Sustainable Forest Licence for the Boundary Waters Forest

Licence No. 542245

Approved by Order-in-Council O.C. 891/97
dated April 24, 1997
And as amended as set out in Appendix “G”
And as most recently amended by Minister’s Approval
Dated September 10, 2020

Subject to the Crown Forest Sustainability Act and the regulations thereto, and the terms and conditions hereinafter set forth, a licence is granted to Boundary Waters Forest Management Corp. (herein called “the Company”) located at R.R. #2 Site 210-10, Fort Frances, Ontario, P9A 3M3 to harvest the following species of forest resources from the Licence Area in the Boundary Waters Forest, which Licence Area is described in Appendix “A” hereto, for the term of this licence; and the Company is required to carry out renewal and maintenance activities in the Licence Area, on behalf of the Crown, which are necessary to provide for the sustainability of the Crown forest.

Tree species

All species

Terms and conditions

1. 1.0 Definitions

   1. In this licence:
      1. “Annual Work Schedule” means a statement, mainly tabular in form, showing the order and extent of all work of any nature to be carried out during one Year consistent with the Forest Management Plan;
      2. “Boundary Waters Forest" means the Management Unit designated as the Boundary Waters Forest in accordance with the Crown Forest Sustainability Act;
      3. “Crown” means Her Majesty the Queen in Right of the Province of Ontario;
      4. “Eligible Silviculture Work” means the work listed in Appendix “C” hereto, or as it may be amended from time to time;
      5. “Forest Management Plan” means a forest management plan prepared in accordance with the Forest Management Planning Manual;
      6. “Forest Renewal Trust” means the Forest Renewal Trust established by the Minister pursuant to the Crown Timber Act, and continued under the Crown Forest Sustainability Act;
      7. “Forest Renewal Trust Agreement” means the Forest Renewal Trust Agreement entered into between the Minister and the trustee pursuant to the Crown Timber Act, and continued under the Crown Forest Sustainability Act;
      8. “Forestry Futures Trust” means the Forestry Futures Trust established by the Minister pursuant to the Crown Timber Act and continued under the Crown Forest Sustainability Act;
      9. “Licence Area” means the lands designated in Appendix “A” hereto;
      10. “Management Unit” means the Crown forest designated as a management unit pursuant to section 7 of the Crown Forest Sustainability Act;
      11. “Management Unit Account” is an account in the Forest Renewal Trust for a Management Unit and includes any Subaccounts thereof;
      12. “Minister” means the Minister of Natural Resources and Forestry or any other member of the Executive Council to whom responsibility for the administration of the Crown Forest Sustainability Act may be assigned or transferred under the Executive Council Act;
      13. “Ministry” means the Ministry of Natural Resources and Forestry;
      14. “Overlapping Licensee” means the holder of a forest resource licence on the Licence Area other than the Company;
      15. “Person” includes a corporation;
      16. “Productive Lands” means productive lands in the forest resource inventory that are not classified as muskeg, brush & alder, rock, developed agricultural land, grass & meadow, unclassified land or land covered by water;
      17. “Special Purpose Account” means an account within the Consolidated Revenue Fund of the Province of Ontario into which a forest renewal charge may be paid pursuant to section 50 of the Crown Forest Sustainability Act;
      18. “Subaccount” means any account within a Management Unit Account in the name of an Overlapping Licensee, or an account in the name of the applicable Sustainable Forest Licensee;
      19. “Sustainable Forest Licence” means a licence granted or deemed to have been granted pursuant to section 26 or 74 respectively of the Crown Forest Sustainability Act;
      20. “Sustainable Forest Licensee” means a Person to whom a Sustainable Forest Licence has been granted pursuant to section 26 of the Crown Forest Sustainability Act, or a Person who is, pursuant to section 74 of the Crown Forest Sustainability Act, deemed to have been granted such a licence;
      21. “Trust Assets” means the assets of the Forest Renewal Trust as more particularly described in the Forest Renewal Trust Agreement;
      22. “Trustee” means the Trustee of the Forest Renewal Trust;
      23. “Withdrawal of Land” means a reduction in the Licence Area through an amendment of the licence pursuant to section 34 of the Crown Forest Sustainability Act, but does not include a reduction in the Licence Area made to correct an error in the description or calculation of the Licence Area; and
      24. “Year” means the period commencing with the date of this licence and terminating with the 31^st day of March next following and thereafter means a period commencing with the 1^st day of April and terminating with the 31^st day of March next following.

2. 2.0 Area, term and pricing

   1. This licence applies in respect of the Licence Area that is comprised of a total area of 15,333.3 square kilometres which total area is more particularly described in Appendix “A” hereto. The area of Productive Lands within the Licence Area is 10,920.5 square kilometres.
   2. The Company shall pay area charges and forestry future charges in accordance with sections 32(1) and 51(5) of the Crown Forest Sustainability Act.
   3. The term of this licence commences on the 1^st day of April 2002 and expires on the 31^st day of March 2032 but may be extended in accordance with section 26(4) of the Crown Forest Sustainability Act. This licence supersedes and replaces all previous Sustainable Forest Licences issued in respect of the Crossroute Forest, which previous Sustainable Forest Licences shall be of no further force or effect as of and following the date this licence is executed and delivered by the Minister.
   4. The Company shall pay the prices determined by the Minister under section 31 of the Crown Forest Sustainability Act for forest resources harvested under this licence.

3. 3.0 Wood supply commitments and overlapping licences

   1. Subject to complying with the wood supply commitments described in Appendix "E” and the conditions in Appendix “F”, the Company shall be entitled to harvest and utilize the full available harvest described in the Forest Management Plan for the Boundary Waters Forest.
   2. If the allowable harvest levels permitted by a Forest Management Plan will not permit a sufficient amount of forest resources to be supplied from the Licence Area to satisfy the wood supply commitments described in paragraph 3.1 and Appendix “E”, the amount of forest resources available shall be shared in a manner prescribed by the Minister unless the Company and the affected beneficiaries identified in Appendix “E” otherwise agree on the manner of sharing subject to the following:
      1. If an agreement on the manner of sharing is reached, the beneficiaries identified in Appendix “E”, who are parties to the agreement, shall acknowledge that the Minister’s obligations with respect to the wood supply commitments which are the subject of the agreement are satisfied by the agreement;
      2. If the Minister is required to prescribe the manner in which the available harvest shall be shared, the Minister will take into consideration, among other things, the traditional wood supplies of those affected by such deficiency.
   3. The Minister may grant an Overlapping Licence on the Boundary Waters Forest pursuant to section 38 of the Crown Forest Sustainability Act.
   4. This licence and any amendment thereto shall prevail over an agreement under section 38 of the Crown Forest Sustainability Act.
   5. The Company shall provide copies of the agreements described in paragraph 3.4 herein to the Minister forthwith after such agreements are made, and as required by the Minister.
   6. The Minister will provide to the Company a copy of the licence, harvest approvals and a monthly scaling summary regarding Overlapping Licensees at the same time they are provided to the Overlapping Licensee.

4. 4.0 Manuals

   1. The Company shall prepare a Forest Management Plan, work schedules, and reports for the Boundary Waters Forest in accordance with the Crown Forest Sustainability Act and the Forest Management Planning Manual, and shall abide by that plan and all other requirements described in that manual and the Crown Forest Sustainability Act.
   2. The Minister hereby requires the Company to conduct the inventories, surveys, tests and studies identified as being the responsibility of a Sustainable Forest Licensee in the Forest Information Manual, and the Company shall carry out those inventories, surveys, tests and studies in accordance with the Forest Information Manual.
   3. The Minister hereby requires the Company to provide the Minister with information identified as being the responsibility of a Sustainable Forest Licensee in the Forest Information Manual, and the Company shall collect that information in accordance with the Forest Information Manual.
   4. The Company shall not commit wasteful practices as described in either the Forest Operations and Silviculture Manual or the Scaling Manual.

5. 5.0 Deleted

6. 6.0 Natural disturbances and salvage

   1. Where either the Minister or the Company becomes aware of killed or damaged forest resources on the Licence Area, the Minister or the Company shall give notice to the other party of the location of such forest resources. Within 30 days of the giving of notice, the Company shall notify the Minister whether or not the Company desires to salvage the killed or damaged forest resources, and,
      1. where the Company desires to salvage such forest resources, the Company shall salvage such forest resources upon such terms and conditions, including the payment of Crown charges pursuant to the Crown Forest Sustainability Act, as set by the Minister in consultation with the Company, or
      2. where the Company does not desire to salvage such forest resources, the Minister may salvage such forest resources or have such forest resources salvaged in such manner as the Minister considers advisable including, but not limited to, the issuing of a forest resource licence(s) pursuant to section 38 of the Crown Forest Sustainability Act and the Company shall not have any interest in the salvaged forest resources.
   2. Where the Minister intends to exercise his/her authority under section 38 of the Crown Forest Sustainability Act and issue a forest resource licence(s), the Company will enter into overlapping agreements with the proposed licensees pursuant to section 38 (2) of the Crown Forest Sustainability Act and the regulations under the Act.
   3. Where forest on land forming part of the Licence Area is killed or damaged by fire or natural causes, the Company shall, if required, propose an amendment to the Forest Management Plan. The amendment shall describe the source of funding for its implementation.
   4. Where the Company fails to give notice to the Minister under paragraph 6.1, the Company shall be deemed to have given notice to the Minister that it does not desire to harvest the killed or damaged forest resources.
   5. The Minister may permit the harvesting of any forest resources that should, in the interests of economic forest utilization, be harvested with any killed or damaged forest resources to be salvaged under paragraph 6.1.
   6. If a forest renewal charge is set for the salvage of killed or damaged forest resources on the Licence Area, such renewal charge shall be paid to the Trustee by the licensee harvesting those forest resources, and shall be credited to the Management Unit Account for the Licence Area, or the Subaccount thereof applicable to the land from which such forest resources were harvested.
   7. Where the harvesting of killed or damaged forest resources occurs, by the Company or an Overlapping Licensee, the Company will ensure the silvicultural standards described in Section 16.0 are met on the area harvested.
   8. Where the Company has indicated no interest in the harvest of killed or damaged forest resources and the Minister is unable to have such forest resources harvested in a satisfactory fashion, then, the Company shall report the area identified in paragraph 6.1 above as natural depletion in the annual report in accordance with requirements of the Forest Management Planning Manual.

7. 7.0 Forest protection

   1. Where injurious insects or diseases may reduce the amount of forest resources available for harvest, the Company and Minister may protect the Licence Area from pest damage by planning, publicly announcing, and executing pest control programs. The Company and the Minister shall jointly plan pest control programs and may make joint application to the Forestry Futures Trust for the funding of such programs. There is no obligation on either the Company or the Minister to engage in such protection unless funding is available from the Forestry Futures Trust.
   2. The Company will participate in pest control programs by assisting in the identification and mapping of affected areas, in the assessment of potential damage to forested lands within the Licence Area, and by recommending to the Minister the specific areas where controls should be undertaken. Additional responsibilities of the Company, if any, shall be agreed upon by the Company and the Minister at a local level.

8. 8.0 Compensation for withdrawals

   1. Where land is withdrawn from the Licence Area, the Company shall remove from such lands within such reasonable period of time as is specified in writing by the Minister, all chattels and all portable buildings and structures. The Company may remove from the withdrawn area such non-portable buildings and structures that the Company desires to remove unless the Company agrees with the Minister to do otherwise. The Minister shall compensate the Company for:
      1. the reasonable cost of removing the aforementioned things from the withdrawn lands and, when necessary, re-establishing them elsewhere on the Licence Area,
      2. the cost less depreciation as defined in the depreciation schedules under the Income Tax Act (Canada), or on such other basis as is mutually agreeable to the Minister and the Company, of the non-portable buildings and structures that are not removed by the Company from the withdrawn lands,
      3. the cost of all Eligible Silviculture Work that has been conducted on the withdrawn lands and for which the Company has not, and will not, receive reimbursement from the Forest Renewal Trust or the Forestry Futures Trust, and
      4. the cost less depreciation as defined in the depreciation schedules under the Income Tax Act (Canada), or on such other basis as is mutually agreeable to the Minister and the Company, for all primary and branch forest access roads on the withdrawn lands constructed or maintained by the Company except those roads for which the Company has received any funding from the Province of Ontario, and except as provided in paragraph 8.2.
   2. No compensation may be payable in the circumstances described in subparagraph 8.1(d) if, after the withdrawal, the Company is allowed to use the road(s) for the purpose for which it was constructed.

9. 9.0 Periodic review of licensee’s performance

   1. A periodic review of the Company’s compliance with the terms and conditions of this licence will be conducted by the Minister in accordance with subsection 26(3) or 26(3.1) of the Crown Forest Sustainability Act. Independent forest audits are conducted in accordance with O. Reg. 160/04 pursuant to the Crown Forest Sustainability Act and these independent forest audits, are taken into consideration as a component of the periodic review.
   2. If the periodic review does not satisfy the Minister that the licensee has complied with the terms and conditions of the licence, the term of the licence will not be extended pursuant to subsection 26(4) of the Crown Forest Sustainability Act.
   3. If the term of this licence is not extended pursuant to subsection 26(4) of the Crown Forest Sustainability Act, the licence shall, subject to being amended, suspended, or cancelled, remain in effect until the date of expiry described in paragraph 2.3 herein.
   4. The Company shall complete an action plan, subject to written approval of the Minister, responding to the independent forest audit findings within 2 months of receiving the final audit report, unless otherwise directed by the Minister.
   5. The Company will implement the action plan, unless otherwise directed in writing by the Minister.
   6. A status report will be prepared within 2 years following the Minister’s approval of the action plan, unless otherwise directed by the Minister.

10. 10.0 Forest Renewal Trust

    1. The Company shall be invoiced by the Crown for the forest renewal charge to be paid by the licensee pursuant to the Crown Forest Sustainability Act. The Company shall pay the forest renewal charge to the Forest Renewal Trust.
    2. The amounts paid by the Trustee in its capacity as Trustee of the Forest Renewal Trust in respect of Eligible Silviculture Work are paid to or for the benefit of the Crown.
    3. Subject to paragraph 15.1 herein, the specific feature of the Forest Renewal Trust Agreement whereby the share of the Trust Assets credited to the Management Unit Account for the Licence Area will only be used to reimburse the cost of Eligible Silviculture Work performed on the Licence Area will not be amended or revoked unless the Company and the Minister so agree.
    4. When paying the forest renewal charge referred to in paragraph 10.1, the Company shall provide the Trustee with the following information in writing:
       1. the forest Management Unit Account to which the payment shall be credited;
       2. the name and licence number of the licensee making the payment;
       3. a copy of the invoice being paid; and
       4. such other related information required by the Minister.
    5. The Company shall submit such documentation and at such times as directed by the Minister, andis not entitled to any payment from the trust unless the Eligible Silvicultural Work is consistent with Appendix “C” and based on the Company’s approved Forest Management Plan or Annual Work Schedule.

11. 11.0 Subaccounts of Forest Renewal Trust

    1. A Subaccount can be opened at the request of the Company only. When the Company and an Overlapping Licensee on the Licence Area agree to establish Subaccounts for the Management Unit Account for the Licence Area, the Company shall provide the Minister with a copy of an agreement between the Company and Overlapping Licensee containing provisions which, at a minimum, provide for the following:
       1. how much transitional funding for the Licence Area will be allocated to the Subaccount for the Licence Area and to any other Subaccount(s) of the forest Management Unit Account;
       2. the licence number of the Overlapping Licensee(s);
       3. a commitment by the Company to submit for each Subaccount, such documentation and at such times as directed by the Minister for the purposes of forest renewal;
       4. the minimum balance to be in each Subaccount annually by March 31, of each and every year;
       5. that only persons authorized by the Company will submit interim and final invoices for Subaccounts; and
       6. the Overlapping Licensee will conduct the necessary Eligible Silviculture Work to ensure that the Company’s obligations to meet the silvicultural standards described in Section 16.0 herein are met on all lands harvested on the Licence Area by the Overlapping Licensee.
    2. A Subaccount can be closed at the request of the Company only. If the Company closes a Subaccount, the value of that Subaccount at the time of its being closed shall be credited to the Management Unit Account for the Licence Area. The Company shall ensure that an amount no less than such value will be spent for Eligible Silviculture Work performed on the lands harvested by the Overlapping Licensee which gave rise to the forest renewal charges which were credited to that Subaccount.
    3. If the Company closes a Subaccount in the name of an Overlapping Licensee, the Company’s minimum balance obligation described in paragraph 12.4 herein will be increased by an amount equal to the minimum balance obligation of the Overlapping Licensee regarding the closed Subaccount.
    4. The Company shall report annually to the Minister regarding monies spent pursuant to paragraph 11.2.

12. 12.0 Forest renewal charges and minimum balance

    1. Forest renewal charges will be determined in accordance with the Crown Forest Sustainability Act.
    2. Forest renewal charges for the Licence Area, or where applicable for each licensee in whose name a Subaccount exists, required to be paid from April 1, 1997 onwards will be calculated as provided in paragraph 12.3 hereof.
    3. The forest renewal charges for those licensees with an account for the Licence Area in the Forest Renewal Trust will be determined after an analysis which includes, at a minimum:
       1. the licensee’s past reimbursements for Eligible Silviculture Work on the Licence Area,
       2. a forecast of the amount of Eligible Silviculture Work to be undertaken by that licensee in the period for which the forest renewal charge is being calculated, including Eligible Silviculture Work to be undertaken on areas which have failed to meet silvicultural standards and retreatment is therefore necessary,
       3. a forecast of the volume and species to be harvested by that licensee in the period for which the forest renewal charge is being calculated,
       4. any transitional funding required to be paid by the Crown to the Trustee to be credited to that account for the licensed area, and
       5. the existing value of that account at the time the analysis is undertaken so as to ensure that each account will have sufficient value to fund Eligible Silviculture Work planned in the period for which the forest renewal charge is being calculated, and to ensure that each account has the minimum balance described in Appendix “D” hereto annually on March 31, 1999 of each and every year or as otherwise set out therein.
    4. The minimum balance obligation for the Management Unit Account for the Licence Area shall be determined in accordance with the provisions set out in Appendix D.
    5. The forest renewal charge for the Boundary Waters Forest, or where applicable for each licensee in whose name a Subaccount exists, may be increased or decreased after the type of analysis referred to in paragraph 12.3 above. Such analysis shall be undertaken at times to be determined by the Minister but no less frequently than every five years. In addition, the Company may request such an analysis at any time.
    6. The analysis described in paragraph 12.3 shall be made jointly by the Minister, the Company, and Overlapping Licensees, where those Overlapping Licensees have a Subaccount for the Licence Area. If they do not agree on such analysis the forest renewal charge shall be set as provided by the Crown Forest Sustainability Act and regulations thereto.

13. 13.0 Record keeping and audit (Forest Renewal Trust)

    1. To facilitate the annual audit of the Forest Renewal Trust:
       1. the Company shall maintain records, including maps, of the amount of Eligible Silviculture Work implemented and the cost thereof;
       2. an auditor retained by the Trustee shall at all reasonable times and upon reasonable notice to the Company be entitled to full access to the Company’s records, including maps which are required for the purpose of verifying that the reimbursements from the Forest Renewal Trust received by the Company were for legitimate claims regarding Eligible Silviculture Work.
    2. When a Company or Overlapping Licensee calculates the cost of Eligible Silviculture Work:
       1. the following elements of cost may be included:
          1. the cost of salaries, wages and normally applied payroll burden associated with staff or contract staff directly engaged in implementing Eligible Silviculture Work;
          2. the cost of transporting and sustaining personnel engaged in implementing Eligible Silviculture Work;
          3. depreciation allowances for any and all equipment and vehicles when employed by the Company in renewal operations including depreciation allowances for that portion of the costs of specialized harvesting equipment designed to facilitate renewal by natural or artificial means, and the cost of transporting and operating such equipment and other equipment or vehicles for the purpose of implementing Eligible Silviculture Work;
          4. planning, data collection and record keeping for Eligible Silviculture Work; and,
          5. the costs of other goods and services directly related to implementing Eligible Silviculture Work.
       2. the following shall not be included as elements of cost of Eligible Silviculture Work:
          1. depreciation allowances for any and all equipment, vehicles, camps or other facilities owned by the Company when employed by the Company in logging operations;
          2. wages or salaries for any personnel not directly engaged in Eligible Silviculture Work; and,
          3. the cost of constructing or maintaining roadways within the Licence Area.
    3. If a Company or Overlapping Licensee contracts out all or part of the work associated with Eligible Silviculture Work, payments by such Company or Overlapping Licensee to contractors performing such work shall be deemed to be expenditures on Eligible Silviculture Work incurred by such Company or Overlapping Licensee for which such Company or Overlapping Licensee is to be reimbursed from the Forest Renewal Trust.
    4. In the event of disputes or audits regarding the cost of Eligible Silviculture Work, generally accepted accounting principles and auditing standards as certified by a person or firm licensed under the Public Accounting Act, 2004, R.S.O. 2004, c. 8 shall be used.

14. 14.0 Effect of transfer, assignment, or other disposition of licence on Forest Renewal Trust

    1. Where the Company requests the written consent of the Minister to the transfer, assignment, charge, or other disposition of this licence pursuant to section 35 of the Crown Forest Sustainability Act, such request shall be in writing and shall be made at least 30 days prior to the date of the proposed transfer, assignment, charge, or other disposition of the licence.
    2. In the event that the licence is transferred, assigned or otherwise disposed of, the Company may claim any expenditures for Eligible Silvicultural Work incurred before the transfer, assignment, or disposition against the Management Unit Account for the Licence Area. The claim for such reimbursements shall be made within three (3) months of the assignment, transfer, or termination of the licence. The balance of that Management Unit Account shall be administered in accordance with the applicable trust agreement. Payments to a new licensee shall only be made for Eligible Silviculture Work performed after the date that the licence was assigned or transferred to that licensee.
    3. Unless otherwise provided for by the written consent of the Minister pursuant to section 35 of the Crown Forest Sustainability Act, the Company’s obligation to fulfil responsibilities described in paragraph 16.0 of this licence continue regardless of any transfer, assignment, charge, or other disposition of this licence.
    4. If the Company’s obligation to pay forest renewal charges ceases, the share of the Trust Assets attributable to the Management Unit Account for the Licence Area shall continue to be held by the Trustee and be administered in accordance with the Forest Renewal Trust Agreement.
    5. Nothing in this licence shall affect the Crown’s right to seek payment from the Company in a court of competent jurisdiction for any monies received by the Company from the Forest Renewal Trust for Eligible Silviculture Work not performed or which is established to have been negligently performed.

15. 15.0 Effect of withdrawal of area on Forest Renewal Trust

    1. If any land harvested after April 1, 1995 is withdrawn from the Licence Area, and forest renewal charges have been paid for forest resources harvested on that withdrawn area, the amount of such payment credited to the Management Unit Account for the Licence Area less reimbursement for Eligible Silviculture Work on that harvested area shall be determined by the Minister and the Company and shall be dealt with as follows:
       1. if the withdrawn area becomes part of another Management Unit for which a Management Unit Account exists, it shall be credited to that Management Unit Account;
       2. if, at the time of the withdrawal, the Ministry indicates that Eligible Silviculture Work will not be implemented on the harvested areas within the withdrawn area, it shall continue to be credited to the Management Unit Account for the Licence Area to be used for Eligible Silviculture Work on the remaining Licence Area; and,
       3. if the withdrawn area does not become part of another Management Unit for which a Management Unit Account exists, but the Ministry indicates that Eligible Silviculture Work will be implemented on the withdrawn area, it shall be paid out as requested by the Ministry for Eligible Silviculture Work undertaken on the withdrawn area.
    2. The Company’s responsibility to conduct Eligible Silviculture Work on or to meet silvicultural standards for a withdrawn area ceases as of the date that area is withdrawn.

16. 16.0 Silvicultural standards

    1. The Company will implement the necessary silvicultural prescriptions on harvested lands so as to meet the silvicultural standards described in the approved Forest Management Plan for the Boundary Waters Forest when the silvicultural prescriptions were made, or in accordance with any amendment of that standard.  The Company's obligation to meet these silvicultural standards is not diminished where Eligible Silviculture Work is performed by an Overlapping Licensee or by a contractor retained by the Company.
    2. The Company shall meet the silvicultural standards described in paragraph 16.1 herein regardless of the balance in the Management Unit Account for the Licence Area at any given time, or the amount of transitional funding available to the Company in any one year or in total.
    3. The Company shall assess and report on, in accordance with the Forest Operations and Silvicultural Manual, the Forest Information Manual, and the Forest Management Planning Manual, the achievement of its regeneration efforts to ensure the obligations and standards outlined in paragraph 16.1 are met.
    4. The obligation to meet the silviculture standards and prescriptions described in paragraphs 16.1 and 16.3 herein may be varied or waived in writing by the Minister in circumstances deemed appropriate by the Minister such as the renewal of areas set aside for experimental studies or for the purpose of tree improvement.

17. 17.0 Termination of Forest Renewal Trust

    1. If the Forest Renewal Trust is terminated, the Trust Assets paid to the Crown by the Trustee upon such termination shall be used to pay for Eligible Silviculture Work on the Licence Area as if the Forest Renewal Trust was still in effect until the value of the Management Unit Account for the Licence Area is completely dissipated.

18. 18.0 Construction liens

    1. If a lien claimant under the Construction Lien Act, R.S.O. 1990, Chapter C.30 that has performed Eligible Silviculture Work on the Licence Area, or has supplied services or materials in relation thereto, serves a notice of lien in accordance with that Act in relation to such Eligible Silviculture Work, the Minister shall not make any payment to that lien claimant directly or into court relating to that claim without the Minister first giving the Company reasonable notice of his/her intention to do so.

19. 19.0 Herbicides

    1. If the government of Ontario or Canada disallows or restricts the use of herbicides which are registered for forestry use in Canada, or such herbicides cease being registered for such use, and such disallowance or lack of registration adversely affects the Company’s ability to meet the silvicultural standards described in paragraph 16.1 herein, the Company’s obligations to meet those standards or the standards themselves will be reasonably amended in accordance with the amendment process for Forest Management Plans.

20. 20.0 Aboriginal opportunities

    1. The Company shall work co-operatively with the Minister and local Aboriginal communities in order to identify and implement ways of achieving a more equal participation by Aboriginal communities in the benefits provided through forest management planning.

21. 21.0 Compliance planning and monitoring

    1. The Company shall prepare a forest compliance plan which describes the proposed planning, monitoring, reporting and education/prevention activities to be undertaken by the Company and any Overlapping Licensees which have been granted approval by the Ministry of Natural Resources and Forestry to directly assume compliance responsibilities on the forest.
    2. The compliance plan will describe the responsibilities of the Company and Overlapping Licensees with respect to ensuring compliance with the Forest Management Plan, the Annual Work Schedule, and all applicable legislation, regulations and manuals and guidelines affecting those operations. The forest compliance plan shall be prepared in accordance with standards established by the Minister, in consultation with representatives of Ontario’s forest industry.
    3. The forest compliance plan prepared by the Company requires the approval of the Minister or delegate, before forest operations may commence.
    4. The compliance plan will include an annual assessment of compliance and a schedule of all monitoring activities (inspection and reporting) for the Licence Area, including a distinct schedule for each Overlapping Licensee having compliance responsibilities.
    5. The Company and those Overlapping Licensees referred to in paragraph 21.1 are responsible for establishing and delivering internal prevention/education programs and for providing individual staff training to competency standards approved by the Ministry. The compliance plan must describe the internal prevention/education program responsibilities of the Company and applicable Overlapping Licensees.
    6. The Company and those Overlapping Licensees referred to in paragraph 21.1 must conduct inspections of forest operations, provide inspection reports to the Ministry and otherwise comply with the requirements of the approved forest compliance plan. Overlapping Licensees which have been granted the inspection and reporting responsibility will provide such information directly to the Ministry in accordance with the compliance plan and Ministry standards for reporting.

22. 22.0 Forestry operations on mining claims

    1. Throughout the Licence area land may be staked or leased for mining potential. Should the Company undertake forestry activities on any mining leases or claims, the Company will assume full responsibility for all forestry activities on these areas and will hold the Crown free from any damages from Company activities.
    2. Following receipt of a Company prepared Annual Work Schedule, the Minister will advise all recorded and patented claim holders located within the proposed operating area of the Company’s intent. Claim holders will be instructed to address their concerns to the Company within thirty days. The Company will in turn be available to discuss stated concerns or conflicts with the claim holders.
    3. Subject to the Minister complying with the Freedom of Information and Protection of Privacy Act, the Minister will advise the Company of any known, new or existing activities within the Licence Area authorized by the Minister pursuant to the Public Lands Act.

23. 23.0 Miscellaneous

    1. The Company shall conduct its operations and meet its obligations with respect to the terms and conditions of the Sustainable Forest Licence in accordance with the business plan, as submitted to the Ministry, titled Boundary Waters Forest SFL Business Plan dated March 25, 2020, and any amendments thereto which have been accepted by the Ministry. The Company is required to inform and seek the acceptance of the Ministry should any changes to the business plan be contemplated. Any substantial change to the business plan, which shall only be made with the acceptance of the Ministry, may result in amendments to this Sustainable Forest Licence pursuant to section 34 of the Crown Forest Sustainability Act.
    2. In the event the Company ceases to carry on business, is dissolved or wound-up or is declared bankrupt or this licence is surrendered to or cancelled by the Minister, the Minister will, on any application for a licence to harvest and/or to receive forest resources from the Licence Area, take into consideration, among other things, the harvest rights on, and the supply of forest resources from the Licence Area, and the Appendix “E” and Appendix “F” beneficiaries.

24. 24.0 General

    1. The headings in this licence are inserted for convenience of reference only and shall not be used to construe the licence.
    2. The Minister may amend this licence pursuant to section 34 of the Crown Forest Sustainability Act.
    3. Unless as otherwise expressly provided herein, this licence shall not be interpreted as in any way limiting the authority conferred upon the Minister by statute or regulation to manage the Licence Area and the resources thereon, including authority regarding forest resource licences under the Crown Forest Sustainability Act and the regulations thereto.
    4. The failure of the Minister to insist in one or more instances upon the performance by the Company of any term or condition of this licence or the management documents shall not be construed as a waiver of the future performance of any such term or condition and the obligation of the Company with respect to such future performance shall continue in full force and effect.
    5. 1. Where any notice is required to be given under this licence or the management documents, such notice shall be given in writing and shall be personally served, mailed by prepaid registered post addressed, or sent by facsimile to the addresses set out below, unless an alternative address has been provided in writing.

          1. in the case of notice to the Minister, to the

             Minister of Natural Resources and Forestry
             99 Wellesley Street West
             Whitney Block, Room 6630
             Toronto, ON M7A 1W3
             Facsimile Number: 416-325-1564

             and

          2. in the case of notice to the Company, to
             General Manager, Ontario
             Boundary Waters Forest Management Corp.
             R.R. #2 Site 210-10
             Fort Frances, Ontario P9A 3M3

       2. Any notice mailed in accordance with subparagraph 1 shall be deemed to have been received on the fifth day next following the day it is mailed at any post office.
    6. This Sustainable Forest Licence is not a confidential document. The Ministry intends to and may make a copy of this Sustainable Forest Licence available to the public, including posting on the Ministry’s public website.

This Licence has been executed and delivered by the Minister of Natural Resources and Forestry this 10^th day of September, 2020.

Original Signed by the Honourable John Yakabuski Minister of Natural Resources and Forestry for the Province of Ontario.

Appendix “A”

Legal description of licence area

All that parcel or tract of land in the Territorial Districts of Rainy River and Kenora as identified on the Plan map dated the 31^st of March, 2020, prepared by the Ministry of Natural Resources and Forestry, a print of which said map is attached and forms part of this Appendix.

Saving and excepting thereout and therefrom all those lands which have been alienated from or not vested in th Crown, all areas regulated under the Provincial Parks and Conservation Reserves Act, 2006, all Ministry of Transportation lands registered by Crown Land Plan, lands under the Mining Lease where the Minister does not have the right to conduct forest management and all First Nations and other Federal lands.

Appendix “B”

[Intentionally Deleted]

Appendix “C”

Forest renewal trust

Eligible silviculture work

The cost of eligible silviculture work that can be claimed from the Forest Renewal Trust includes direct employee costs and contractor costs associated with:

1. Natural Regeneration
   1. Harvest and Regeneration Option
   2. Modified Harvest Cutting
2. Tree Marking
3. Artificial Regeneration
   1. Tree Planting - bareroot, container, cuttings and other
   2. Seeding - direct and with site preparation (including cost of seed and application)
4. Site Preparation
   1. Mechanical
   2. Chemical (including cost of chemical and application)
   3. Slash Piling (chipper and debris)
   4. Prescribed Burn
   5. Scarification (natural)
5. Tending
   1. Cleaning
   2. Spacing
   3. Pre-Commercial Thinning
   4.  Improvement Cut (uneven-aged & even-aged)
6. Renewal Support
   1. Cone Collection and Transport
   2. Seed Extraction, Storage, Testing and Transport
   3. Tree Improvement
   4. Stock Purchase and Delivery (bareroot, container, cuttings and other)
7. Silviculture Surveys and Associated Information
   1. Surveys,e.g., Free to Grow, establishment, performance, not sufficiently regenerated etc.
   2. Supplemental Aerial Photography
   3. Silviculture Planning and Reporting
8. Other Eligible Silviculture  
   1. Associated Administrative Overhead based on 10% of the total ESW (pre-HST) claimed from the Forest Renewal Trust
   2. Silviculture Wages & Expenses
9. And other such activities as identified by the Minister from time to time

Ineligible Expenses:

1. The following activities or expenses are not eligible for reimbursement by the Forest Renewal Trust:
   1. Commercial Thinning
   2. Boundary marking

Appendix “D”

Minimum balances

Management Unit Account

Boundary Waters Forest: $4,775,400
(Licence no. 542245)

Transition funding total: $4,775,400

Note: Minimum balance is the balance as of March 31, 2021 and each March 31 thereafter. This balance equals the amount of the total transitional funding paid to the Account by the Crown to ensure that there are adequate funds to perform forest renewal on the unit. Where there are Subaccounts, the minimum balance for the Management Unit Account will be the total minimum balance required for all Subaccounts.

Appendix “E”

Wood supply commitments

The Company shall comply with the following wood supply commitments on the Boundary Waters Forest:

1. To make wood fibre available to Norbord Inc. through a long term memorandum of agreement in accordance and consistent with Supply Agreement 536238 dated April 1, 2016. The Company must enter into and execute the memorandum of agreement within six months of the amendment of this licence for the inclusion of this condition. A copy of the executed memorandum of agreement must be provided by the Company to the Ministry upon request. Where Norbord Inc. is a shareholder in the Company and the parties agree that the shareholders’ agreement constitutes an MOA, a separate MOA is not required..

Appendix “F”

Special conditions

1. The Company shall provide opportunities, through memoranda of agreement, for the operators identified in the Company’s Shareholder Agreement to conduct harvesting operations on the Boundary Waters Forest in accordance with an approved Forest Management Plan. The harvest areas to be made available to these operators will be determined through the forest management planning process and will be documented in the Forest Management Plan for the Boundary Waters Forest.

   A copy of the memoranda of agreement must be provided by the Company to the Ministry upon request.

Appendix “G”

Summary of Sustainable Forest Licence Amendments