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EXHIBIT 10.17
Industrial Research Assistance Program
Repayable Contribution Agreement
Project No.: 367907
THIS AGREEMENT IS MADE IN DUPLICATE-
BETWEEN: National Research Council Canada
Industrial Research Assistance Program
1101- 000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
(herein called the NRC)
HYDROGENICS CORP.
000 XXXXXX XXXXXX
XXXXXXXXXX, XXXXXXX
X0X 0X0
(herein called the Firm)
1. This Agreement comes into effect on December 01, 1999 and terminates on
December 31, 2010 unless extended in accordance with the Basis of Payment
and Repayment.
2. The NRC agrees to contribute up to a maximum of $475,000 for the
performance of work undertaken by the Firm as described in the attached
Statement of Work (SW) (hereafter referred to as "the Work") and in
accordance with the BASIS OF PAYMENT AND REPAYMENT (BP) and CONDITIONS OF
CONTRIBUTION (CC).
3. The Firm agrees to undertake the Work and understands and accepts all the
CONDITIONS OF CONTRIBUTION.
4. Subject to the CONDITIONS OF CONTRIBUTION (CC), the Firm agrees to pay to
NRC the amounts required to be paid by the Firm under the BASIS OF
PAYMENT AND REPAYMENT (BP) plus any applicable administrative costs and
interest penalties specified therein.
5. This Agreement shall become null and void if not signed and returned to
NRC within thirty (30) days of the signature date of the authorized
officer of the NRC.
NATIONAL RESEARCH COUNCIL CANADA
/s/ XXX X. CREW 30/NOV 99
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Xxx X. Crew Date
Regional Director Ontario
HYDROGENICS CORPORATION
/s/ X. XXXXXX DEC 1/99
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X. Xxxxxx, President Date
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STATEMENT OF WORK SW-1
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PROJECT NO.: 367907
PROJECT TITLE: FUEL CELL AUTOMATED TEST STATION FOR RESIDENTIAL FUEL CELLS
DESCRIPTION OF THE WORK
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ACTIVITY ESTIMATED WORK
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COMPLETION
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Start 2 Dec 99 Milestone
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Beta Conceptual 28 Jan 00 Process & Instrumentation Diagram P&ID, parameterization,
Design - Mechanical design of 3D bulk and clearance/positioning, cabinetry, specifying
components, detailing
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Beta Conceptual 8 Mar 00 Design of electrical wiring diagram, physical wiring diagram,
Design - Electrical terminal box physical layout diagram
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Beta Conceptual 31 Mar 00 Coding main and sub-routines in BridgeVIEW(TM), Man-Machine
Design - Software Interface.
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Beta Satellite Cart 3 Jan 00 Assembly of piping, sensors, actuators, valves, relays, components
Assembly and wiring
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Beta Mainframe Assembly 12 July 00 Assembly of wiring to/from computer and data acquisition
circuitry, mounting of terminal box, umbilical cord bulkheads and
gateways, connectors, UPS
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Beta System Integration 26 July 00 Linking of mainframe to satellite, and of satellite to fuel
cell stack / balance of plant
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Beta Functional Testing 10 Aug 00 Power up, troubleshooting, leak check, continuity check
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Beta Delivery to OPT 15 Sept 00 Milestone
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Beta On-Going 1 Dec 01 Testing under dynamic load conditions, diurnal load cycles,
Testing at OPT seasonal load cycles, co-generation evaluations
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Alpha Assembly 20 Dec 00 Based on Beta model and on initial feedback from OPT testing
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Alpha Design 15 Jan 00 Continuous improvement of the pre-commercial design.
Iterations at
HYDROGENICS
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Alpha On-Going 1 Dec 01 Testing under dynamic load conditions, fuel cell and reformer
Testing at evaluation, and durability/robustness issues.
HYDROGENICS
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Final Report / 3 Oct 01 Photographing, diagramming, charting, screen captures, operating
Documentation protocol
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End of Project 1 Dec 01 Milestone
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STATEMENT OF WORK SW-2
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SUMMARY OF TOTAL COST OF THE WORK
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Salaries $ 612,280
Services and Contracts $ 155,200
Material and Supplies $ 621,500
Consumed Value of Capital Items $ 60,000
Overheads $ 51,000
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Total $ 1,499,980
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Basis of Payment and Repayment BP-1
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PROJECT NO.: 367907
(NOTE: THE GOODS AND SERVICES TAX (GST), HARMONIZED SALES TAX (HST), OR QUEBEC
SALES TAX (QST) WILL NOT NORMALLY BE REIMBURSED BY NRC AND THE FIRM MUST DELETE
ANY GST, HST, OR OST COSTS FROM INVOICES PRIOR TO SUBMISSION TO NRC FOR
PAYMENT. HOWEVER, IF THE FIRM HAS PAID GST, HST, OR QST IN RELATION TO
ALLOWABLE COSTS INCURRED (AS DEFINED BELOW) AND CAN CLEARLY DEMONSTRATE TO
NRC'S SATISFACTION THAT IT IS NOT ENTITLED TO ANY INPUT TAX CREDITS OR OTHER
FORM OF REBATES FOR THESE TAXES, THEN NRC WILL CONSIDER THOSE TAXES PAID AS AN
ALLOWABLE COST. )
1.0 Terms of Payment
1.1 NRC AGREES TO REIMBURSE THE FIRM EIGHTY PERCENT (80%) OF THEIR TOTAL
ALLOWABLE COSTS INCURRED IN THE DIRECT PERFORMANCE OF THE WORK UP TO A
MAXIMUM OF $475,000. ALLOWABLE COSTS UNDER THIS AGREEMENT ARE: SALARIES
(EXCLUDING BENEFITS).
Note: Overhead costs exceeding 65% of the salary costs directly incurred by
the Firm in the performance of the Work will not be considered by NRC
as costs of the Work without its prior written consent.
Note: NRC's maximum contribution will be the lesser of 33% of the total costs
incurred in the performance of the Work or $ 475,000.
1.2 The Firm agrees to invoice NRC, MONTHLY, in arrears for costs incurred
and as specified in clause 1.1 above.
1.3 The Firm agrees to provide NRC the reports on the dates outlined below.
The Firm acknowledges that failure to comply with these requests will
cause the payments of current and subsequent claims to be delayed or
stopped.
a) A summary of the actual total costs incurred in the performance of
the Work from the start of this Agreement and a summary of the
total forecasted expenditures to complete the Work must be
submitted on June 30, 2000, June 30, 2001 and June 30, 2002.
b) Firm's unaudited annual financial statements within one hundred
and twenty (120) days of the Firm's fiscal year end until
repayments commence. The first financial statements must be
submitted on April 1, 2000. Audited revenue or financial
statements should be submitted annually within one hundred and
twenty (120) days of the Firm's fiscal year end, during the
repayment period, and until the end of this agreement. The first
audited revenue or financial statement is due on April 30, 2006.
c) A final technical report is to be submitted on or before November
30, 2002.
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Basis of Payment and Repayment BP-2
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2.0 Sources of Funding for the Work
2.1 The Firm agrees that the following table fairly represents the
anticipated sources of funds for the Work.
This contribution $ 475,000 32%
Other government assistance $ 275,000 18%
Private sector funding $ 749,980 50%
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Total Cost of the Work $1,499,980 100%
2.2 THE FIRM ACKNOWLEDGES THAT SECURING ANY OTHER FURIUING FOR THE WORK IS
ENTIRELY A MATTER BETWEEN IT AND THE OTHER SOURCES OF FUNDS AND THAT
NRC CANNOT GIVE ANY ASSURANCE ABOUT ELIGIBILITY, SUITABILITY, TERMS, OR
AMOUNTS.
3.0 Summary of NRC's Support by Fiscal Year
The following table summarizes the maximum contribution to be made by
NRC in each given NRC fiscal year (April 01 to March 31).
Fiscal Year 1999/2000 (December 01, 1999 to March 31, 2000) -- Up to: $139,700
Fiscal Year 2000/2001 (April 01, 2000 to March 31, 2001) -- Up to: $253,000
Fiscal Year 2001/2002 (April 01, 2001 to March 31, 2002) -- Up to: $ 72,300
Fiscal Year 2002/2003 (April 01, 2002 to November 30, 2002) -- Up to: $ 10,000
Claims for payment, in accordance with clause 1.1, for project costs
incurred in a given fiscal year must be submitted by April 10 of the
following fiscal year. The maximum amount per fiscal year cannot be
exceeded without prior written approval of NRC.
No unclaimed portion of these maximum annual amounts will be added to
subsequent fiscal year limits without the express written consent of
NRC.
4.0 Supporting Documentation
a) The Firm agrees to provide proofs of costs incurred when
requested by NRC.
b) Each claim is to be accompanied by a brief report, in a
manner specified by NRC, of the Work completed during the
claim period.
c) Payment of claims for payment by NRC is contingent upon receipt
of any required reports.
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Basis of Payment and Repayment BP-3
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5.0 Repayment
5.1 Beginning on April 01, 2005 and at the beginning of every QUARTER
thereafter up to and including January 01, 2008 the Firm shall pay to
NRC:
One point three percent (1.3%) of the Firm's gross revenues for the
QUARTER, preceding the repayment. Gross revenues are defined as all
revenues, receipts, monies and other considerations of whatever nature
earned or received by the Firm, whether in cash, or by way of benefit,
advantage, or concession, without deductions of any nature, net of any
returns or discounts actually credited and any sales, excise, ad valorem
or similar taxes paid but without deduction for bad debts or doubtful
accounts, as determined in accordance with generally accepted accounting
principles, applied on a consistent basis.
If by January 01, 2008, the total amount paid to NRC is less than the NRC
contribution to the Firm, the Firm will continue to make payments to NRC
under the same terms until the earlier of the full repayment of the NRC
contribution or ten years after the start of the repayment period. If at
any time during the life of this Agreement the total amount paid to NRC
pursuant to this article equals or exceeds $712,500 [150% of the
contribution amount], the Firm shall cease to have any further obligation
to make payments to NRC pursuant to this article.
5.2 The Firm agrees to provide to NRC a report of gross revenues for the
repayment period defined in 5.1, above. This repayment and report are
due within 60 days from the end of the applicable period.
5.3 The Firm agrees to provide to NRC within one hundred and twenty (120)
days of the end of each Firm fiscal year, an audited report of gross
revenues for that fiscal year, until the end of the contract.
5.4 The Firm agrees that in its revenue reports to NRC, all transactions with
related persons (as that term is defined in the Income Tax Act) will be
reported, treated and valued at the greater of the typical recent price
for sales by the Firm, or by any company related to the Firm, of the
product or service in question to unrelated third parties or of the fair
market value (defined as the highest price obtained for a similar product
in a preceding calendar year).
5.5 The Firm agrees that if it licenses the production and sale of any of its
products or services to a third party, that it will pay to NRC an amount
equal to the amount it would have paid to NRC had it made the sales
itself in the repayment period in question.
5.6 Interest at one percent (1%) per month compounded monthly (annual rate of
12.68%), must be paid on overdue amounts. An amount is overdue if unpaid
30 days after the repayment is due according to article 5.0. NRC may
revise that rate upon 2 months' notice. The Firm shall pay an
administrative charge of $25 for any cheque that is refused payment by
the Firm's bank or financial institutions.
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Basis of Payment and Repayment BP-4
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5.7 The amount paid by the Firm to NRC pursuant to article 5.1 does not
include interest charges or penalties or any other amounts paid or owed
by the Firm to NRC whether related to this Agreement or not.
5.8 Payments must be made by cheque payable to "Receiver General - National
Research Council of Canada" and addressed to:
Finance Branch,
National Research Council,
0000 Xxxxxxxx Xxxx,
Xxxxxx, Xxxxxxx, X0X XX0
6.0 Special Conditions
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CONDITIONS OF CONTRIBUTION
This Agreement is conditional upon the Firm's adherence to all conditions set
out below. A breach of any of the following conditions, or a submission to NRC
of false or misleading information, is grounds for suspension or immediate
termination of NRC's financial assistance for the Work, in addition to any other
action permitted by law. NRC will notify the Firm, in writing, of any such
suspension or termination. Termination of this Agreement due to breach of any of
these conditions by the Firm will render the total amount of all contribution
payments made by NRC to the Firm pursuant to this Agreement immediately due and
payable to the Receiver General -- National Research Council of Canada. Failure
on the part of NRC to act on any breach does not constitute a waiver of NRC's
right to act on that or any other breach of the following conditions.
1. The Firm must undertake the Work. Any significant change proposed in
relation to anything that is written in the Statement of Work or the
Basis of Payment and Repayment requires an amendment to this Agreement
signed by both the Firm and NRC.
2. The Firm must abide by all of the provisions of the Basis of Payment and
Repayment and the Conditions of Contribution of this Agreement. Failure
to do so constitutes a breach of the conditions of this Agreement.
3. The Firm must notify NRC in writing if it seeks or receives financial
assistance for the Work from any level of government, beyond that
indicated in the Basis of Payment and Repayment. In such cases, NRC
reserves the right to reduce the amount of its contribution.
4. The Firm must maintain adequate records and accounts related to its
performance of the Work, in accordance with generally accepted accounting
practices. The Firm must make such records available to authorized
representatives of NRC for inspection, auditing, or copying and must
permit authorized representatives of NRC to have access to the Firm's
facilities and personnel for the purpose of inspection and interviewing.
This clause 4 remains in effect for three years after the end of the
repayment period of this Agreement.
5. The Firm must maintain data relating to the economic and job creation
benefits traceable to this Agreement for its duration and must provide
NRC with such data upon request.
6. The Firm must demonstrate, to the satisfaction of NRC, acceptable
performance of the Work, and the capability of continuing the Work. The
Firm must permit NRC to inspect the facilities used by the Firm in the
performance of the Work, and to discuss the Work with NRC
representatives.
7. The Firm must contribute its agreed portion of the total cost of the
Work. If it is found upon the completion of the Work that the Firm has
not contributed its agreed share of the total cost of the Work, as
mentioned in the Basis of Payment and Repayment, NRC may require the Firm
to repay NRC the overpayment of the of the contribution within 30 days.
The remaining part of the contribution will be repaid to NRC in
accordance with the Basis of Payment and Repayment.
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8. The Firm must make reasonable efforts to protect and exploit the results
arising from the Work supported under this Agreement in a manner
appropriate to the achievement of the economic and job-creation benefits
outlined in the Firm's proposal to NRC and must report to NRC on its
efforts as requested by NRC. If, based on these reports, NRC is of the
opinion that the Firm is not exploiting the results in a manner conducive
to the achievement of the benefits in the Firm's proposal, NRC may
require the Firm to license the technology developed under this Agreement
to a third party of NRC's choosing upon reasonable commercial terms and
conditions, failing which the Firm shall grant NRC a non-exclusive,
perpetual, royalty-free license to use the results and associated
intellectual property in Canada for any purpose, which license shall
include the right to grant sublicenses.
9. The Firm agrees to obtain prior written consent from NRC if, at any time
during the life of this Agreement or within five years after the end of
this Agreement, the Firm intends:
(a) to enter into third party agreements that would limit the Firm's
control of the results derived from the Work,
(b) to do part of the Work outside Canada,
(c) to manufacture using the results of the Work outside Canada,
(d) to license, sell, assign, or otherwise grant any right in or
transfer title to intellectual property arising out of the Work to
any person or organization outside Canada, or to any government
other than the Government of Canada
(e) to undertake any action that would adversely impact its ability to
achieve the economic benefits and benefits to Canada outlined in
its proposal to NRC or that would materially affect its ability to
meet its repayment obligations described in the Basis of Payment
and Repayment.
10. The Firm must indicate in writing, or by a clear label, the
confidentiality of any specific information which it wishes to be treated
as confidential by NRC. Protection from third party access to
confidential business information supplied to NRC is provided by the
federal Access to Information Act.
11. 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. No person will
receive a direct benefit from this contract if that person is subject to,
and not in compliance with, a Conflict of Interest and Post-Employment
Code, either the one for Public Office Holders, for the Public Service,
or for NRC Employees. (NOTE: post-employment rules mainly affect persons
in the NRC "MG" category, the federal public service categories "Senior
Manager" and above, ministerial staff, and Governor in Council
appointees.)
12. The Firm warrants that:
a) it has not, nor has any person on its behalf, offered or promised
to any official or employee of Her Majesty the Queen in right of
Canada any bribe, gift or other inducement for or with the view to
obtaining this Agreement; and
b) it has not employed anyone on its behalf to solicit or secure this
Agreement for a commission, contingency fee or other
consideration.
13. Nothing in this Agreement shall be construed as creating a partnership,
joint venture or agency relationship between NRC and the Firm.
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14. In its performance of the Work, the Firm must maintain adequate
environmental protection measures, including those for biohazardous
materials, to satisfy the requirement of all relevant regulatory bodies.
If the Work directly involves human subjects or animals, the Firm must
meet the conditions set, by one of NRC's Research Ethics Boards or by a
Local Animal Care Committee (ACC) operating in accordance with the IRAP
Terms of Reference for Local ACCs.
15. This Agreement terminates immediately if the Firm ceases operations,
assigns its rights under this Agreement, enters into receivership, or
becomes insolvent or bankrupt. Upon such termination, the total amount of
all payments made by NRC to the Firm under this Agreement become a debt
due to the Receiver General -- National Research Council of Canada.
16. The Firm shall indemnify NRC in respect of any claim against NRC by a
third party resulting directly or indirectly from the Firm's performance
of the Work or use by the Firm or a third party of the results arising
from the Work funded under this Agreement. The Firm shall not take action
against NRC for failure or delay in performance caused by circumstances
beyond NRC's reasonable control or for incorrectness of data supplied,
advice given, or opinions expressed in relation to the Work.
17. Either party may terminate this Agreement for any reason, by giving the
other party at least sixty days' notice in writing. The Firm shall have
no obligation to NRC to perform the Work after notice is given or
received, and NRC shall not reimburse costs incurred subsequent to the
termination date, nor any costs incurred at a rate greater than the
typical rate before the notice was given. Within the termination notice
period given by a party, either party may request the other party to
consider an amendment to the amount and terms of repayment. If within the
termination notice period the parties do not enter into negotiations or
do not agree to an amendment, the amount and manner of repayment
specified in the Agreement will apply. Any termination is without
prejudice to the rights and obligations of the parties that have accrued
before termination.
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