e) shall be governed by, and dealt with as if it were the subject of a Statement in accordance with, this Schedule, except that it shall be decided by the Arbitrator already appointed, and shall be determined by the Arbitrator accordingly; and

(f)

the time limits referred to in paragraphs 10(a) to (e) may be extended by the Arbitrator for such period and for such reasons as the Arbitrator in the Arbitrators discretion may determine upon application in writing made to the Arbitrator by the Claimant or any Respondent on notice to each other Party to the arbitration, either before or within 2 days after the expiry of the relevant time limits and, in the event that the other Party or Parties opposes the application, the other Party or Parties shall be given an opportunity to make submissions on the application.

Schedule 12.2 - Page iv

Discovery 11. Unless otherwise directed by the Arbitrator or agreed between the Parties, the Parties shall exchange the documents in each Partys possession, power or control which are not privileged and are relevant to any issue in the Dispute by no later than 10 days after the expiry of the last of the relevant time limits for the exchange of statements prescribed in paragraphs 10(a) to 10(e). 12. Unless otherwise directed by the Arbitrator or agreed between the Parties, each Party shall be entitled to conduct an examination for discovery of a representative of any adverse Party. Subject to the discretion of the Arbitrator, the examining party shall be entitled to name the representative to be examined. Case Conferences 13. At any time after the appointment of the Arbitrator, any Party may apply in writing to the Arbitrator to convene a case conference for the determination of any preliminary or interlocutory matter or to provide for planning and scheduling of the arbitration. The Arbitrator shall convene the case conference on the date specified in the application or such other date in the discretion of the Arbitrator. 14. Issues to be determined at the first case conference after the completion of the steps prescribed by paragraphs 10(a) to 10(e) or the expiry of the time limit for any mandatory step not taken by such time may include the following: (a) any request for an adjournment of the case conference and the terms, if any, of any adjournment; (b) (c) the identification and narrowing of the issues in the arbitration; the desirability of the Parties engaging in further settlement negotiations or some other dispute resolution process, with or without the assistance of a mediator; (d) the necessity for, timing of, and restrictions applicable to oral examination for discovery;

Schedule 12.2 - Page v

(e)

the fixing of a date, time and place for the Hearing (as defined in paragraph 15 of this Schedule); and

(f) The Hearing 15.

the manner of presentation of evidence at the Hearing.

At the date, time and place fixed at a case conference or, if no case conference has been held, at a date, time and place fixed by the Arbitrator which date shall be within 120 days of the appointment of the Arbitrator, the Arbitrator shall convene a hearing (the Hearing). If there has been no case conference, the Hearing shall be convened by delivery by the Arbitrator of notice of the date, time and place of the Hearing to each Party to the arbitration at least 45 days before the date of the Hearing.

16.

Either prior to or at the conclusion of the Hearing, the Arbitrator may require the delivery of a written statement of fact, law and argument to the Arbitrator and to each other Party. The timing for the delivery of this statement is at the discretion of the Arbitrator.

17.

At least 10 days prior to the commencement of the Hearing, each Party shall deliver to the Arbitrator and each other Party all sworn statements or transcripts or portions of transcripts on which the Party intends to rely at the Hearing.

18.

At the Hearing, the Arbitrator shall consider any evidence as would be admissible in a court of law and any other evidence the Arbitrator considers appropriate to determine the Dispute. Evidence may be presented by affidavit or by oral sworn testimony as the Party presenting the evidence considers appropriate, provided that no affidavit of any witness shall be accepted by the Arbitrator unless each other adverse Party has been given an opportunity at the Hearing to cross examine the witness on the information contained in the affidavit. The Arbitrator shall determine the applicability of any privilege or

immunity and the admissibility, relevance, materiality and weight of any evidence offered. 19. A Party who intends to call an expert witness at the Hearing or file an affidavit from an expert witness at the Hearing shall, not less than 20 days before the commencement of

Schedule 12.2 - Page vi

the Hearing, deliver to every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed evidence. 20. A Party who intends to call an expert witness at the Hearing or file an affidavit from an expert witness to respond to the expert witness of another Party shall, not less than 10 days before the commencement of the hearing, serve on every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed testimony. 21. An expert witness may not give evidence at the Hearing except with leave of the Arbitrator unless the substance of his or her evidence is set out in a report delivered pursuant to paragraphs 19 and 20, as the case may be, or in a supplementary report delivered on every other Party not less than 5 days before the commencement of the Hearing. 22. The Arbitrator shall have the right to exclude any witness from the Hearing during the testimony of any other witness. 23. Despite subsection 28(1) of the Arbitration Act, the Arbitrator shall not, without the written consent of all Parties, retain any expert. Awards 24. The Arbitrator may make final, interim, interlocutory and partial awards. Any award shall be considered to be validly made if it is approved by the Arbitrator. An award may grant any remedy or relief which the Arbitrator considers just and equitable and consistent with the intentions of the Parties under this Agreement and the laws of the Province of New Brunswick and Canada applicable therein. The Arbitrator shall state in the award whether the Arbitrator views the award as final or interim, for purposes of any judicial proceedings in connection with such award. Subject to section 39 of the

Arbitration Act, the Arbitrators final award shall be made within 30 days of the conclusion of the Hearing.

Schedule 12.2 - Page vii

25.

Unless interest is otherwise specified in the Agreement, all awards for the payment of money shall include prejudgment and postjudgment interest in accordance with sections 45 and 46 of the Judicature Act (New Brunswick), with necessary modifications.

26. 27.

All awards shall be in writing and shall state reasons. Subject to any agreement among the Parties, the Arbitrator may apportion the costs of the arbitration, including the reasonable fees and disbursements of the Arbitrator and the legal costs and disbursements of the Parties, between or among the Parties in such manner as the Arbitrator considers reasonable. In determining the allocation of these costs, the Arbitrator shall invite submissions as to costs and may consider, among other things, any offer of settlement made by any Party during the course of the arbitration.

28.

Executed copies of all awards shall be delivered by the Arbitrator to the Parties as soon as is reasonably possible.

29.

Subject to section 44 of the Arbitration Act, all awards of the Arbitrator shall be final and binding on the Parties, and there shall be no appeal of any such award whatsoever. The Parties undertake to satisfy any award without delay.

Additional Matters 30. All case conferences and Hearings shall be conducted in Fredericton, New Brunswick in the English language. 31. All notices or other communications required or permitted to be given under this Schedule to a Party shall be given in the manner specified in section 10.3 of this Agreement. All notices or other communications and all other documents required or permitted by this Schedule to be given by the Parties to the Arbitrator shall be given in accordance with the Arbitrators instructions. 32. The Parties desire that any Dispute should be conducted in strict confidence and that, subject to the exceptions set out in this paragraph, there shall be no disclosure to any person of the existence of the Dispute or any aspect of the Dispute except as is necessary for the resolution of the Dispute or as required by Applicable Law. Any case conference
Schedule 12.2 - Page viii

or Hearing shall be attended only by counsel and by those persons whose presence, in the opinion of any Party or the Arbitrator, is reasonably necessary for the resolution of the Dispute. All matters relating to, all evidence presented at and all submissions made in the course of an arbitration, and all documents produced in accordance with this Schedule or any order of the Arbitrator or created in the course of or for the purposes of an arbitration, as well as any arbitral award, shall be kept confidential and shall not be disclosed to any person without the prior written consent of all of the Parties except as is necessary for the resolution of the Dispute, as required in connection with an application of a Party under section 46 of the Arbitration Act, as required to enforce the arbitral award, or as required by Applicable Law or by an order of an Arbitrator made pursuant to a motion or application on notice to all Parties. Despite the foregoing, a Party may disclose such confidential information: (a) in the case of the Buyer and the Seller, to the Province or any representative thereof solely in its or his capacity as a shareholder of that Party or any Affiliate of that Party, as required by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; (b) in the case of the Buyer and the Seller, to its wholly-owned subsidiaries and its and its subsidiaries respective officers, directors, employees, agents, consultants, and advisors, provided that such Persons have been informed of the Partys confidentiality obligations hereunder; and (c) to the extent necessary, to any financial institution or other Person (from whom financing is being sought) or to advisors to any such financial institution or other Person, provided that any such financial institution, Person or advisor has been informed of the Partys confidentiality obligations hereunder and has agreed to be bound similarly thereby. 33. In the computation of time under this Schedule or an order or direction given by the Arbitrator pursuant to this Schedule, except where a contrary intention appears or the parties otherwise agree:

Schedule 12.2 - Page ix

(a)

where there is a reference to a number of days between two events, those days shall be counted by excluding the day on which the first event happens and including the day on which the second event happens, even if they are described as clear days or the words at least are used;

(b)

where the time for doing any act under this Schedule or any order or direction given by the Arbitrator expires on any day other than a Business Day, the time for doing that act shall be extended to the next Business Day; and

(c)

service of a document or notice provided for in this Schedule or any order or direction given by the Arbitrator made after 4:00 p.m. (New Brunswick time) or at any time on any day other than a Business Day, shall be deemed to have been made on the next Business Day.

Schedule 12.2 - Page x

EXECUTION COPY

NEW BRUNSWICK POWER GENERATION CORPORATION and

NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION

and

NEW BRUNSWICK POWER HOLDING CORPORATION

VESTING AGREEMENT

October 1, 2004

TABLE OF CONTENTS ARTICLE 1 INTERPRETATION................................................................................................... 3 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 Definitions ......................................................................................................... 3 Headings and Table of Contents...................................................................... 23 Gender and Number and Grammatical Changes ............................................. 23 Business Days.................................................................................................. 23 Currency .......................................................................................................... 23 Calculation of Interest ..................................................................................... 23 Statutes ............................................................................................................ 24 Invalidity of Provisions ................................................................................... 24 Entire Agreement............................................................................................. 24 Waiver ............................................................................................................. 25 Amendment ..................................................................................................... 25 Governing Law................................................................................................ 26 Technical Terms .............................................................................................. 26 Schedules......................................................................................................... 26

ARTICLE 2 CAPACITY ................................................................................................................ 27 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Initial Nominated Capacity.............................................................................. 27 Reduction of Base Load Capacity ................................................................... 27 Reduction of Peaking Capacity ....................................................................... 28 Reduction of Nominated Capacity .................................................................. 28 Notice of Shutdown......................................................................................... 29 Supply of Capacity .......................................................................................... 29 Surplus Capacity.............................................................................................. 30

ARTICLE 3 NET ENERGY........................................................................................................... 32 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Net Energy....................................................................................................... 32 Unit Generator Load and Common Service Load........................................... 34 Prohibition ....................................................................................................... 34 Surplus Net Energy.......................................................................................... 35 Title and Risk of Loss...................................................................................... 36 Transmission and Related Costs...................................................................... 36 Emission Credits and Other Environmental Attributes ...................................37

ARTICLE 4 COLESON COVE OFF-TAKE ............................................................................... 38 4.1 Purchase and Sale ............................................................................................ 38

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4.2 4.3 4.4 4.5

Price................................................................................................................. 39 Fuel Procurement............................................................................................. 40 Disco Obligations ............................................................................................ 42 No Amendment ............................................................................................... 42

ARTICLE 5 ANCILLARY SERVICES........................................................................................ 43 5.1 5.2 Self-Supply by Disco....................................................................................... 43 Payment for Ancillary Services.......................................................................43

ARTICLE 6 PRICE......................................................................................................................... 45 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 Capacity Payment............................................................................................ 45 Vesting Energy Price....................................................................................... 45 Third Party Gross Margin Credit..................................................................... 46 Third Party Gross Margin Adjustment ............................................................ 47 Third Party Purchases Benefit Adjustment ..................................................... 47 CT Energy Price .............................................................................................. 47 Purchased Energy Price................................................................................... 48 Interruptible Energy Price ............................................................................... 49 Excess Entitlement .......................................................................................... 49 ORIMULSION Adjustment .......................................................................... 50 Point Lepreau PPA Shortfall ........................................................................... 51 Hydro Flow...................................................................................................... 51 Fuel Delivery System ...................................................................................... 52 Exit Adjustment............................................................................................... 52

ARTICLE 7 ADDITIONAL COSTS ............................................................................................. 54 7.1 7.2 7.3 Refurbishment ................................................................................................. 54 Adjustments for Environmental Costs.............................................................56 Exception......................................................................................................... 64

ARTICLE 8 OPERATIONS...........................................................................................................66 8.1 8.2 8.3 8.4 8.5 8.6 8.7 Metering .......................................................................................................... 66 Operation, Repair and Maintenance ................................................................ 66 Information ...................................................................................................... 67 Inspection ........................................................................................................ 68 Regulatory Compliance ...................................................................................68 Notification of Actions .................................................................................... 68 Agency............................................................................................................. 69 - ii -

ARTICLE 9 OUTAGES.................................................................................................................. 71 9.1 9.2 9.3 9.4 9.5 9.6 9.7 Planned Outage Schedule ................................................................................ 71 Changes to Planned Outage Schedule ............................................................. 71 Forced Outages................................................................................................ 72 Maintenance Outages ...................................................................................... 73 Cost of Changes............................................................................................... 74 Scheduling ....................................................................................................... 74 Unit Generators at the Genco Facilities........................................................... 74

ARTICLE 10 REPRESENTATIONS AND WARRANTIES........................................................ 75 10.1 10.2 10.3 Representations and Warranties of Genco ...................................................... 75 Representations and Warranties of Disco........................................................ 76 Representations and Warranties of NB Power Holdco ................................... 77

ARTICLE 11 CONTRACT OPERATION AND ADMINISTRATION...................................... 79 11.1 11.2 The Operating Committee ............................................................................... 79 Record Retention ............................................................................................. 79

ARTICLE 12 BILLING AND PAYMENT .....................................................................................81 12.1 12.2 12.3 12.4 12.5 Billing and Other Statements........................................................................... 81 Payments and Interest...................................................................................... 81 Netting ............................................................................................................. 82 Adjustments..................................................................................................... 82 Disputed Bills .................................................................................................. 82

ARTICLE 13 CREDIT AND COLLATERAL REQUIREMENTS ............................................. 84 13.1 Disco Credit and Collateral Requirements ...................................................... 84

ARTICLE 14 FORCE MAJEURE ..................................................................................................86 14.1 14.2 14.3 14.4 Effect of Invoking Force Majeure and Notice................................................. 86 Definition of Force Majeure............................................................................ 87 No Capacity Payment ...................................................................................... 88 NB Power Holdco Limitation.......................................................................... 89

- iii -

ARTICLE 15 REMEDIES FOR FAILURE TO DELIVER CAPACITY AND ENERGY .......90 15.1 Gencos Failure to Deliver Capacity and Energy............................................ 90

ARTICLE 16 TERM, DEFAULT AND TERMINATION............................................................ 92 16.1 16.2 16.3 16.4 16.5 16.6 Term ................................................................................................................ 92 Events of Default by Disco.............................................................................. 92 Termination by Genco..................................................................................... 94 Events of Default by Genco ............................................................................ 95 Termination by Disco ...................................................................................... 97 Termination and Survival ................................................................................ 98

ARTICLE 17 LIABILITY AND INDEMNIFICATION ............................................................... 99 17.1 17.2 17.3 17.4 17.5 17.6 Limitation of Liability ..................................................................................... 99 Liquidated Damages ........................................................................................ 99 Indemnification by Genco .............................................................................100 Indemnification by Disco ..............................................................................101 Sole Remedies and Equitable Relief ............................................................. 102 Defence of Claims .........................................................................................103

ARTICLE 18 INSURANCE ...........................................................................................................107 18.1 18.2 Insurance Coverage .......................................................................................107 Damage, Destruction and Repair...................................................................108

ARTICLE 19 MISCELLANEOUS ................................................................................................ 109 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 19.9 19.10 19.11 19.12 Heritage PPAs ...............................................................................................109 Taxes..............................................................................................................109 Assignment ....................................................................................................110 Set-off ............................................................................................................113 Audit ..............................................................................................................114 Informal Dispute Resolution Procedures.......................................................116 Arbitration Procedures...................................................................................117 Further Assurances ........................................................................................117 Confidentiality...............................................................................................117 Notice Provisions...........................................................................................119 Time of the Essence.......................................................................................122 Legal Relationship.........................................................................................122 - iv -

19.13 Counterparts ..................................................................................................122 SCHEDULES Schedule 1.1.17 Schedule 1.1.30 Schedule 1.1.67 Schedule 1.1.80 Schedule 6.2 Schedule 6.3 Schedule 7.2 Schedule 19.7 Capacity Payment CPI Adjustment Genco Heritage Assets Heritage PPAs Calculation of Fuel Component of Vesting Energy Price Third Party Gross Margin Credit Adjustments to Capacity Payment Arbitration Procedures

- v -

VESTING AGREEMENT THIS VESTING AGREEMENT is made effective this 1st day of October, 2004, B E T W E E N: NEW BRUNSWICK POWER GENERATION CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (Genco) and NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (Disco) and NEW BRUNSWICK POWER HOLDING CORPORATION, a duly incorporated company under and by virtue of the laws of the Province of New Brunswick, with head office therein at the City of Fredricton, in the County of York (NB Power Holdco)

RECITALS: A. Disco and Genco are the successors to the distribution business and the electricity generation business (with the exception of Coleson Cove and Point Lepreau), respectively, of New Brunswick Power Corporation.

- 2 B. New Brunswick Power Corporation was restructured as a result of the proclamation of the Electricity Act on the date hereof and its assets and liabilities were transferred, in part, to five corporations, two of which are Disco and Genco. C. The parties intend that Genco operate and maintain the Unit Generators owned by it until the end of their respective operating lives. D. Genco is required to make the capacity and Net Energy from the Genco Heritage Assets and Coleson Cove available to Disco in accordance with the terms of this Agreement. E. Disco is required to purchase capacity and Net Energy from Genco in accordance with the terms of this Agreement. F. NB Power Holdco is required to purchase ORIMULSION, to the extent possible and as requested by Genco, acting as Discos agent in this regard, for use at Coleson Cove. G. Genco is required to reimburse NB Power Holdco for the costs of ORIMULSION purchased by NB Power Holdco for use at Coleson Cove. NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties agree as follows:

- 3 ARTICLE 1 INTERPRETATION 1.1 Definitions In this Agreement and the recitals to this Agreement: 1.1.1 Actual Capital Costs has the meaning attributed to that term in

section 7.2.4.1. 1.1.2 Affected Unit Generator has the meaning attributed to that term in

section 7.2.1. 1.1.3 Affiliate means, with respect to any Person, any other Person that, directly or

indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under the common Control of a third Person. 1.1.4 Agreement means this vesting agreement and all Schedules attached to this

vesting agreement, in each case as they may be amended, restated or replaced from time to time, and unless otherwise indicated, references to Articles, recitals, sections and Schedules are references to articles, recitals, sections and schedules in this vesting agreement. 1.1.5 Alternative Arrangement means any power purchase agreement, tolling

agreement, hedging or other derivatives agreement or any other arrangement relating to the supply of capacity or Energy to Disco or the price thereof between Disco and any Person other than Genco. 1.1.6 Ancillary Services means services and products necessary to maintain the

reliability of the SO-Controlled Grid, including frequency control, voltage control, reactive power and operating reserve. 1.1.7 Ancillary Services Agreements means the ancillary services agreements

between the SO and Genco in respect of the Genco Facilities or, if applicable, Coleson

- 4 Cove or the Heritage PPA Facilities effective as of October 1, 2004, as amended, restated or replaced from time to time. 1.1.8 1.1.9 Annual Benefits has the meaning attributed to that term in section 6.4. Applicable Law means, collectively, all applicable laws, statutes, ordinances,

decrees, rules, regulations, by-laws, legally enforceable policies, codes and guidelines, the Market Rules, judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, decisions, directives, rulings and awards, and conditions of any grant of approval, permission, certification, consent, registration, authority or licence by any court, statutory body, self-regulatory authority, stock exchange or other Governmental Authority. 1.1.10 Assumed Hydro Production has the meaning attributed to that term in

section 6.12. 1.1.11 Base Load Assets means those Genco Heritage Assets that produce or supply

energy at relatively high annual capacity factors and which are designated as Base Load Assets in Schedule 1.1.67, and Coleson Cove. 1.1.12 Base Load Capacity means: 1.1.12.1 100% of the aggregate DNCs of the Unit Generators that are Base Load Assets which form part of the Genco Facilities, provided that, for purposes of this Agreement, the DNC of each such Unit Generator shall not exceed the DNC listed for that Unit Generator in Schedule 1.1.67 and if the DNC of such a Unit Generator exceeds the DNC listed for that Unit Generator in Schedule 1.1.67, the DNC for that Unit Generator, for purposes of this Agreement, shall equal the DNC listed for that Unit Generator in Schedule 1.1.67; 1.1.12.2 100% of the capacity purchased by Genco under each Heritage PPA which forms part of the Base Load Assets; and

- 5 1.1.12.3 100% of the capacity purchased by Disco under the Coleson Cove TA. 1.1.13 1.1.14 1.1.15 1.1.16 Bill means either a Genco Bill, a Disco Bill or an NB Power Holdco Bill. Billing Month has the meaning attributed to that term in section 12.1.1. Board has the meaning attributed to that term in section 1.11. Business Day means any day, other than a Saturday, Sunday, any statutory

holiday in the Province of New Brunswick, or any day on which banking institutions in Fredericton, New Brunswick are not open for the transaction of business. 1.1.17 1.1.18 Capacity Payment has the meaning attributed to that term in Schedule 1.1.17. Capital Threshold means: 1.1.18.1 for the Fiscal Year ending March 31, 2005, $5,000,000; and 1.1.18.2 for each Fiscal Year thereafter, the product of (i) the Capital Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. 1.1.19 Change of Control means the occurrence of any change in the Control or For greater certainty, a change in either the equity

Effective Control of a Person.

ownership or the voting control of a Person which results in a decrease in the beneficial ownership of or control over the equity value or voting rights or interests, respectively, of that Person from more than 50% to 50% or less of the outstanding equity value or voting rights or interests, respectively, shall be considered a Change of Control for the purposes of this Agreement. 1.1.20 Coleson Cove means the Coleson Cove generating station located in the City

of Saint John, New Brunswick, and owned by Coleson Cove Corporation. 1.1.21 Coleson Cove Corporation means New Brunswick Power Coleson Cove

Corporation, a corporation incorporated under the laws of New Brunswick, and includes

- 6 any successor to New Brunswick Power Coleson Cove Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Coleson Cove Corporation or any continuance under the laws of another jurisdiction. 1.1.22 Coleson Cove TA means the tolling agreement between Coleson Cove

Corporation, Disco and NB Power Holdco dated October 1, 2004, as amended, restated or replaced from time to time in accordance with section 4.5. 1.1.23 Collection Period means the period in days commencing on the first day of a

Billing Month and ending on the date that is 30 days after the Payment Date for that Billing Month. 1.1.24 Commercially Reasonable Efforts means efforts which are designed to

enable a party, directly or indirectly, to satisfy or perform its obligations under this Agreement or to otherwise assist in the consummation of the transactions contemplated by this Agreement and which do not require the performing party to expend any funds or assume liabilities other than expenditures or liabilities which are reasonable in nature and amount in the context of such obligations or transactions or, where applicable, usual commercial practice. 1.1.25 Common Service Load means, in respect of a Genco Facility, the total

amount of Energy measured in MWh consumed by that Genco Facility which is not Unit Generator Load, as measured at the applicable Metering Installation(s). 1.1.26 Confidential Information has the meaning attributed to that term in

section 19.9. 1.1.27 Contribution to Fixed Costs has the meaning attributed to that term in

section 6.2.6. 1.1.28 Control means: 1.1.28.1 when applied to the relationship between a Person and a corporation, the beneficial ownership by such Person at the relevant time of shares of the

- 7 corporation: (i) carrying more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of the corporation, and (ii) representing more than 50% of the equity value of the corporation; 1.1.28.2 when applied to the relationship between a Person and a partnership or joint venture, (i) the beneficial ownership by such Person at the relevant time of: (a) more than 50% of the voting interests of the partnership or joint venture, and (b) partnership or joint venture interests representing more than 50% of the equity value of the partnership or joint venture, and (ii) it can reasonably be expected that the Person directs the affairs of the partnership or joint venture; 1.1.28.3 when applied to the relationship between a Person and a limited partnership, the beneficial ownership by such Person at the relevant time of: (i) shares of the general partner or general partners of the limited partnership carrying more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of such general partner or general partners such that it can reasonably be expected that the Person directs the affairs of the limited partnership, and (ii) partnership interests representing more than 50% of the equity value of the limited partnership; or 1.1.28.4 when applied to the relationship between a Person and another Person that is not a corporation, partnership, joint venture or limited partnership, (i) the beneficial ownership by such Person at the relevant time of more than 50% of the equity, participating and any other ownership interests of that other Person, and (ii) it can reasonably be expected that the Person directs the affairs of that other Person; and the term Controlled by has a corresponding meaning; provided that a Person (the first-mentioned Person) who Controls a corporation, partnership, limited partnership, joint venture or other Person (the second-mentioned Person) shall be deemed to Control a corporation, partnership, limited partnership, joint venture or other Person which is Controlled by the second-mentioned Person and so on.

- 8 1.1.29 CPI (New Brunswick) means the Consumer Price Index for New Brunswick,

All items (Not Seasonally Adjusted), 1992 = 100, or any index published in substitution therefor if the Consumer Price Index for New Brunswick, All items (Not Seasonally Adjusted), 1992 = 100, is no longer published, or any other replacement index designated by Genco and acceptable to Disco, acting reasonably, published by Statistics Canada (or any successor thereof or any other Governmental Authority) from time to time. 1.1.30 1.1.31 CPI Adjustment has the meaning attributed to that term in Schedule 1.1.30. CT Threshold means, for the Fiscal Year ending March 31, 2005, $200 per

MWh, and for each Fiscal Year thereafter the product of (i) the CT Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. 1.1.32 CTs means the combustion turbine generators forming part of the Genco For greater certainty, the CTs are

Facilities and CT means any one of them. considered Peaking Assets. 1.1.33

Dalhousie means the Dalhousie generating station located in Dalhousie, New

Brunswick. 1.1.34 1.1.35 Direct Claim has the meaning attributed to that term in section 17.6.8. Disco means New Brunswick Power Distribution and Customer Service

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Distribution and Customer Service Corporation, resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Distribution and Customer Service Corporation. 1.1.36 1.1.37 Disco Bill has the meaning attributed to that term in section 12.1.2. Disco Event of Default has the meaning attributed to that term in

section 16.2. 1.1.38 Disco Indemnitee has the meaning attributed to that term in section 17.3.1.

- 9 1.1.39 1.1.40 1.1.41 Disputes has the meaning attributed to that term in section 19.6. Disputes Committee has the meaning attributed to that term in section 19.6. DNC means, in respect of a Unit Generator, that Unit Generators

demonstrated net maximum capability to deliver Net Energy to that Unit Generators Point of Delivery, as declared from time to time by Genco and acceptable to Disco, acting reasonably, provided that if the SO determines, establishes or audits the demonstrated net maximum capability of a Unit Generator, that Unit Generators DNC for the purposes of this Agreement shall equal such demonstrated net maximum capability determined, established or audited by the SO from time to time. For greater certainty, a Unit Generators DNC shall be calculated net of that Unit Generators Unit Generator Load and net of that Unit Generators pro rata share of any Common Service Load for the generating station of which that Unit Generator forms a part. 1.1.42 Effective Control means control in fact by one Person, together with its

Affiliates and those with whom it is acting in concert, exercising effective control over another Person or over the decision-making of that other Person, either directly or indirectly, whether through the holding of shares of a corporation or through the holding of a significant portion of any class of shares of a corporation or through the holding of units in a partnership or limited partnership or through the holding of outstanding debt of a corporation, partnership or limited partnership or of any shareholder or member of a corporation, partnership or limited partnership or by any other means; any Person which holds voting or equity securities (as defined in the Securities Act (Ontario)) representing, in the aggregate, 50% or more of the outstanding securities of any class of the Person shall be deemed for the purposes of this Agreement to have Effective Control of that Person. 1.1.43 Electric Finance Corporation means New Brunswick Electric Finance

Corporation, a corporation incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Electric Finance Corporation resulting from any amalgamation, merger, arrangement or other reorganization of or including New

- 10 Brunswick Electric Finance Corporation or any continuance under the laws of another jurisdiction. 1.1.44 1.1.45 Electricity Act means the Electricity Act (New Brunswick). Emission Allowances means any allowances issued, allocated or granted

under Applicable Law authorizing the emission into the Environment of specified substances in specified levels or quantities, including the emission of particulates, nitrogen oxide, sulphur dioxide and carbon dioxide. 1.1.46 Emission Credits means any credits issued, allocated or granted under

Applicable Law which are associated with an amount of emissions into the Environment which have been avoided or reduced. 1.1.47 1.1.48 1.1.49 Energy means electrical energy measured in MWh or GWh, as applicable. Energy Entitlement has the meaning attributed to that term in section 3.1.2. Environment means the air, water (including surface water and underground

water) and land. 1.1.50 Environmental Costs has the meaning attributed to that term in

section 7.2.1.2. 1.1.51 Environmental Law means all Canadian federal, provincial and municipal

laws, statutes, ordinances, decrees, regulations, by-laws, decisions and rules, and any legally enforceable orders, codes, policies and guidelines of any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any permits, certificates, approvals, consents, authorizations, registrations or licences issued by any Canadian Governmental Authority (whether federal, provincial, municipal or local), and any requirements or obligations arising under Canadian common law, relating specifically to the Environment, the Release and/or threatened Release of Hazardous Substances into the Environment, and/or the manufacture, processing, distribution, use, treatment, storage, transport, disposal and/or handling of Hazardous Substances, including the Canadian Environmental Assessment Act (Canada), the Canadian Environmental Protection Act,

- 11 1999 (Canada), the Fisheries Act (Canada), the Pest Control Products Act (Canada), the Transportation of Dangerous Goods Act, 1992 (Canada), the Clean Air Act (New Brunswick), the Clean Environment Act (New Brunswick), the Clean Water Act (New Brunswick), and the Transportation of Dangerous Goods Act (New Brunswick), and the respective regulations thereunder and any municipal noise or sewer use by-law. 1.1.52 Estimated Collection Value means an estimated amount payable for a

Collection Period by Disco to Genco under this Agreement from time to time, including for Net Energy that is expected to be Scheduled with the SO and capacity. The Estimated Collection Value shall be determined by Genco, acting reasonably, by reference to Scheduling instructions and PROMOD for the Collection Period. 1.1.53 Estimated Shutdown Date means, in respect of a Unit Generator, that date

specified as such in Schedule 1.1.67, subject to section 2.5. 1.1.54 Default. 1.1.55 1.1.56 1.1.57 1.1.58 Excess Capacity has the meaning attributed to that term in section 2.7.1. Excess Entitlement has the meaning attributed to that term in section 3.1.2. Excluded Month has the meaning attributed to that term in section 9.2.1.3. Final Hourly Balanced Schedule has the meaning attributed to that term in Event of Default means a Disco Event of Default or a Genco Event of

the Market Rules. 1.1.59 1.1.60 Firm Estimate has the meaning attributed to that term in section 7.2.4. Fiscal Year means the 12-month period from April 1 in one year to March 31

in the next year, inclusive. 1.1.61 1.1.62 Force Majeure has the meaning attributed to that term in section 14.2. Forced Outage means an unplanned Unit Generator outage, including an

unplanned Unit Generator outage that is a result of:

- 12 1.1.62.1 automatic action of equipment without any action of the operator; 1.1.62.2 action of the operator where such operator reasonably believes that such action is necessary to avoid: (i) compromising the health or safety of any Person, (ii) compromising the integrity of the Environment, (iii) damage to material plant or facilities, or (iv) breaching the provisions of Applicable Law; 1.1.62.3 action of the operator where such operator reasonably believes that such action is necessary to avoid an automatic disconnection of a Unit Generator that would have occurred shortly after the intentional disconnection of a Unit Generator by the operator; or 1.1.62.4 Force Majeure. 1.1.63 1.1.64 Fuel Component has the meaning attributed to such term in section 6.2.5. Genco means New Brunswick Power Generation Corporation, a corporation

incorporated under the laws of New Brunswick, and includes any successor to New Brunswick Power Generation Corporation, resulting from any amalgamation, merger, arrangement or other reorganization of or including New Brunswick Power Generation Corporation. 1.1.65 1.1.66 Genco Bill has the meaning attributed to that term in section 12.1.1. Genco Facilities means the plant, facilities, buildings, equipment, supplies

and improvements owned by Genco which are located at, on, in, upon, over, across, under or within the Genco Heritage Assets. 1.1.67 Genco Heritage Assets means those assets listed in Schedule 1.1.67 which

were transferred to Genco as of the date hereof. 1.1.68 1.1.69 Genco Indemnitee has the meaning attributed to that term in section 17.4.1. Generation Interconnection Agreements means the generation

interconnection agreements between Genco and New Brunswick Power Transmission Corporation, as amended, restated or replaced from time to time.

- 13 1.1.70 Good Utility Practices means, as applicable to the party obliged to use Good

Utility Practices hereunder, any of the practices, methods and activities adopted by a significant portion of the North American electric utility industry as good practices applicable to facilities of similar design, size and capacity to the relevant Unit Generator or any of the practices, methods or activities which, in the exercise of skill, diligence, prudence, foresight and reasonable judgment by a prudent operator in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, expedition and Applicable Law. Good Utility Practices are not intended to be limited to the optimal practices, methods or acts to the exclusion of all others, but rather to be practices, methods or acts generally accepted in the North American electric utility industry. 1.1.71 Governmental Authority means any federal, provincial, municipal or local

government, parliament or legislature, or any regulatory authority, agency, tribunal, commission, board or department of any such government, parliament or legislature, or any court or other law, regulation or rule-making entity, or any arbitrator, each having or reasonably purporting to have jurisdiction in the relevant circumstances, including, for greater certainty, the SO, or any Person acting or reasonably purporting to act under the authority of any such Governmental Authority. 1.1.72 Grandview Facility means the electrical cogeneration facilities which will

produce the electric capacity and energy to be sold pursuant to the Grandview PPA and which are located adjacent to the Irving Oil Limited refinery in the City of Saint John, New Brunswick. 1.1.73 Grandview PPA means the power purchase agreement between New

Brunswick Power Corporation and Grandview Cogeneration Corporation for the provision of electric capacity and energy to New Brunswick Power Corporation from the Grandview Facility, dated March 31, 2003, which power purchase agreement was transferred to Genco as of the date hereof, as amended, restated or replaced from time to time in accordance with section 19.1.

- 14 1.1.74 1.1.75 GST means all tax payable under Part IX of the Excise Tax Act (Canada). Guarantee means a guarantee in a form satisfactory to Genco, acting

reasonably, as provided by a Guarantor pursuant to section 13.1.1.1, or replaced pursuant to section 13.1.4. 1.1.76 Guarantor has the meaning attributed to that term in section 13.1.1.1, and

includes a Guarantors permitted assignee pursuant to section 13.1.4. 1.1.77 1.1.78 GWh means gigawatt hour. Hazardous Substances means: 1.1.78.1 any chemicals, materials or substances defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, hazardous constituents, restricted hazardous materials,

extremely hazardous substances, toxic substances, deleterious substances, contaminants, pollutants, toxic pollutants or words of similar meaning and regulatory effect under any applicable Environmental Law, including any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, friable asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls waste; and 1.1.78.2 any other material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law. 1.1.79 Heritage PPA Facilities means the plant, facilities, buildings, equipment,

supplies and improvements located at, on, in, upon, over, across, under or within the generating stations supplying capacity and Energy to Genco under a Heritage PPA. 1.1.80 Heritage PPAs means the power purchase agreements listed in

Schedule 1.1.80. 1.1.81 HST means all tax payable under the Harmonized Sales Tax Act (New

Brunswick) and under Part IX of the Excise Tax Act (Canada).

- 15 1.1.82 including, included and include means including, included or include,

each without limitation. 1.1.83 1.1.84 Indemnifiable Loss has the meaning attributed to that term in section 17.3.1. Indemnifying Party means a Person required to provide indemnification

under this Agreement. 1.1.85 Indemnitee means a Genco Indemnitee or a Disco Indemnitee or an NB

Power Holdco Indemnitee, as the case may be. 1.1.86 In-Province Supply Requirements means all capacity and Energy, as the

case may be, required by Disco to meet its requirements to supply its customers in New Brunswick from time to time, including Discos obligations to supply Energy to Interruptible Customers in a manner consistent with the RSP Manual. 1.1.87 Insolvency Legislation means the Bankruptcy and Insolvency Act (Canada),

the Companies Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act (Canada) and any other similar legislation, statutes, regulations and rules. 1.1.88 Interest Rate means, for any day, the annual rate of interest equal to the rate

which the Bank of Montreal establishes at its principal office in Fredericton, New Brunswick as the reference rate of interest to determine interest rates it will charge on such day for commercial loans in Canadian dollars made to its customers in Canada and which it refers to as its prime rate of interest, plus 1%. 1.1.89 Interruptible Customers means those customers to which Disco supplies

interruptible Energy. 1.1.90 Interruptible Energy Price has the meaning attributed to that term in

section 6.8. 1.1.91 Knowledge of any Person means the actual knowledge of the corporate

officers of that Person charged with responsibility for the particular function.

- 16 1.1.92 Letter of Credit means one or more irrevocable, standby letters of credit

issued by a Canadian commercial bank or foreign bank with a Canadian branch having an S&P debt rating in respect of its most senior unsecured debt of at least A- or another debt rating at least equivalent to the foregoing S&P rating in respect of its most senior unsecured debt, and in a form acceptable to the receiving party, acting reasonably. 1.1.93 Load Forecast means, in respect of any period of time, the forecasted

capacity or Energy requirements, as the case may be, necessary to supply the In-Province Requirements over that period of time. 1.1.94 1.1.95 Lower Threshold has the meaning attributed to that term in Schedule 6.3. Maintenance Outage means an unplanned Unit Generator outage which is

required as a result of equipment failure, an order from a Governmental Authority, or any other event or condition which, without a Unit Generator outage, would reduce safety or materially reduce unit reliability, and the operator has some discretion to schedule the outage (as opposed to a Forced Outage where the operator has no such discretion). 1.1.96 Major Refurbishment Amount means, in respect of a Unit Generator at any

time, the product of (i) the Major Refurbishment Dollar Factor at that time, and (ii) the DNC of the Unit Generator at that time. 1.1.97 Major Refurbishment Dollar Factor means, for the Fiscal Year ending

March 31, 2005, $100,000 per MW, and for each Fiscal Year thereafter, the product of (i) the Major Refurbishment Dollar Factor for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year. 1.1.98 Major Refurbishment Life Factor means, in respect of a Unit Generator at

any time, the quotient obtained by dividing the number of years remaining at that time until that Unit Generators Estimated Shutdown Date at that time by 25, and if the Major Refurbishment Life Factor exceeds one, it shall be deemed to equal one. 1.1.99 Major Refurbishment Threshold means, in respect of a Unit Generator

forming part of the Genco Facilities at any time, the product of (i) the Major

- 17 Refurbishment Amount for that Unit Generator at that time, and (ii) the Major Refurbishment Life Factor for that Unit Generator at that time. 1.1.100 Market Participant has the meaning attributed to that term in the Market Rules. 1.1.101 Market Price means at any time the price at which capacity or Energy, as the case may be, is sold at that time or as close as possible to that time in the open market and that is not sold at a forced sale, but is sold in the usual and ordinary course of trade between buyers and sellers equally free to bargain, as established by records of sales. 1.1.102 Market Rules means the rules made under Section 58 of the Electricity Act. 1.1.103 Metering Installation means any apparatus used to measure electrical quantities. 1.1.104 Millbank Firm Contract means the firm power contract between New Brunswick Power Corporation and Hydro Qubec dated May 28, 1990 for the sale of capacity and Energy to Hydro Qubec from the Millbank generating station, which contract was transferred to Genco on the date hereof. 1.1.105 Minimum Credit Rating has the meaning attributed to that term in section 13.1.3. 1.1.106 Monthly Assumed Hydro Production has the meaning attributed to that term in section 6.12. 1.1.107 Monthly Payment has the meaning attributed to that term in Schedule 1.1.17. 1.1.108 MW means megawatt. 1.1.109 MWh means megawatt hour. 1.1.110 NB Power Holdco means New Brunswick Power Holding Corporation, a corporation continued under the laws of New Brunswick, and includes any successor to New Brunswick Power Holding Corporation resulting from any amalgamation, merger,

- 18 arrangement or other reorganization of or including New Brunswick Power Holding Corporation or any continuance under the laws of another jurisdiction. 1.1.111 NB Power Holdco Bill has the meaning attributed to that term in section 12.1.3. 1.1.112 NB Power Holdco Indemnitee has the meaning attributed to that term in section 17.3.1. 1.1.113 Net Energy means the aggregate of: 1.1.113.1 the aggregate Net Generation per Unit for all of the Unit Generators which form part of the Genco Facilities less, subject to section 3.2, the aggregate Common Service Load for all Genco Facilities; 1.1.113.2 the aggregate Energy that Genco receives pursuant to the Heritage PPAs, measured in MWh; and 1.1.113.3 the aggregate Energy that Genco receives pursuant to section 4.1, measured in MWh. 1.1.114 Net Generation per Unit means, in respect of a Unit Generator which forms part of the Genco Facilities, the total amount of Energy measured in MWh at that Unit Generators Point of Delivery less the Unit Generator Load applicable to that Unit Generator measured in MWh. For greater certainty, Net Generation per Unit can be a negative amount for the purposes of this Agreement, subject to section 3.2. 1.1.115 Nominated Capacity has the meaning attributed to that term in section 2.1. 1.1.116 O&M Threshold means: 1.1.116.1 for the Fiscal Year ending March 31, 2005, $500,000; and 1.1.116.2 for each Fiscal Year thereafter, the product of (i) the O&M Threshold for the immediately preceding Fiscal Year, and (ii) the CPI Adjustment for the immediately preceding calendar year.

- 19 1.1.117 Operating Committee has the meaning attributed to that term in section 11.1. 1.1.118 ORIMULSION Adjustment has the meaning attributed to that term in section 6.10.1. 1.1.119 ORIMULSION Fuel Supply Agreement means the fuel supply agreement between New Brunswick Power Corporation and Bitumenes Orinoco, S.A. and binding on PDVSA, effective May 6, 2003, for the supply of ORIMULSION for use at Coleson Cove, as such agreement may be amended, restated or replaced from time to time. 1.1.120 Payee has the meaning attributed to that term in section 12.2. 1.1.121 Payment Date has the meaning attributed to that term in section 12.2. 1.1.122 Payor, except in section 19.2 where such term is separately defined, has the meaning attributed to that term in section 12.2. 1.1.123 PDVSA means the Petroleos de Venezuela, S.A. 1.1.124 Peaking Assets means those Genco Heritage Assets that produce or supply energy at relatively low annual capacity factors and which are designated as Peaking Assets in Schedule 1.1.67. 1.1.125 Peaking Capacity means, subject to section 2.3 and section 2.4.1, 100% of the aggregate DNCs of the Unit Generators that are Peaking Assets, provided that, for purposes of this Agreement, the DNC of each such Unit Generator shall not exceed the DNC listed for that Unit Generator in Schedule 1.1.67 and if the DNC of such a Unit Generator exceeds the DNC listed for that Unit Generator in Schedule 1.1.67, the DNC for that Unit Generator, for purposes of this Agreement, shall equal the DNC listed for that Unit Generator in Schedule 1.1.67. 1.1.126 Person means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, Governmental Authority or entity however designated or constituted.

- 20 1.1.127 Planned Outage means any Unit Generator outage other than a Maintenance Outage or a Forced Outage. For greater certainty, a Planned Outage may arise because work is being conducted on a facility which requires a Unit Generator outage, even though work is not being performed on that Unit Generator. 1.1.128 Planned Outage Schedule has the meaning attributed to that term in section 9.1. 1.1.129 Point of Delivery means, in respect of a Unit Generator, the high voltage terminals of the step-up transformer for that Unit Generator, or an alternative place if mutually agreed by the parties. 1.1.130 Point Lepreau means the Point Lepreau nuclear generating station located in Point Lepreau, New Brunswick. 1.1.131 Point Lepreau PPA means the power purchase agreement between Disco and New Brunswick Power Nuclear Corporation dated October 1, 2004, as amended, restated or replaced from time to time. 1.1.132 Point Lepreau Refurbishment In-Service Date means the In-Service Date as defined in the Point Lepreau PPA. 1.1.133 PROMOD means the computer software model used by Disco and Genco to simulate the operation of the power system and the SO-Controlled Grid, and any replacement software agreed to by Disco and Genco from time to time. PROMODs primary role is a production costing model which projects future operating costs of the generating stations, including the Genco Heritage Assets, from which Energy is to be purchased in whole or in part by Disco. 1.1.134 Province means Her Majesty the Queen in right of the Province of New Brunswick. 1.1.135 PUB has the meaning attributed to that term in section 6.14.1.

- 21 1.1.136 Refurbishment means, in respect of a Unit Generator and at any time, any refurbishment, construction or rehabilitation of or in respect of that Unit Generator that is required in order to enable that Unit Generator to continue to operate until its Estimated Shutdown Date as of the date of this Agreement. 1.1.137 Release means any spilling, leaking, pumping, pouring, emitting, venting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the Environment. 1.1.138 RSP Manual means the Rate Schedules and Policies Manual of Disco, as amended, restated or replaced from time to time. 1.1.139 S&P has the meaning ascribed to that term in section 13.1.3. 1.1.140 Schedule, Scheduled and Scheduling means all acts necessary pursuant to and in accordance with the Scheduling Procedures and the Market Rules for Disco and Genco, or either one of them, to schedule, dispatch and deliver, or to cause to be scheduled, dispatched and delivered, capacity and Energy to the applicable Points of Delivery, including, if applicable, (i) the submission or re-submission of all dispatch data or bilateral contract data to, and (ii) the receipt of dispatch communications or instructions from, the SO. 1.1.141 Scheduling Procedures means any procedures for Scheduling adopted or approved by the Operating Committee from time to time, which procedures shall comply with all applicable Market Rules. 1.1.142 Shutdown means, in respect of a Unit Generator, when that Unit Generator has stopped generating capacity and Energy, has been shutdown on a permanent basis and will eventually be decommissioned. 1.1.143 SO means the New Brunswick System Operator established under section 40 of the Electricity Act, and includes any successor thereto. 1.1.144 SO-Controlled Grid means the transmission systems with respect to which, pursuant to Applicable Law, the SO has authority to direct operations;

- 22 1.1.145 Stranded Costs Component has the meaning attributed to that term in section 6.14.2. 1.1.146 Surplus Net Energy has the meaning attributed to that term in section 3.4.1. 1.1.147 Taxes means all sales taxes, including HST, GST, use taxes, ad valorem taxes, value-added taxes, excise taxes, and any similar taxes, whether enacted before or after the date of this Agreement, but excluding taxes based on excess profits, profits, net income, taxable income or net worth, capital taxes, and any similar taxes and any payments in lieu of any such taxes. 1.1.148 Term has the meaning attributed to that term in section 16.1. 1.1.149 Termination Date has the meaning attributed to that term in section 16.1. 1.1.150 Third Party Claim has the meaning attributed to that term in section 17.6.1. 1.1.151 Third Party Gross Margin Credit has the meaning attributed to that term in Schedule 6.3. 1.1.152 Transfer means a sale, assignment, lease, sublease, mortgage, encumbrance, disposition, licence, tolling, or any other transaction whereby ownership of, or the right to control, use, occupy or operate all or part of the Genco Facilities has been transferred to, or conferred on, any Person. Transferred has a corresponding meaning. 1.1.153 Transmission and Related Costs means all costs applicable to, or incurred by a party in relation to, the transmission of Energy, including, if applicable, Ancillary Services costs, transmission charges and transmission losses. 1.1.154 Transmission Tariff means the tariff approved under Part V of the Electricity Act. 1.1.155 Unit Generator Load means, in respect of a Unit Generator which forms part of the Genco Facilities, the total amount of Energy consumed by that Unit Generator as measured at that Unit Generators Point of Delivery.

- 23 1.1.156 Unit Generators means the electrical generating units located at the Genco Facilities or the Heritage PPA Facilities or Coleson Cove and Unit Generator means any one of them. 1.1.157 Upper Threshold has the meaning attributed to that in Schedule 6.3. 1.1.158 Vesting Energy Price has the meaning attributed to that term in section 6.2.3. 1.2 Headings and Table of Contents The inclusion of headings and a table of contents in this Agreement is for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.3 Gender and Number and Grammatical Changes In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. 1.4 Business Days If any payment is required to be made pursuant to this Agreement on a day which is not a Business Day, then such payment shall be made on the next Business Day. 1.5 Currency Except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in Canadian currency. 1.6 Calculation of Interest Any interest to be calculated pursuant to this Agreement shall be calculated based on the amount upon which interest is payable multiplied by the product of the specified rate of interest and the total number of days lapsed for which interest is payable divided by 365 (366 in a leap year). For any period of time, the first day of such period shall be included and the last day of such period shall be excluded.

- 24 1.7 Statutes Any reference in this Agreement to a statute or to a regulation or rule promulgated under a statute or to any provision of a statute, regulation or rule shall be a reference to the statute, regulation, rule or provision, as amended, re-enacted or replaced from time to time. 1.8 Invalidity of Provisions Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction or an arbitrator shall not affect the validity or enforceability of any other provision of this Agreement. To the extent permitted by Applicable Law, the parties waive any provision of Applicable Law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties shall engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the legal and economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. 1.9 Entire Agreement This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement thereto, by a party to this Agreement or its partners, shareholders, directors, officers, employees or agents, to the other parties to this Agreement or their partners, shareholders, directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and no party to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly,

- 25 there shall be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above. 1.10 Waiver No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver or operate as a waiver of, or estoppel with respect to, any subsequent failure to comply, unless otherwise expressly provided. 1.11 Amendment Except as expressly provided in this Agreement, no amendment of this Agreement shall be binding unless executed in writing by each of the parties. Notwithstanding the foregoing and sections 19.6 and 19.7, for so long as Genco, NB Power Holdco and Disco remain directly or indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the Province, any party may submit in writing any concerns or issues relating to the terms of this Agreement to the board of directors of the Electric Finance Corporation (the Board) for its consideration, provided that such party provides a copy of any such submission to the other parties at the same time it is provided to the Board. Provided that the other parties are permitted to deliver a reply submission to the Board and that all parties are given a reasonable opportunity in the circumstances to provide the Board with additional written or oral submissions with respect to the concerns or issues raised, the parties acknowledge and agree that the Board may, in its sole discretion, amend the terms of this Agreement to protect the financial integrity of the parties, to prevent undue hardship for consumers, or to facilitate a third party investment in or Transfer of all or part of the Genco Facilities. If the Board amends the terms of this Agreement, each party shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, agreements, written amendments, assurances and things as may be reasonably required for the purpose of giving effect to the amended terms directed by the Board and shall take all such steps as may be reasonably within its power to implement to their full extent the terms of any amendment made by the Board.

- 26 1.12 Governing Law This Agreement and any Disputes shall be governed by and construed in accordance with the laws of the Province of New Brunswick and the laws of Canada applicable therein. 1.13 Technical Terms Words or abbreviations that have well known technical or trade meanings are used in this Agreement in accordance with their recognized meanings. 1.14 Schedules The following are the Schedules attached to this Agreement: Schedule 1.1.17 Schedule 1.1.30 Schedule 1.1.67 Schedule 1.1.80 Schedule 6.2 Schedule 6.3 Schedule 7.2 Schedule 19.7 Capacity Payment CPI Adjustment Genco Heritage Assets Heritage PPAs Calculation of Fuel Component of Vesting Energy Price Third Party Gross Margin Credit Adjustments to Capacity Payment Arbitration Procedures

- 27 ARTICLE 2 CAPACITY 2.1 2.1.1 Initial Nominated Capacity Subject to section 2.4, the Nominated Capacity is deemed to be the Base Load

Capacity. On the date hereof, the Base Load Capacity is 2335.1 MW and will increase to 2425.1 MW in accordance with section 2.1.2, and the Peaking Capacity is 1258.4 MW. Notwithstanding the foregoing or any other provision in this Agreement, the parties acknowledge that the Millbank Firm Contract permits Hydro Qubec to call on 200 MW of the Peaking Capacity and the Energy generated therefrom. Accordingly, any rights of Disco under this Agreement in respect of capacity and Energy from the Millbank generating station are subject at all times to this prior right of Hydro Qubec. 2.1.2 The Base Load Capacity will increase by the DNC of the Unit Generators

located at the Grandview Facility when the planned additional capacity and Energy from the Grandview PPA becomes commercially available, and the Nominated Capacity shall correspondingly increase. Genco shall notify Disco when the Base Load Capacity has so increased pursuant to this section 2.1.2. 2.2 Reduction of Base Load Capacity Base Load Capacity available to Disco from Genco shall be reduced from time to time (and as a result Nominated Capacity shall also be reduced) in accordance with the following: 2.2.1 if a Unit Generator that is a Base Load Asset and that forms part of the Genco

Facilities is Shutdown, the Base Load Capacity shall be reduced by that Unit Generators DNC; 2.2.2 if a Unit Generator that is a Base Load Asset and that forms part of the Genco

Facilities requires a Refurbishment or Environmental Costs are incurred in respect of the Unit Generator, the Base Load Capacity shall be decreased pursuant to section 7.1.3.1 or section 7.1.3.3.1 or section 7.2.4.5.2, if applicable;

- 28 2.2.3 if a Heritage PPA is terminated or the term thereof has expired, or the contracted

capacity under such Heritage PPA is otherwise reduced in accordance with section 19.1, if applicable, the Base Load Capacity shall be reduced by the contracted capacity formerly under contract pursuant to that Heritage PPA if it is terminated or the term thereof has expired, or otherwise by the reduction in such contracted capacity; or 2.2.4 if the Coleson Cove TA is terminated or the term thereof has expired, or the

contracted capacity under the Coleson Cove TA is otherwise reduced in accordance with section 4.5, if applicable, the Base Load Capacity shall be reduced by the contracted capacity formerly under contract pursuant to the Coleson Cove TA if it is terminated or the term thereof has expired, or otherwise by the reduction in such contracted capacity. 2.3 Reduction of Peaking Capacity Peaking Capacity available to Disco from Genco shall be reduced from time to time in accordance with the following: 2.3.1 if a Unit Generator that is a Peaking Asset and that forms part of the Genco

Facilities is Shutdown, the Peaking Capacity shall be reduced by that Unit Generators DNC; 2.3.2 if a Unit Generator that is a Peaking Asset and that forms part of the Genco

Facilities requires a Refurbishment or Environmental Costs are incurred in respect of the Unit Generator, the Peaking Capacity shall be reduced pursuant to section 7.1.3.1, section 7.1.3.3.1 or section 7.2.4.5.2, if applicable; or 2.3.3 if at any time Nominated Capacity is reduced to zero, Peaking Capacity shall

also be reduced to zero at that time. 2.4 2.4.1 Reduction of Nominated Capacity At any time and from time to time prior to the Termination Date or such earlier

date on which this Agreement may be terminated, but subject to section 2.4.2, Disco may reduce the Nominated Capacity, provided that Disco has given Genco 12 months prior written notice of such reduction. Upon any such reduction of the Nominated Capacity,

- 29 the available Peaking Capacity shall also be reduced by the percentage that the amount of the reduction in the Nominated Capacity represents of the aggregate of (i) Nominated Capacity prior to the reduction, (ii) Peaking Capacity prior to the reduction, and (iii) the demonstrated maximum net capability to generate net energy of the Point Lepreau unit generator which is allocated to Disco under the Point Lepreau PPA at the time of the reduction. Thereafter, Disco may not nominate a new Nominated Capacity which is greater than either the previous Nominated Capacity or the Base Load Capacity from time to time. 2.4.2 Notwithstanding section 2.4.1, Disco may not reduce the Nominated Capacity

solely because it has entered into an Alternative Arrangement, provided that Disco may reduce the Nominated Capacity, and seek requests for proposals to purchase capacity and Energy, as necessary to comply with its obligations under section 142 of the Electricity Act and any related regulations, provided that any such reduction shall be limited to the assessed capacity factor for the Alternative Arrangement if less than the nameplate capacity for such Alternative Arrangement. 2.5 Notice of Shutdown Genco shall advise Disco from time to time as soon as it appears likely to Genco that a Unit Generator will Shutdown on a date which is different from that Unit Generators Estimated Shutdown Date, and shall notify Disco of the revised estimated date for such Shutdown, which revised estimated date shall then become that Unit Generators Estimated Shutdown Date for purposes of this Agreement. To the extent possible, Genco shall provide Disco with notice in writing of the planned Shutdown of any Unit Generator prior to its Estimated Shutdown Date, at least five years prior to such earlier Estimated Shutdown Date. 2.6 2.6.1 Supply of Capacity Disco shall provide Genco with a Load Forecast from time to time as required

by and within the time periods set out in the Market Rules or as otherwise required by, and within the time periods required by, Genco to permit Genco to comply with and meet its obligations to Disco under this Agreement. Disco shall use all reasonable efforts to ensure that any Load Forecast provided to Genco is accurate, correct and complete. If,

- 30 after reviewing a Load Forecast provided by Disco, Genco determines or believes that the Load Forecast is not correct, the Operating Committee shall meet forthwith and consider the Load Forecast. However, unless the Operating Committee decides otherwise, Genco shall be required to use Discos Load Forecast for purposes of this Agreement. 2.6.2 Subject to section 2.7, Genco shall make the Nominated Capacity and the

Peaking Capacity exclusively available to Disco on a priority basis, but in each case only to the extent required to supply Disco with the In-Province Supply Requirements. For greater certainty, Disco shall use the Nominated Capacity and the Peaking Capacity solely to supply the In-Province Supply Requirements. 2.7 2.7.1 Surplus Capacity Subject to sections 2.7.2, 2.7.3 and 2.7.4, if Genco determines that, based on a

Load Forecast, all of the Nominated Capacity and Peaking Capacity are not required to supply Disco with the In-Province Supply Requirements, Genco may sell to any Person any such Nominated Capacity or Peaking Capacity which is not so required by Disco to supply the In-Province Supply Requirements (the Excess Capacity). 2.7.2 Notwithstanding section 2.7.1, if as a result of a Forced Outage or a

Maintenance Outage of a Unit Generator or an incorrect Load Forecast or any other reason, but subject to section 2.7.3, there is insufficient capacity to supply the In-Province Supply Requirements, Genco shall interrupt or curtail sales of Excess Capacity to the extent necessary to supply the In-Province Supply Requirements, provided that Genco shall first interrupt or curtail non-firm sales of such Excess Capacity. 2.7.3 Genco may make firm export sales of Excess Capacity, provided that in order to

enter into such firm export sales contracts, Genco must first have obtained Discos prior written consent, which consent shall not be unreasonably withheld or delayed. Genco shall use Commercially Reasonable Efforts to avoid curtailing or interrupting firm capacity commitments, provided, however, that if Genco is required to curtail or interrupt firm capacity commitments pursuant to section 2.7.2, it shall curtail or interrupt both any such firm export sales contracts of Excess Capacity entered into in compliance with this

- 31 section 2.7.3 and Discos firm capacity required to supply the In-Province Supply Requirements on a pro rata basis. 2.7.4 For greater certainty, and notwithstanding any other provision of this Article 2,

if Base Load Capacity, Nominated Capacity or Peaking Capacity is reduced pursuant to section 2.2, 2.3 or 2.4 or the DNC of a Unit Generator has been increased and Disco has not reimbursed Genco for all or part of the costs of increasing the DNC pursuant to section 7.1.3.1 or section 7.2.4, Genco shall be under no obligation to provide or sell the capacity represented by such reduction or such increase in the DNC of a Unit Generator to Disco under this Agreement and shall be permitted to sell the capacity represented by such reduction or such increase in the DNC of a Unit Generator to any Person on a firm or non-firm basis and shall not be required to interrupt or curtail any such sales of capacity in order to supply Disco with such capacity.

- 32 ARTICLE 3 NET ENERGY 3.1 3.1.1 Net Energy Genco shall declare to Disco, in good faith, its maximum bona fide availability

from the Unit Generators and shall promptly declare to Disco, in good faith and from time to time, any change to its maximum bona fide availability from the Unit Generators. Based on Gencos declaration of bona fide availability and the relevant Load Forecast and the provisions of this Agreement, Disco shall provide both the SO and Genco with a day ahead schedule of the In-Province Supply Requirements to be supplied from Net Energy. Disco hereby appoints Genco, and Genco hereby agrees to act, as Discos service provider for purposes of determining the day ahead schedules of the In-Province Supply Requirements and providing that information to the SO until such time as Disco notifies Genco that such services are no longer required by Disco, subject to Disco providing to Genco, from time to time, all information necessary for Genco to perform these services. Disco and Genco shall Schedule Net Energy in accordance with, and perform their respective obligations under, the Market Rules and as otherwise required by the SO and any Scheduling Procedures. Genco shall comply with all dispatch and other instructions provided by the SO. Each of the parties shall provide to the other party all information reasonably necessary for the other party to effectively meet or comply with, or cause to be met or complied with, its Scheduling obligations. The Operating

Committee shall, as soon as possible after the date hereof, establish the Scheduling Procedures for, among other things, the communication of Scheduling information between the parties. Each of Genco and Disco shall schedule Net Energy in accordance with, and perform its respective obligations set forth in, any Scheduling Procedures so established. 3.1.2 Each Fiscal Year and subject to the remaining provisions of this section 3.1 and

section 3.4, Disco shall be entitled to purchase and receive, and Genco shall sell and deliver, on a priority basis, at the applicable Points of Delivery, a portion of Net Energy up to a maximum amount (the Energy Entitlement) equal to the product of (i) the

- 33 weighted-average Nominated Capacity for such Fiscal Year, (ii) 0.565, and (iii) 8760 hours. In addition and subject to the remaining provisions of this section 3.1 and

section 3.4, in any Fiscal Year, Genco shall deliver Net Energy to Disco at the applicable Points of Delivery in excess of the Energy Entitlement to the extent required by Disco to supply the In-Province Supply Requirements (such excess Net Energy to be referred to as the Excess Entitlement). In any Fiscal Year and subject to the remaining provisions of this section 3.1 and section 3.4, Genco shall not Schedule, sell or deliver Net Energy to any other Person in priority to its obligation to deliver the Energy Entitlement and the Excess Entitlement to Disco. 3.1.3 Genco shall be required to supply Net Energy to Disco solely to supply Disco

with the In-Province Supply Requirements. For greater certainty, Disco shall use Net Energy solely to supply the In-Province Supply Requirements. Notwithstanding the foregoing, Disco shall first supply the In-Province Supply Requirements with Energy available pursuant to the Point Lepreau PPA and non-dispatchable Energy available pursuant to Alternative Arrangements Disco has entered into in order to comply with its obligations under section 142 of the Electricity Act, prior to using Net Energy, and Energy purchased from other Persons by Genco, subject to section 3.1.5. 3.1.4 Without limiting the generality of the foregoing, Genco shall supply Net Energy

to meet Discos obligations to supply Interruptible Customers in accordance with the RSP Manual. The quantity of any such Net Energy supplied to Disco to meet its obligations to supply Interruptible Customers shall, for greater certainty, be included in calculating whether Disco has received the Energy Entitlement in any Fiscal Year. 3.1.5 Genco shall supply Net Energy from the CTs only if Net Energy from the other

Unit Generators is not sufficient to supply the In-Province Supply Requirements. To the extent that from time to time Net Energy (other than that generated by the CTs) is insufficient to supply Disco with the In-Province Supply Requirements, Genco shall: 3.1.5.1 3.1.5.2 generate Net Energy through the operation of the CTs; and/or purchase Energy from other Persons;

- 34 in a quantity sufficient to permit Genco to supply Disco with the In-Province Supply Requirements, but only to the extent such Energy is available. For greater certainty, if Genco has used all reasonable efforts to generate Net Energy through the operation of the CTs or to purchase Energy from other Persons and, despite such reasonable efforts, is unable to deliver Net Energy or Energy to Disco in a quantity sufficient to supply Disco with the In-Province Supply Requirements, Genco shall have discharged its obligations to Disco under this section 3.1.5. In determining whether to (i) generate Net Energy

pursuant to section 3.1.5.1, (ii) purchase Energy from other Persons pursuant to section 3.1.5.2, or (iii) do a combination of the foregoing, Genco shall, subject to section 8.2, choose the least cost alternative, to the extent it has a choice. The quantity of any such Net Energy or Energy from other Persons supplied to Disco pursuant to this section 3.1.5 shall, for greater certainty, be included in calculating whether Disco has received the Energy Entitlement in any Fiscal Year. 3.2 Unit Generator Load and Common Service Load The parties acknowledge and agree that Genco is responsible for making its own arrangements with respect to servicing its Unit Generator Load and Common Service Load requirements through third party arrangements or self-supply. Each hour, Genco shall be permitted to self-supply the Unit Generator Load and Common Service Load requirements for a particular Genco Facility if the Energy generated by the Unit Generator(s) forming part of that Genco Facility during that hour is sufficient to meet such requirements. For greater certainty, Unit Generator Load and Common Service Load for a particular Genco Facility shall not be deducted from the calculation of Net Energy to the extent that the Energy generated by the Unit Generators forming part of a Genco Facility during an hour is less than the Unit Generator Load and Common Service Load requirements for that Genco Facility during that hour. 3.3 Prohibition Genco shall not directly, or indirectly through any other Person, supply or offer to supply Energy to any of Discos customers to whom Disco is supplying Energy as of the date hereof until that date which is the earlier of (i) the date that Disco has reduced the

- 35 Nominated Capacity in accordance with section 2.4.1 by an aggregate of 200 MW, or (ii) the date which is five years from the date hereof. 3.4 3.4.1 Surplus Net Energy Subject to section 3.4.2, if Genco determines that, based on a Load Forecast, all

of the Net Energy expected to be generated during the relevant period is not needed to supply the In-Province Supply Requirements, Genco may sell to any Person any such Net Energy which is not required by Disco to supply the In-Province Supply Requirements (the Surplus Net Energy). Notwithstanding the foregoing, Genco shall use Good Utility Practices to manage its resources of water and fuel available to meet future InProvince Supply Requirements so that such water and fuel is not used to generate Surplus Net Energy to the detriment of Disco. 3.4.2 Notwithstanding section 3.4.1 but subject to sections 3.4.3 and 3.4.4, if as a

result of a Forced Outage or a Maintenance Outage or a Planned Outage of a Unit Generator or an incorrect Load Forecast or any other reason there is insufficient Net Energy allocated to Disco and insufficient Energy obtained by Genco pursuant to section 3.1.5.2 to supply the In-Province Supply Requirements, Genco shall curtail or interrupt sales of Net Energy to any Person other than Disco, or obtain replacement Energy therefor, at Gencos option, to the extent necessary to supply the In-Province Supply Requirements, provided that Genco shall use Commercially Reasonable Efforts to avoid curtailing or interrupting sales of Net Energy. 3.4.3 If Genco has made firm export sales of Excess Capacity pursuant to and in

accordance with section 2.7.3, Genco shall be permitted to also make export sales of firm Net Energy which correspond to such firm Excess Capacity. If Genco is required to curtail or interrupt sales of firm Net Energy pursuant to section 3.4.2, it shall curtail or interrupt both any such firm export sales of Net Energy and Net Energy to be supplied to Disco to supply the In-Province Supply Requirements on a pro rata basis. 3.4.4 For greater certainty, and notwithstanding any other provision of this Article 3,

if Base Load Capacity, Nominated Capacity or Peaking Capacity is reduced pursuant to section 2.2, 2.3 or 2.4 or the DNC of a Unit Generator has been increased and Disco has

- 36 not reimbursed Genco for all or part of the costs of increasing the DNC pursuant to section 7.1.3.1 or section 7.2.4, Genco shall be under no obligation to provide or sell the Net Energy corresponding to the capacity represented by such reduction or such increase in the DNC of a Unit Generator to Disco under this Agreement and shall be permitted to sell such Net Energy to any Person on a firm or non-firm basis and shall not be required to curtail or interrupt any such sales of Net Energy in order to supply Disco with such Net Energy. 3.5 Title and Risk of Loss Each hour, property, title in and risk of loss relating to Energy sold and delivered to Disco hereunder by Genco during that hour up to the amount Scheduled with the SO to be delivered and sold by Genco to Disco during that hour will pass from Genco to Disco at the applicable Points of Delivery. Genco warrants that it will deliver to Disco Energy hereunder free and clear of all liens, security interests, claims and encumbrances of any kind by any Person arising prior to the applicable Points of Delivery. 3.6 Transmission and Related Costs Save and except for charges payable by Genco under the Generation Interconnection Agreements for equipment and facilities after the applicable Points of Delivery, Disco shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable after the applicable Points of Delivery in respect of Energy sold and delivered to Disco hereunder during each hour up to the amount Scheduled with the SO to be delivered and sold by Genco to Disco during that hour. Genco shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable (i) prior to the applicable Points of Delivery in respect of Energy sold and delivered to Disco hereunder, (ii) in respect of Energy sold or delivered to Persons other than Disco, or (iii) in respect of Unit Generator Load or Common Service Load. Disco shall be responsible for obtaining or arranging all transmission rights necessary or required to permit Energy sold and delivered to Disco hereunder to be transmitted from the applicable Points of Delivery. Genco shall be responsible for obtaining or arranging all transmission rights necessary or required (i) to permit Net Energy sold and delivered to

- 37 Persons other than Disco to be transmitted from the applicable Points of Delivery, or (ii) in respect of Unit Generator Load or Common Service Load. 3.7 Emission Credits and Other Environmental Attributes For no additional consideration payable to Genco, Disco shall be entitled to, and Genco shall assign, convey, transfer and deliver to Disco, all Emission Credits and all other environmental grants, credits or benefits allocated to, or in respect of, Coleson Cove, the Unit Generators, the Genco Facilities or Net Energy which Genco has received and which are not required by Genco to operate the Unit Generators forming part of the Genco Facilities, or the Genco Facilities.

- 38 ARTICLE 4 COLESON COVE OFF-TAKE 4.1 4.1.1 Purchase and Sale Until the termination of this Agreement, or the termination of the Coleson Cove

TA, whichever occurs first, Disco shall sell or transfer to Genco and Genco shall purchase or receive all capacity, Energy, Ancillary Services and Emission Credits and all other environmental grants, credits or benefits allocated to, or in respect of, Coleson Cove, the Unit Generators located at Coleson Cove or Energy generated by such Unit Generators, which Disco is entitled to purchase or receive from Coleson Cove Corporation or its successor or permitted assignee under the Coleson Cove TA, provided that and notwithstanding the foregoing, Disco may self-supply Ancillary Services from the Unit Generators located at Coleson Cove. Disco shall make all such capacity and Energy exclusively available to Genco. 4.1.2 Property, title in and risk of loss relating to Energy sold and delivered to Genco

by Disco under this section 4.1 shall pass from Disco to Genco at the applicable Points of Delivery for the Unit Generators located at Coleson Cove. Disco warrants that it will deliver to Genco such Energy free and clear of all liens, security interests, claims and encumbrances of any kind by any Person arising prior to such applicable Points of Delivery. 4.1.3 Save and except for charges payable to Coleson Cove Corporation or its

successor or permitted assignee under the Coleson Cove TA for equipment and facilities after the applicable Points of Delivery for the Unit Generators located at Coleson Cove, but without in any way limiting section 3.6, Genco shall be responsible for and pay or cause to be paid all Transmission and Related Costs payable after the applicable Points of Delivery in respect of Energy sold and delivered by Disco to Genco pursuant to this section 4.1. Disco shall be responsible, as between Disco and Genco and without in any way limiting section 3.6, for and pay or cause to be paid all Transmission and Related Costs payable prior to the applicable Points of Delivery in respect of such Energy sold and delivered by Disco to Genco pursuant to this section 4.1.

- 39 4.2 4.2.1 Price In exchange for such Coleson Cove capacity, Energy, Ancillary Services and

Emission Credits and other environmental grants, credits or benefits pursuant to section 4.1, Genco shall, subject to section 4.2.2, pay or reimburse Disco pursuant to monthly Bills the same prices or amounts that Disco is required to pay to Coleson Cove Corporation or its successor or permitted assignee under the Coleson Cove TA (after, for greater certainty, any amounts owing to Disco by Coleson Cove Corporation have been netted or set-off). Genco shall be entitled to retain any amounts or payments it receives from the SO in its capacity as Market Participant for the Unit Generators at Coleson Cove. Genco shall correspondingly pay any amounts owed to the SO in its capacity as Market Participant for the Unit Generators at Coleson Cove. Notwithstanding the

foregoing, Disco shall be entitled to retain any liquidated damages or other payments Disco receives pursuant to section 2.9.3 of the Coleson Cove TA. 4.2.2 Notwithstanding section 4.2.1, it shall be Discos responsibility to pay or

reimburse Coleson Cove Corporation or its successor or permitted assignee under the Coleson Cove TA for: 4.2.2.1 Environmental Costs (as defined in the Coleson Cove TA, including

deemed Environmental Costs pursuant to section 2.14.2 of the Coleson Cove TA) which are capital costs in nature or New Fuel Capital Costs (as defined in the Coleson Cove TA), including any such New Fuel Capital Costs in respect of ORIMULSION; 4.2.2.2 Environmental Costs (as defined in the Coleson Cove TA, including

deemed Environmental Costs pursuant to section 2.14.2 of the Coleson Cove TA) or costs incurred with respect to the use of a new fuel to generate Energy by the Unit Generators located at Coleson Cove (other than heavy fuel oil or ORIMULSION), in each case which are fixed operations and maintenance costs in nature; and 4.2.2.3 a proportion of (i) Environmental Costs (as defined in the Coleson

Cove TA, including deemed Environmental Costs pursuant to section 2.14.2 of

- 40 the Coleson Cove TA) or costs incurred with respect to the use of a new fuel to generate Energy by the Unit Generators located at Coleson Cove (other than heavy fuel oil or ORIMULSION), in each case which are variable operations and maintenance costs in nature, or (ii) costs of acquiring additional Emission Allowances and/or Emission Credits (each as defined in the Coleson Cove TA), which proportion shall equal, from time to time, the proportion of Net Energy from the Unit Generators located at Coleson Cove used to supply In-Province Supply Requirements; and Genco shall have no obligation to pay or reimburse Disco for any such costs. For greater certainty, Genco shall pay or reimburse Disco for a proportion of (i) Environmental Costs (as defined in the Coleson Cove TA, including deemed Environmental Costs pursuant to section 2.14.2 of the Coleson Cove TA) or costs incurred with respect to the use of a new fuel to generate Energy by the Unit Generators located at Coleson Cove (other than heavy fuel oil or ORIMULSION), in each case which are variable operations and maintenance costs in nature, or (ii) costs of acquiring additional Emission Allowances and/or Emission Credits (each as defined in the Coleson Cove TA), which proportion shall equal, from time to time, the proportion of Net Energy from the Unit Generators located at Coleson Cove which is not used to supply In-Province Supply Requirements. Disco shall supply Genco with copies of, or access to, all information, books, records and data that Genco reasonably requires in order to determine and verify and confirm the allocation of the foregoing costs between Disco and Genco. 4.3 4.3.1 Fuel Procurement Genco shall, subject to sections 4.3.2 and 4.3.3, at its own cost, expense and

risk, procure and deliver to Coleson Cove all fuel, including heavy fuel oil, required under the Coleson Cove TA to be delivered by Disco, as set out in the Coleson Cove TA. Genco shall maintain its capability to procure and deliver heavy fuel oil to Coleson Cove unless Disco notifies Genco in writing that it is no longer required to maintain such capability. Any fuel procured and delivered to Coleson Cove pursuant to this

- 41 section 4.3.1 shall comply with the terms and conditions of the Coleson Cove TA, including the fuel specifications contained therein. 4.3.2 NB Power Holdcos predecessor has entered into the ORIMULSION Fuel

Supply Agreement for the provision by Bitumenes Orinoco, SA of ORIMULSION for use at Coleson Cove. NB Power Holdco shall, at the request of Genco, cause ORIMULSION to be provided for use at Coleson Cove, as set out in the Coleson Cove TA, up to the maximum amount of ORIMULSION NB Power Holdco is able to procure under the ORIMULSION Fuel Supply Agreement. NB Power Holdco hereby appoints Genco to act, and Genco shall act, as NB Power Holdcos agent for purposes of administering the ORIMULSION Fuel Supply Agreement. Genco shall reimburse NB Power Holdco for all costs, expenses and damages suffered or incurred by NB Power Holdco in connection with the ORIMULSION Fuel Supply Agreement, provided that (i) NB Power Holdco shall pay to Genco any penalties or damages NB Power Holdco receives in connection with the ORIMULSION Fuel Supply Agreement, and (ii) NB Power Holdco shall, at Gencos cost and direction, dispute any bill it receives or other amount it is alleged to owe from time to time pursuant to the ORIMULSION Fuel Supply Agreement. 4.3.3 Subject to section 4.3.4, Disco shall reimburse Genco for the proportion of

(i) the amount of any damages or penalties for which Genco is liable for (including to NB Power Holdco pursuant to section 4.3.2), or (ii) costs or expenses incurred by Genco (including any such costs or expenses that may be owed by Genco to NB Power Holdco pursuant to section 4.3.2) to enforce any claim or demand or conduct any action, suit, or proceeding or obtain any judgment, settlement or compromise relating thereto, arising, in each case under or in connection with the ORIMULSION Fuel Supply Agreement, equal to the proportion of Net Energy from the Unit Generators located at Coleson Cove used to supply In-Province Supply Requirements at the relevant time. Subject to section 4.3.4, Genco shall pay Disco a proportion of the amount of any penalties or damages it receives (including from NB Power Holdco pursuant to section 4.3.2) under or in connection with the ORIMULSION Fuel Supply Agreement equal to the proportion of

- 42 Net Energy from the Unit Generators located at Coleson Cove used to supply In-Province Supply Requirements at the relevant time. 4.3.4 Notwithstanding section 4.3.3, Disco shall be responsible for and shall

reimburse Genco for all of the costs or expenses incurred by Genco (including any such costs or expenses that may be owed by Genco to NB Power Holdco pursuant to section 4.3.2) in connection with the enforcement of the claim that the ORIMULSION Fuel Supply Agreement was entered into, and Genco shall pay Disco all damages it receives (including from NB Power Holdco pursuant to section 4.3.2) in connection therewith. 4.3.5 At the request of Genco, Disco shall use all reasonable efforts to ensure that any

fuel provided or delivered or caused to be provided or delivered to Coleson Cove by Genco hereunder is returned to Genco in circumstances where Disco or its agents have rights under the Coleson Cove TA to the return of such fuel. In addition, Disco agrees to take all reasonable steps requested by Genco in connection with fuel provided or delivered or caused to be provided or delivered to Coleson Cove by Genco hereunder, including acting on or enforcing rights Disco may have under the Coleson Cove TA in connection with such fuel. 4.4 Disco Obligations Disco covenants with Genco that it shall meet all its payment obligations to Coleson Cove Corporation in a timely manner and that, to the extent that Disco has granted authority to Genco to administer the Coleson Cove TA, it shall not unreasonably interfere with the administration of the Coleson Cove TA by Genco. 4.5 No Amendment Disco has provided Genco with a copy of the Coleson Cove TA. Disco shall not terminate, amend, restate, replace or assign, or agree to the amendment, restatement, replacement or assignment of, all or any part of, or exercise a right or waive an obligation under, the Coleson Cove TA without Gencos prior written consent, which consent shall not be unreasonably withheld or delayed. At Gencos request, Disco shall enforce or exercise any right it may have under the Coleson Cove TA.

- 43 ARTICLE 5 ANCILLARY SERVICES 5.1 5.1.1 Self-Supply by Disco Subject to section 5.1.2, Disco and Genco acknowledge that Genco has the

obligation to provide Ancillary Services to Disco under this Agreement. Subject to the Market Rules and the Transmission Tariff, Disco may, at its option, and for no additional consideration, instruct Genco to offer to supply Ancillary Services from the Unit Generators (including the Unit Generators located at Coleson Cove and, with respect to the Unit Generators that are subject to a Heritage PPA, only to the extent Genco is able to do so) to the SO in connection with Discos self-supply of Ancillary Services so long as such instructions are consistent with Good Utility Practices. Genco shall follow any such instructions from Disco and supply such Ancillary Services from the Unit Generators (including the Unit Generators located at Coleson Cove and, with respect to the Unit Generators that are subject to a Heritage PPA, only to the extent Genco is able to do so) to the SO in connection with Discos self-supply of Ancillary Services. 5.1.2 Disco may only instruct Genco to offer to supply Ancillary Services to the SO

pursuant to section 5.1.1 from the Unit Generators that form part of the Genco Facilities or the Heritage PPA Facilities after Disco has first obtained the maximum amount of Ancillary Services available to it pursuant to the Coleson Cove TA and the Point Lepreau PPA. 5.2 5.2.1 Payment for Ancillary Services If Disco at any time is required to pay the SO for Ancillary Services required to

be delivered by Disco, Disco shall first look to receive payments or off-sets under the Coleson Cove TA or Point Lepreau PPA in respect of payments received by Coleson Cove Corporation or its successor or permitted assignee or New Brunswick Power Nuclear Corporation or its successor or permitted assignee, respectively, in any form for any Ancillary Services provided by such Persons, and only if Disco is not fully reimbursed by payments or off-sets from such Persons for such costs, then, if Genco receives a payment in any form for any Ancillary Services provided by Genco or any

- 44 other Person under an Ancillary Services Agreement or any other agreement or arrangement Genco may have in respect of the Unit Generators (including the Unit Generators located at Coleson Cove), including the Heritage PPAs, other than payments received for out-of-order dispatch, Genco shall forthwith notify Disco of such payment and Discos obligation to make payments to Genco under this Agreement shall be reduced by the amount or value of such payment to Genco in respect of such Unit Generators under the Ancillary Services Agreement(s) or any such other agreement or arrangement, up to the cost for which Disco was not fully reimbursed by such off-sets. 5.2.2 The parties respective obligations for imbalance charges are as follows: 5.2.2.1 Disco is responsible for and shall pay any charges levied by the SO

relating to an imbalance associated with or caused by a Load Forecast error; and 5.2.2.2 Genco is responsible for and shall pay any charges levied by the SO

relating to an imbalance associated with or caused by a Unit Generator forming part of the Genco Facilities, or part of the Heritage PPA Facilities, to the extent Genco is the Market Participant for such Heritage PPA Facilities, being off schedule. 5.2.3 Disco and Genco shall cooperate with each other in good faith to minimize any

imbalance charges. 5.2.4 For greater certainty, Genco is entitled to retain any out-of-order dispatch

payments from the SO.

- 45 ARTICLE 6 PRICE 6.1 Capacity Payment Disco shall pay Genco the Capacity Payment in arrears for each calendar month until the Termination Date or such earlier date on which this Agreement may terminate. The Capacity Payment for the last calendar month prior to the Termination Date or such earlier date on which this Agreement may terminate shall be decreased by a factor equal to the quotient obtained by dividing the number of days in that calendar month which are not prior to the Termination Date or such earlier date on which this Agreement may terminate by the total number of days in that calendar month. 6.2 6.2.1 Vesting Energy Price Except as otherwise specifically provided for in this Agreement, Disco shall pay

Genco monthly, for each MWh of Net Energy or Energy purchased pursuant to section 3.1.5.2 Scheduled with the SO to be purchased and received hereunder by Disco for each hour during that month, an amount equal to the Vesting Energy Price. 6.2.2 Notwithstanding any other provision of this Agreement, any reference in this

Agreement to an amount of Net Energy Scheduled with the SO to be purchased and received by Disco for each hour shall mean that amount of Net Energy Scheduled with the SO in the last balanced hourly schedule submitted by Disco or its agent (including, if applicable, Genco) to the SO, being the Final Hourly Balanced Schedule as described in the Market Rules, in respect of that hour and not, for greater certainty, the amount of Net Energy ultimately dispatched by the SO, to the extent the amounts are different. For greater certainty, Disco shall pay Genco for each MWh included in the Final Hourly Balanced Schedule submitted by Disco or its agent (including, if applicable, Genco) for each hour regardless of the amount of Net Energy ultimately dispatched by the SO or generated during that hour; and Disco shall purchase and receive Net Energy in any hour up to the amount of Net Energy included in such Final Hourly Balanced Schedule for that hour.

- 46 6.2.3 For each Fiscal Year, the Vesting Energy Price shall equal (i) the Fuel

Component, plus (ii) the Contribution to Fixed Costs, each in respect of that Fiscal Year. 6.2.4 The Fuel Component for each month up to and including March 31, 2005 shall

be that set out in Schedule 6.2. The Vesting Energy Price for the Fiscal Year ending March 31, 2006 shall be established by the Operating Committee on or before December 31, 2004 in accordance with this section 6.2 and Schedule 6.2. Beginning with October 1, 2005 and on the first Business Day in October of each year of this Agreement thereafter, the Vesting Energy Price for the next Fiscal Year will be established by the Operating Committee in accordance with this section 6.2 and Schedule 6.2. 6.2.5 The Fuel Component shall be determined for each Fiscal Year based on

forecasted operating costs using PROMOD or such other modeling software acceptable to both Disco and Genco. Inputs to PROMOD or such other acceptable software shall include: Discos Load Forecast for that Fiscal Year; the forward prices for fuel used by the Unit Generators (including, if applicable, natural gas, coal, ORIMULSION, and heavy fuel oil); fixed prices under any Heritage PPA or Alternative Arrangement; forward foreign exchange rates; pre-set forced outage rates; historical hydro generation; guaranteed heat rate curves; and any other relevant parameters. The Fuel Component for each Fiscal Year shall be established by the Operating Committee in accordance with Schedule 6.2. 6.2.6 The contribution to fixed costs will be $7.00 for the Fiscal Year ending

March 31, 2005 (the Contribution to Fixed Costs). For each Fiscal Year thereafter, the Contribution to Fixed Costs will equal the product of (i) the Contribution to Fixed Costs for the immediately preceding Fiscal Year, and (ii) the product of (a) the CPI Adjustment for the immediately preceding calendar year, and (b) one, for each calendar year up to and including the calendar year ending December 31, 2008, and onethird for each calendar year thereafter. 6.3 Third Party Gross Margin Credit For each Billing Month during a Fiscal Year, Discos obligation to make any payments to Genco under this Agreement shall be reduced by the amount obtained by dividing

- 47 (i) the Third Party Gross Margin Credit in respect of that Fiscal Year, by (ii) 12 or 6, in the case of the Fiscal year ending March 31, 2005. 6.4 Third Party Gross Margin Adjustment When the actual gross margin calculated as revenue net of any associated fuel costs, incremental operating costs (including any such incremental costs relating to Emission Allowances or Emission Credits) and Transmission and Related Costs (the Annual Benefits) in any Fiscal Year to Genco derived from sales of Net Energy or capacity from or in respect of Nominated Capacity and Peaking Capacity (other than, for greater certainty, that quantity of Peaking Capacity that has been reduced pursuant to section 2.3 or section 2.4.1) to Persons other than Disco is greater than the Upper Threshold or less than the Lower Threshold, the following payments shall be made: 6.4.1 if the Annual Benefits exceed the Upper Threshold, Genco shall pay Disco an

adjustment equal to 50% of the difference between the Annual Benefits and the Upper Threshold; or 6.4.2 if the Annual Benefits are less than the Lower Threshold, Disco shall pay Genco

an adjustment equal to 50% of the difference between the Lower Threshold and the Annual Benefits. 6.5 Third Party Purchases Benefit Adjustment In circumstances where Genco has elected to purchase imports of Energy as opposed to generating Energy by operating one or more of the Unit Generators forming part of the Genco Facilities, and the quantity of such imports of Energy exceeds the quantity of Gencos sales to third parties other than Disco, then for each MWh of such excess, Genco shall pay Disco 50% of the amount, if any, by which the Vesting Energy Price exceeds the price for such import purchases of Energy. 6.6 6.6.1 CT Energy Price If Genco is required to generate Net Energy from the CTs pursuant to

section 3.1.5.1 in order to supply Disco with the In-Province Supply Requirements as a result of the unavailability of a Unit Generator that forms part of the Genco Facilities and

- 48 that is not as a result of an event of Force Majeure or that is not as a result of a Maintenance Outage to which Disco provided its consent, Genco shall be responsible for all of the costs of operating the CTs to the extent required to compensate for such unavailability and Genco shall not be paid or reimbursed by Disco for such costs pursuant to section 6.6.2, provided that if the unit generator located at Point Lepreau is not available during any such time the CTs are so operating, Disco shall pay or reimburse Genco for the costs of operating the CTs in excess of the applicable CT Threshold. For greater certainty and notwithstanding the foregoing, in these circumstances, Disco shall pay Genco pursuant to section 6.2 for each MWh of such Net Energy Scheduled with the SO to be delivered from the CTs in order to compensate for such unavailability an amount equal to the Vesting Energy Price. 6.6.2 Notwithstanding section 6.2 and section 6.6.1, if Genco is required to generate

Net Energy from the CTs pursuant to section 3.1.5.1 in order to supply Disco with the In-Province Supply Requirements in circumstances other than as set out in section 6.6.1, Disco shall pay or reimburse Genco for the costs incurred by Genco in generating such Net Energy and not the Vesting Energy Price in respect thereof. 6.7 6.7.1 Purchased Energy Price If Genco is required to purchase Energy pursuant to section 3.1.5.2 in order to

supply Disco with the In-Province Supply Requirements as a result of the unavailability of a Unit Generator that forms part of the Genco Facilities and that is not as a result of an event of Force Majeure or that is not as a result of a Maintenance Outage to which Disco provided its consent, Genco shall be responsible for all of the costs of purchasing such Energy to the extent required to compensate for such unavailability and Genco shall not be paid or reimbursed by Disco for such costs pursuant to section 6.7.2, provided that if the unit generator located at Point Lepreau is not available during any such time the Energy is so purchased, Disco shall pay or reimburse Genco for the costs of purchasing such Energy in excess of the applicable CT Threshold. For greater certainty, in these circumstances, Disco shall pay Genco pursuant to section 6.2 for each MWh of such Energy Scheduled with the SO to be delivered to Disco in order to compensate for such unavailability an amount equal to the Vesting Energy Price.

- 49 6.7.2 Notwithstanding section 6.2 and section 6.7.1, if Genco is required to purchase

Energy pursuant to section 3.1.5.2 in order to supply Disco with the In-Province Supply Requirements in circumstances other than as set out in section 6.7.1, Disco shall pay or reimburse Genco for the costs incurred by Genco in purchasing such Energy and not the Vesting Energy Price in respect thereof. Notwithstanding the foregoing, if such Energy is purchased as a result of one or more of the CTs being unavailable and that is not as a result of an event of Force Majeure or that is not as a result of a Maintenance Outage to which Disco provided its consent, Discos obligation to pay or reimburse Genco shall be limited to those costs which would have been incurred by Genco had the CTs been available and Genco shall be responsible for the amount, if any, by which the costs to purchase such Energy exceed the amount which Disco is obliged to pay or reimburse Genco pursuant to this section 6.7.2. 6.8 Interruptible Energy Price Notwithstanding section 6.2, but subject to section 6.9, Disco shall pay Genco monthly for each MWh of Net Energy Scheduled with the SO to be purchased and received hereunder by Disco in order to supply Interruptible Customers a price (the Interruptible Energy Price) which shall be calculated in accordance with the RSP Manual. To that end, the Operating Committee shall manage, develop and maintain procedures and guidelines for calculating the Interruptible Energy Price in accordance with the RSP Manual. 6.9 Excess Entitlement Notwithstanding sections 6.2 and 6.8, in any Fiscal Year, if Net Energy Scheduled with the SO to be delivered and sold to Disco hereunder and Energy delivered and sold to Disco hereunder pursuant to section 3.1.5.2 exceeds the Energy Entitlement for that Fiscal Year, then: 6.9.1 Disco shall pay Genco monthly for each MWh of the Excess Entitlement

Scheduled with the SO to be purchased and received hereunder by Disco, including for greater certainty such Excess Entitlement Scheduled with the SO to be supplied to Disco in order to supply Interruptible Customers, an amount equal to the Market Price for such MWh; and

- 50 6.9.2 notwithstanding the foregoing, Disco shall continue to pay Genco for Energy

provided pursuant to section 3.1.5, the amounts set out in sections 6.6 and 6.7, as applicable. 6.10 6.10.1 ORIMULSION Adjustment If the actual availability of ORIMULSION for the Unit Generators at Coleson

Cove and/or Dalhousie is different than the modeled availability used when determining the Vesting Energy Price, an adjustment (the ORIMULSION Adjustment) will be applied. The purpose of the adjustment is to compensate either Disco or Genco for the actual difference in the cost of generating Net Energy from such Unit Generators. 6.10.2 When the actual fuel is different than the modeled fuel, the ORIMULSION

Adjustment shall equal: 6.10.2.1 For Dalhousie, the product of (i) the modeled MWh delivered from Dalhousie to supply the firm In-Province Supply Requirements, and (ii) the cost per MWh of Dalhousie operating on the actual fuel, less the cost per MWh of Dalhousie operating on the modeled fuel. 6.10.2.2 For Coleson Cove, the product of (i) the modeled MWh delivered from Coleson Cove to supply the firm In-Province Supply Requirements, and (ii) the cost per MWh of Coleson Cove operating on the actual fuel, less the cost per MWh of Coleson Cove operating on the modeled fuel. 6.10.3 The costs of converting Coleson Cove or Dalhousie from ORIMULSION to

another fuel, or subsequently back to ORIMULSION, shall be borne solely by Disco. 6.10.4 When the actual fuel is the same as modeled but the actual availability of fuel is

less than modeled, the ORIMULSION Adjustment shall equal the product of (i) the cost incurred as a result of the reduced availability, and (ii) the share of the ORIMULSION that was allocated to Disco in the model determining the Vesting Energy Price. 6.10.5 All ORIMULSION Adjustments shall be payable by the applicable party

pursuant to monthly Bills. The absolute value of negative ORIMULSION Adjustments

- 51 pursuant to section 6.10.2 shall be payable by Genco to Disco and positive ORIMULSION Adjustments pursuant to section 6.10.2 shall be payable by Disco to Genco. Any ORIMULSION Adjustment payable pursuant to section 6.10.4 shall be payable by Disco to Genco. 6.11 6.11.1 Point Lepreau PPA Shortfall If in any Fiscal Year the Energy Scheduled with the SO to be supplied to Disco

pursuant to the Point Lepreau PPA is less than 4,240 GWh (for periods prior to the Point Lepreau Refurbishment In-Service Date) or 4,500 GWh (for periods after the Point Lepreau Refurbishment In-Service Date) (each, a threshold), Disco shall pay Genco for each MWh by which the applicable threshold exceeds such actual Energy Scheduled with the SO to be supplied an amount equal to the amount by which the First Threshold Price (as defined in the Point Lepreau PPA) for that Fiscal Year exceeds the Vesting Energy Price for such Fiscal Year. If the Point Lepreau Refurbishment In-Service Date occurs other than on the first or last day of a Fiscal Year, the thresholds shall be pro rated by reference to when during that Fiscal Year the Point Lepreau Refurbishment In-Service Date occurred. Notwithstanding section 3.1.2, the quantity of Energy by which the

applicable threshold exceeds such actual Energy Scheduled with the SO to be supplied to Disco pursuant to the Point Lepreau PPA in any Fiscal Year shall not be included in Net Energy in calculating whether Disco has received the Energy Entitlement in that Fiscal Year. 6.11.2 Upon the permanent shutdown of the unit generator at Point Lepreau, the

adjustment under this section 6.11 shall be zero. 6.12 Hydro Flow It shall be assumed for purposing of calculating the Vesting Energy Price pursuant to section 6.2 that the average annual Net Energy from the hydro-electric Unit Generators that form part of the Genco Facilities will be 2654 GWh (the Assumed Hydro Production) for each Fiscal Year. The Assumed Hydro Production shall be allocated in PROMOD to each month in a Fiscal Year (the Monthly Assumed Hydro Production). If in any month during a Fiscal Year the actual Net Energy production from such hydro-electric Unit

- 52 Generators is less than the Monthly Assumed Hydro Production for that month, Disco shall pay Genco for each MWh that such actual Net Energy production is less than the Monthly Assumed Hydro Production an amount equal to the incremental costs incurred by Genco as a result of such lower actual Net Energy production during that month. If in any month during a Fiscal Year the actual Net Energy production from such hydro-electric Unit Generators is greater than the Monthly Assumed Hydro Production for that month, Genco shall pay Disco for each MWh that such actual Net Energy production is greater than the Monthly Assumed Hydro Production an amount equal to the incremental costs avoided by Genco as a result of such higher actual Net Energy production during that month. Notwithstanding the foregoing, any payments for incremental costs pursuant to this section 6.12 shall be prorated down from time to time by the equivalent percentage reduction in the Nominated Capacity from time to time. 6.13 Fuel Delivery System If at any time the system to deliver ORIMULSION to Coleson Cove is not being used and an access fee is payable therefor by Genco, either directly or through NB Power Holdco, Disco shall be required to pay Genco a percentage of such access fee equal to the percentage of Net Energy generated by the Unit Generators at Coleson Cove that is used to supply the In-Province Supply Requirements, each at that time. 6.14 6.14.1 Exit Adjustment Disco shall from time to time file proposals with the Board of Commissioners of

Public Utilities constituted under the Public Utilities Act (New Brunswick) (the PUB) relating to the exit fees to be charged to customers if such customers terminate the standard service supply offered by Disco in order to obtain Energy from another source. 6.14.2 Where, as a result of customers terminating the standard service supply offered

by Disco, Disco is expected to reduce the Nominated Capacity under this Agreement, and Genco is expected to suffer unmitigatable stranded costs as a result, Genco shall be entitled to propose to Disco the formula for determining the exit fee to be charged to such customers so that the formula includes a component to reflect such stranded costs (the Stranded Costs Component). Disco and Genco acknowledge that the parties intend that Genco be able to recover the Stranded Costs Component from Disco in respect of

- 53 each such customer terminating the standard service supply offered by Disco. Disco shall use all reasonable efforts and shall do, take, execute, or deliver, or cause to be done, taken, executed or delivered all such acts, steps, deeds or documents necessary to have such formula, including the Stranded Costs Component, approved by the PUB as the formula to determine the exit fee charged to such customers. If the Stranded Costs Component is so included in the formula to determine the exit fee, Disco shall pay Genco for each such customer that terminates the standard service supply an amount equal to the Stranded Costs Component.

- 54 ARTICLE 7 ADDITIONAL COSTS 7.1 7.1.1 Refurbishment If at any time a Unit Generator that forms part of the Genco Facilities requires a

Refurbishment, Genco shall notify Disco in writing of such requirement and provide Disco with a description of the required Refurbishment, an estimate of the costs and expenses thereof, and a statement as to whether such costs and expenses exceed the Major Refurbishment Threshold for that Unit Generator at that time. 7.1.2 Subject to section 7.2, if at any time a Unit Generator that forms part of the

Genco Facilities requires a Refurbishment and the costs and expenses of completing such Refurbishment are less than the Major Refurbishment Threshold for that Unit Generator at that time, Genco shall complete the Refurbishment at its sole cost and expense. 7.1.3 Subject to section 7.2, if at any time a Unit Generator that forms part of the

Genco Facilities requires a Refurbishment and the costs and expenses of completing such Refurbishment equal or exceed the Major Refurbishment Threshold for that Unit Generator at that time, then: 7.1.3.1 If Disco wishes to explore with Genco whether it would pay for all or

part of the costs and expenses of completing the Refurbishment, Genco and Disco shall negotiate in good faith to determine and agree, if possible, on the circumstances in which Disco shall so pay for such costs and expenses, provided that in no event shall the Estimated Shutdown Date for that Unit Generator be extended for purposes of this Agreement as a result of the Refurbishment and if the Refurbishment does so extend such Estimated Shutdown Date, Base Load Capacity (and as a result Nominated Capacity) or Peaking Capacity, as applicable, depending on the nature of the Unit Generator, shall be reduced pursuant to section 2.2.2 or section 2.3.2, respectively, by the DNC of the Unit Generator as of such unextended Estimated Shutdown Date (unless Base Load Capacity (and as a result Nominated Capacity) or Peaking Capacity, as

- 55 applicable, has already been reduced in respect of that Unit Generator pursuant to section 2.2.1 or section 2.3.1, respectively) regardless of the actual extended Estimated Shutdown Date of that Unit Generator from time to time as a result of the Refurbishment. 7.1.3.2 If Disco does not wish to pay for all or part of the costs and expenses

of completing the Refurbishment or Genco and Disco cannot agree pursuant to section 7.1.3.1 on the circumstances in which Disco shall pay for such costs and expenses, Genco shall not be required to complete the Refurbishment and Base Load Capacity (and as a result Nominated Capacity) or Peaking Capacity, as applicable, depending on the nature of the Unit Generator, shall be reduced in respect of that Unit Generator in accordance with section 2.2.1 or section 2.3.1, respectively. 7.1.3.3 If Disco does not wish to pay for all or part of the costs and expenses

of completing the Refurbishment or Genco and Disco cannot agree pursuant to section 7.1.3.1 on the circumstances in which Disco shall pay for such costs and expenses, and if Genco decides to complete the Refurbishment at its sole cost and expense, then: 7.1.3.3.1 Base Load Capacity (and as a result Nominated Capacity)

or Peaking Capacity, as applicable, depending on the nature of the Unit Generator, shall be reduced pursuant to section 2.2.2 or section 2.3.2, respectively, by the DNC of the Unit Generator as of the then current Estimated Shutdown Date for that Unit Generator prior to the completion of the Refurbishment, and no additional DNC resulting from the Refurbishment shall form part of the Base Load Capacity (and as a result, Nominated Capacity) or Peaking Capacity, as applicable; and 7.1.3.3.2 notwithstanding Articles 2 and 3, Genco shall only be

required to supply Disco with capacity and Net Energy from that Unit Generator up to the amount of capacity and Net Energy that could have been generated by the amount of Base Load Capacity or Peaking

- 56 Capacity, as applicable, allocable to that Unit Generator prior to completion of the Refurbishment. 7.2 7.2.1 Adjustments for Environmental Costs Genco shall promptly notify Disco, in writing, if it becomes aware of one or

more of the following which would prevent Genco from being able to Schedule and deliver to the applicable Points of Delivery the Net Energy required by Disco in order for Disco to supply the In-Province Supply Requirements. 7.2.1.1 a change or proposed change in Environmental Law which applies

generally to electricity generators in New Brunswick, or in Canada if the change is imposed at the federal level, and not specifically to Genco, and which results, or would result if the proposed change were enacted, in the Emission Allowances and/or Emission Credits Genco has in respect of one or more of the Unit Generators forming part of the Genco Facilities being insufficient to permit the generation and delivery of such Net Energy to the applicable Points of Delivery; and/or 7.2.1.2 a change or proposed change in Environmental Law which applies

generally to electricity generators in New Brunswick, or in Canada if the change is imposed at the federal level, and not specifically to Genco, and which results, or would result if the proposed change were enacted, in Genco being required to make additional capital expenditures and/or to incur additional operations and maintenance costs (collectively, Environmental Costs) in order to be able to generate and deliver such Net Energy from the Unit Generators forming part of the Genco Facilities to the applicable Points of Delivery. Each Unit Generator forming part of the Genco Facilities and affected by such change shall be referred to as an Affected Unit Generator. Together with such notice, Genco shall also indicate to Disco: 7.2.1.3 each of the possible methods for addressing the change or proposed

change in Environmental Law; and

- 57 7.2.1.4 Gencos best estimate of (i) the amount it will cost to acquire

additional Emission Allowances and/or Emission Credits on a per Affected Unit Generator basis which will be sufficient to allow Genco to generate and deliver such Net Energy to the applicable Points of Delivery, and/or (ii) the amount of such Environmental Costs on a per Affected Unit Generator basis, setting out separately such Environmental Costs which are capital costs in nature and those which are operations and maintenance costs in nature, each in respect of the least cost method for addressing the change or proposed change in Environmental Law. 7.2.2 Upon receipt of a notice pursuant to section 7.2.1 of a change in Environmental

Law (but not, for greater certainty, notice of a proposed change in Environmental Law), Disco shall, in its sole discretion and within a reasonable amount of time in the circumstances and upon written notice to Genco, determine whether Disco will reimburse Genco for (i) the cost of acquiring additional Emission Allowances and/or Emission Credits which will be sufficient to allow Genco to generate and deliver such Net Energy to the applicable Points of Delivery, and/or (ii) making or incurring such Environmental Costs. In this regard, Genco shall assist Disco in making such determination, including by providing Disco and its agents, representatives and advisors, with all information, data, books and records, and access to the Genco Facilities and all directors, officers, employees, agents, representatives and advisors of Genco, that Disco may request. Further, Genco shall, upon the request of Disco, use reasonable efforts to challenge or dispute the necessity of the change or proposed change in Environmental Law and/or the requirement to procure such additional Emission Allowances and/or Emission Credits or to make or incur such Environmental Costs. Disco shall be responsible for and/or shall reimburse Genco for all reasonable costs incurred by Genco in carrying out any such challenge or dispute requested by Disco. 7.2.3 If Disco does not agree that Genco has selected the least cost method for

addressing the change in Environmental Law or that Gencos best estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits or the amount of such Environmental Costs is reasonable and appropriate in the circumstances, Genco and

- 58 Disco shall discuss and negotiate in good faith the method to be used and such costs in order that agreement between Genco and Disco can be reached as to the method to be used and a reasonable and appropriate estimate of the costs thereof. If Genco and Disco cannot agree on a reasonable and appropriate estimate of such costs, the estimate shall be determined in accordance with the provisions of section 19.6 and, if required, section 19.7. The least cost method for addressing the change in Environmental Law shall be used unless Genco and Disco agree otherwise. 7.2.4 Once the method for addressing the change in Environmental Law and the

estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or such Environmental Costs on a per Affected Unit Generator basis has either been agreed between Disco and Genco or determined in accordance with the provisions of section 19.6 and, if required, section 19.7 (such estimate to be referred to as the Firm Estimate), Disco shall determine, at its sole option and in its sole discretion and upon notice to Genco, whether it shall reimburse Genco for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for such Environmental Costs, provided that if Disco determines that it shall so reimburse Genco, the following provisions shall apply: 7.2.4.1 Subject to section 7.2.4.5, Discos obligation to reimburse Genco for

such Environmental Costs which are capital costs in nature shall be capped at the Firm Estimate in respect thereof plus 50% of all actual Environmental Costs incurred or made (the Actual Capital Costs) in excess of the Firm Estimate in respect thereof. For greater certainty, Genco shall be solely responsible for 50% of the Actual Capital Costs in excess of the Firm Estimate in respect thereof. 7.2.4.2 Subject to section 7.2.4.5, if ultimately the Actual Capital Costs are

less than the Firm Estimate in respect thereof, Disco shall be responsible for reimbursing Genco in aggregate for the amount of (i) the Firm Estimate in respect thereof, less (ii) 50% of the difference between the Firm Estimate in respect thereof and the Actual Capital Costs.

- 59 7.2.4.3 Subject to section 7.2.4.5, the Firm Estimate shall include an estimate

of the Environmental Costs which are fixed operations and maintenance costs in nature for the Fiscal Year in which the change will take effect and for each Fiscal Year thereafter and Discos obligation to reimburse Genco for such Environmental Costs shall be capped at the Firm Estimate thereof in respect of each Fiscal Year. For greater certainty, Genco shall be solely responsible for any such Environmental Costs incurred by Genco in a Fiscal Year in excess of the Firm Estimate of such costs in respect of that Fiscal Year. 7.2.4.4 The Firm Estimate shall include an estimate of the Environmental

Costs which are variable operations and maintenance costs in nature and/or an estimate of the cost of acquiring such additional Emission Allowances and/or Emission Credits, as applicable, for the Fiscal Year in which the change will take effect and for each Fiscal Year thereafter and Discos obligation to reimburse Genco for such Environmental Costs and/or for such costs of acquiring such additional Emission Allowances and/or Emission Credits, as applicable, in respect of each Affected Unit Generator shall be capped at the proportion of the Firm Estimate thereof in respect of each Fiscal Year equal to the proportion of Net Energy generated by the Affected Unit Generator which is assumed in PROMOD for that Fiscal Year to be used to supply In-Province Supply Requirements as compared to total Net Energy assumed in PROMOD for that Fiscal Year to be generated by the Affected Unit Generator. For greater certainty, Genco shall be solely responsible for the remaining proportion of any such costs and any such costs incurred by Genco in a Fiscal Year in excess of the Firm Estimate of such costs in respect of that Fiscal Year. 7.2.4.5 Notwithstanding sections 7.2.4.1, 7.2.4.2 and 7.2.4.3, Discos

obligation to reimburse Genco for Environmental Costs which are capital costs or fixed operations and maintenance costs in nature shall be reduced in accordance with the following provisions: 7.2.4.5.1 If Disco reduces Nominated Capacity pursuant to

section 2.4.1, Discos obligation to reimburse Genco for such

- 60 Environmental Costs shall be reduced by the percentage by which Nominated Capacity is so reduced. 7.2.4.5.2 If the expenditure of such Environmental Costs will

extend the Estimated Shutdown Date of an Affected Unit Generator, Discos obligation to reimburse Genco for such Environmental Costs shall be limited to the Environmental Costs which are associated with or correspond to or are allocable to the period ending on the unextended Estimated Shutdown Date and Disco shall not be obligated to reimburse Genco for such Environmental Costs which are associated with or correspond to or are allocable to such extension of the Estimated Shutdown Date and Base Load Capacity (and as a result Nominated Capacity) or Peaking Capacity, as applicable, depending on the nature of the Affected Unit Generator, shall be reduced pursuant to section 2.2.2 or 2.3.2, respectively, by the DNC of the Affected Unit Generator as of such unextended Estimated Shutdown Date (unless Base Load Capacity (and as a result Nominated Capacity or Peaking Capacity, as applicable,) has already been reduced in respect of the Affected Unit Generator pursuant to section 2.2.1 or section 2.3.1, respectively) regardless of the actual extended Estimated Shutdown Date of the Affected Unit Generator from time to time as a result of the expenditure of such Environmental Costs. 7.2.4.5.3 If the expenditure of such Environmental Costs will

increase the then current DNC of an Affected Unit Generator, Disco shall not reimburse Genco for the portion of such Environmental Costs which are associated with or correspond to or are allocable to such increase in the DNC of the Affected Unit Generator and no such increase in DNC shall form part of the Base Load Capacity (and as a result Nominated Capacity) or Peaking Capacity, as applicable, depending on the nature of the Affected Unit Generator.

- 61 7.2.5 Subject to the limits set forth in section 7.2.4, if Disco determines that Genco

shall be reimbursed by Disco for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, then: 7.2.5.1 in respect of such Environmental Costs which are capital costs in

nature or fixed operations and maintenance costs in nature, Disco shall, at its sole option and upon notice to Genco, either: 7.2.5.1.1 reimburse Genco in arrears, pursuant to monthly Bills, for

such Environmental Costs actually incurred or made during the applicable Billing Month; or 7.2.5.1.2 adjust the Monthly Payment in accordance with

section 7.2.6; and 7.2.5.2 in respect of the cost of acquiring such additional Emission

Allowances and/or Emission Credits and/or such Environmental Costs which are variable operations and maintenance costs in nature, Disco shall reimburse Genco in arrears pursuant to monthly Bills for such costs and expenses incurred or made during the applicable Billing Month. 7.2.6 If Disco chooses to reimburse Genco for such Environmental Costs which are

capital costs or fixed operations and maintenance costs in nature by adjusting the Monthly Payment, the Monthly Payment shall be adjusted as set forth in Schedule 7.2. 7.2.7 Notwithstanding any of the other provisions of this section 7.2, Disco shall not

be obligated to reimburse Genco for Environmental Costs which are capital costs in nature unless all of such Environmental Costs arising from a change in Environmental Law, regardless of whether such costs are payable by Disco or Genco, in aggregate exceed the Capital Threshold at the time of change in Environmental Law. Notwithstanding any of the other provisions of this section 7.2, Disco shall not be obligated to reimburse Genco for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for such Environmental Costs which are

- 62 operations and maintenance costs in nature unless all of such costs and expenses arising in a Fiscal Year from a change in Environmental Law, regardless of whether such costs are payable by Disco or Genco, in aggregate exceed the O&M Threshold for that Fiscal Year. For greater certainty, for purposes of this section 7.2.7, all changes to

Environmental Law related to one another and implemented at the same time as part of a series or package of changes shall be considered a change in Environmental Law. 7.2.8 Provided that Disco is obligated to reimburse Genco for at least 50% of the cost

of acquiring such additional Emission Allowances and Emission Credits and/or for making or incurring such Environmental Costs, and Disco has decided to so reimburse Genco, Genco shall complete the project under which such costs will be incurred or such expenditures will be made and Disco shall be permitted to monitor the project. If Disco is obligated to reimburse Genco for less than 50% of the cost of acquiring such additional Emission Allowances and Emission Credits and/or such Environmental Costs, it shall be Gencos sole decision whether to complete the project under which such costs will be incurred or such expenditures will be made. If Genco decides or is obligated to complete the project, Genco shall follow its normal practices to solicit bids or expressions of interest in respect of such project through a competitive process so that such costs or expenditures are minimized and competitive in relation to similar projects. Genco shall provide Disco with all details related to any such competitive process, including copies of all bids or expressions of interest provided to Genco. To the extent possible, Genco shall enter into fixed-price or guaranteed maximum contracts in respect of such costs or expenditures or projects. Genco shall consult with Disco about any material deviation in or amendment to the scope or schedule or costs of the project. Genco shall regularly update Disco, and provide written reports upon the request of Disco in reasonable detail, with respect to the progress, details and costs of any such project. Genco shall promptly notify Disco in writing if it reasonably expects that any such project will be delayed or the costs thereof will exceed the Firm Estimate thereof. 7.2.9 If Disco determines that Genco shall not be reimbursed by Disco for the cost of

acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, and provided that such costs and

- 63 expenditures are in excess of the Capital Threshold or the O&M Threshold, as applicable, then: 7.2.9.1 notwithstanding any other provision of this Agreement, Genco shall

not be liable for failing to Schedule and deliver all or part of Net Energy to Disco at the applicable Point of Delivery to the extent such failure arises because Genco has not (i) acquired such additional Emission Allowances and/or Emission Credits, and/or (ii) made or incurred such Environmental Costs; 7.2.9.2 until the Termination Date or such earlier date on which this

Agreement may be terminated but subject to section 7.2.9.3, Disco shall pay Genco in respect of each MWh of Net Energy that Genco is not capable of Scheduling and delivering to Disco at the applicable Point of Delivery as a result of Genco failing to (i) acquire such additional Emission Allowances and/or Emission Credits, and/or (ii) make or incur such Environmental Costs, an amount equal to the Vesting Energy Price less all non-capital costs or variable costs which can be avoided as a result of the MWh not being generated and delivered to Disco at the applicable Points of Delivery, and less all costs, expenses or damages which have been mitigated by Genco; and 7.2.9.3 if Genco decides to incur such cost of acquiring such additional

Emission Allowances and/or Emission Credits and/or such Environmental Costs, at its sole cost and expense, section 7.2.9.2 shall not apply and the project in respect of an Affected Unit Generator will be deemed to be a Refurbishment, the costs and expenses of which exceed the Major Refurbishment Threshold, and accordingly section 7.1.3.3 shall apply. Genco shall use Commercially Reasonable Efforts to mitigate its costs, expenses and damages and assist Disco with minimizing all costs, expenses and damages which may arise as a result of Discos determination not to reimburse Genco for the cost of acquiring such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs, including, upon the request of Disco, attempting to cancel all or part of any fuel contract. For the purposes of calculating the Net Energy not

- 64 able to be Scheduled and delivered by Genco to Disco at the applicable Points of Delivery as a result of the Buyers determination, the forecasted Net Energy that could have been delivered shall be based upon the then current projections of capacity factors for each Affected Unit Generator for each year until the Estimated Shutdown Date or the expected Termination Date, whichever is earlier, each determined as of the date of notification of Discos decision not to reimburse Genco for the costs to acquire such additional Emission Allowances and/or Emission Credits and/or for making or incurring such Environmental Costs. 7.2.10 For greater certainty, notwithstanding the foregoing provisions of this

section 7.2, if the sole cause for the requirement to acquire such additional Emission Allowances and/or Emission Credits and/or to incur such Environmental Costs arises because of a Refurbishment and not because of a change in Environmental Law, this section 7.2 shall not apply. 7.3 Exception Notwithstanding sections 7.1 and 7.2, if, as a result of any costs being incurred or expenditures being made as described in those sections, Gencos projected annual operations and maintenance costs associated with a Unit Generator will decrease, Discos obligation to reimburse Genco pursuant to section 7.1 or section 7.2, as the case may be, shall correspondingly decrease each Fiscal Year by the proportion of such decrease in operations and maintenance costs that is equal to the proportion of Net Energy generated by that Unit Generator which is assumed in PROMOD for that Fiscal Year to be used to supply In-Province Supply Requirements as compared to total Net Energy assumed in PROMOD for that Fiscal Year to be generated by that Unit Generator. The total amount of any such decrease pursuant to this section 7.3 (and not, for greater certainty, the portion of the decrease allocated to InProvince Supply Requirements) shall be considered and reflected in determining whether the Major Refurbishment Threshold for that Unit Generator or the Capital Threshold or the O&M Threshold, as applicable, has been exceeded pursuant to section 7.1 or section 7.2.7, as the case may be. For greater certainty, Disco and Genco acknowledge that if Disco chooses to reimburse Genco for any such costs or expenditures by adjusting the Monthly Payment

- 65 pursuant to section 7.2.6, the formula set out in Schedule 7.2 already contemplates an adjustment to reflect a decrease in annual operations and maintenance costs.

- 66 ARTICLE 8 OPERATIONS 8.1 Metering Net Energy shall be calculated in accordance with the Market Rules and any metering procedures adopted or approved by the Operating Committee from time to time, provided that, in all circumstances: 8.1.1 all Metering Installations used in connection with this Agreement shall be

certified as meeting the requirements of Measurement Canada or any successor thereof or any other applicable Governmental Authority, including, if applicable, the SO; 8.1.2 if the SO develops validation, estimation or other metering procedures to

produce final metering data or to replicate missing metering data, any metering procedures adopted or approved by the Operating Committee shall be consistent with, and not contradict, any such metering procedures of the SO; and 8.1.3 Genco agrees to authorize the SO to provide Disco and its agents, advisors and

representatives with access to metering data controlled by the SO as reasonably required by Disco from time to time. 8.2 Operation, Repair and Maintenance Genco shall operate, repair, maintain, rehabilitate (or cause to be operated, repaired, maintained, rehabilitated) the Genco Facilities in accordance with Good Utility Practices and all Applicable Laws and in a manner that permits Genco to satisfy and perform its obligations under this Agreement. In doing so, Genco shall ensure that it carries out (or causes another Person to carry out) such operation, repair, maintenance and rehabilitation in a manner and to the extent necessary to comply with the requirements specified in any insurance policy relating to the Genco Facilities required to be held by Genco under this Agreement and, subject to Article 7, Genco shall incur such capital and operations and maintenance costs and expenses as are required so that each Unit Generator at a Genco Facility can operate until its Estimated Shutdown Date as of the date of this Agreement. Genco shall exercise its rights associated with

- 67 the Heritage PPAs to ensure that the Heritage PPA Facilities are operated in accordance with Good Utility Practices. Disco shall exercise its rights associated with the Coleson Cove TA and the Point Lepreau PPA to ensure that (i) the Unit Generators, the Facilities and the Other Facilities (each as defined in the Coleson Cove TA) and (ii) the Unit Generator, the Facilities and the Other Facilities (each as defined in the Point Lepreau PPA), are operated in accordance with Good Utility Practices. Genco shall not Transfer or assign any portion of the Genco Heritage Assets necessary to permit Genco to satisfy and perform its obligations under this Agreement without the consent of Disco, which consent shall not be unreasonably withheld or delayed. 8.3 8.3.1 Information Genco shall: 8.3.1.1 within a reasonable period after a written request by Disco, provide to

Disco information on the state of repair, condition and operation of any part of the Genco Facilities or the Heritage PPA Facilities which request shall not, unless the circumstances require, be made more frequently than annually; 8.3.1.2 promptly provide to Disco, upon request, information and data

required for, or input into, or generated by Gencos PROMOD; 8.3.1.3 promptly provide to either Disco or the SO, upon request, incremental

cost and production efficiency data necessary to economically dispatch the Unit Generators forming part of the Genco Facilities; and 8.3.1.4 promptly notify Disco of any material loss or any material damage to

the Genco Facilities or the Heritage PPA Facilities or any portion thereof including those situations in which Genco or another Person in respect of the Heritage PPA Facilities is obliged to give notice to a Governmental Authority or to an insurer under a policy of insurance, whether or not such insurance is required to be maintained under this Agreement, provided that the Operating Committee may specify which notices to a Governmental Authority are to be provided to Disco.

- 68 Notwithstanding the foregoing, Genco shall not be required to provide information to Disco where to do so would be a breach of its confidentiality obligations under the Heritage PPAs. 8.3.2 Disco shall promptly provide to Genco, upon request, information and data

required for, or input into, and generated by Discos PROMOD. 8.4 Inspection Upon Disco giving Genco reasonable prior notice, Genco will permit Disco, and its authorized representatives and advisors, at all reasonable times, to inspect at its own expense the Genco Facilities and, to the extent Genco is able, the Heritage PPA Facilities for the purposes of determining whether Genco is complying with its obligations under this Agreement. In conducting such inspections, Disco and its authorized representatives and advisors shall not unduly interfere with the operations of Genco or the owner or operator of a Heritage PPA Facility, as the case may be, and will be subject to the same limitations and conditions of access as are applied to Genco and its employees or such owner or operator of the Heritage PPA Facility and its employees, as the case may be. 8.5 Regulatory Compliance Each party shall be responsible for obtaining and maintaining all approvals, permits, certificates, consents, registrations, authorizations and licenses of or from, and shall make or file all declarations, filings and registrations with, or notices to, Governmental Authorities required for or in respect of the performance of its respective obligations under this Agreement. Subject to section 7.2, each party will be responsible for its own costs and fees in connection with its compliance with this section 8.5 and in connection with its compliance with any changes in Applicable Laws. In exercising its respective rights and remedies under this Agreement, each party agrees that it shall do so only in compliance with Applicable Law. 8.6 Notification of Actions Each party (for the purposes of this section 8.6, the disclosing party) shall notify the other parties as soon as reasonably practicable of any action, suit, proceeding or investigation by or before a Governmental Authority that would, in the opinion of the

- 69 disclosing party, acting reasonably and taking into account the disclosing partys reasonable assessment of the likelihood of success of any such action, suit, proceeding or investigation, have a material adverse effect on the disclosing partys ability to perform its obligations under this Agreement if such action, suit, proceeding or investigation were determined adversely to the disclosing party. 8.7 8.7.1 Agency Disco hereby appoints Genco to act, and Genco agrees to act, as the agent for

Disco for purposes of: 8.7.1.1 providing Scheduling instructions to Coleson Cove Corporation or its

permitted assign; 8.7.1.2 procuring and delivering fuel to Coleson Cove pursuant to

section 4.3.1; and 8.7.1.3 providing Scheduling instructions to New Brunswick Power Nuclear

Corporation or its permitted assign in connection with the Point Lepreau PPA; each under Discos direction and subject to the limitations in sections 8.7.4, 8.7.5 and 8.7.6. In providing such services under the Coleson Cove TA or the Point Lepreau PPA, as the case may be, Genco shall act in good faith to represent only the best interests of Disco in all respects concerning the Coleson Cove TA or the Point Lepreau PPA, as the case may be. 8.7.2 Disco hereby irrevocably appoints Genco to act, and Genco agrees to act, as

Discos agent as the Market Participant for Coleson Cove and the Unit Generators located at Coleson Cove. Disco agrees to use all reasonable efforts and to do, take, execute or deliver, or cause to be done, taken, executed or delivered, all such acts, steps, deeds or documents necessary to effect such appointment with the SO. 8.7.3 To the extent permitted by the Coleson Cove TA, and as requested by Disco

from time to time in connection with providing the agency services described in section 8.7.1, Genco shall have a representative attend meetings of the operating

- 70 committee established under the Coleson Cove TA, accompanied by a representative of Disco. 8.7.4 Genco has no authority to act, and shall not act, as the agent for Disco with

respect to the resolution of any disputes of a material nature that may arise, or with respect to payment obligations of Disco, under the Coleson Cove TA or the Point Lepreau PPA, as the case may be. 8.7.5 If at any time while Genco is acting as agent for Disco it appears to either party

that Genco may be in a conflict of interest position with respect to any Coleson Cove TA issue, Point Lepreau PPA issue or issue under this Agreement, as the case may be, that party shall notify the other of such conflict and Genco shall not be authorized to act, and shall not act, as agent for Disco with respect to that issue unless Disco has consented in writing. 8.7.6 Disco may terminate all or any part of the agency created by this section 8.7,

other than the agency created by section 8.7.1.2 or 8.7.2, upon written notice to Genco.

- 71 ARTICLE 9 OUTAGES 9.1 Planned Outage Schedule Genco and Disco have agreed to a schedule of Planned Outages (the Planned Outage Schedule) that includes the expected starting date and ending date of each Planned Outage during the period commencing on the date of this Agreement and ending on March 31, 2006. Subject to first complying with the provisions of section 9.2, Genco shall provide a revised Planned Outage Schedule to Disco by October 1 of each Fiscal Year, or sooner if required by Disco to meet any requirements under Applicable Law, that includes details with respect to Planned Outages from the date of such revised Planned Outage Schedule until the end of the next Fiscal Year. Any such revised Planned Outage Schedule shall be (i) prepared in accordance with section 9.2 and (ii) deemed to amend and replace the then current Planned Outage Schedule. Genco shall schedule its Planned Outages with the SO at any time pursuant to and only in accordance with the then current Planned Outage Schedule at that time. 9.2 9.2.1 Changes to Planned Outage Schedule Changes to the Planned Outage Schedule for the purposes of (i) including the

next Fiscal Years Planned Outages, (ii) adding or removing Planned Outages, or (iii) changing the timing or duration of Planned Outages identified in the then current Planned Outage Schedule, may be initiated by either Disco or Genco and shall be made only in accordance with the following: 9.2.1.1 Disco and Genco shall co-operate to amend the then current Planned

Outage Schedule, but, subject to the remaining provisions in this section 9.2, no such changes to such Planned Outage Schedule shall be made by Disco or Genco without the others prior written consent, which consent shall not be unreasonably withheld or delayed. For greater certainty, it will be reasonable for Disco to withhold its consent to a change in a Planned Outage identified in the then current Planned Outage Schedule if the costs to Disco, including replacement capacity and Energy costs and additional reserve costs, are likely to increase as a result of the proposed change.

- 72 9.2.1.2 Notwithstanding any provision to the contrary in this section 9.2,

Genco may amend the then current Planned Outage Schedule without Discos consent if Genco is so required by the SO, provided that Genco shall not initiate with the SO any amendment to the Planned Outage Schedule not in compliance with the other provisions in this section 9.2. If Genco amends the then current Planned Outage Schedule pursuant to this section 9.2.1.2, Genco shall co-operate with Disco to minimize the adverse impacts on Disco of such amendment to the Planned Outage Schedule. 9.2.1.3 No Planned Outages scheduled to occur in whole or in part during

January, February, March, November or December (each, an Excluded Month and collectively, the Excluded Months) shall be added to the Planned Outage Schedule, and the timing of any Planned Outage included in the Planned Outage Schedule shall not be changed in a manner which results in any part of such Planned Outage being scheduled to be conducted in whole or in part during an Excluded Month, even if such Planned Outage was already scheduled to occur in whole or in part during one or more Excluded Months, without Discos prior written consent, which consent shall not be unreasonably withheld or delayed. For greater certainty, it will be reasonable for Disco to withhold its consent pursuant to this section 9.2.1.3 if the costs to Disco, including replacement capacity and Energy costs and additional reserve costs, are likely to increase as a result of the proposed change. 9.2.1.4 Any changes made in accordance with this section 9.2 shall be

reflected in a revised Planned Outage Schedule and shall be deemed to amend and replace the then current Planned Outage Schedule. 9.3 Forced Outages For greater certainty, Forced Outages of the Unit Generators may be taken by Genco as they arise and, in any event, in Gencos sole discretion, provided that: 9.3.1 Genco shall use Commercially Reasonable Efforts to terminate or end a Forced

Outage of a Unit Generator as soon as possible; and

- 73 9.3.2 Genco shall not during a Forced Outage, without Discos prior consent, such

consent not to be unreasonably withheld or delayed, undertake any work not related to the cause or effects of the Forced Outage, including, for greater certainty, work scheduled to be conducted during an upcoming Planned Outage, if completing and undertaking such work would extend the length or duration of the Forced Outage. 9.4 9.4.1 Maintenance Outages For greater certainty, Maintenance Outages of the Unit Generators shall be

scheduled, to the extent possible, in conjunction with Disco, and in any event, Genco shall, in scheduling a Maintenance Outage, use Commercially Reasonable Efforts to: 9.4.1.1 consider Discos alternate generation sources, the cost to Disco of

replacement capacity and Energy, and Discos Load Forecast in order to minimize the impact on Disco; and 9.4.1.2 9.4.2 schedule the Maintenance Outage outside of an Excluded Month.

In the event that Disco and Genco are unable to reach an agreement as to the

scheduling of a Maintenance Outage, Genco, using Good Utility Practices, shall have the right to unilaterally schedule the Maintenance Outage in order to protect its investment in a Unit Generator by avoiding additional equipment maintenance that would be in excess of normal maintenance requirements, provided that Genco: 9.4.2.1 considers Discos alternate generation sources, the cost to Disco of

replacement capacity and Energy, and Discos Load Forecast in order to minimize the impact on Disco; 9.4.2.2 shall not during a Maintenance Outage, without Discos prior written

consent, undertake any work not related to the cause or effects of the Maintenance Outage, including, for greater certainty, work scheduled to be conducted during an upcoming Planned Outage, if completing and undertaking such work would extend the length or duration of the Maintenance Outage; and

- 74 9.4.2.3 to the best of its abilities, schedules the Maintenance Outage outside

of an Excluded Month. 9.4.3 Genco shall use Commercially Reasonable Efforts to terminate or end a

Maintenance Outage of a Unit Generator as soon as possible. 9.5 Cost of Changes Except in the case of a change to the Planned Outage Schedule pursuant to section 9.2.1.2, the party initiating a change in a Planned Outage identified in the then current Planned Outage Schedule shall pay Discos or Gencos, as the case may be, reasonable out-of-pocket incremental costs and expenses resulting from any such change that is ultimately made to the Planned Outage Schedule; provided, however, that unless otherwise agreed by Disco and Genco the cost of replacement capacity and Energy and additional operating reserves shall not be included in such incremental costs and expenses. In the case of a change to the Planned Outage Schedule pursuant to section 9.2.1.2, Disco and Genco shall each bear and be responsible for its own respective costs and expenses resulting from any such change. 9.6 Scheduling Each of Disco and Genco shall participate in any Maintenance Outage or Planned Outage co-ordination meetings of electricity generators in New Brunswick, including any such meetings arranged or required by the SO. In addition, the Operating Committee will develop outage procedures to govern the communications between Disco and Genco relating to the scheduling, duration, conduct and termination of Planned Outages, Maintenance Outages and Forced Outages, and each of the parties shall comply with any such procedures so developed and adopted by the Operating Committee. For the purposes of financial planning, at the time each Planned Outage Schedule is determined annually, Disco and Genco shall also discuss and set out, for information only, the Planned Outage requirements for at least one additional Fiscal Year beyond the Planned Outage Schedule then being determined. 9.7 Unit Generators at the Genco Facilities For greater certainty and notwithstanding the foregoing provisions of this Article 9, this Article 9 applies only to the Unit Generators located at the Genco Facilities.

- 75 ARTICLE 10 REPRESENTATIONS AND WARRANTIES 10.1 Representations and Warranties of Genco Genco represents and warrants to Disco and NB Power Holdco as follows and acknowledges that each of Disco and NB Power Holdco is relying on such representations and warranties in entering into this Agreement: 10.1.1 Genco is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 10.1.2 This Agreement has been duly authorized, executed and delivered by Genco and

is a valid and binding obligation of Genco enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 10.1.3 The execution and delivery of this Agreement by Genco and the performance by

Genco of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of Genco under: 10.1.3.1 any contract or obligation to which Genco is a party or by which it or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on Gencos ability to fulfil or perform its obligations and covenants under this Agreement; 10.1.3.2 the articles, by-laws or other organizational or constating documents of Genco; or

- 76 10.1.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit, certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to Genco. 10.1.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation or other similar proceedings pending against Genco or being contemplated by Genco or, to the Knowledge of Genco, threatened against Genco. 10.1.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which the Agreement may be terminated. 10.2 Representations and Warranties of Disco Disco represents and warrants to Genco and NB Power Holdco as follows and acknowledges that each of Genco and NB Power Holdco is relying on such representations and warranties in entering into this Agreement: 10.2.1 Disco is a corporation duly formed and existing under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 10.2.2 This Agreement has been duly authorized, executed and delivered by Disco and

is a valid and binding obligation of Disco enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. 10.2.3 The execution and delivery of this Agreement by Disco and the performance by

Disco of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of Disco under: 10.2.3.1 any contract or obligation to which Disco is a party or by which it or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or

- 77 consents have been obtained or which would not have a material adverse effect on Discos ability to fulfil or perform its obligations and covenants under this Agreement; 10.2.3.2 the articles, by-laws or other organizational or constating documents of Disco; or 10.2.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit, certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to Disco. 10.2.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation, or other similar proceedings pending against Disco or being contemplated by Disco or, to the Knowledge of Disco, threatened against Disco. 10.2.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which the Agreement may be terminated. 10.3 Representations and Warranties of NB Power Holdco NB Power Holdco represents and warrants to Genco and Disco as follows and acknowledges that each of Genco and Disco is relying on such representations and warranties in entering into this Agreement: 10.3.1 NB Power Holdco is a corporation duly continued under the laws of New

Brunswick and has the corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. 10.3.2 This Agreement has been duly authorized, executed and delivered by NB Power

Holdco and is a valid and binding obligation of NB Power Holdco enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.

- 78 10.3.3 The execution and delivery of this Agreement by NB Power Holdco and the

performance by NB Power Holdco of its obligations hereunder will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the termination, cancellation or acceleration of any obligation of NB Power Holdco under: 10.3.3.1 any contract or obligation to which NB Power Holdco is a party or by which it or its assets may be bound, except for such breaches, violations, defaults, conflicts, terminations, cancellations or accelerations as to which requisite waivers or consents have been obtained or which would not have a material adverse effect on NB Power Holdcos ability to fulfil or perform its obligations and covenants under this Agreement; 10.3.3.2 the articles, by-laws or other organizational or constating documents of NB Power Holdco; or 10.3.3.3 any judgment, decree, law, statute, regulation, rule, licence, permit, certificate, registration, approval, consent, authorization, order, ruling or award of any Governmental Authority having jurisdiction over or applicable to NB Power Holdco. 10.3.4 There are no bankruptcy, insolvency, receivership, interim-receivership, seizure,

realization, liquidation, or other similar proceedings pending against NB Power Holdco or being contemplated by NB Power Holdco or, to the Knowledge of NB Power Holdco, threatened against NB Power Holdco. 10.3.5 All of the foregoing representations and warranties will continue to be true and

correct until the Termination Date or such earlier date on which the Agreement may be terminated.

- 79 ARTICLE 11 CONTRACT OPERATION AND ADMINISTRATION 11.1 The Operating Committee Disco and Genco shall each appoint, from time to time, a representative to an operating committee (the Operating Committee) which representative shall be duly authorized to act on behalf of the party that has made the appointment, and with whom the other party may consult at all reasonable times, and whose instructions, requests, and decisions shall be binding on the appointing party as to all matters pertaining to this Agreement; provided, however, that the Operating Committee shall not have the authority to amend this Agreement except as specifically provided for in this Agreement. The Operating Committee shall meet from time to time as required and, in any event, at least once each calendar year. The Operating Committee shall address operating and administrative issues related to the Agreement, including the formulation, adoption and approval, if and as required, of the Scheduling Procedures, metering procedures and outage planning procedures, along with any and all other issues arising between Genco and Disco under the Agreement which either Genco or Disco may reasonably request the Operating Committee to address. Genco shall provide through the Operating Committee all additional information relating to a Forced Outage, Planned Outage or Maintenance Outage of a Unit Generator reasonably requested by Disco. 11.2 Record Retention Each party (the disclosing party for the purposes of this section 11.2) shall keep complete and accurate records and all other data required by each party for the purpose of the proper administration of this Agreement. All such records and data shall be maintained for a minimum of seven years after the creation of the record or data or for such longer period of retention as required by Applicable Law or a Governmental Authority. The disclosing party, on a confidential basis as provided for in section 19.9 and subject to the limitations of disclosure set forth in section 19.5, shall provide to another party (the receiving party for the purposes of this section 11.2) reasonable access to the relevant and appropriate records and data kept by the disclosing party which are required by the receiving party in order for the receiving party to be able to comply with its obligations to Governmental Authorities or under Applicable

- 80 Law or in order to provide the receiving party with all relevant information required by the receiving party in connection with this Agreement and the parties compliance herewith. A party may use its own employees for the purposes of any such review of records and data provided that those employees are advised of and bound by the confidentiality obligations provided for in section 19.9.

- 81 ARTICLE 12 BILLING AND PAYMENT 12.1 12.1.1 Billing and Other Statements Genco shall render and deliver to Disco, in accordance with section 19.10, a

monthly billing statement (a Genco Bill) promptly following each calendar month (the Billing Month) setting out all costs, expenses or amounts owed by Disco to Genco pursuant to this Agreement in respect of the Billing Month or any other applicable period. Together with each Genco Bill, Genco shall also provide Disco with the metering information and all other relevant data upon which the Genco Bill is based. 12.1.2 Disco shall render and deliver to Genco, in accordance with section 19.10, a

monthly billing statement (a Disco Bill) promptly following each Billing Month setting out all costs, expenses or amounts owed by Genco to Disco pursuant to this Agreement in respect of the Billing Month or any other applicable period. Together with each Disco Bill, Disco shall also provide Genco with all relevant data upon which the Disco Bill is based. 12.1.3 NB Power Holdco shall render and deliver to Genco, in accordance with

section 19.10, a monthly billing statement (an NB Power Holdco Bill) promptly following each Billing Month setting out all costs, expenses or amounts owed by Genco to NB Power Holdco or by NB Power Holdco to Genco pursuant to this Agreement in respect of the Billing Month or any other applicable period. Together with each

NB Power Holdco Bill, NB Power Holdco shall also provide Genco with all relevant data upon which the NB Power Holdco Bill is based. 12.2 Payments and Interest Subject to section 12.5, the party required to make a payment under a Bill (the Payor) shall remit to the other applicable party (the Payee) full payment in respect of a Bill by the later of (i) 10 days after receipt of the Bill by the other party, or (ii) the 20th day of the calendar month immediately following the Billing Month in respect of which the Bill was issued (such later date being the Payment Date). All payments hereunder shall be made by

- 82 wire transfer to an account designated by the Payee or in such other manner as is agreed by the applicable parties. Interest on unpaid amounts shall be paid by the Payor and shall accrue daily at the Interest Rate from and including the date such payment is due until the date it is paid. 12.3 Netting If Disco and Genco are each required to pay an amount under this Agreement in a Billing Month pursuant to a Genco Bill and a Disco Bill, respectively, the parties may discharge their obligations to pay through netting, in which case the party owing the greater amount may pay to the other party the difference between the amounts owed. Any such netting shall not result in any waiver of, and each party reserves to itself, any rights, counterclaims, remedies or defences (to the extent not expressly waived herein or denied) which such party has or may be entitled to arising from or out of this Agreement. 12.4 Adjustments If a party renders a Bill on an estimated basis, that party shall concurrently provide the other party with the basis of such estimate. Any adjustment for estimated amounts shall be made in the next Bill delivered by the party following the date the actual information becomes available. Each Bill shall also be subject to adjustment for errors in arithmetic, computation, meter readings, or other errors until 24 months after the date Genco, Disco or NB Power Holdco, as the case may be, rendered the Bill, after which time the Bill shall be final and conclusive for all purposes of this Agreement unless the Bill has been disputed in accordance with section 12.5. If it is determined that a Bill should be adjusted for any such errors, such adjustment shall be made in the next Bill of the billing party. Any overpayment or

underpayment relating to an adjusted Bill shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment to the date of the refund or payment thereof. 12.5 Disputed Bills If a party disputes a Bill or any portion thereof, the disputing party shall pay both the disputed and the undisputed portions of the Bill payable by it. The disputing party shall also provide written notice to the billing party setting out the portions of the Bill that are in dispute, an explanation of the dispute and the amount that the disputing party believes is the

- 83 correct amount. If it is subsequently determined through arbitration or agreed that an

adjustment to the disputed Bill is appropriate or that the disputed portion of the Bill should not have been paid, the billing party shall include an adjustment in the next Bill delivered to the disputing party. Following a determination or agreement as set out above, any overpayment or underpayment in connection with a disputed Bill and the adjustment in respect thereof shall bear interest at the Interest Rate from and including the date of the overpayment or underpayment in respect of the disputed Bill to the date of the refund or payment thereof. If a Bill dispute has not been resolved between the applicable parties within 30 days after receipt by a party of written notice of the dispute, the dispute may be submitted to the Disputes Committee by either party in accordance with section 19.6.

- 84 ARTICLE 13 CREDIT AND COLLATERAL REQUIREMENTS 13.1 13.1.1 Disco Credit and Collateral Requirements Disco shall provide to Genco one of the following forms of security for so long

as it does not have a Minimum Credit Rating: 13.1.1.1 a Guarantee from the Person or Persons that ultimately Controls or Control Disco, provided that such Person or Persons has or have a Minimum Credit Rating (the Guarantor); 13.1.1.2 a Letter of Credit; or 13.1.1.3 an equivalent form of security satisfactory to Genco, acting reasonably; each in an amount equal to the Estimated Collection Value from time to time. Except as otherwise provided for in this section 13.1, Disco shall have the sole discretion to select which of the above forms of security it will provide to Genco. 13.1.2 Disco shall provide security pursuant to section 13.1.1.1 within five Business

Days of it failing to have a Minimum Credit Rating. 13.1.3 Disco will be considered to have a Minimum Credit Rating if its credit

rating is rated (i) by Standard & Poors (S&P) as BBB or above, (ii) by Dominion Bond Rating Service as BBB or above, or (iii) by Moodys Investors Service as Baa2 or above. 13.1.4 If Disco has delivered a Guarantee to Genco, Genco agrees that the Guarantor

may assign its obligations under the Guarantee to an Affiliate of the Guarantor or to any other Person that has (i) a credit rating equal to or better than the Minimum Credit Rating, and (ii) substantial assets in Canada. Such assignment shall be effective only when the assignee has delivered to Genco a replacement guarantee in a form satisfactory to Genco, acting reasonably. Upon delivery of the replacement guarantee, such guarantee

- 85 shall be deemed to be the Guarantee and such assignee shall be deemed to be the Guarantor for all purposes of this Agreement. 13.1.5 If Disco delivers one form of security pursuant to this section 13.1 or if Disco

obtains or restores a Minimum Credit Rating, Genco shall concurrently release any other form of security, if any, previously delivered by Disco. 13.1.6 Subject to section 13.1.4, if Disco has delivered a Guarantee to Genco and the

Guarantor, at any time, fails to have a Minimum Credit Rating, Disco shall provide to Genco within five Business Days of such failure a Letter of Credit in an amount equal to the Estimated Collection Value from time to time. 13.1.7 Disco. The cost of any Letter of Credit or equivalent form of security shall be borne by

- 86 ARTICLE 14 FORCE MAJEURE 14.1 14.1.1 Effect of Invoking Force Majeure and Notice A party shall be deemed to have invoked Force Majeure with effect from the

commencement of the event or circumstances constituting Force Majeure when that party gives to the other parties written or oral notice which is reasonably prompt in the circumstances (but if oral, promptly confirmed in writing in accordance with section 19.10) of the effects of the Force Majeure and reasonably full particulars of the cause thereof. Any Dispute between the parties as to whether a valid Force Majeure has occurred shall be resolved in accordance with sections 19.6 and 19.7. The party claiming Force Majeure shall use all reasonable efforts to remedy the situation and remove, so far as possible and with reasonable dispatch, the effects of the Force Majeure provided, however, that the settlement of labour disputes shall be within the discretion of such party. The party claiming Force Majeure shall give prompt notice to the other parties of the termination of the event of Force Majeure. In addition, the party claiming Force Majeure shall, as soon as reasonably practicable following the occurrence of the Force Majeure and from time to time thereafter, provide the other parties with (i) access to all information, data, books and records about the Force Majeure, the effects thereof, and the plans or proposals to remedy or remove the effects of the Force Majeure, reasonably requested by the other parties, and access to the Genco Facilities, if applicable, to conduct inspections with respect to the Force Majeure, and (ii) the opportunity, but not the obligation, to take, at its own cost, the steps it deems are reasonably necessary to remedy the effects of the delay or prevention of performance caused by the Force Majeure. If by reason of Force Majeure a party is unable, wholly or partially, to perform or comply with its obligations hereunder, then that party shall be excused and relieved from performing or complying with such obligations and shall not be liable for any liabilities, damages, losses, payments, costs, expenses or, for greater certainty, Indemnifiable Losses (excluding Indemnifiable Losses which relate to negligence or wilful misconduct, which arose prior to the event of Force Majeure or which do not relate to the event of Force Majeure) to, or incurred or made by, the other parties in respect of or relating to (a) such

- 87 Force Majeure and (b) such partys failure to so perform or comply during the continuance of such Force Majeure, to the extent of the inability so caused from and after the invocation of such Force Majeure and until the termination of such Force Majeure. 14.1.2 If a party claims a valid Force Majeure pursuant to section 14.1, Disco and

Genco shall use Commercially Reasonable Efforts to re-Schedule the Net Energy that Disco had instructed Genco pursuant to the Scheduling Procedures to deliver to Disco at the Point of Delivery during the period of the Force Majeure so that it is delivered by Genco to Disco at the Point of Delivery after the termination of the event of Force Majeure. 14.2 Definition of Force Majeure For the purposes of this Agreement, the term Force Majeure means and is limited to any circumstance, act, event, cause or condition that is beyond the reasonable control of the party claiming Force Majeure, that is not caused by such partys negligence, and that, by the exercise of all reasonable efforts, such party is unable to overcome or prevent, including: 14.2.1.1 an earthquake, tornado, severe storm, flood, fire, lightning or other act of God; 14.2.1.2 an epidemic plague or quarantine; 14.2.1.3 an act of civil or military authorities, insurrection, war (whether declared or undeclared), revolution, sabotage, invasion, blockade, occupation, civil disturbance, an act of public enemies or terrorists, riot or vandalism or a local, regional or national state of emergency, or explosion resulting from any of the foregoing; 14.2.1.4 an interruption, disruption or failure in the operation of electric lines, equipment or systems or an interruption, disruption or failure in the operation of transmission lines, systems, equipment or facilities, including any such interruption, disruption or failure caused by weather, an explosion or accident;

- 88 14.2.1.5 transmission restrictions, loss or deterioration of transmission or electric services, which, for greater certainty, were not caused by the negligence of that party and that by the exercise of all reasonable efforts, that party was not able to overcome or prevent, or any transmitter or rotating load cuts required by the SO; 14.2.1.6 in the case of Genco, any equipment failure, or mechanical or electrical breakdown of equipment which, for greater certainty, was not caused by the negligence of Genco and that by the exercise of all reasonable efforts, Genco was unable to overcome or prevent; 14.2.1.7 a strike or other work stoppage or other labour dispute; 14.2.1.8 a reduction in the amount of Energy delivered pursuant to a Heritage PPA in circumstances where the counterparty to the Heritage PPA is entitled to validly claim force majeure under that Heritage PPA; 14.2.1.9 delays or reductions in fuel supply resulting from the counterparty to any fuel supply agreement being entitled to validly claim force majeure thereunder; or 14.2.1.10 an order, judgment, decree, legislation, ruling or direction by a Governmental Authority restraining a party from performing its obligations hereunder, provided that the affected party has not applied for or assisted in the application for and has used Commercially Reasonable Efforts to oppose the order, judgment, decree, legislation, ruling or direction; but excluding: 14.2.1.11 subject to section 14.2.1.10, changes in Applicable Law. 14.3 No Capacity Payment For greater certainty, if either Disco or Genco has validly claimed Force Majeure pursuant to this Agreement and such Force Majeure affects the availability of one or

- 89 more of the Unit Generators at the Genco Facilities which form part of the Base Load Assets, or causes a reduction in Net Energy delivered hereunder, the Capacity Payment shall be reduced by (i) an amount which corresponds to such loss of availability or Net Energy as compared to the Nominated Capacity at that time, or (ii) in the case of Force Majeure invoked by Genco as described in section 14.2.1.6, 150% of the amount which corresponds to such loss of availability or Net Energy as compared to the Nominated Capacity at that time. 14.4 NB Power Holdco Limitation Notwithstanding the foregoing provisions of this Article 14, NB Power Holdco may not claim Force Majeure, and the rights of NB Power Holdco pursuant to this Article 14 shall be limited to receiving any notices that a party is required to provide pursuant to this Article 14.

- 90 ARTICLE 15 REMEDIES FOR FAILURE TO DELIVER CAPACITY AND ENERGY 15.1 Gencos Failure to Deliver Capacity and Energy Unless excused or relieved from performance hereunder by Force Majeure or unless (i) a Forced Outage, Maintenance Outage or Planned Outage or other operating conditions or derations, or (ii) an insufficient supply of Energy available for purchase from other Persons pursuant to section 3.1.5.2, has prevented Genco from delivering Energy to Disco, if as a direct or indirect result or consequence of Genco failing to comply with its obligations under this Agreement, Genco fails to deliver to the Point of Delivery that portion of the Net Energy, or Energy required to be purchased from other Persons pursuant to section 3.1.5.2, that Disco has instructed Genco to deliver pursuant to the Scheduling Procedures in that calendar month or that the SO has dispatched Genco to deliver in order for Disco to supply the In-Province Supply Requirements, and Genco was not prevented from delivering such Energy because of Discos inability to receive such Energy at the Point of Delivery, including, for greater certainty, circumstances where Disco has validly claimed Force Majeure has prevented it from receiving such Energy at the Point of Delivery, the following provisions shall apply: 15.1.1 For each MWh of such Energy not so delivered by Genco, Genco shall pay

Disco as liquidated damages, and not as a penalty, amounts equal to the positive difference, if any, between: 15.1.1.1 the price Disco pays to purchase replacement Energy for such MWh, plus the aggregate direct, out of pocket costs and expenses, including Transmission and Related Costs (calculated as a per MWh amount) reasonably incurred by Disco in affecting the purchase of the replacement MWh; and 15.1.1.2 the price which Disco would have paid Genco for such MWh, plus the aggregate direct, out of pocket costs and expenses, including Transmission and Related Costs (calculated as a per MWh amount) that Disco would have reasonably incurred had Disco purchased such MWh from Genco hereunder;

- 91 provided, however, that: 15.1.1.3 Disco shall have taken Commercially Reasonable Efforts to mitigate its damages. 15.1.2 Provided that replacement Energy is available to be purchased by Disco, the

right to receive liquidated damages under section 15.1.1 shall be Discos sole and exclusive remedy for any and each failure of Genco, as a direct or indirect result or consequence of Genco failing to comply with its obligations under this Agreement, to deliver to the Point of Delivery that portion of the Net Energy, or Energy required to be purchased from other Persons pursuant to section 3.1.5.2, that Disco has instructed Genco pursuant to the Scheduling Procedures to deliver to the Point of Delivery, or that the SO has dispatched Genco to deliver, and all other damages and remedies are hereby waived by Disco. For greater certainty and notwithstanding section 16.5, it shall not be

considered a Genco Event of Default, nor shall Disco have the termination rights or other remedies contained in section 16.5 or elsewhere in this Agreement, in circumstances where (i) Genco, as a direct or indirect result or consequence of Genco failing to comply with its obligations under this Agreement, has failed to deliver to the Point of Delivery that portion of such Energy that Disco has instructed Genco pursuant to the Scheduling Procedures to deliver to the Point of Delivery, or that the SO has dispatched Genco to deliver, (ii) replacement Energy was available and purchased by Disco and (iii) Genco has paid Disco liquidated damages under section 15.1 in respect thereof in accordance with this section 15.1. If replacement Energy is not available to be purchased by Disco, Disco shall be entitled to specific performance and any other appropriate equitable or other remedy pursuant to section 17.5.2 or otherwise.

- 92 ARTICLE 16 TERM, DEFAULT AND TERMINATION 16.1 Term The term of this Agreement (the Term) shall commence upon the date hereof and, subject to sections 16.3, 16.5 and 16.6, shall include all days up to and including the later of (i) the date upon which Nominated Capacity is zero, and (ii) the date the Coleson Cove TA terminates or the term thereof expires (the Termination Date). Subject to sections 16.3, 16.5 and 16.6, this Agreement and the parties respective obligations hereunder shall terminate on the Termination Date and be of no further force and effect. 16.2 Events of Default by Disco Each of the following will constitute an event of default by Disco (each, a Disco Event of Default): 16.2.1 Disco fails to make any payment required to be made by Disco to Genco under

this Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by Disco of written notice of the failure from Genco. 16.2.2 Other than a failure referred to in section 16.2.1, Disco fails to perform in all

material respects or is otherwise in material breach of its obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by Genco to perform, or a breach by Genco of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) Disco fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by Disco of written notice of the failure or breach from Genco, or (b) Disco, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach within 90 days after receipt of such written notice. 16.2.3 Any representation or warranty made by Disco contained in this Agreement is or

becomes untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be terminated

- 93 and, if the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by Disco within 30 days after receipt by Disco of written notice from Genco that the representation and warranty is untrue or incorrect. 16.2.4 An effective resolution is passed for, or documents are filed in an office of

public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of Disco, unless there has been a valid assignment of this Agreement by Disco under section 19.3 to a Person that is not dissolving, terminating its existence, liquidating or winding up and Disco has been relieved from all of its liabilities and obligations hereunder. 16.2.5 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of Disco or of any of its assets, undertaking or property is appointed by a Governmental Authority or pursuant to the terms of a debenture or a similar instrument. 16.2.6 By judgment, order or decree of a Governmental Authority, Disco is adjudicated

bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing in good faith is made or filed against Disco pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 16.2.7 Disco makes an assignment for the benefit of its creditors generally under the

provisions of any Insolvency Legislation, consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal, application or filing pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized or shall

- 94 have taken advantage of any of the provisions of any Insolvency Legislation in respect of its own debts. 16.3 16.3.1 Termination by Genco If a Disco Event of Default occurs, then, without prejudice to any other rights

that Genco has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, Genco may at its option and in its sole discretion: 16.3.1.1 subject to section 16.3.2, upon written notice to Disco and NB Power Holdco immediately terminate this Agreement and, subject to section 16.6, the parties respective obligations hereunder; and/or 16.3.1.2 submit a claim to be resolved in accordance with section 19.7 (without first having to comply with section 19.6) against Disco for Indemnifiable Losses asserted against or suffered by Genco where the Event of Default has arisen as a result of a breach by Disco of a covenant or agreement or a representation and warranty of Disco contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 16.3.2 Notwithstanding section 16.3.1.1, if Disco disputes whether a Disco Event of

Default has occurred, Genco shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 19.7 (without first having to comply with section 19.6) and it has been determined or agreed that a Disco Event of Default occurred, provided that if the dispute is resolved in favour of Genco such that it is determined that the Disco Event of Default had occurred and Genco should have been able to terminate this Agreement immediately, Disco shall be liable to Genco for all additional Indemnifiable Losses incurred or suffered by Genco as a result of the delayed termination of this Agreement, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement.

- 95 16.4 Events of Default by Genco Subject to section 15.1.2, each of the following will constitute an event of default by Genco (each, a Genco Event of Default): 16.4.1 Genco fails to make any payment required to be made by Genco to Disco under

this Agreement within the time period for the payment and the failure is not corrected within 30 days after receipt by Genco of written notice of the failure from Disco. 16.4.2 Genco fails to make the Nominated Capacity or Peaking Capacity exclusively

available to Disco on a priority basis in accordance with section 2.6 or Genco sells, delivers or Schedules Net Energy to any Person in priority to its obligations to Disco under this Agreement. 16.4.3 Genco fails or ceases to hold any material licence, permit, approval, permission,

certification, consent, registration or authority required under Applicable Law to permit Genco to perform its obligations under this Agreement and the failure or cessation was not excused by Force Majeure and, if the failure or cessation is capable of being corrected, the failure or cessation is not corrected within 30 days after receipt by Genco of written notice of the failure or cessation from Disco. 16.4.4 Other than a failure referred to in section 16.4.1, 16.4.2 or 16.4.3, Genco fails to

perform in all material respects or is otherwise in material breach of its other obligations under this Agreement, and the failure or breach was not (i) excused by Force Majeure, or (ii) as a result of a failure by Disco to perform, or a breach by Disco of any of, its obligations hereunder, and, if the failure or breach is capable of being corrected, (a) Genco fails to use Commercially Reasonable Efforts to correct the failure or breach within 30 days after receipt by Genco of written notice of the failure or breach from Disco, or (b) Genco, after using such Commercially Reasonable Efforts, is unable to correct the failure or breach within 90 days after receipt of such written notice. 16.4.5 Any representation or warranty made by Genco in this Agreement is or becomes

untrue or incorrect in any material respect either when made or at any time prior to the Termination Date or such earlier date on which this Agreement may be terminated and, if

- 96 the representation and warranty is capable of being made true and correct in all material respects, the representation and warranty is not made true and correct in all material respects by Genco within 30 days after receipt by Genco of written notice from Disco that the representation and warranty is untrue or incorrect. 16.4.6 An effective resolution is passed for, or documents are filed in an office of

public record in respect of, or a judgment or order is issued by a court of competent jurisdiction ordering, the dissolution, termination of existence, liquidation or winding up of Genco, unless there has been a valid assignment of this Agreement by Genco under section 19.3 to a Person that is not dissolving, terminating its existence, liquidating or winding up and Genco has been relieved from all of its liabilities and obligations hereunder. 16.4.7 A receiver, interim-receiver, manager, receiver-manager, liquidator, monitor or

trustee in bankruptcy of Genco or of any of its assets, undertaking or property is appointed by a Governmental Authority or pursuant to the terms of a debenture or a similar instrument. 16.4.8 By judgment, order or decree of a Governmental Authority, Genco is

adjudicated bankrupt or insolvent or any substantial part of its assets, undertaking or property is sequestered, or a bona fide petition, proceeding, proposal, application or filing is made or filed in good faith against Genco pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized. 16.4.9 Genco makes an assignment for the benefit of any of its creditors generally

under the provisions of any Insolvency Legislation, consents to the appointment of a receiver, interim-receiver, manager, receiver-manager, monitor, trustee in bankruptcy or liquidator of it or of all or part of its assets, undertaking or property, or makes or files a petition, proceeding, proposal application or filing pursuant to any of the provisions of any Insolvency Legislation seeking to have it declared bankrupt or insolvent, or seeking an adjustment or composition of it or its debts, or seeking to have it reorganized, or shall

- 97 have taken advantage of any of the provisions of any Insolvency Legislation in respect of its own debts. 16.4.10 If any material execution, attachment or similar process shall be issued against Genco, or any encumbrancer shall take any action or proceeding which is not being diligently defended by appropriate proceedings by Genco, whereby the Genco Facilities or any portion thereof, shall be taken or attempted to be taken by someone (other than Genco), unless such execution, attachment or similar process, action or proceeding is set aside, vacated, discharged or abandoned within 30 days after its commencement. 16.4.11 Genco makes a sale in bulk of all or a substantial portion of its assets other than in conjunction with an assignment, transfer, pledge or other disposition permitted by section 19.3 or consented to by Disco. 16.5 16.5.1 Termination by Disco If a Genco Event of Default occurs, then without prejudice to any other rights

that Disco has pursuant to this Agreement or Applicable Law, including general principles of common law or equity, Disco may at its option and in its sole discretion: 16.5.1.1 subject to section 16.5.2, upon written notice to Genco and NB Power Holdco immediately terminate this Agreement and, subject to section 16.6, the parties respective obligations hereunder; and/or 16.5.1.2 promptly submit a claim to be resolved in accordance with section 19.7 (without first having to comply with section 19.6) against Genco for Indemnifiable Losses asserted against or suffered by Disco where the Event of Default has arisen as a result of a breach by Genco of a covenant or agreement or a representation and warranty of Genco contained in this Agreement, except to the extent such Indemnifiable Losses are waived or limited pursuant to this Agreement. 16.5.2 Notwithstanding section 16.5.1.1, if Genco disputes whether a Genco Event of

Default has occurred, Disco shall not be permitted to terminate this Agreement until the dispute has been resolved in accordance with section 19.7 (without first having to comply

- 98 with section 19.6) and it has been determined or agreed that a Genco Event of Default occurred, provided that if the dispute is resolved in favour of Disco such that it is determined or agreed that the Genco Event of Default had occurred and Disco should have been able to terminate this Agreement immediately, Genco shall be liable to Disco for all additional Indemnifiable Losses incurred or suffered by Disco as a result of the delayed termination, except to the extent such Indemnifiable Losses have been waived or limited pursuant to this Agreement. 16.6 Termination and Survival Neither the expiration of the Term nor the termination of this Agreement shall affect, prejudice or excuse any rights, obligations or liabilities that exist or have accrued or arisen under this Agreement prior to or upon such expiration or termination, and such rights, obligations and liabilities shall survive such expiration or termination of this Agreement. Without limiting the generality of the forgoing, the provisions of sections 1.12, 11.2, 16.3, 16.5, 16.6, 19.2, 19.3, 19.4, 19.6, 19.7, 19.8 and 19.9 and Article 17 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect indefinitely and each party shall be entitled to the full performance thereof by the other parties without limitation as to time or amount (except as specifically set forth in this Agreement). The provisions of Article 12 and section 19.5 shall survive the expiration of the Term or earlier termination of this Agreement and continue in full force and effect for a period of two years, or such later period as is required in order that all Bills have been deemed to be final hereunder and all disputed Bills have been resolved, and shall thereafter terminate and be of no further force and effect, provided that a party shall not be required to render and deliver a Bill to the other party in respect of any Billing Month for which no amounts are payable.

- 99 ARTICLE 17 LIABILITY AND INDEMNIFICATION 17.1 Limitation of Liability Notwithstanding any other provision in this Agreement, but except (i) for the payment of liquidated damages by Genco pursuant to Article 15 or (ii) in respect of a breach by a Party of the obligations contained in section 19.9 (none of which shall be limited by this section 17.1), in no event shall a party (including any Indemnitee) be entitled to recover from another party (including an Indemnifying Party), for any liabilities, damages, obligations, payments, losses, costs, expenses or Indemnifiable Losses under this Agreement, any amount in excess of the actual compensatory direct damages, court costs and reasonable lawyers and other advisor fees suffered or incurred by such party and each party waives any right to recover: 17.1.1 17.1.2 punitive, indirect, incidental, exemplary or consequential damages; economic loss or damages in respect of loss of opportunity or loss of profit or

loss of use of any property; or 17.1.3 Indemnifiable Losses in respect of replacement Energy or the costs thereof

unless another party is specifically required under the terms of this Agreement to deliver replacement Energy or pay the costs thereof; arising in connection with or with respect to this Agreement (or any performance or non-performance hereunder) under a statute, in tort or contract, under any indemnity provision or otherwise. 17.2 Liquidated Damages Nothing in this Article 17 shall reduce any claim for liquidated damages pursuant to Article 15. The parties agree that the liquidated damages payable pursuant to Article 15 are not penalties and are a reasonable and genuine pre-estimate and calculation of actual damages and Genco hereby irrevocably waives any right it may have to raise a defence that such damages are unreasonable, excessive or punitive.

- 100 17.3 17.3.1 Indemnification by Genco Subject to sections 15.1 and 17.1, Genco shall indemnify, defend and hold

harmless Disco, its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, a Disco Indemnitee) and NB Power Holdco, its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, an NB Power Holdco Indemnitee) from and against any and all claims, demands, losses, damages, liabilities, including liabilities for bodily injury to, or death of, persons, obligations, payments, costs and expenses and accrued interest thereon (including the costs and expenses of, and accrued interest in respect of, any and all actions, suits, and proceedings and assessments, judgments, settlements and compromises relating thereto and reasonable lawyers fees and reasonable disbursements in connection therewith) (each, an Indemnifiable Loss) asserted against or suffered by a Disco Indemnitee or an NB Power Holdco Indemnitee relating to, in connection with, resulting from, or arising out of: 17.3.1.1 any negligence or wilful misconduct of Genco, its employees or any authorized representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, in performing Gencos obligations under this Agreement; 17.3.1.2 any breach by Genco of any representations and warranties or covenants or agreements contained in this Agreement; 17.3.1.3 in the case of an NB Power Holdco Indemnitee, (i) the ORIMULSION Fuel Supply Agreement, (ii) the procurement and provision of ORIMULSION to Coleson Cove, and/or (iii) NB Power Holdco following or implementing directions provided by Genco, including any of Gencos third party contractors, subcontractors, consultants, agents or advisors, pursuant to section 4.3.2; or 17.3.1.4 Gencos ownership, occupation or operation of the Genco Facilities;

- 101 except to the extent that the Indemnifiable Loss is caused by (i) the negligence or wilful misconduct of a Disco Indemnitee or an NB Power Holdco Indemnitee, as the case may be, or any authorized representative of Disco or NB Power Holdco, including any of their third party contractors, subcontractors, consultants, agents or advisors, performing Discos or NB Power Holdcos obligations under this Agreement, as the case may be, or (ii) a breach by Disco or NB Power Holdco of any representations and warranties or covenants or agreements contained in this Agreement, as the case may be. 17.3.2 It is the intention of Genco to constitute Disco as trustee for the Disco

Indemnitees that are not party to this Agreement of the covenants of Genco in section 17.3.1 and Disco agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. It is the intention of Genco to constitute NB Power Holdco as trustee for the NB Power Holdco Indemnitees that are not party to this Agreement of the covenants of Genco in section 17.3.1 and NB Power Holdco agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. 17.4 17.4.1 Indemnification by Disco Subject to section 17.1, Disco shall indemnify, defend and hold harmless Genco,

its subsidiaries and shareholders, and each of their respective directors, officers, employees, shareholders and agents (each, a Genco Indemnitee) from and against any and all Indemnifiable Losses asserted against or suffered by a Genco Indemnitee relating to, in connection with, resulting from, or arising out of: 17.4.1.1 Genco acting as Discos agent or service provider under the Coleson Cove TA, the Point Lepreau PPA or this Agreement, other than pursuant to section 8.7.1.2; 17.4.1.2 Genco failing, at any time prior to the termination of the Coleson Cove TA or the expiration of the term thereof, to be appointed or to continue to be appointed to act as the Market Participant for the Unit Generators located at Coleson Cove;

- 102 17.4.1.3 any negligence or wilful misconduct of Disco, its employees or any authorized representatives, including any of its third party contractors, subcontractors, consultants, agents or advisors, in performing Discos obligations under this Agreement; or 17.4.1.4 any breach by Disco of any representations and warranties or covenants or agreements contained in this Agreement; except to the extent that the Indemnifiable Loss is caused by (i) the negligence or wilful misconduct of a Genco Indemnitee or any authorized representative of Genco, including any of its third party contractors, subcontractors, consultants, agents or advisors, performing Gencos obligations under this Agreement, or (ii) a breach by Genco of any representations and warranties or covenants or agreements contained in this Agreement. 17.4.2 It is the intention of Disco to constitute Genco as trustee for the Genco

Indemnitees that are not party to this Agreement of the covenants of Disco in section 17.4.1 and Genco agrees to accept such trust and to hold and enforce such covenants on behalf of such Persons. 17.5 17.5.1 Sole Remedies and Equitable Relief Except to the extent otherwise provided in Article 15, the parties agree that

sections 17.3 and 17.4 set out the sole and exclusive manner by which a party may seek compensation or other monetary relief from the other party or parties (other than the right of set-off contained in section 19.4), and is in lieu of any and all other rights and remedies which a Party may have, for any matter in respect of which the Party may make a claim for indemnification. 17.5.2 Each of the parties acknowledges that a breach or threatened breach by any

party of any provisions of this Agreement, including, for greater certainty, Gencos obligations hereunder to deliver Net Energy and make the Nominated Capacity and Peaking Capacity exclusively available to Disco on a priority basis in accordance with section 2.6, will result in the other parties suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone.

- 103 Accordingly, to the extent permitted by Applicable Law, each of the parties is entitled to equitable relief, including interim, interlocutory and permanent injunctive relief, specific performance, and other equitable remedies, in the event of any breach of the provisions of this Agreement, in addition to any other remedies available to the parties. 17.6 17.6.1 Defence of Claims If any Indemnitee receives notice of the assertion of any claim or of the

commencement of any claim, action or proceeding made or brought by any Person who is not an Indemnitee (Third Party Claim) with respect to which indemnification is to be sought from an Indemnifying Party, the Indemnitee shall give such Indemnifying Party reasonably prompt written notice thereof, but in any event such notice shall not be given later than 20 calendar days after the Indemnitees receipt of notice of such Third Party Claim. Such notice shall describe the nature of the Third Party Claim in reasonable detail and shall indicate the amount or, if the amount is not then determinable, an appropriate and reasonable estimate of the potential amount of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party will have the right to participate in or, by giving written notice to the Indemnitee, to elect to assume the defence of any Third Party Claim at such Indemnifying Partys expense and by such Indemnifying Partys own counsel; provided, however, that (i) counsel for the Indemnifying Party shall conduct the defence of such Third Party Claim in a manner reasonably satisfactory to the Indemnitee, and (ii) if the defendants to the Third Party Claim include both the Indemnifying Party and the Indemnitee, and the Indemnitee has reasonably concluded that there may be legal defences available to it which are different from, additional to or inconsistent with those available to the Indemnifying Party, the Indemnitee shall have the right to select separate counsel to participate in the defence of the Third Party Claim on behalf of the Indemnitee and the reasonable fees and disbursements of such separate counsel shall be considered Indemnifiable Losses for the purposes of this Agreement. The Indemnitee shall co-operate in good faith with the Indemnifying Party in defence of the Third Party Claim at the Indemnitees own expense. If an Indemnifying Party elects not to assume control of the defence of any Third Party Claim, the Indemnitee shall be entitled to assume such control and may compromise or

- 104 settle such Third Party Claim over the objection of the Indemnifying Party, which settlement or compromise shall conclusively establish the Indemnifying Partys liability pursuant to this Agreement and the Indemnifying Party shall be bound by the results obtained by the Indemnitee with respect to such Third Party Claim. 17.6.2 If, within 20 calendar days after an Indemnitee provides written notice to the

Indemnifying Party of any Third Party Claim, the Indemnitee receives written notice from the Indemnifying Party that the Indemnifying Party has elected to assume the defence of such Third Party Claim as provided in and subject to section 17.6.1, the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defence thereof unless the Indemnitee is permitted to select separate counsel pursuant to section 17.6.1, provided, however, that if the Indemnifying Party shall fail to take reasonable steps necessary to defend diligently such Third Party Claim within 20 calendar days after receiving notice from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defence and the Indemnifying Party shall be liable for all reasonable expenses thereof. 17.6.3 Without the prior written consent of the Indemnitee, the Indemnifying Party

shall not enter into any settlement of any Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification under this Agreement. The Indemnifying Party shall not settle any Third Party Claim or conduct any legal or administrative proceeding in a manner which would, in the opinion of the Indemnitee, have a material adverse impact on the Indemnitee. If a final offer is made to settle a Third Party Claim and the offer creates no liability or financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification under this Agreement and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such final offer within 20 calendar days after its receipt of such written notice, the Indemnifying Party shall be relieved of its obligations to defend such Third Party Claim and the Indemnitee may contest or defend such Third Party

- 105 Claim. In such event, the maximum liability of the Indemnifying Party as to such Third Party Claim will be the amount of such settlement offer plus reasonable costs and expenses paid or incurred by the Indemnitee up to the date of such written notice. 17.6.4 In the event that any Third Party Claim is of a nature such that the Indemnitee is

required by Applicable Law to make a payment to any Person (a Third Party for the purposes of this section 17.6.4) with respect to such Third Party Claim before the completion of settlement negotiations or related legal proceedings, the Indemnitee may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount of any liability under the Third Party Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnifying Party to the Indemnitee, the Indemnitee shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Indemnifying Party. 17.6.5 Except in the circumstances contemplated by sections 17.6.1, 17.6.2 or 17.6.4

and whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnitee shall not negotiate, settle, compromise or pay any Third Party Claim except with the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed). 17.6.6 The Indemnitee shall not permit any right of appeal in respect of any Third Party

Claim to terminate without giving the Indemnifying Party notice thereof and an opportunity to contest such Third Party Claim. 17.6.7 Disco, Genco and NB Power Holdco, as applicable, shall co-operate fully with

each other with respect to Third Party Claims, shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available) and shall each designate a senior officer who will keep himself informed about and be prepared to discuss the Third Party Claim with his counterparts and with counsel at all reasonable times.

- 106 17.6.8 Any claim by an Indemnitee on account of an Indemnifiable Loss which does

not result from a Third Party Claim (a Direct Claim) shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, stating the nature and factual basis of the Direct Claim in reasonable detail and indicating the amount, or if the amount is not then determinable, an approximate and reasonable estimate of the potential amount of the Direct Claim, but in any event such notice shall not be given later than 20 calendar days after the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party shall have a period of 20 calendar days within which to investigate and respond to such Direct Claim. For the purpose of such investigation, the Indemnitee shall make available to the Indemnifying Party the information relied upon by the Indemnitee to substantiate the Direct Claim. If the Indemnitee and the Indemnifying Party agree, at or prior to the expiration of such 20 calendar day period, to the validity and amount of the Direct Claim, the Indemnifying Party shall immediately pay to the Indemnitee the full agreed upon amount of the Direct Claim. If the Indemnifying Party does not respond within such 20 calendar day period, the Indemnifying Party shall be deemed to have accepted the Direct Claim. If the Indemnifying Party rejects the Direct Claim, the Indemnitee will be free to seek enforcement of its right to indemnification under this Agreement and shall be entitled to submit the dispute to the dispute resolution procedure set out in section 19.7 (without first having to comply with section 19.6). 17.6.9 If the amount of any Indemnifiable Loss, at any time subsequent to the making

of an indemnity payment in respect thereof, is reduced by recovery, settlement or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by, from or against any other Person, the amount of such reduction, together with any interest earned on such amount, if applicable, less any deductibles, cost or expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party. 17.6.10 A failure to give timely notice as provided in this section 17.6 shall not affect the rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party which was entitled to receive such notice was actually prejudiced.

- 107 ARTICLE 18 INSURANCE 18.1 18.1.1 Insurance Coverage Genco shall, until the Termination Date or such earlier date on which this

Agreement may be terminated, and at its expense, take out and maintain in full force and effect in the name of Genco such insurance (including re-insurance, where appropriate) from reputable insurance companies against such risks and up to such limits as a prudent owner or tenant of premises such as the Genco Facilities would procure (including, for greater certainty, full site property damage insurance with coverage equal to and not less than the replacement cost, from time to time, of the Genco Facilities), but in no event shall such insurance coverage be less than that required by Applicable Law. 18.1.2 Any commercial general liability insurance policy required by section 18.1.1

shall also be in the name of Disco and shall (i) contain a waiver of subrogation in favour of Genco and Disco, (ii) be for the mutual benefit of Genco and Disco, and (iii) contain a provision for cross-liability and severability of interests. 18.1.3 The policies shall be primary and without rights of contribution to any other

insurance carried by or for Genco relating to the Genco Facilities, or by or for Disco in respect of any such policy required by section 18.1.2, and the amount of any deductible shall not exceed an amount that would be arranged by a prudent owner or tenant of premises such as the Genco Facilities. The policies shall also provide that the insurer cannot cancel or materially alter any policy or permit its lapse so as to adversely affect the protection of Genco or Disco, as the case may be, except after 90 days (or such lesser period if the insurers are unwilling after Genco has used Commercially Reasonable Efforts to obtain a notice period of 90 days, but in any event not less than 30 days) prior written notice to Disco. 18.1.4 Genco shall duly and punctually pay, or cause to be paid, all premiums and other

sums of money payable for maintaining any insurance required to be obtained and maintained pursuant to this section 18.1. Genco will produce to Disco upon request

- 108 evidence of payment of any premiums required for maintaining such insurance not later than the due date thereof and shall, upon request of Disco and upon Disco providing reasonable notice to Genco, provide access to certified copies of the insurance policies at the offices of Genco and/or provide certificates of insurance in a form satisfactory to Disco. 18.2 Damage, Destruction and Repair In the event of any damage to or destruction of all or part of the Genco Facilities, Genco shall, at its sole cost and expense, repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Genco Facilities which has been damaged or destroyed. Genco shall use all insurance proceeds received as a result of such damage or destruction to repair, reconstruct or replace, or cause to be repaired, reconstructed or replaced, that part of the Genco Facilities which has been damaged or destroyed. Notwithstanding the foregoing, if, having complied with section 18.1, Genco does not have the right to receive insurance proceeds, less the amount of any deductible, sufficient to cover such costs and expense to repair, reconstruct or replace the damaged or destroyed part of the Genco Facilities, Genco shall be relieved of its obligations under this section 18.2 but only to the extent such costs and expenses are not so covered.

- 109 ARTICLE 19 MISCELLANEOUS 19.1 Heritage PPAs Genco shall not amend, replace, restate or assign, or agree to the amendment, restatement, replacement or assignment of, any of the Heritage PPAs or exercise a right or waive an obligation under a Heritage PPA without the prior written consent of Disco, which consent shall not be unreasonably withheld or delayed. 19.2 19.2.1 Taxes The Vesting Energy Price, the Capacity Payments and all other amounts

payable, set-off or reimbursed under this Agreement are exclusive of all Taxes and where any such amounts are deemed under Applicable Law to be inclusive of Taxes, the parties shall ensure that such amounts are increased to take into account such deeming factor, and shall reflect any such increase in any Bills provided under this Agreement. For greater certainty, all HST and GST payable in respect of the Vesting Energy Price, the Capacity Payments, and such other amounts shall, as required by Applicable Law, be borne and payable by the party (the payor for the purposes of this section 19.2) paying such payment or paying, setting off or reimbursing such amount under this Agreement, and shall be collected and remitted by the other applicable party (the recipient for the purposes of this section 19.2). If, contrary to this section 19.2, and subject to any joint election the parties may make under section 156 of the Excise Tax Act (Canada), the payor does not pay HST or GST to the recipient, such HST or GST shall be deducted by the recipient from any amounts becoming due to the payor hereunder. Each party shall provide the others with its HST or GST registration number upon request therefor. 19.2.2 For greater certainty, each party is responsible for its own income taxes or taxes

based on excess profits, profits, net income, taxable income or net worth, capital taxes, and any similar taxes, and any payments in lieu of any such taxes. 19.2.3 Each party shall act reasonably in considering a request by another party to file

any joint tax election that may be available from time to time and shall agree to do so

- 110 where filing the joint tax election is of net benefit or not adverse to the party receiving the request. 19.3 19.3.1 Assignment This Agreement and all of the provisions of this Agreement shall be binding

upon and shall enure to the benefit of the parties and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by Disco without the prior written consent of Genco, by Genco without the prior written consent of Disco, and NB Power Holdco, if such assignment would materially affect the rights, duties, responsibilities or obligations of NB Power Holdco under this Agreement, or by NB Power Holdco without the prior written consent of both Genco and Disco, which consent or consents shall not be unreasonably withheld or delayed. Applicable Law: 19.3.1.1 Genco or its permitted assignee may as security only assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing the Genco Facilities or Genco Heritage Assets, including such an assignment, transfer or other disposition upon or pursuant to the exercise of remedies by such Person with respect to such financing or refinancing; 19.3.1.2 NB Power Holdco or its permitted assignee may assign, transfer, pledge or otherwise dispose of all or part of its rights and interests under this Agreement to Genco or Disco; 19.3.1.3 Disco or its permitted assignee may as security only, assign, transfer, pledge, grant a security interest in or otherwise dispose of all or part of its rights and interests under this Agreement to a trustee, lending institution or other Person for the purposes of financing or refinancing any of Discos assets, including such an assignment, transfer or other disposition upon or pursuant to Notwithstanding the foregoing, but subject to

- 111 the exercise of remedies by such Person with respect to such financing or refinancing; and 19.3.1.4 Any of Disco, Genco or NB Power Holdco (or any of their respective permitted assignees) may grant a security interest in or assign, transfer, pledge or otherwise dispose of (absolutely or as security) all or part of its rights and interests under this Agreement to the Province or an agent thereof; provided that: 19.3.1.5 as a condition of an assignment, transfer, pledge or other disposition as a security interest, the assignee, transferee, pledgee or other acquiror enters into and delivers an agreement in favour of the assignor and enforceable against the assignee, transferee, pledgee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor, other than pre-existing liabilities and obligations, under this Agreement from the time of the exercise of its remedies under the security until the assignment, transfer, sale or other disposition of its interest in this Agreement to another Person is made in accordance with the terms of this Agreement; 19.3.1.6 as a condition of an assignment, transfer or other disposition, other than as a security interest, or the assignment, transfer, sale or other disposition pursuant to the exercise of a secured partys remedies as contemplated in section 19.3.1.5, the assignee, transferee or other acquiror enters into and delivers an agreement in favour of the other parties and enforceable against the assignee, transferee or other acquiror in which it agrees to be bound by the terms and conditions of this Agreement and to assume all liabilities and obligations of the assignor under this Agreement, including pre-existing liabilities and obligations, from the date of the assignment, transfer or acquisition; and 19.3.1.7 subject to section 19.3.3, section 19.3.4 and section 19.3.5, none of the foregoing assignments, transfers, pledges, grants or other dispositions shall

- 112 relieve or discharge Genco, Disco or NB Power Holdco from any of its obligations under this Agreement. 19.3.2 Notwithstanding section 19.3.1, for so long as the parties remain directly or

indirectly wholly-owned by the Province and/or any wholly-owned Affiliates of the Province, no party shall assign any of its rights, interests or obligations under this Agreement pursuant to section 19.3.1 without first obtaining the prior written consent of the Electric Finance Corporation. 19.3.3 An assignment, transfer, pledge or disposition by Genco as described in

section 19.3.1.4 shall free and relieve Genco from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and Disco and NB Power Holdco shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 19.3.4 An assignment, transfer, pledge or disposition by Disco as described in

section 19.3.1.4 shall free and relieve Disco from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and Genco and NB Power Holdco shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 19.3.5 An assignment, transfer, pledge or disposition by NB Power Holdco as

described in section 19.3.1.2 or section 19.3.1.4 shall free and relieve NB Power Holdco from its liabilities and obligations under this Agreement to the extent that such liabilities and obligations have been assumed by the assignee, transferee, pledgee or other acquiror and Genco and Disco shall look to the assignee, transferee, pledgee or other acquiror for performance of such liabilities and obligations. 19.3.6 Any Change of Control of Genco shall be deemed to be an assignment of the

rights, interests or obligations of this Agreement by Genco and, accordingly, subject to the provisions of section 19.3.1.

- 113 19.3.7 Each party agrees, at the assigning partys expense, to execute and deliver such

documents as may be reasonably required to accomplish any such permitted assignment, transfer, pledge or other disposition of rights and interests under this Agreement by the assigning party so long as the other parties rights and interests under this Agreement are not thereby altered, amended, diminished or otherwise impaired. 19.3.8 Genco shall deliver to Disco at the written request of Disco at any time and from

time to time, a certificate of Genco signed by a senior officer thereof (without personal liability) which states whether or not any Change of Control of Genco has occurred since the date hereof and which sets out the relevant facts with respect to the Control and Effective Control of Genco in sufficient detail to enable Disco to determine whether there has been any Change of Control of Genco. 19.4 19.4.1 Set-off Any amount (the First Amount for purposes of this section 19.4) payable by

one party (the first party for the purposes of this section 19.4) to another party (the second party for the purposes of this section 19.4) under this Agreement, in circumstances where an Event of Default has occurred with respect to the second party or the second party is in default of its obligations under any other agreement between the first party and the second party, shall, at the option of the first party, be reduced by or set-off against any amount (the Second Amount for purposes of this section 19.4) payable (whether at such time or in the future or upon the occurrence of a contingency) by the second party to the first party under (i) this Agreement, (ii) any other agreement between the second party and the first party, (iii) any instrument or undertaking issued or executed by the second party to, or in favour of, the first party, (iv) any arbitrators award or court order, or (v) any other legal obligation. The Second Amount will be discharged promptly and in all respects to the extent it is so set-off. 19.4.2 The first party will give notice to the second party of any set-off effected under Notwithstanding any other terms of this Agreement or any other

this section 19.4.

agreement between the first party and the second party, a set-off under this section 19.4

- 114 may be effected at any time before, upon and at any time after, the termination of this Agreement or any such other agreement. 19.4.3 If a Second Amount is unascertained, the first party may in good faith estimate

that amount and set-off in respect of the estimate, subject to the first party accounting to the second party when the obligation is ascertained. For greater certainty, the Second Amount includes any amounts payable (whether at such time or in the future or upon the occurrence of a contingency) under any indemnity including the indemnities set forth in sections 17.3 and 17.4, and if the amount payable under these indemnities is unascertained, the first party may in good faith estimate that amount in accordance with the immediately preceding sentence. 19.4.4 If the First Amount and the Second Amount are denominated in different

currencies, then at the option of the second party, all or any portion of either amount may be converted by the second party into the currency in which the other is denominated at the rate of exchange at which the second party would be able, acting reasonably and in good faith, to purchase the relevant amount of that currency. 19.4.5 Nothing in this section 19.4 shall be effective to create a charge or other security

interest. This section 19.4 shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, agreement or otherwise). Further, this section 19.4 shall be without prejudice to any other rights that the parties have pursuant to this Agreement or Applicable Law, including general principles of common law or equity. 19.5 19.5.1 Audit Genco shall provide Disco and its internal auditors and professional advisors

with access to the Genco Facilities, including the Point of Delivery, and to any books, records and information, including the station log and Metering Installation readings, as may be reasonably required by Disco or such auditors or advisors to (i) confirm and verify Net Energy, Unit Generator Load and Common Service Load; (ii) audit the accuracy of a Bill or any charge or computation or calculation made hereunder or

- 115 thereunder; (iii) audit the basis for any claim by Genco of Force Majeure; (iv) audit the accuracy of or basis for Environmental Costs; or (v) otherwise confirm and verify compliance by Genco with the terms of this Agreement, and shall provide Disco and such auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications. 19.5.2 Disco and NB Power Holdco shall each provide Genco and its internal auditors

and professional advisors with access to any books and records as may be reasonably required by Genco or such auditors or advisors to (i) audit the basis for any claim by Disco for liquidated damages hereunder, (ii) audit the accuracy of a Bill or any charge or computation or calculation made hereunder or thereunder; (iii) audit the basis for any claim by Disco of Force Majeure, or (iv) otherwise confirm and verify compliance by Disco and NB Power Holdco with the terms of this Agreement, and shall provide Genco and such auditors and advisors with any assistance that they may reasonably require in connection with such audits, confirmations and verifications. 19.5.3 Any audit, confirmation or verification (which shall collectively be referred to as

audits for the purposes of this section 19.5), shall be conducted in accordance with the following: 19.5.3.1 audits shall be made at reasonable times and on at least 5 business days prior notice; 19.5.3.2 no party shall commence an audit of a Bill later than 24 months after the receipt of the Bill; 19.5.3.3 audits shall be made without unreasonably interfering with the operations of any party; 19.5.3.4 each party shall provide copies of and review and discuss with the other party or parties, as the case may be, the results and findings of any audit conducted pursuant to this section 19.5 prior to the finalization thereof, and the other party or parties, as the case may be, may prepare and submit a response to

- 116 such results and findings within 15 days of receipt thereof from the auditing party; and 19.5.3.5 any fees, costs and expenses incurred by a party in connection with an audit shall be solely for its account. 19.5.4 For greater certainty and without limiting section 19.5.1, Genco shall provide

Disco with access to the Genco Facilities so that Disco can (i) read meter data from the Metering Installations in order to permit Disco to conduct the audits, confirmations or verifications described in section 19.5.1, and (ii) test the accuracy of such Metering Installations. In addition, Genco shall provide Disco with access to the results of any tests of the accuracy of such Metering Installations performed by Genco or any other Person if Genco has access to the results of such tests. 19.6 Informal Dispute Resolution Procedures Unless otherwise specifically provided for in this Agreement, all disputes, disagreements, controversies, questions or claims (including claims for indemnification) arising out of or relating to this Agreement, including with respect to its formation, execution, validity, application, interpretation, performance, breach, termination or enforcement (Disputes), shall first be submitted to a disputes committee (the Disputes Committee) for informal resolution. A party may commence an informal resolution under this section 19.6 by delivering a written notice of informal resolution to the other party or parties, as the case may be, (the Notice of Informal Resolution). Once the Notice of Informal Resolution has been delivered, each applicable party shall within five days appoint an executive officer to the Disputes Committee. If a nominee is unable to continue acting on the Disputes Committee or if a nominating party wishes to replace its nominee, the nominee shall be replaced by another executive officer of the nominating party. The Disputes Committee shall review the Dispute on a timely basis. If the Disputes Committee is unable to resolve the dispute within 30 days of the date of receipt of the Notice of Informal Resolution by the receiving party or parties, as the case may be, then any applicable party may commence arbitration proceedings in accordance with the provisions of section 19.7.

- 117 19.7 Arbitration Procedures Unless otherwise specifically provided for in this Agreement, any Dispute that is not resolved by the Disputes Committee pursuant to section 19.6 shall be determined in accordance with Schedule 19.7, which sets out the sole and exclusive procedure for the resolution of Disputes not resolved by the Disputes Committee. The resolution of Disputes pursuant to the terms of Schedule 19.7 shall be final and binding upon the parties to this Agreement, and there shall be no appeal therefrom, including any appeal to a court of law on a question of law, a question of fact, or a question of mixed fact and law. The application of subsection 7(2) of the Arbitration Act (New Brunswick) is expressly excluded. The arbitrator shall be authorized only to interpret and apply the provisions of this Agreement and shall have no power to modify or change the Agreement in any manner. 19.8 Further Assurances Each of the parties shall promptly do, take, execute or deliver or cause to be done, taken, executed or delivered all such further acts, steps, deeds, documents, assurances and things as the other parties may reasonably require from time to time for the purpose of giving effect to this Agreement and shall use Commercially Reasonable Efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement. 19.9 Confidentiality The terms of this Agreement, all information and knowledge relating to operations hereunder, including pricing and scheduling, information and data required for, or inputted to, and generated by Gencos or Discos PROMOD, any information provided pursuant to any provision of this Agreement (including any disclosure under section 11.2 or section 19.5) and all other information emanating from or pertaining to a partys business (in any form) that a party (the receiving party for purposes of this section 19.9) may acquire under the terms or otherwise as a result of this Agreement or by virtue of the relationship between the parties created by this Agreement (collectively, Confidential Information), shall be considered confidential and, except as otherwise permitted in this Agreement, shall not be used by or disclosed, revealed or divulged to, any other Person, or published in any manner

- 118 whatsoever, in a manner not specifically permitted by this Agreement without first obtaining the written consent of the other applicable party (the disclosing party for purposes of this section 19.9), which consent shall not be unreasonably withheld or delayed. Confidential Information does not include information that: (i) at the time of disclosure, is already known by the receiving party; (ii) is or becomes publicly known other than through a wrongful act or omission of the receiving party or its partners, officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, or any other Person subject to a confidentiality agreement or other obligation to hold such information in confidence, whether contractual, fiduciary or otherwise; (iii) is rightfully received from a third party without similar restriction provided that the third party did not come into possession of the Confidential Information as a result, directly or indirectly, of a breach of an obligation of confidentiality owed by any Person to the disclosing party; or (iv) is independently developed by or on behalf of the receiving party without disclosure of or recourse to the Confidential Information. Notwithstanding the foregoing, a receiving party may disclose, reveal, divulge or permit the use of Confidential Information: 19.9.1 in the case of any party, to or by the Province or any representative thereof

solely in its or his capacity as a shareholder of that party or any Affiliate that party, as required by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; 19.9.2 in the case of any party, to or by its wholly-owned subsidiaries and its and its

wholly-owned subsidiaries respective officers, directors, employees, agents, consultants, advisors, contractors, subcontractors or other representatives, provided that such Persons have been informed of that partys confidentiality obligations hereunder; 19.9.3 as required by any Governmental Authority (other than the Province in its

capacity as a shareholder of Disco, NB Power Holdco or Genco or any Affiliate of Disco, NB Power Holdco or Genco) or Applicable Law; provided that where circumstances permit, and where such disclosure is not made in the ordinary course to such Governmental Authorities, prior to any disclosure, the disclosing party shall be notified

- 119 by the receiving party of the proposed disclosure and the receiving party shall, at the disclosing partys request, take reasonable steps to allow the disclosing party, at its sole expense, to contest the requirement for disclosure or to obtain an order or ruling to preserve the confidentiality of such Confidential Information; 19.9.4 as necessary in connection with any dispute resolution commenced pursuant to

this Agreement so long as such disclosure is made in accordance with paragraph 32 of Schedule 19.7 or as necessary in connection with any Third Party Claim in respect of this Agreement; 19.9.5 to the extent necessary, to or by any financial institution or other Person (from

whom financing is being sought) or to advisors to any such financial institution or other Person, provided that any such financial institution, Person or advisor has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby; 19.9.6 to the extent necessary, to or by any Person providing services to the receiving

party to enable the receiving party to perform any of its obligations or exercise any of its rights under this Agreement, provided that such Person has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby; or 19.9.7 to the extent necessary, to or by a credit rating agency as required to establish or

maintain a credit rating with that agency, provided that such rating agency has been informed of the receiving partys confidentiality obligations hereunder and has agreed with the receiving party to be bound similarly thereby. 19.10 Notice Provisions Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be given by facsimile or other means of electronic communication or by mail, registered mail, courier, or hand-delivery as provided below. Any such notice or other communication, if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the

- 120 sending or, if delivered by hand or courier, shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Any such notice or communication given by mail shall be deemed to have been delivered on the 5th Business Day following the deposit thereof in the mail and if given by registered mail, shall be deemed to have been delivered on the 3rd Business Day following the deposit thereof in the mail. If the party giving any demand, notice or other communication knows or ought reasonably to know of any difficulties with the postal system which might affect the delivery of mail, any such demand, notice or other communication shall not be mailed but shall be given by personal delivery or by electronic communication. Notice of change of address shall also be governed by this section 19.10. communications shall be addressed as follows: (i) (A) all Genco Bills shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: (B) Controller (506) 458-4000 Notices and other

all other notices and other communications to Disco shall be to: New Brunswick Power Distribution and Customer Service Corporation P.O. Box 2000 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

- 121 (ii) (A) all Disco Bills shall be to: New Brunswick Power Generation Corporation P.O. Box 2040 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: (B) Controller (506) 458-4000

all other notices and other communications to Genco shall be to: New Brunswick Power Generation Corporation P.O. Box 2040 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary (506) 458-4000 and General Counsel

(iii)

all notices and communications to NB Power Holdco shall be to: New Brunswick Power Holding Corporation P.O. Box 2010 515 King Street Fredericton, New Brunswick E3B 4X1 Attention: Fax: with a copy to: Fax: Chief Executive Officer (506) 458-4000 Corporate Secretary and General Counsel (506) 458-4000

Notwithstanding the foregoing, any notice or other communication required or permitted to be given by any party pursuant to or in connection with any arbitration procedures contained in this Agreement or in any Schedule to this Agreement may only be delivered by hand. A failure to provide a notice in the manner provided for in this section 19.10 shall not affect the rights or obligations of any party under this Agreement except if, and only to the extent that, as a result of such failure, the party entitled to notice in such manner was actually prejudiced.

- 122 19.11 Time of the Essence Time is of the essence of this Agreement. 19.12 Legal Relationship Except as otherwise specifically provided for in this Agreement, none of the Persons employed by any party shall be considered employees, agents or authorized representatives of the other parties for any purpose. Except as otherwise specifically provided for in this Agreement, nothing in this Agreement nor any action of a party shall create or be deemed to create a relationship of partners, joint venturers, fiduciary, principal and agent or any other relationship or association between the parties. 19.13 Counterparts This Agreement may be signed in counterparts and each of such counterparts shall constitute an original document and such counterparts, taken together, shall constitute one and the same instrument.

- 123 IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement by the undersigned duly authorized representatives as of the date first stated above. NEW BRUNSWICK POWER GENERATION CORPORATION

by: Name: Leon Furlong

NEW BRUNSWICK POWER DISTRIBUTION AND CUSTOMER SERVICE CORPORATION

by: Name: Leon Furlong NEW BRUNSWICK POWER HOLDING CORPORATION

by: Name: Leon Furlong

SCHEDULE 1.1.17 CAPACITY PAYMENT I. Definitions In this Schedule 1.1.17: Coleson Cove Price means $6,708.33 per MW. Genco Price means:
For each month in the Fiscal Year ending March 31: 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Price ($ per MW) 9477.50 10187.54 10897.59 13027.72 13027.72 13027.72 13027.72 13027.72 13027.72 13027.72 13027.72 13027.72 12850.21 12674.47 12500.49 12328.25 12157.74 11988.93 11821.80 11656.35 11492.56 11330.40 11169.86 11010.93 10853.58 10697.81

Schedule 1.1.17 - Page i

For the Fiscal Year commencing April 1, 2030 and for each Fiscal Year thereafter, the Genco Price for a Fiscal Year shall be the Genco Price for the previous Fiscal Year minus 1% of the Genco Price for the previous Fiscal Year. Monthly Payment means, subject to section III below:
For each month in the Fiscal Year ending March 31: 2005* 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 * Commencing October 1, 2004. Price ($ per MW) 8333.33 8750.00 9166.67 10416.67 10416.67 10416.67 10416.67 10416.67 10416.67 10416.67 10416.67 10416.67 10321.50 10209.38 10107.28 10006.21 9906.15 9807.08 9709.01 9611.92 9515.80 9420.65 9326.44 9233.18 9140.84 9049.44

For each month commencing on April 1, 2030, the Monthly Payment shall equal the Genco Price for that month.
Schedule 1.1.17 - Page ii

II.

Calculation of Capacity Payment Subject to section III below, for each calendar month, the Capacity Payment shall equal the product of (i) the Monthly Payment in respect of that calendar month, and (ii) the Nominated Capacity in respect of that calendar month.

III.

Adjustments Notwithstanding the foregoing, the Capacity Payment shall be adjusted in accordance with the following provisions:

1.

Subject to section III.2 below, if Nominated Capacity is reduced at any time pursuant to

section 2.2.1 (except in respect of the Shutdown of the Grand Lake generating station), 2.2.2, 2.2.3 or 2.2.4, the Monthly Payment shall be re-set by multiplying the then Monthly Payment by a fraction calculated in accordance with the following: (A x B) + (C x D) , where A+C A equals: the amount of Nominated Capacity after the reduction allocable to a Genco Facility or a Heritage PPA Facility (excluding, for greater certainty, any Nominated Capacity allocable to the Grand Lake generating station). the Genco Price in effect immediately prior to the reduction in Nominated Capacity. the amount of Nominated Capacity after the reduction allocable to Coleson Cove. the Coleson Cove Price.

B equals: C equals: D equals:

2.

Once the Coleson Cove TA is terminated or the term thereof has expired, or the contracted

capacity under the Coleson Cove TA has otherwise been reduced to zero in accordance with section 4.5, if applicable, and the adjustment(s) to Nominated Capacity pursuant to section III.1 above have been reflected in respect thereof, this section III shall terminate and no longer apply to reductions in Nominated Capacity.

Schedule 1.1.17 - Page iii

SCHEDULE 1.1.30 CPI ADJUSTMENT Definitions In this Schedule 1.1.30: CPI Factor means, in respect of any calendar year:
CPI (New Brunswick) for that calendar year minus CPI (New Brunswick) for the immediately preceding calendar year CPI (New Brunswick) for the immediately preceding calendar year

Calculation of CPI Adjustment The CPI Adjustment for any calendar year shall be calculated in accordance with the following: 1. If the CPI Factor for that calendar year is less than or equal to zero, the

CPI Adjustment shall equal 1. 2. If the CPI Factor for that calendar year is greater than zero, the CPI

Adjustment shall equal (i) 1, plus (ii) the CPI Factor.

Schedule 1.1.30 - Page i

SCHEDULE 1.1.67 GENCO HERITAGE ASSETS

PLANT AND UNIT GENERATORS OR HERITAGE PPAS

UNIT

Unit DNC

BASE LOAD ASSETS (DNC)

PEAKING ASSETS (DNC)

ESTIMATED SHUTDOWN DATE

Genco Facilities: Thermal Belledune: Unit 2 Dalhousie:(1) Unit 1 Unit 2 Grand Lake: Unit 8 Courtenay Bay: Unit 4 Hydro Beechwood: Unit 1 Unit 2 Unit 3

458.1 MW

458.1 MW

Oct. 31/2028

90.3 MW 189.7 MW

90.3 MW 189.7 MW

Apr. 30/2024 Apr. 30/2024

56.8 MW

56.8 MW

Dec. 31/2009

97.7 MW

97.7 MW

Nov. 30/2007

36 MW 36 MW 41 MW

Mar. 31/2057 Mar. 31/2057 Mar. 31/2057

Grand Falls: Unit 1 Unit 2 Unit 3 Unit 4

16.5 MW 16.5 MW 16.5 MW 16.5 MW

Mar. 31/2031 Mar. 31/2031 Mar. 31/2031 Mar. 31/2031

Mactaquac: Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6

110 MW 110 MW 110 MW 116 MW 113 MW 113 MW

Mar. 31/2030 Mar. 31/2030 Mar. 31/2030 Mar. 31/2030 Mar. 31/2030 Mar. 31/2030

Milltown: Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6 Unit 7

0.70 MW 0.70 MW 0.70 MW 0.25 MW 0.25 MW 0.40 MW 0.60 MW

Mar. 31/2020 Mar. 31/2020 Mar. 31/2020 Mar. 31/2020 Mar. 31/2020 Mar. 31/2020 Mar. 31/2020

Schedule 1.1.67 - Page i

PLANT AND UNIT GENERATORS OR HERITAGE PPAS

UNIT

Unit DNC

BASE LOAD ASSETS (DNC)

PEAKING ASSETS (DNC)

ESTIMATED SHUTDOWN DATE

Tobique: Unit 1 Unit 2

10 MW 10 MW

Mar. 31/2053 Mar. 31/2053

Sisson: Unit 1 Hydro Total Combustion Turbines Grand Manan: Unit 3 Ste. Rose: Unit 1 Millbank: Unit 1 Unit 2 Unit 3 Unit 4

9 MW 883.6 MW 250 MW 633.6 MW

Mar. 31/2065

28.6 MW

28.6 MW

Nov. 30/2014

99.7 MW

99.7 MW

Nov. 30/2016

99.7 MW 99.7 MW 99.7 MW 99.7 MW

99.7 MW 99.7 MW 99.7 MW 99.7 MW

Nov. 30/2016 Nov. 30/2016 Nov. 30/2016 Nov. 30/2016

Heritage PPAs: Frasers Edmundston PPA Bayside Power PPA Musquash St. George Pulp & Paper PPA Genco Heritage Assets (As of the date hereof) Future Heritage PPA: Grandview PPA Expected Genco Heritage Assets (As of January 1, 2005) 90.0 MW 90.0 MW 2445.1 MW(2) N/A 38.5 MW 263.0 MW 10.7 MW 38.5 MW 263.0 MW 10.7 MW 2355.1 MW(2) N/A N/A N/A

1258.4 MW

1258.4 MW

1. 2.

Dalhousie excludes 20 MW associated with Maritime Electrics capacity entitlement. This number includes the 998 MW of DNC of the Coleson Cove Unit Generators. The Coleson Cove TA is not a Genco Heritage Asset and this number is included here only for informational purposes. Until the In-Service Date (as defined in the Coleson Cove TA), the DNC of the Unit Generators located at Coleson Cove shall equal, for purposes of this Schedule 1.1.67, 998 MW in aggregate or 332.67 MW each. At and after such In-Service Date, the DNC of the Unit Generators located at Coleson Cove shall equal, for purposes of this Schedule 1.1.67, 978 MW in aggregate or 326 MW each. Schedule 1.1.67 - Page ii

SCHEDULE 1.1.80 HERITAGE PPAS 1. Agreement for the Supply of Capacity and Energy between New

Brunswick Power Corporation and Frasers Inc., dated May 16, 1995. 2. Amended and Restated Power Purchase and Transmission Access

Agreement between New Brunswick Power Corporation and Bayside Power L.P., for Electricity from the Unit #3 Project at Courtenay Bay Generating Station Located at Saint John, New Brunswick, dated March 31, 2000. 3. Agreement for the Supply of Power and Energy between New Brunswick

Power Corporation and Province of New Brunswick as represented by Natural Resources and Energy RE: Musquash Generating Station, dated December 1, 1994. 4. Power Purchase Agreement between New Brunswick Power Corporation

and St. George Pulp and Paper Limited, dated March 31, 2004. 5. Power Purchase Agreement between New Brunswick Power Corporation

and Grandview Cogeneration Corporation, dated March 31, 2003.

Schedule 1.1.80 - Page i

SCHEDULE 6.2 CALCULATION OF FUEL COMPONENT OF VESTING ENERGY PRICE I. October 1, 2004 to March 31, 2005 The Fuel Component of the Vesting Energy Price from and including October 1, 2004 to and including March 31, 2005 shall equal $35.85. II. After March 31, 2005 For each Fiscal Year commencing on or after April 1, 2005, the Operating Committee shall determine the Fuel Component of the Vesting Energy Price by reference to the following modeling guidelines: 1. For each dispatchable Unit Generator at Belledune, Dalhousie, Grand Lake,

Courtenay Bay #4, and at hydro plants the incremental cost of energy in $/MWh at the applicable Point of Delivery will be used to determine the Fuel Component. Acceptable incremental costs are fuel costs as delivered to the plant and variable operations and maintenance costs. 2. For electricity purchased under the Heritage PPAs, the energy will be modeled as

take-or-pay and the purchase price of the PPA expressed in $/MWh will be used to determine the Fuel Component. 3. For electricity dispatched and purchased under the Coleson Cove TA, the

incremental cost to be modeled will be sum of (i) the fuel cost as delivered to the plant converted to $/MWh using the Target Heat Rate Curve set out in the Coleson Cove TA and (ii) the Contracted Energy Price as set out in the Coleson Cove TA. 4. The Energy and related costs estimated to be supplied to Disco by Genco from

CTs and energy purchases will be removed from the calculation. 5. Before refurbishment at Point Lepreau, the Point Lepreau PPA will be modeled at

the greater of the budgeted fiscal year production or 4240 GWh. After refurbishment at Point Lepreau, the Point Lepreau PPA will be modeled at the greater of the budgeted fiscal year production or 4500 GWh.
Schedule 6.2 - Page i

6.

As a Unit Generator located at a Genco Facility is shut down or a Heritage PPA is

terminated or when the Point Lepreau PPA terminates or when the Coleson Cove TA terminates, the associated Unit Generators or unit generators will be removed from the model. 7. All financial hedges entered into prior to the date of this Agreement will be

included in the calculation of the Vesting Energy Price. The Operating Committee shall manage, develop and maintain the process for establishing the Fuel Component of the Vesting Energy Price in accordance with the modeling guidelines set out above, as such modeling guidelines may be amended from time to time.

Schedule 6.2 - Page ii

SCHEDULE 6.3 THIRD PARTY GROSS MARGIN CREDIT I. (i) Definitions Lower Threshold means, for each Fiscal Year, 80% of the Third Party Gross Margin Credit for that Fiscal Year. (ii) Third Party Gross Margin Credit means, subject to section II below: (a) (b) (c) (d) (e) (f) for the six month period ending March 31, 2005, $38,500,000; for the Fiscal Year ending March 31, 2006, $72,900,000; for the Fiscal Year ending March 31, 2007, $69,400,000; for the Fiscal Year ending March 31, 2008, $69,600,000; for the Fiscal Year ending March 31, 2009, $19,400,000; and in October, 2008, Disco and Genco shall establish the Third Party Gross Margin Credit for each of the five Fiscal Years in the period commencing on April 1, 2009 and ending on March 31, 2014. In establishing the Third Party Gross Margin Credit for each Fiscal Year during that period, the following principles shall be applied: the Third Party Gross Margin Credit shall represent an amount estimated to equal gross revenue to Genco, net of any associated fuel costs, incremental operating costs (including incremental operating costs relating to Emission Allowances or Emission Credits) and Transmission and Related Costs, received by Genco from sales of capacity, Energy or Ancillary Services from Discos Nominated Capacity and Peaking Capacity to any third parties during the relevant Fiscal Year, such amounts to be based on relevant PROMOD projections at the time of establishment. Disco and Genco shall repeat this process in the October prior to each subsequent five Fiscal Year period in establishing the Third Party Gross Margin Credit for that period and shall use the same principles in so establishing the Third Party Gross Margin Credit for that period.
Schedule 6.3 - Page i

(iii)

Upper Threshold means, for each Fiscal Year, 120% of the Third Party Gross Margin Credit for that Fiscal Year.

II.

Adjustments

The Third Party Gross Margin Credit shall be adjusted in the following circumstances: 1. The Third Party Gross Margin Credit shall be reduced from time to time by the

percentage that the Nominated Capacity is reduced in accordance with section 2.2 or section 2.4.1. 2. If Gencos transmission reservation to New England is reduced as a result of a

decision of a Governmental Authority in connection with the following hearing currently being heard by the PUB: A Hearing to Review Section 2.1 of the Open Access Transmission Tariff Approved by the Board on June 19, 2003 and to Review the Boards Open Season Direction contained in its March 13, 2003 Decision with Respect to the said Tariff, the Third Party Gross Margin Credit will be decreased, until such time that the Third Party Gross Margin Credit is recalculated in accordance with section I(ii)(f) of this Schedule 6.3, by a ratio equal to the reduction in such transmission reservation divided by 700 MW. 3. If the Transmission Tariff is amended to reduce (increase) the tariff for Energy

sales outside of New Brunswick by 20% or more, the Third Party Gross Margin Credit thereafter will be increased (decreased) by an amount that is equal to the difference between the point to point tariff in existence immediately prior to such reduction (increase) or elimination and the new reduced (increased) point to point tariff multiplied by the transmission capacity contracted for by Genco, until such time that the Third Party Gross Margin Credit is recalculated in accordance with section I(ii)(f) of this Schedule 6.3. For greater certainty, any such increase (decrease) to the Third Party Gross Margin Credit will equal: (A B) x C, where, A B = = $ per MW per year tariff before Transmission Tariff change $ per MW per year tariff after Transmission Tariff change
Schedule 6.3 - Page ii

Gencos contracted transmission capacity in MW for which the Transmission Tariff is reduced (increased). If the Unit Generators at Coleson Cove are using any fuel other than 3% heavy

4.

fuel oil to generate Energy, the Third Party Gross Margin Credit shall be adjusted based on relevant PROMOD forecasted costs for such fuel until such time that the Third Party Gross Margin Credit is recalculated in accordance with section I(ii)(f) of this Schedule 6.3. 5. If at any time as a result of the foregoing adjustments, the Third Party Gross

Margin Credit is less than or equal to zero, then notwithstanding section 6.4, there shall be no payments in respect of Annual Benefits pursuant to section 6.4.

Schedule 6.3 - Page iii

SCHEDULE 7.2 ADJUSTMENTS TO CAPACITY PAYMENT FORMULA If Disco chooses to reimburse Genco for Environmental Costs in respect of an Affected Unit Generator which are capital costs or fixed operations and maintenance costs in nature by adjusting the Monthly Payment pursuant to section 7.2.6, the following formula shall be used to calculate the adjustment to the Monthly Payment in effect for the Fiscal Year in which the applicable change in Environmental Law becomes effective: M = (PMT+OC) / (12 x Nominated Capacity in the most recently completed calendar month prior to the adjustment taking effect), where: The adjustment to the Monthly Payment, expressed in $/MW. The amount of such Environmental Costs in respect of an Affected Unit Generator for which Disco is required to reimburse Genco under the terms of this Agreement, expressed in dollars of the Fiscal Year in which the adjustment to the Monthly Payment is to become effective. The levelizing factor, which for purposes of this Agreement shall equal w/(1-(1/(1+w)n)). The tax rate applicable to Genco as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals. The period in years from the date the adjustment is to become effective to the Estimated Shutdown Date in respect of the Affected Unit Generator at that time, which Estimated Shutdown Date, for greater certainty, shall not be extended for purposes of this calculation as a result of such Environmental Costs being incurred. The pre-tax weighted average cost of capital, which for purposes of this Agreement shall equal d x DR + (r/(1-t)) x ER. Gencos reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective, expressed in decimals. Gencos debt ratio, which for purposes of this Agreement shall equal 0.55. Gencos rate of return on equity, which for purposes of this Agreement shall equal 0.11. Gencos equity ratio, which for purposes of this Agreement shall equal 0.45. IxL

M equals: I equals:

L equals: t equals: n equals:

w equals: d equals: DR equals: r equals: ER equals: PMT equals:

Schedule 7.2 - Page i

OC equals:

The projected negative change in annual operations and maintenance costs resulting from or associated with the expenditure of Environmental Costs, if any.

The Monthly Payment for subsequent Fiscal Years will then be calculated pursuant to Schedule 1.1.17 with the Monthly Payment for the Fiscal Year in which the change in Environmental Law becomes effective being calculated to include the applicable addition pursuant to the above formula. EXAMPLE The following example sets forth how the formula shall be used to calculate increases to the Monthly Payment in circumstances where the Buyer chose to reimburse Genco for Environmental Costs in respect of an Affected Unit Generator which are capital costs or fixed operations and maintenance costs in nature by adjusting the Monthly Capital Payment. For purposes of these examples, it is assumed that: (i) (ii) (iii) (iv) the Estimated Shutdown Date is March, 2020; I = $100,000,000 in the Fiscal Year ended March, 2005; Nominated Capacity in February 2005 equals 1000 MW; Gencos reasonable cost of borrowing as of the Fiscal Year in which the adjustment is to become effective is 7% and therefore for purposes of this example only d equals 0.07; (v) the tax rate applicable to Genco as of the Fiscal Year in which the adjustment becomes effective is 35.12% and therefore for purposes of this example only t equals .3512; and (vi) w = = = = = = = OC equals zero. d x DR + (r/(1-t)) x ER 0.07 x 0.55 + (0.11/(1 - 0.3512)) x 0.45 0.0385 + 0.763 = 0.1148 or 11.48% w/(1-(1/(1+w)n)) 0.1148/(1 - (1/(1 + 0.1148)15)) 0.1148/(1 - (1/(5.1045)) 0.1148/(1 - 0.1959) = 0.1428

Schedule 7.2 - Page ii

PMT M

= = =

($100,000,000 x 0.1428) = $14.28 million ($14.28 million + 0)/(1000 MW x 12) $1,190/MW per month

Schedule 7.2 - Page iii

SCHEDULE 19.7 ARBITRATION PROCEDURES Definitions 1. (a) In this Schedule: Arbitration Act has the meaning attributed to such term in paragraph 2 of this Schedule; (b) Arbitrator means the arbitrator appointed pursuant to paragraph 6 of this Schedule; (c) Claimant means any Party that commences an arbitration pursuant to paragraph 4 of this Schedule; (d) Disputes has the meaning attributed to such term in section 19.6 of this Agreement; (e) Document has the meaning set out in Rule 31.01 of the New Brunswick Rules of Court; (f) (g) (h) Party means a party to a Dispute; paragraph means a paragraph of this Schedule; and Respondent means a Party who is not the Claimant, and the term Respondents shall, where there is only one Respondent, refer to that Respondent. General 2. All Disputes which are to be determined according to the terms of this Schedule

pursuant to section 19.7 of this Agreement shall be arbitrated in accordance with the provisions of the Arbitration Act (New Brunswick) (the Arbitration Act) except to the extent that those provisions are modified by the provisions of this Agreement and this Schedule.
Schedule 19.7 - Page i

3.

No individual shall be appointed to arbitrate a Dispute pursuant to this Schedule

unless he or she agrees in writing to be bound by the provisions of this Schedule. Commencement of Arbitration 4. A Party may commence an arbitration as Claimant by delivering a written notice

of arbitration (the Notice of Arbitration) to each of the Respondents in the manner described in section 19.10 of this Agreement. 5. (a) (b) (c) (d) (e) Arbitration 6. The arbitrator nominated by the Claimant shall be appointed as the Arbitrator to The Notice of Arbitration shall include in the text or in one or more attachments: the full names, descriptions and addresses of the Parties; a demand that the Dispute be referred to arbitration pursuant to this Schedule; a general description of the Dispute; the relief or remedy sought; and the name of the person the Claimant nominates as the arbitrator.

resolve the Dispute unless, within 10 days after the receipt or deemed receipt of the Notice of Arbitration by all the Respondents, one or more of the Respondents, by notice to the Claimant, objects to the Claimants nominee and proposes an alternative to act as arbitrator (the Objection). In the event that the Claimant and the Respondents do not agree within 10 days of the date of the Objection as to who shall act as arbitrator, any Party may apply to a judge of the Court of Queens Bench of New Brunswick (the Court), on notice to each other Party, for the appointment of the Arbitrator. The costs of such application, if any, will be determined by the Court. 7. Subject to the Arbitration Act, the Agreement and this Schedule, the Arbitrator

may conduct the arbitration in such manner as the Arbitrator considers appropriate.
Schedule 19.7 - Page ii

Interim Relief 8. Prior to the appointment of the Arbitrator, the Parties may apply to the Court for

interim relief. A request for interim relief by a Party to the Court shall not be considered to be incompatible with section 19.7 of this Agreement, or as a waiver of that provision. 9. At the request of any Party, the Arbitrator may direct a Party to take such interim

measures as the Arbitrator considers necessary in respect of the Dispute and any measures for the preservation of assets, the conservation of goods or the sale of perishable goods. The Arbitrator may require a Party to provide security for the costs of such measures. Pleadings 10. (a) The following shall apply to the arbitration of any Dispute: within 10 days of the appointment of the Arbitrator, the Claimant shall deliver to all the Respondents and the Arbitrator a written statement (the Statement) concerning the Dispute setting forth, with particularity, the Claimants position with respect to the Dispute and the material facts upon which the Claimant intends to rely; (b) within 20 days after the delivery of the Statement, each Respondent shall deliver to the Claimant and the Arbitrator a written response (an Answer) to the Statement setting forth, with particularity, the Respondents position on the Dispute and the material facts upon which the Respondent intends to rely; (c) if any Respondent fails to deliver an Answer within the time limit in paragraph 10(b), that Respondent shall be deemed to have waived any right to provide an Answer to the Statement and the arbitration may continue without further notice to that Respondent; (d) subject to paragraph 10(c), within 15 days after the earlier of: (i) the day all Answers have been delivered, and (ii) the twentieth day referred to in paragraph 10(b), the Claimant may deliver to all the Respondents and the
Schedule 19.7 - Page iii

Arbitrator a written reply (a Reply) to the Answer of each Respondent, setting forth, with particularity, the Claimants response, if any, to the Answer; (e) within the time limit in paragraph 10(b), a Respondent may also deliver to the Claimant, each other Respondent and the Arbitrator a counter-statement (a Counter-Statement) setting forth, with particularity, any additional Dispute for the Arbitrator to decide. Within 15 days of the delivery of a

Counter-Statement, the Claimant shall deliver to each Respondent and the Arbitrator an Answer to the Counter-Statement. If the Claimant fails to deliver an Answer to the Counter-Statement within such 15 day period, the Claimant shall be deemed to have waived any right to provide an Answer to the Counter-Statement. Within 15 days after the delivery of an Answer to the

Counter-Statement, the Respondents may deliver to the Claimant and the Arbitrator a Reply to such Answer. Any Dispute submitted to arbitration in accordance with this paragraph 10(e) shall be governed by, and dealt with as if it were the subject of a Statement in accordance with, this Schedule, except that it shall be decided by the Arbitrator already appointed, and shall be determined by the Arbitrator accordingly; and (f) the time limits referred to in paragraphs 10(a) to (e) may be extended by the Arbitrator for such period and for such reasons as the Arbitrator in the Arbitrators discretion may determine upon application in writing made to the Arbitrator by the Claimant or any Respondent on notice to each other Party to the arbitration, either before or within 2 days after the expiry of the relevant time limits and, in the event that the other Party or Parties opposes the application, the other Party or Parties shall be given an opportunity to make submissions on the application. Discovery 11. Unless otherwise directed by the Arbitrator or agreed between the Parties, the

Parties shall exchange the documents in each Partys possession, power or control which are not
Schedule 19.7 - Page iv

privileged and are relevant to any issue in the Dispute by no later than 10 days after the expiry of the last of the relevant time limits for the exchange of statements prescribed in paragraphs 10(a) to 10(e). 12. Unless otherwise directed by the Arbitrator or agreed between the Parties, each

Party shall be entitled to conduct an examination for discovery of a representative of any adverse Party. Subject to the discretion of the Arbitrator, the examining party shall be entitled to name the representative to be examined. Case Conferences 13. At any time after the appointment of the Arbitrator, any Party may apply in

writing to the Arbitrator to convene a case conference for the determination of any preliminary or interlocutory matter or to provide for planning and scheduling of the arbitration. The

Arbitrator shall convene the case conference on the date specified in the application or such other date in the discretion of the Arbitrator. 14. Issues to be determined at the first case conference after the completion of the

steps prescribed by paragraphs 10(a) to 10(e) or the expiry of the time limit for any mandatory step not taken by such time may include the following: (a) any request for an adjournment of the case conference and the terms, if any, of any adjournment; (b) (c) the identification and narrowing of the issues in the arbitration; the desirability of the Parties engaging in further settlement negotiations or some other dispute resolution process, with or without the assistance of a mediator; (d) the necessity for, timing of, and restrictions applicable to oral examination for discovery; (e) the fixing of a date, time and place for the Hearing (as defined in paragraph 15 of this Schedule); and
Schedule 19.7 - Page v

(f) The Hearing 15.

the manner of presentation of evidence at the Hearing.

At the date, time and place fixed at a case conference or, if no case conference has

been held, at a date, time and place fixed by the Arbitrator which date shall be within 120 days of the appointment of the Arbitrator, the Arbitrator shall convene a hearing (the Hearing). If there has been no case conference, the Hearing shall be convened by delivery by the Arbitrator of notice of the date, time and place of the Hearing to each Party to the arbitration at least 45 days before the date of the Hearing. 16. Either prior to or at the conclusion of the Hearing, the Arbitrator may require the

delivery of a written statement of fact, law and argument to the Arbitrator and to each other Party. The timing for the delivery of this statement is at the discretion of the Arbitrator. 17. At least 10 days prior to the commencement of the Hearing, each Party shall

deliver to the Arbitrator and each other Party all sworn statements or transcripts or portions of transcripts on which the Party intends to rely at the Hearing. 18. At the Hearing, the Arbitrator shall consider any evidence as would be admissible

in a court of law and any other evidence the Arbitrator considers appropriate to determine the Dispute. Evidence may be presented by affidavit or by oral sworn testimony as the Party presenting the evidence considers appropriate, provided that no affidavit of any witness shall be accepted by the Arbitrator unless each other adverse Party has been given an opportunity at the Hearing to cross-examine the witness on the information contained in the affidavit. The

Arbitrator shall determine the applicability of any privilege or immunity and the admissibility, relevance, materiality and weight of any evidence offered. 19. A Party who intends to call an expert witness at the Hearing or file an affidavit

from an expert witness at the Hearing shall, not less than 20 days before the commencement of the Hearing, deliver to every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed evidence.

Schedule 19.7 - Page vi

20.

A Party who intends to call an expert witness at the Hearing or file an affidavit

from an expert witness to respond to the expert witness of another Party shall, not less than 10 days before the commencement of the hearing, serve on every other Party a report, signed by the expert, setting out his or her name, address and qualifications and the substance of his or her proposed testimony. 21. An expert witness may not give evidence at the Hearing except with leave of the

Arbitrator unless the substance of his or her evidence is set out in a report delivered pursuant to paragraphs 19 and 20, as the case may be, or in a supplementary report delivered on every other Party not less than 5 days before the commencement of the Hearing. 22. The Arbitrator shall have the right to exclude any witness from the Hearing

during the testimony of any other witness. 23. Despite subsection 28(1) of the Arbitration Act, the Arbitrator shall not, without

the written consent of all Parties, retain any expert. Awards 24. The Arbitrator may make final, interim, interlocutory and partial awards. Any

award shall be considered to be validly made if it is approved by the Arbitrator. An award may grant any remedy or relief which the Arbitrator considers just and equitable and consistent with the intentions of the Parties under this Agreement and the laws of the Province of New Brunswick and Canada applicable therein. The Arbitrator shall state in the award whether the Arbitrator views the award as final or interim, for purposes of any judicial proceedings in connection with such award. Subject to section 39 of the Arbitration Act, the Arbitrators final award shall be made within 30 days of the conclusion of the Hearing. 25. All awards for the payment of money shall include prejudgment and

postjudgment interest in accordance with sections 45 and 46 of the Judicature Act (New Brunswick), with necessary modifications. 26. All awards shall be in writing and shall state reasons.

Schedule 19.7 - Page vii

27.

Subject to any agreement among the Parties, the Arbitrator may apportion the

costs of the arbitration, including the reasonable fees and disbursements of the Arbitrator and the legal costs and disbursements of the Parties, between or among the Parties in such manner as the Arbitrator considers reasonable. In determining the allocation of these costs, the Arbitrator shall invite submissions as to costs and may consider, among other things, any offer of settlement made by any Party during the course of the arbitration. 28. Executed copies of all awards shall be delivered by the Arbitrator to the Parties as

soon as is reasonably possible. 29. Subject to section 44 of the Arbitration Act, all awards of the Arbitrator shall be

final and binding on the Parties, and there shall be no appeal of any such award whatsoever. The Parties undertake to satisfy any award without delay. Additional Matters 30. All case conferences and Hearings shall be conducted in Fredericton, New

Brunswick in the English language. 31. All notices or other communications required or permitted to be given under this

Schedule to a Party shall be given in the manner specified in section 19.10 of this Agreement. All notices or other communications and all other documents required or permitted by this Schedule to be given by the Parties to the Arbitrator shall be given in accordance with the Arbitrators instructions. 32. The Parties desire that any Dispute should be conducted in strict confidence and

that, subject to the exceptions set out in this paragraph, there shall be no disclosure to any person of the existence of the Dispute or any aspect of the Dispute except as is necessary for the resolution of the Dispute or as required by Applicable Law. Any case conference or Hearing shall be attended only by counsel and by those persons whose presence, in the opinion of any Party or the Arbitrator, is reasonably necessary for the resolution of the Dispute. All matters relating to, all evidence presented at and all submissions made in the course of an arbitration, and all documents produced in accordance with this Schedule or any order of the Arbitrator or
Schedule 19.7 - Page viii

created in the course of or for the purposes of an arbitration, as well as any arbitral award, shall be kept confidential and shall not be disclosed to any person without the prior written consent of all of the Parties except as is necessary for the resolution of the Dispute, as required in connection with an application of a Party under section 46 of the Arbitration Act, as required to enforce the arbitral award, or as required by Applicable Law or by an order of an Arbitrator made pursuant to a motion or application on notice to all Parties. Despite the foregoing, a Party may disclose such confidential information: (a) in the case of Disco or NB Power Holdco, to the Province or any representative thereof solely in its or his capacity as a shareholder of Disco or NB Power Holdco or any Affiliate of Disco or NB Power Holdco, as required by Applicable Law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; (b) in the case of Disco, NB Power Holdco and Genco, to its wholly-owned subsidiaries and its and its subsidiaries respective officers, directors, employees, agents, consultants, and advisors, provided that such Persons have been informed of the Partys confidentiality obligations hereunder thereby; (c) in the case of Genco, to the Province or any representative thereof solely in its or his capacity as a shareholder of Genco or any Affiliate of Genco, as required by Applicable law or pursuant to the terms of any shareholder or other agreement with the Province or a representative thereof; and (d) to the extent necessary, to any financial institution or other Person (from whom financing is being sought) or to advisors to any such financial institution or other Person, provided that any such financial institution, Person or advisor has been informed of the Partys confidentiality obligations hereunder and has agreed to be bound similarly thereby. 33. In the computation of time under this Schedule or an order or direction given by

the Arbitrator pursuant to this Schedule, except where a contrary intention appears or the parties otherwise agree:
Schedule 19.7 - Page ix

(a)

where there is a reference to a number of days between two events, those days shall be counted by excluding the day on which the first event happens and including the day on which the second event happens, even if they are described as clear days or the words at least are used;

(b)

where the time for doing any act under this Schedule or any order or direction given by the Arbitrator expires on any day other than a Business Day, the time for doing that act shall be extended to the next Business Day; and

(c)

service of a document or notice provided for in this Schedule or any order or direction given by the Arbitrator made after 4:00 p.m. (New Brunswick time) or at any time on any day other than a Business Day, shall be deemed to have been made on the next Business Day.

Schedule 19.7 - Page x