04.10.97-acoa Business Development Program

ATLANTIC CANADA OPPORTUNITIES AGENCY Newfoundland Office


Project No.: 620-4032924-1


April 10, 1997


Northstar Technical Inc. P0. Box 13397 St. John's, Newfoundland AlE 4B7


Attention Mr Wilson Russell- President


Dear Sir:


Re: ACOA Business Development Program


In response to your application dated December 3, 1996, the Atlantic Canada Opportunities Agency ("the Agency"), hereby offers to make a repayable contribution to Northstar Technical Inc. ("the Applicant") upon the following Terms and Conditions:


1.00 Contribution


1.01 Subject to all other provisions of this Agreement, the Agency will
make a repayable contribution ("the Contribution") to the applicant to
assist in the execution by the Applicant ofthe project as described
and defined in Annex 1 (Statement of Work) calculated as the
lesser of (a) and (b) as follows:


(a) (1) 50% of eligible capital costs estimated to be $88,200; plus


(2) 50% of working capital requirements estimated to be $197,000;
plus


(3) 75% of the fees to be incurred for the engagement of expertise
estimated to be $60,000; plus


(4) 75% of marketing related activities estimated to be $64,750;
and


(b) $236,163.


2.00


2.Ol Advance Payment
At the discretion of the Agency and at the request of the Applicant,
an advance payment not exceeding 40% of the Contribution, may be
made to the Applicant based on a three (3) month forecast of cash
requirements pertaining to eligible costs to be incurred
in accordance with the Statement of Work Except where the Agency
has given specific permission to the contrary, the Applicant must
demonstrate to the satisfaction of the Agency that the advance was
applied exclusively to the payment of eligible costs within
six (6) months after the date of the disbursement.


Progress Payments:


At the request of the Applicant the Agency may make progress payments
to the Applicant based on claims for eligible costs which have been
incurred. Each claim shall be completed in accordance with instructions
to be provided by the Agency to the Applicant.


JointPayments:


At the discretion of the Agency or at the request of the Applicant,
the Agency may make a payment's Jointly to the Applicant and the
supplier for eligible costs which have been incurred.


Final Payments:


Notwithstanding the foregoing, 10% of the contribution will normally
be reserved for a final payment to be based on a claim submitted by
the Applicant at the time of Project Completion and normally after
all eligible costs have been incurred and paid.


2.02 It is a requirement of this agreement that the Applicant shall
keep the original invoices and proof of payment for all claimed
costs readily available for examination by the Agency during any
payment verification ot audit and until 36 months following the end
of the Control Period.


3.00 Repayment Terms


3.01 The Applicant shall repay the Contribution to the Agency in thirty-six
(36) consecutive monthly instalments of $6,560 each commencing on July 1,
1998 and ending on June 1, 2001 however, the last instalment will
be adjusted to include all sums owing.


3.02 The Applicant shall, at the request of the Agency, on or before each
Anniversary of the Project Completion Date, provide the Agency
with post dated cheques or arrange pre-authorized payments for
any repayments scheduled in the next twelve months.


3.03 The Applicant shall pay interest on overdue repayment instalments at
rate 3% higher than the Bank Rate as determined by the Bank of Canada
for the day the first disbursement on account of the repayable
contribution was made to the Applicant.


3.04 The Applicant may, at any time, make prepayments on account of repayment
instalments and each such prepayment will be applied first to interest
owing and secondly to repayment instalments in reverse order of maturity.


4.00 Conditions


4.01 The Agency shall not contribute to any cost incurred by the Applicant
prior to December 5, 1996.


4.02 As a condition of the Agency's assistance,


(a) The Applicant shall ensure the Project commences on or
before June 1,1997.


(b) The Applicant shall ensure the Project is completed as
described in the Statementof Work on or before June 1,1998.


4.03 The Applicant shall inform the Agency promptly in writing of any
assistance from other federal, provincial or municipal sources
which had been received or is to be received for the Project,
the Agency shall have the right to adjust the amount of the
assistance to take into account the amount of any such further
assistance received.


4.04 The Applicant shall comply with environmental protection measures in
relation to theProject that satisfy the requirements of all regulatory
bodies of appropriate jurisdiction.


4.05 The Applicant shall attain equity, satisfictory to the Agency, in the
total amount of $350,000 on or before the date of the first
disbursement by the Agency to the Applicant.


4.06 Unless otherwise authorized by the Agency in writing, this level of
equity shall be maintained until the end of the control period.


4.07 Prior to the end of the control penod, the Applicant shall not pay any
dividends whatsoever, make payments to a parent Company or any of its
affiliates, nor payoutshareholders loans without the approval of
the Agency.


4.08 The Applicant, on or before the date of disbursement shall
obtain the following financing:


Additional Equity $75,000


5.01 From the date of Project Commencement until the Project Completion date,
the Applicant shall submit, at the request of the Agency, status r
reports on the progress and results of the Project in a form
satisfactory to the Agency.


5.02 The Applicant shall submit to the Agency, within 90 days of the end
of each fiscal year which commences before end of the Control Period,
as defined in the attached general conditions, a copy of its
unaudited financial statements.


6.00 NOTICE


6.01 Any notice or correspondence to the Agency, including the attached
duplicate copy ofthis Agreement signed by the Applicant, shall he
addressed to:


Atlantic Canada Opportunities Agency
P.O Box 1060, Station "C"
Suite 801, Atlantic Place
St. John's, Newfoundland
A1C 5M5


Attention: Ms. Jocelyn Chaytor
Account Manager


or to such address as is designated by the Agency in writing.


7.00 Entire Contract


7.01 This offer, if accepted, including Annex I (Statement of Work),
Sheet for News Release) and Annex 3 (General Conditions) will constitute
the entire agreement between the parties with respect to its
subject matter. No amendments shall be made to the resulting contract
unless confirmed in writing.


This offer is open for acceptance for 60 days from the date that
appears on its race. The date of acceptance shall be the date the
duplicate copy or this offer, unconditionally accepted and duly
executed by the Applicant is recei ...