Exhibit 10.6
((COMPANY LETTERHEAD))
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((LOGO))
EDC GLOBAL COMPREHENSIVE POLICY(SHIPMENTS)
SEE
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Policy No. GC1-19781
This policy is issued June 30, 1998 by Export Development Corporation ("EDC")to
Pultronex Corp. with offices located at
2305 Eighth Street (the "Exporter")
Nisku, AB
A copy of the Exporter's application dated May 7, 1998 (the"Application") in
respect of this Policy is attached as Schedule "A".
COVERAGE
Insuring Agreement
1. Subject to the provisions of this Policy, on payment of a non-refundable
processing fee of $500 and in consideration of the Exporter's undertaking to pay
EDC any premium amounts that become due and payable pursuant to Subsection 8(2),
EDC hereby insures the Exporter against and agrees to pay 90% of any Loss, in
respect of goods Shipped during the period from June 1, 1998 to May 31, 1999
inclusive, as a direct result of the occurrence of any of the following risks:
Insolvency
(1) Insolvency of The Buyer,
Non-payment
(2) failure of the buyer to pay by the Due Date all or any part of the
Gross Invoice Value of goods delivered to and accepted by the buyer,
Repudiation
(3) failure of the buyer to accept goods exported from Canada before the
expiry of thirty days of the date of which the goods were placed at
the buyer's disposal in accordance with the delivery terms set out in
the Eligible Contract, or refusal of the buyer to accept such goods,
where such failure of refusal is not excused by and does not arise
from any breach of contract on the part of the Exporter,
Conversion and Transfer
(4) the operation of a law or any governmental directive having the force
of law in the buyers country which restricts or prevents the
conversion or transfer of currency, and as a consequence prevents the
buyer from making any payment required to be made to the Exporter in
circumstances where:
(a) the buyer has complied with all requirements in the buyer's
country for the subsequent conversion or transfer of currency for
the purpose of making such payment, and
(b) the buyer has made an irrevocable deposit for transfer to the
Exporter of a sum in the currency of the buyer's country
equivalent to the amount of such payment required to be made to
the Exporter unless the buyer is specifically precluded by a law
or any governmental directive having the force of law in the
buyer's country from making such deposit,
War and Related Disturbances
(5) war or hostilities between two or more countries, or rebellion,
revolution, insurrection, civil commotion, acts of political terrorism
or other political disturbance of a similar nature in any country
other than Canada, excluding however any Loss sustained by the
Exporter as a result of the occurrence of a risk that is within the
scope of marine cargo insurance available under the War, Strikes,
Riots and Civil Commotion Clauses of the London or American Institute
on the date of goods were Shipped, whether or not any such insurance
was placed,
Export Permits
(6) cancellation or non-renewal of an export permit by the Government of
Canada or the imposition by the Government of Canada of restrictions
on the export from Canada of goods which were not subject to permit or
restriction prior to the date on which the goods were Shipped, or
Import Permits
(7) cancellation or non-renewal of an import permit or the imposition of
restrictions on the import into the buyer's country of goods which
were not subject to permit or restriction prior to the date on which
the goods were Shipped.
Page 1 of 6
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GLOBAL COMPREHENSIVE POLICY (SHIPMENTS)
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Extended Political Cover
2. If a Loss is a result of the occurrence of Risk insured pursuant to
Subsection 1(2), and if the default that resulted in the Loss cannot be remedied
by the buyer because of the occurrence of a Political Risk within 60 days
immediately after the Due Date, then such Loss shall be deemed to have been
sustained by the Exporter as a result of the occurrence of the Political Risk.
Changes by EDC
3. EDC shall have the right at any time by notice to the Exporter to add or
amend any special condition set out in Schedule "B" or to cancel or amend the
Credit Limit for all or any buyers in any country designated in Schedule "B",
and any such addition, amendment or cancellation shall only apply to shipments
made after EDC has given such notice to the Exporter; and, any Loss which is the
result of non-compliance with an addition, amendment or cancellation made
pursuant to the provisions of this Section shall be conclusively deemed to be
due to a cause avoidable by the Exporter.
Application
4. The representations and the declarations made by the Exporter to EDC in the
Application form the basis on which this Policy has been issued.
EXCLUSIONS
Exclusion of Liability
5. EDC shall not be liable for the payment of any claim for any Loss in respect
of goods Shipped in circumstances where:
Misrepresentation
(1) the Exporter has at any time made any misrepresentation to EDC that is
material to EDC's rights, liabilities or obligations under this
Policy,
Dispute
(2) there is a dispute between the Exporter and the buyer with regard to
any matter under the Eligible Contract,
Changing Terms of Payment
(3) the Exporter or an agent of the Exporter has entered into an agreement
with the buyer changing the terms of any payment to be made by the
buyer to the Exporter pursuant to the Eligible Contract, unless EDC
has given its prior approval in writing to such agreement or unless
such agreement:
(a) constitutes a composition arrangement that is legally binding on
all creditors of the buyer, or
(b) has been entered into by the buyer with the Exporter in the
circumstances described in Section 6,
Cause Avoidable by Exporter
(4) the Loss is due to a cause avoidable by the Exporter, an agent of the
Exporter or an Affiliate, or is caused by the insolvency of the
Exporter or the agent or Affiliate,
Assignment of Contract
(5) any right, title or interest of the Exporter under the Eligible
Contract is assigned by the Exporter to any person other than EDC,
unless the assignee has executed and delivered to the Exporter a
reassignment and release in respect thereof in form and substance
satisfactory to EDC,
Licences, Approvals or Authorizations
(6) The Exporter or the buyer has failed to obtain all or any licences,
approvals, or authorizations required on the date goods were Shipped
for the due performance of the Eligible Contact, or
Related Buyers
(7) the Exporter has direct or indirect equity interest in the buyer, or
if the buyer has any such equity interest in the Exporter.
Extension of Due Date
6. Where the buyer has requested the extension of a Due Date the Exporter may
agree with the buyer to extend the Due Date if:
(1) payment is to be made on terms other than,
(a) cash against documents,
(b) documents against payment of sight draft, or
(c) documents on payment,
(2) the agreement is entered into prior to the original Due Date,
(3) the extension of the Due Date is not greater than 90 days from the
original Due Date, and
(4) the new extended Due Date does not result in the Exporter having
granted credit to the buyer for a period in excess of 180 days.
DUTIES OF THE EXPORTER
Notification of Other Contracts
7. The Exporter shall promptly notify EDC in each and every case whwere an
export shipment of goods is to be made by the Exporter pursuant to a contract of
sale that is neither an Eligible Contract nor an Excluded Contract; and on being
so notified, EDC shall either:
(1) extend the application of this Policy to include the contract of sale
as an Eligible Contact, and advise the Exporter of the terms of such
insurance coverage, or
(2) designate the contract of sale as an Excluded Contact.
8. On or before the 10th day of each calendar month the Exporter shall:
Monthly Declarations
(1) complete and return to EDC declaration forms provided by EDC
specifying by county the Gross Invoice Value of all goods Shipped
during the previous calendar month pursuant to contracts of sale other
than Excluded Contracts, and if no such goods have been Shipped during
the previous calendar month then the Exporter shall submit a
declaration to EDC expressly stating that no such goods have been
Shipped,
Payment of Premium
(2) pay the premium to EDC computed on the Gross Invoice Value of all
goods Shipped during the previous calendar month, pursuant to Eligible
Contracts, at the rates applicable on the date such goods were
Shipped, as set out in Schedule "B", and remit the premium to EDC at
the same time that the declaration forms are completed and returned to
EDC pursuant to Subsection B(1), and
Overdue Accounts
(3) provide EDC with full particulars as to all amounts payable to the
Exporter pursuant to Eligible Contracts, which are in default for more
than 90 days.
Events that Could Cause a Loss
9. The Exporter shall immediately notify EDC of the occurrence of any event or
circumstance that could cause a Loss.
Prevent and Minimize Loss
10. The Exporter shall use all reasonable and usual care, skill and forethought
in respect of all matters affecting this Policy, and shall take all practicable
measures, including any measures requested by EDC to:
(1) prevent the occurrence of any Loss, or
(2) minimize the amount of any Loss that may occur or has occurred.
CREDIT LIMITS
Discretionary Credit Limit
11. Subject to Section 12, where a Credit Approval has not been issued for a
buyer, the Credit Limit for the buyer shall be the greater of:
(1) the highest amount at any one time owing by the buyer to the Exporter
on similar terms which was promptly paid during the twelve-month
period immediately preceeding the date the goods that are the subject
of the Loss were Shipped, and
(2) the amount justified by reliable written credit information obtained
by the Exporter from a recognized independent credit reporting agency
or bank which was current at the date the goods that are the subject
of the Loss were Shipped,
except that such Credit Limit shall not exceed the amount set out in Item 1 of
Schedule "B".
Extended Discretionary Credit Limit
12. Where a Credit Approval has not been issued for a buyer, and where all Loss
in respect of goods Shipped to the buyer is a result of the occurrence of a
Political Risk, including any Loss deemed pursuant to Section 2 to be the result
of a Political Risk, the Credit Limit for the buyer shall be the amount set out
in Item 1 of Schedule "B".
EDC Approved Credit Limit
13. Where a Credit Approval has been issued for a buyer, the Credit Limit for
the buyer shall be the amount stipulated in the Credit Approval.
EDC's Maximum Liability Limit
14. Notwithstanding the aggregate amount of Credit Limits for individual buyers,
EDC's overall maximum liability under this Policy for the payment of claims on
account of all Losses is limited in the aggregate to the maximum liability
amount set out in Item 2 of Schedule "B".
CURRENCY FOR PREMIUM AND CLAIM PAYMENTS
15. The premium payable to EDC pursuant to Subsection 8(2) and any claim payment
by EDC in respect of a Loss shall be paid in Dollars; and where the Contract
Currency is other than Dollars,
(1) the premium payments shall be made on the basis of the Gross Invoice
Value being translated to Dollars, and
(2) the claim payment shall be made on the basis of the Loss amount being
translated to Dollars,
at the buying rate of exchange at the Exporter's bank for the conversion of
Contract Currency to Dollars on the last business day of the calendar month in
which the goods were Shipped.
LOSSES
Computation of Loss
16. Any Loss in respect of goods SHipped shall be computed in the Contract
Currency and, shall be the Gross Invoice Value of the goods together with any
additional insurance, freight or other handling costs incurred as a result of
the interruption of diversion of voyage outside Canada due to the occurrence of
the Risk which resulted in such Loss, less:
(1) all amounts received, recovered or realized on account of amounts due
and payable to the Exporter by the buyer in respect of such goods, and
(2) all costs that would have normally been incurred by the Exporter in
respect of such goods but which have not been incurred as a result of
the occurrence of the Risk insured,
except that where the amount comptued above in respect of Loss exceeds the
Credit Limit for the buyer less any
(79)
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GLOBAL COMPREHENSIVE POLICY (SHIPMENTS)
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unrecovered prior Loss amounts in respect of which claim payments have been made
by EDC as a result of transactions between the Exporter and the buyer, the
amount of Loss computed hereunder shall be the Credit Limit for the buyer less
any such unrecovered prior Loss amounts.
CLAIM PAYMENTS
Third Party Guarantees
17. EDC shall not be required to make any claim payment in respect of a Loss
where EDC has expressly stated that its liability is subject to the Exporter
obtaining a third party guarantee wherein the buyer's obligation to pay the
Exporter is guaranteed by such third party unless:
(1) the guarantee has been obtained by the Exporter, and
(2) the guarantor has defaulted in its payment obligations to the
Exporter.
Claim Waiting Period
18. The right of the Exporter to claim against EDC for indemnification under
this Policy for a Loss hall arise four months after the date on which the Loss
was sustained by the Exporter, except that:
(1) if the Loss is a result of the occurrence of the Risk described in
Subsection 1(1), the right of the Exporter to claim against EDC shall
arise immediately upon the Loss having been sustained by the Exporter,
(2) if the Loss is a result of the occurrence of the Risk described in
Subsection 1(2), the right of the Exporter to claim against EDC shall
arise six months from the date on which the Loss was sustained by the
Exporter, and
(3) if the Loss is a result of the occurrence of the Risk described in
Subsection 1(3), the right of the Exporter to claim against EDC shall
arise when the goods referred to in the Risk have been resold or
otherwise disposed of by or on behalf of the Exporter with the prior
approval of EDC.
Claim Period
19. EDC shall not be liable for the payment of a claim for any Loss unless EDC
has received notice from the Exporter of the claim within twelve months from the
date on which the Loss was sustained by the Exporter.
RECOVERIES
Sharing of Recoveries
20. Where EDC has paid a claim for a Loss in respect of goods Shipped, all
amounts exclusive of post maturity interest that are received, recovered or
realized on account of amounts payable to the Exporter by the buyer in respect
of such goods shall be first divided between the Exporter and EDC in the
proportion in which they shared the Loss, until the aggregate of such amounts
equals the amount of the Loss, after which any further such amounts received,
recovered or realized shall be exclusively for the account of the Exporter; and
any post maturity interest in respect of unrecovered EDC claim payments shall be
for the account of EDC.
Remittance of Recoveries
21. All amounts due to EDC pursuant to Section 20, which have been received,
recovered or realized by the exporter or any person on behalf of the Exporter
other than EDC, shall be forthwith remitted to EDC in the Contract Currency
unless otherwise directed by EDC, and until so remitted such funds shall be held
in trust for EDC.
Recovery Obligations of Exporter
22. On payment of a claim by EDC in respect of a Loss, the Exporter shall take
all steps necessary or expedient to recover the amount of the Loss, and if
requested by EDC, the Exporter shall:
(1) institute legal proceedings against the buyer to recover any amounts
owned to the Exporter in respect of such Loss,
(2) grant and execute in form acceptable to EDC a Power of Attorney in
favour of EDC, enabling EDC to give instructions on behalf of the
Exporter in respect of any legal rights and remedies available to the
Exporter against the buyer to recover any amounts owed to the Exporter
in respect of such Loss, including the institution of legal
proceedings in respect thereof against any person by and in the
Exporter's name, and
(3) transfer and assign to EDC all or any part of the Exporter's right,
title and interest in any amounts owed to the Exporter in respect of
such Loss, or any security in respect thereof, and the Exporter agrees
to give notice of any such assignment only when and as may be directed
in writing by EDC.
Subrogation
23. On payment of a claim by EDC in respect of a Loss, EDC shall be fully
subrogated to the Exporter's recovery rights in respect of the Loss, whether or
not the Exporter has been fully indemnified for such Loss; and EDC may institute
legal proceedings in the Exporter's name against any person for purposes of
exercising any such subrogated right.
GENERAL CONDITIONS
EDC's Access to Information
24. EDC may at any time examine and make copies of all letters, commuications,
accounts or other documents in the possession or control of the Exporter
relating to any matter under this Policy; and in respect thereof the Exporter
shall, at the request of EDC,
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(1) provide EDC with all information in the possession of the Exporter,
and
(2) take all reasonable steps to obtain any information or to obtain the
sight of any document in the possession of a third party.
Contract of Insurance
25. This Policy and any endorsements thereto, and the Application on which it is
based constitutes the entire contract of insurance between EDC and the Exporter;
and except as expressly provided for herein, any verbal statements, undertakings
or agreements between the parties other than what is contained in this Policy
and any endorsements thereto or as contained in the Application, shall not form
part of, or be deemed to be part of, such contract of insurance.
Notice
26. Every notice to be given pursuant to this Policy shall be in writing, which
shall include telex, cable or telegram, and such notice shall be with delivered
by hand mailed or transmitted to EDC or the Exporter, as the case may be, at
their respective addresses; and any such notice shall be effective as to the
matters therein referred to, when received by the Exporter or EDC as the case
may be.
Observance of Policy Conditions
27. The due performance and observance of the Exporter's duties and obligations
as set out in this Policy, shall be a condition precedent to any liability of
EDC for the payment of a claim in respect of a Loss.
Termination
28. EDC shall have the right to terminate this Policy of fifteen days notice to
the Exporter if the Exporter defaults in the due performance or observance of
its duties or obligations as set out in this Policy, unless such default is
cured or remedied by the Exporter within such fifteen day notice period.
Policy not Assignable
29. The Exporter shall not assign this Policy or any right, title or interest
therein, without the prior approval in writing of EDC.
Good Faith
30. Without limiting the operation of any rule of law, this Policy has been
issued on the condition that the Exporter will observe the utmost good faith at
all time; and that, as at the date of issuance hereof, the Exporter has
disclosed to EDC all facts material to the Risks insured, and also that the
Exporter will promptly disclosed to EDC all changes within the knowledge of the
Exporter which are material to any of the Risks insured.
Severability
31. If any provision of this Policy or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Policy and the application of such provision to persons or circumstances
other that those as to which it is held invalid or unenforcable, shall not be
affected thereby and each provision of this Policy shall be separately valid and
enforcable to the fullest extent permitted and this Policy shall be interpreted
as for as possible so as to give effect to its stated purposes.
Interpretation
32. The marginal notes and headings in this Policy have been inserted for
convenience of reference only and do not form part of this Policy, and shall not
be referred to in the interpretation of this Policy; and all references herein
to "Section", "Subsection" and "Paragraph" shall respectively refer to Sections,
Subsections and Paragraphs of this Policy.
DEFINITIONS
33. In this Policy, and any endorsement or schedule hereto, the terms "EDC",
"Exporter" and "Application" have the meaning ascribed to such terms as referred
to in the opening words on page 1 of this Policy, and
(1) "Affiliate" means a person carrying on business,
(a) that is either directly or indirectly controlled by the Exporter
or by a person that also controls the Exporter, or
(b) that either directly or indirectly control the Exporter,
and for purposes of this definition of Affiliate control means de facto control,
(2) "Contract Currency" means the currency in which the Gross Invoice
Value of goods is contractually required to be paid by a buyer to the
Exporter,
(3) "Credit Approval" means a notice given by EDC to the Exporter stating
specific terms and amount of the Credit Limit for a buyer,
(4) "Credit Limit" means the maximum amount of Loss for which EDC claim
payments may be computed in respect of any individual buyer, as
determined in that regard pursuant to Section 11, 12 or 13 as the case
may be,
(5) "Dollars" or "$" means the Currency described in Item 3 of Schedule
"B",
(6) "Due Date" means the date on which an amount payable by a buyer to the
Exporter under an Eligible Contract is due for payment,
(7) "Eligible Contract" means a contract of sale that is not an Excluded
Contact, and which ,
(a) has been entered into by the Exporter with a buyer located in one
of the countries designated in Schedule "B", and
(81)
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(b) complies with any special conditions set out in Schedule "B" for
the country in which the buyer is located, and which provided
that all amounts payable by the buyer to the Exporter shall be
paid,
(i) in Canadian or United States of America dollars, and
(ii) within the maximum terms of payment set out in Schedule "B"
for the country in which the buyer is located,
subject however to the provisions of any Credit Approval issued for
that buyer,
(8) "Excluded Contract" means a contract of sale which EDC has advised the
Exporter in writing is not subject to insurance coverage under this
Policy,
(9) "Gross Invoice Value" means the invoice value of goods together with
the amount of any insurance, freight or other handling costs incurred
by the Exporter on behalf of the buyer at the time the goods were
Shipped, excluding however:
(a) any amount secured by an irrevocable letter of credit prior to or
on the date on which the goods were Shipped,
(b) any amount paid by the buyer to the Exporter prior to or on the
date on which the goods were Shipped, and
(c) any post maturity interest which is computed for a period during
which payment is in default,
(10) "Insolvency Of The Buyer" means those circumstances where the
financial affairs of a buyer have resulted in the reorganization or
winding up of the financial affairs of the buyer under the bankruptcy
or insolvency laws of that buyer's country,
(11) "Loss" means any loss sustained by the Exporter under an Eligible
Contract computed in accordance with Section 16,
(12) "Political Risk" means a Risk described in Subsection 1(4), 1(5),
1(6), or 1(7),
(13) "Risk" means a risk described in Section 1, and
(14) "Shipped" means that goods sold by the Exporter to a foreign buyer
have been palaced in transit from a location with Canada to a delivery
destination outside Canada.
EXPORT DEVELOPMENT CORPORATION
/s/ Signature /s/ Signature
____________________________________ _____________________________
(82)
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[LOGO]
EDC
SEE
Policy No.: GC1-19781
Endorsement No.: 3
Issued: May 26, 1999
CONTINUATION ENDORSEMENT
This Endorsement is attached to and forms part of Export Development
Corporation Global Comprehensive Policy (Shipments) No. GC1-19781, dated June
30, 1998, in the name of Pultronex Corp..
The end date of the period of cover set out in Section 1 of this Policy is
hereby amended by replacing in the fourth line thereof the date of "May 31,
1999" with the date of "May 31, 2001".
The Exporter hereby expressly acknowledges its concurrence and agreement to
extend the insurance Policy which is subject to the changes reflected in the
attached Schedule B. The maximum liability amount or amounts, as the case may
be, set out in Item 2 of the attached Schedule B shall apply to the payment of
all claims made by the Exporter after May 31, 1999, on account of all Losses
suffered under the Policy for the entire period of cover; such amount cancels
and replaces the maximum liability amount or amounts set out in Item 2 of any
other Schedule B issued during the previous period(s) of cover. This
Continuation Endorsement requires your acceptance.
EXPORT DEVELOPMENT PULTRONEX CORP.
CORPORATION
/s/ Signature /s/ Gary Loblick
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(Authorized Signature)
/s/ Signature May 29, 1999
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(Date)
(83)
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