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EXHIBIT 10.13
DEPARTMENT OF NATURAL RESOURCES
EFFICIENCY AND ALTERNATIVE ENERGY PROGRAM
CONTRIBUTION AGREEMENT
THIS AGREEMENT is made in duplicate
BETWEEN:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA ("Canada"),
represented by the Minister of Natural Resources,
AND:
HYDROGENICS CORPORATION INC., incorporated under the laws in
force in the Province of Ontario,
(the "Proponent").
WHEREAS Canada wishes to encourage the adoption of energy efficiency
and renewable energy technologies in all sectors of the Canadian economy and has
established the Efficiency and Alternative Energy Program for this purpose.
WHEREAS Canada and the Proponent agree that for the Proponent to
develop and implement the Project as described in Schedule A, the Proponent
will require financial assistance from Canada;
AND WHEREAS Canada is willing to provide financial assistance towards
the total Eligible Costs of the Project in the manner and upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, Canada and the Proponent agree as follows:
1. INTERPRETATION
1.1 In this Agreement:
"Agreement" means the Agreement and the attached Schedules A, B and C;
"Completion Date" means the date specified in Article 3.2;
"Eligible Costs" means any cost incurred by the Proponent in the period
between April 1, 1999 and March 31, 2001 in relation to the Project and
which is listed in Schedule B;
"Fiscal Year" means the period beginning on April 1 of any year and
ending on March 31 in the next year.
"Intellectual Property" means any information developed by the Proponent
in performance of the Project including, without limitation, data,
techniques, methods, processes, know-how, inventions, designs, formulas,
photographs, drawings, plans, specifications, reports, studies, technical
and procedural manuals, programs, including computer hardware and software
and source code, whether susceptible to copyright or not, and all patents,
copyrights, trademarks, and industrial designs arising therefrom;
"Minister" means the Minister of Natural Resources and includes any duly
authorized officers or representatives;
"Project" means the Project described in Schedule A;
"Proposal" means a written proposal including at least a background,
purpose, work description, results expected and a budget, which is
accepted by the Minister for a specific Project; and
"Revenue" means all considerations received by the Proponent from any
person or party in respect of the licensing, selling, marketing or
commercialization of the Intellectual Property, less returns actually
credited and any applicable sales taxes.
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2. REPRESENTATIONS AND WARRANTIES
2.1 The Proponent represents and warrants that all factual matters
contained in the Proposal and all material submitted in support
are true and accurate, and that all estimates, forecasts and other related
matters involving judgement were prepared in good faith and to the best
of its ability, skill and judgement.
3. CONDUCT OF PROJECT
3.1 The Proponent shall carry out the Project promptly, diligently and in a
professional manner and in accordance with the terms and conditions of
this Agreement.
3.2 The Proponent shall complete the Project by March 31, 2001.
3.3 The Proponent shall comply with all federal, provincial and municipal
laws in relation to the Project.
4. CONTRIBUTIONS
4.1 Notwithstanding any other provision of this Agreement, Canada's liability
under this Agreement shall not in any circumstances exceed $300,000.
4.2 Subject to the terms and conditions of this Agreement, Canada shall make a
contribution to the Proponent towards the Eligible Costs of the Project in
accordance with Article 5 and Schedule B.
4.3 In order to be eligible to receive a full contribution as described
herein, the Proponent must submit its final claim for payment on or before
April 10, 2001.
4.4 Canada may reduce its contribution by such an amount as the Minister may
decide if the Proponent receives contributions or payments in respect of
the Project covered by this Agreement in addition to, or from sources
other than, those named in its Proposal.
5. METHOD OF PAYMENT
5.1 Subject to Article 5.2 following receipt of a claim, acceptable to the
Minister, for payment of Eligible Costs paid by the Proponent, accompanied
by copies of invoices, vouchers, and any other documents that the Minister
may require, Canada shall pay its contribution towards the Eligible Costs
of the Project.
5.2 Canada shall withold 10% from any payment under Article 5.1 until:
(a) the Project has been completed to the satisfaction of the Minister;
(b) a final report documenting the completion of the Project has been
received and approved by the Minister; and
(c) the Minister has approved a final statement of Eligible Costs paid
in respect of the Project.
5.3 The Proponent shall submit claims for payment at least on a quarterly
basis and not more frequently than on a monthly basis.
6. REPAYMENT OF CONTRIBUTION
6.1 The Proponent shall pay to Canada two percent (2%) of the Revenue
received by the Proponent.
6.2 Notwithstanding any other provision of this Agreement, Article 6.1 shall
remain in effect for a period of 15 years or until Canada has received
$300,000 from any Revenue received by the Proponent, whichever occurs
first.
6.3 The Proponent shall submit Revenue reports and payments to Canada as
described in Schedule C for the period set out in Article 6.2.
6.4 The Proponent agrees that all considerations to be received by the
Proponent in respect of the licensing, selling, marketing or
commercialization of the Intellectual Property shall be established
in a bona fide arm's length transaction between parties.
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7. ACCOUNTS AND AUDIT
7.1 Prior to the Completion Date of the Project and for three years after the
period described in Article 6.2, the Proponent shall;
(a) keep proper books, accounts and records of its Revenue and any
contributions received and expense incurred and paid in connection
with the Project and shall keep its invoices, receipts and vouchers
relating thereto;
(b) keep proper and accurate records relating to the environmental impact
(if any) of the Project; and
(c) on demand, make available to the Minister such books, accounts,
records, invoices, receipts and vouchers referred to above and permit
the Minister to examine and audit and take copies and extract from
such documents.
7.2 If any discrepancy is identified between the amounts paid by Canada
and the amounts actually payable under this Agreement, the
appropriate adjustments shall be promptly made between the parties.
If there has been an overpayment by Canada, the amount of the overpayment
shall constitute a debt due to Canada and may be so recovered.
8. INTELLECTUAL PROPERTY
8.1 Subject to Articles 8.2, 8.3 and 12.1, title to all Intellectual
Property shall be vested in the Proponent.
8.2 The Proponent hereby grants to Canada a non-exclusive, royalty-free
licence in perpetuity to use or sublicense the use of any Intellectual
Property for any purpose, which licence Canada may not exercise until
three years after the Completion Date and then only if in the Minister's
sole opinion the Proponent has failed to take reasonable steps to develop
and market in Canada the products, processes or services to which the
Intellectual Property relates.
8.3 The Proponent shall supply to Canada copies of all reports,
documents and publications arising out of the performance of the
Project; and the right to the copyright in all such reports,
documents and publications shall be vested in Canada which hereby
grants to the Proponent a non-exclusive, royalty-free licence to
copy and publish the material provided that Canada's financial
support is prominently acknowledged in any publication.
8.4 The Proponent shall ensure that any moral rights in the reports,
documents and publications arising out of the performance of the
Project are irrevocably waived in favour of Canada.
8.5 Except with the written consent of the Minister, the Proponent shall
not license the Intellectual Property to any government other than the
Government of Canada or to any person, corporation, partnership or
business for the purpose of manufacturing outside Canada the products or
processes resulting from the Project, and shall place the same
restrictions on any authorized licensee.
8.6 If the Proponent elects not to retain ownership of or use any
Intellectual Property, the Proponent shall notify the Minister of the
election and shall, if the Minister so requires, assign and transfer the
Intellectual Property to Canada, whereupon Canada will grant the
Proponent a non-exclusive, royalty-free licence to use the Intellectual
Property solely for internal purposes, if so requested by the Proponent.
9. INDEMINTY
9.1 The Proponent shall idemnify and save harmless Canada and its Ministers,
officers, employees and agents from and against any and all claims,
damages, loss, costs and expenses which they or any of them may at any
time incur or suffer as a result of or arising out of any injury to
persons (including injuries resulting in death) or loss of or damage to
property which may be alleged to be caused by or suffered as a result of
the carrying out of the Project or any part thereof, except to the extent
caused by a breach of duty of Canada or its Ministers, officers,
employees or agents.
9.2 The Proponent shall idemnify and save harmless Canada and its Ministers,
officers, employees and agents from and against any and all claims,
damages, loss, costs and expenses which they or any of them may at any
time incur or suffer as a result arising out of any claim, demand or
action for the infringement or alleged infringement of any patent,
registered industrial design, copyright or other intangible property
based upon the use thereof by the Proponent or upon the use of the
Intellectual Property by Canada in accordance with the terms of this
Agreement.
9.3 The Proponent shall indemnify and save harmless Canada and its Ministers,
officers, employees and agents from and against any and all claims,
damages, loss, costs and expenses which they or any of them
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may at any time incur or suffer as a result of or arising out
of any claim, demand or action made by a third party against them
or any of them based upon Canadas capacity as a provider of
financial assistance under this Agreement, including without
limitation, any claim in respect of materials or services provided
by a third party to the Proponent or to a subcontractor of the
Proponent.
10. ACCESS
10.1 The Proponent shall ensure that the Minister has access during
normal working hours to any premises or place where the Project is
being carried out for the purposes of inspecting and assessing the
progress of the Project and all matters pertaining thereto.
11. REPORTS
11.1 The Proponent shall submit Project reports satisfactory to the
Minister in accordance with the provisions of Schedule C or as
otherwise requested by the Minister.
12. DEFAULT
12.1 If, in the opinion of the Minister, there has been a
misrepresentation or a breach of warranty under Article 2, or the
Proponent fails to proceed diligently with the Project, or is
otherwise in default in carrying out any of the terms, conditions,
covenants, or obligations of this Agreement, or if the Proponent
becomes bankrupt or insolvent, or has a receiving order made
against it (either under the Bankruptcy and Insolvency Act or
otherwise), or a receiver is appointed, or the Proponent makes an
assignment for the benefit of creditors, or if an Order is made or
a Resolution passed for the winding up of the Proponent, or if the
Proponent takes the benefit of any statute for the time being in
force relating to bankrupt or insolvent debtors, the Minister may,
by giving notice in writing to the Proponent, exercise any or all
of the following remedies:
(a) terminate the whole or any part of this Agreement;
(b) terminate the obligation on the part of Canada to pay any
monies in respect of the Project, including monies due or
accruing due;
(c) direct the Proponent to repay forthwith all or any part of
monies paid by Canada pursuant to this Agreement and that
amount is a debt due to Canada and may be so recovered;
(d) request the Proponent to assign all rights in the
Intellectual Property and the Proponent shall, if so
requested, do so; and
(e) request the Proponent to transfer to Canada title to all or
any of the equipment and supplies purchased by the
Proponent to carry out the Project and funded by Canada
under this Agreement, and the Proponent shall, if so
requested, do so.
12.2 In the event of a termination of this Agreement by the Minister
under Article 12.1, Canada may, in the discretion of the Minister,
pay to the Proponent Canada's share of the Eligible Costs of the
Project completed to the date of termination.
13. SALE OF PROPERTY
13.1 If, prior to the Completion Date of the Project, the Proponent
sells, leases, or otherwise disposes of any property other than
Intellectual Property, where the cost of the property is part of
the Eligible Costs under the Project to which Canada has
contributed under this Agreement, the Proponent shall immediately
notify the Minister in writing of the disposition and, if the
Minister so requires, the Proponent shall share with Canada the
proceeds of the disposition in the same ratio as that of Canada's
contribution to the purchase of the property, except that Canada's
share shall not exceed its contribution under this Agreement.
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14. SUBCONTRACTS AND CANADIAN CONTENT
14.1 Except as provided in the Proposal, the Proponent shall not
subcontract all or any part of the Project funded by Canada unless
the Proponent has obtained the prior written consent of the
Minister. Every subcontract entered into by the Proponent shall
provide that the subcontractor shall comply with the terms and
conditions of this Agreement which are applicable to the
subcontract.
14.2 Canadian goods and services shall be used in carrying out the
Project to the full extent to which they are procurable,
competitive and allow for the expeditious performance of the
Project.
15. ACKNOWLEDGEMENT
15.1 The Proponent will acknowledge the financial support of Canada in
all public information produced as part of the Project.
16. NOTICES
16.1 The claims for payment, requests, notices, and information
referred to in this Agreement shall be sent in writing or by any
method of telecommunication and, unless notice to the contrary is
given, shall be addressed to the party concerned at the following
address:
TO CANADA:
Natural Resources Canada
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: XX. XXXXX XXXXXXXXXX
RESEARCH ADVISOR, HYDROGEN & FUEL CELLS
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
E-MAIL: XXxxxxx@XXXXX.xx.xx
TO THE PROPONENT:
Hydrogenics Corporation
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: XX. XXX XXXXXXXXX
DIRECTOR & VICE-PRESIDENT ENGINEERING
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
E-MAIL: x0_xxxx@xxxxxxx.xxx
16.2 Notices, requests and documents are deemed to have been received,
if sent by registered mail, when the postal receipt is
acknowledged by the other party; by telegram, when transmitted by
the carrier; by telex or facsimile, when transmitted and receipt
is confirmed; and by messenger or specialized courier agency, when
delivered.
17. LEGAL RELATIONSHIP
17.1 Nothing contained in this Agreement shall create the relationship
of principal and agent, employer and employee, partnership or
joint venture between the parties.
17.2 The Proponent shall not make any representation that the Proponent
is an agent of Canada and shall ensure that the members of the
Proponent do not make any representation that could reasonably
lead any member of the public to believe that the Proponent or its
members or contractors are agents of Canada.
18. TIME OF ESSENCE
18.1 Time is of the essence of this Agreement.
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19. MEMBERS OF THE HOUSE OF COMMONS
19.1 No Member of the House of Commons shall be admitted to any share
or part of this Agreement or to any benefit to arise therefrom.
20. CONFLICT OF INTEREST
20.1 It is a term of this Agreement that no individual, for whom the
post-employment provisions of the Conflict of Interest and
Post-Employment Code for Public Office Holders or the Conflict of
Interest and Post-Employment Code for the Public Service apply,
shall derive a direct benefit from this Agreement unless that
individual is in compliance with the applicable post-employment
provisions.
21. FUNDS
21.1 The Proponent shall not make any direct or indirect reference to
this Agreement for the purpose of raising funds without the prior
written approval of the Minister.
22. ASSIGNMENT
22.1 This Agreement shall not be assigned in whole or in part by the
Proponent without the prior written consent of the Minister and
any assignment made without that consent is void and of no effect.
22.2 Where an assignment of this Agreement is made pursuant to Article
22.1, such assignment shall not relieve the Proponent of any
obligation under this Agreement or impose any liability upon
Canada.
23. DISPUTE RESOLUTION
23.1 The parties agree to negotiate all disputes arising from this
Agreement in good faith after receiving written notification of
the existence of a dispute from any party.
23.2 If a dispute arising out of this Agreement cannot be settled
amicably through negotiation, then the parties agree that either
party may submit the dispute to mediation as administered by the
Arbitration and Mediation Institute of Canada Inc. upon written
notice to the other party. The cost of mediation shall be borne
equally by the parties.
24. GOVERNING LAW
24.1 This Agreement shall be interpreted in accordance with the laws in
force in the Province of Ontario.
25. AMENDMENTS
25.1 No amendment of this Agreement nor waiver of any of the terms and
provisions shall be deemed valid unless effected by a written
amendment signed by the parties.
26. ENTIRE AGREEMENT
26.1 This Agreement constitutes the entire Agreement between the
parties with respect to the subject matter of this Agreement and
supersedes all previous negotiations, communications, and other
agreements, whether written or verbal, between the parties.
27. SUCCESSORS AND ASSIGNS
27.1 This Agreement shall enure to the benefit of and be binding on the
parties and their respective representatives, successors and
assigns.
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IN WITNESS WHEREOF this Agreement has been executed on behalf of HER
MAJESTY THE QUEEN IN RIGHT OF CANADA by an officer duly authorized by the
Minister of Natural Resources and on behalf of the PROPONENT, by an officer
duly authorized in that behalf.
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
June 9/99 [SIG]
------------------ ----------------------------------------
Date for X.X. Xxxx, Chief
Transportation Energy Technologies
CETC/Energy Technology Branch
Department of Natural Resources
HYDROGENICS CORPORATION INCORPORATED
June 7/99 /s/ XXXX XXXXXX XXXXXX
------------------ ----------------------------------------
Date Xxxx Xxxxxx Xxxxxx, Principal and Director
Hydrogenics Corporation Incorporated
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SCHEDULE A
STATEMENT OF WORK
BACKGROUND
Although not commercially available, regenerative PEM Fuel Cells / Electrolysers
are increasingly attracting commercial and research interests because of the
weight and size reduction achievable when compared to two segregated systems. A
further cost reduction is expected when mass-produced, automotive grade MEA-s
(Membrane Electrode Assembly) becomes available by 2003, benefiting both the PEM
electrolyser and the fuel cell economics.
OBJECTIVE/PURPOSE:
The objective of this project is to develop a monolithic appliance capable of
acting reversibly as an electrolyser or a fuel cell, using Proton Exchange
Membrane PEM technology.
DESCRIPTION/SCOPE
Milestones and Deliverables
FY 1999/00
1. Design and assembly of a 100W early development model of a monolithic PEM
electrolyser / fuel cell system, including:
- a proof-of-concept fuel cell stack / electrolyser system with
reversible / regenerative capability;
- a microprocessor-based controller, providing self-attended Supervisory
Control and Data Acquisition (SCADA).
FY 2000/01
2. Demonstration of the system in both reversible modes for a total of 25
cycles.
Tasks
Task 1. Design, assemble and test a single-cell for testing / optimization
Task 2. Design a 100W Regenerative PEM fuel cell / electrolyser stack (REFC)
Task 3. Construct a working prototype of the regenerative power source which
will include the following major components:
a) one or two fuel cell stacks delivering a total of 12 volts and
having a maximum current rating sufficient to achieve the power
rating of at least 100W;
b) a self-attending micro-controller for the generator which will:
- monitor the temperature, voltages and supply and delivery
pressure for the system and activate solenoids, relays or
valves accordingly to sustain and optimize operations;
- consume minimal parasitic power from the generator, or
from a battery (or a second stack) when one stack operates
in the electrolyser mode;
- be adaptable through the software changes.
Task 4. Test and demonstrate the REFC Advanced Development Model
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SCHEDULE B
ELIGIBLE COSTS
The Proponent shall be reimbursed for Eligible Costs paid following successful
completion of Project requirements. Canada shall pay an amount equal to the
lesser of the dollar or percentage amount of the Eligible Costs of the Project
as indicated below. Eligible Costs shall be approved in accordance with Treasury
Board Guidelines associated with the execution of the various Tasks as described
in Schedule A. The reimbursable Provincial Sales Tax and the Goods and Services
Tax costs must be net of any tax rebate to which the Proponent is entitled.
TOTAL ELIGIBLE COSTS $680,565
Contributors: $ %
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CANADA* 300,000 44.1
PROPONENT 357,465 52.5
VIKING TOOL CO. 23,100 3.4
*Canada's contribution will be $150,000 in FY 1999/00 and $150,000 in FY
2000/01.
ELIGIBLE COSTS:
1. Salaries at competitive rates.
2. Materials for the project.
3. Travel expenses under the Treasury Board Guidelines.
4. Other expenses related to the Project with the Minister's approval.
NON-ELIGIBLE COSTS:
1) Property Taxes
2) Purchase of Land
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SCHEDULE C
REPORTS
1.1 TECHNICAL REPORTS
The Proponent shall prepare Quarterly Reports on the Tasks listed in
Schedule A. In addition, the Proponent shall prepare a Draft Final Report
of the Project which shall be delivered to Canada on or before April 1,
2001. The Proponent shall make appropriate changes to the Draft Final
Report as required and deliver the Final Report on or before May 30,
2001. All reports shall be to the satisfaction of the Minister.
1.2 TECHNICAL MEETINGS
The Proponent shall hold two Technical Review Meetings to discuss the
progress on the Project. The dates for these meetings shall be chosen in
consultation with the Minister's representative and shall be held on or
before October 31, 1999 and on or before October 31, 2000.
1.3 REVENUE REPORTS AND PAYMENTS
The Proponent shall provide to the Minister not later than 30 days after
the end of September in each calendar year, for the period of the payment
obligation described in Article 6.2 of this Agreement, a complete and
accurate report (including nil reports) of any Revenue received by the
Proponent and shall include any payments due to Canada. The reports
shall:
(a) contain a statement of the Revenue received by the Proponent;
(b) include a computation of any share of the Revenue, if any, due
and payable to Canada; and
(c) be certified as correct by the Treasurer or some other senior
officer of the Proponent.
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