Page 1 of 3 MEDIA ADVISORY – February 22, 2021 In light of the February 16, 2021, decision of the Supreme Court of Nova Scotia, Bay Ferries Limited (the "Company") is disclosing the amount of the Management Fee contained in its ferry operation agreements with the Province of Nova Scotia. Under the Ferry Operations Agreement dated April 1, 2018, between the Province and the Company, the Management Fee for operating the ferry service is $97,500 per month, equating to $1.17 million annually. The Company may earn incentives equal to the Management Fee based on incentivization wording contained in the Agreement, a copy of that wording is attached. The maximum the Company can earn in any year is two times the Management Fee, or $2.34 million. Under the initial agreement with the Province of Nova Scotia dated March 2016, the Management Fee was $65,000 per month or $0.78 million annually and similar incentives existed. The Management Fee was adjusted by agreement between the parties in the 2018 Agreement due to substantial additional duties required of the Company which were not contemplated in the original Agreement. In each of the years the Company has operated the Yarmouth ferry service since 2016, it has received aggregate management fees in the amount of $1.17 million. The Management Fee represents the Company’s margin for undertaking the work. The Management Fee equates to about 5% of all costs of the ferry operation in a normal operating year. Page 2 of 3 ADDITIONAL BACKGROUND INFORMATION Under the Ferry Operations Agreement between the Company and the Province of Nova Scotia, the Company undertakes all aspects of the Province of Nova Scotia's ferry operation between Nova Scotia and Maine. The financial structure of the agreement provides that the Company is reimbursed the cost of all elements associated with the operation, including Company overheads, net of revenues received, and receives a management fee which represents the Company's margin or operating profit. The services provided by the Company may be subdivided into two broad categories: 1. Core services: The typical services offered by an operating or management company in a ferry operation, including the following: • Crewing of vessels; • All aspects of vessel operations and maintenance; • Purchasing and procurement; • Implementation of safety and operational management systems including Planned Maintenance System; • Insurability and insurance capacity; • Credit capacity; • Marketing of the ferry service; • Sales engines and reservation systems; • All aspects of terminal operations including knowledge and application of Canadian and US immigration and customs procedures and working with both US and Canadian border agencies; and • Budgeting, accounting and financial management 2. Developmental services: Those services undertaken by the Company in connection with the initial and ongoing development of the ferry service, examples of which include: • Identification of vessel for the ferry service; • Securing agreement by U.S. Navy to consider lease of the vessel; • Negotiation of agreement for charter of the vessel which makes provision for the circumstances of this service; • Securing subsequent five-year agreement for charter of the vessel following competitive process undertaken by US Navy; • Securing lease for US port; • Development of terminal infrastructure at Yarmouth, Nova Scotia; • Responding to need to change of US port; • Securing agreement and political approvals for replacement port; • Engaging with US Customs and Border Protection for approval of port change and requirements for new port; • Engaging with US Customs and Border Protection on regulatory issues associated with the provision of customs services at Bar Harbor, Maine; • Engaging consultants for design and construction management of new port facilities; • Overseeing construction of new port facilities; and • Engaging in regulatory proceedings and litigation in respect of pilotage rates applicable to US ports. Page 3 of 3 INCENTIVE CLAUSE IN FERRY OPERATIONS AGREEMENT 9.0 DETERMINATION AND PAYMENT OF MANAGEMENT FEE 9.01 The Management Fee payable to BFL under this Agreement shall be $1,170,000 per annum (or $97,500 per month). 9.02 The Management Fee will be paid at least quarterly, and shall be paid in the amounts and at the time set out in the Approved Budget for each Year. 9.03 For any Year after 2016-2017, BFL shall be eligible to earn a performance incentive (the "Performance Incentive". The amount of any such Performance Incentive shall not exceed in any Year the amount of the Management Fee (the "Maximum Performance Incentive") and shall be determined based on the following criteria: (a) where the Ferry Service is delivered better than the Approved Budget (with increase in expenditure due to fuel price excluded and after any adjustments to the Approved Budget made pursuant to section 7.09), the Performance Incentive shall include, at a minimum, 33% of the difference between estimated and actual Cash Deficiency for a Year; (b) overall customer satisfaction as measured using professional survey methodology and appropriate sample size; (c) introduction of innovation in marketing and operations which drive visitation to Nova Scotia; (d) introduction, negotiation or continuation of innovation, cost saving or value engineering solutions which enhance efficiency, reduce or avoid maintenance, fuel or other costs, or otherwise deliver value to the Ferry Service; (e) success in the procurement of vessel(s) for use in the Ferry Service; (f) participation in development projects extending beyond normal ferry service operation, including any agreed off-season deployment of the Vessel which ultimately reduces the cost of the Ferry Service; and (g) delivery of a highly reliable ferry service (excluding impact of weather conditions or events). In conjunction with the annual Budget review and approval process conducted pursuant to Section 7.05, the parties may attempt in good faith to jointly agree as to specific targets and initiatives which will form the basis for payment of some or all of the Performance Incentive and may also do so on an ongoing basis as opportunities arise. BFL shall be at liberty to make submission at any time as to potential payment of Performance Incentive and shall include sufficient detail to enable the Province to properly assess any such request, which it shall do in accordance with this clause. The parties may from time to time enter into memoranda of agreement respecting payment of Performance Incentive. Under no circumstances shall any amounts payable under this Section for any given Year exceed the Maximum Performance Incentive. 9.04 Any payment due to BFL under Section 9.03 will be paid within 30 days after the Province receives the audited statements under clause 13.01(c) for the Year or as otherwise agreed between the parties. 9.05 The Province will pay all applicable taxes including HST on the Management Fee and performance incentive.