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EXHIBIT 10.11
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 this 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, 1998 and MARCH 31, 2000 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, formulae,
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, 2000.
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 $200,000.
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, 2000.
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 withhold 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 per cent (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
$200,000 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 expenses 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
extracts 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 this 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. INDEMNITY
9.1 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 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 or 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 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 may at any
time incur or suffer as a result of or arising
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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 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 Canada s 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. ACKNOWLEDGMENT
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: xxxxxxxx@xxxxxxxxxxx.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.
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18. TIME OF ESSENCE
18.1 Time is of the essence of this Agreement.
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 9/98 [SIG]
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Date for X.X. Xxxx, Acting Chief
Transportation Energy Technology
CETC / Energy Technology Branch
Department of Natural Resources
HYDROGENICS CORPORATION INCORPORATED
June 02, 1998 [SIG]
---------------------- ---------------------------------------
Date Xxxx Xxxxxx Xxxxxx, Prinicipal and
Director Hydrogenics Corporation
Incorporated
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SCHEDULE A
STATEMENT OF WORK
BACKGROUND:
Air breathing PEM fuel cell designs are attracting increasing research interest
worldwide as a reliable and cost-effective alternative to pressurized,
recirculating fuel cell systems. Earlier work in this field has focused on
sub-kilowatt demonstrators while the fuel cells in the greater than 1 - 10 KW
power range remain unexplored.
Hydrogenics has been among the first to demonstrate a 1KW PEM stack without
forced convection.
OBJECTIVE/PURPOSE:
Design and build a 2KW field deployable prototype generator system based on
low-cost hydrogen PEM fuel cells which would operate:
- without recirculation/pressurization;
- at lower temperatures than 70 degrees C, commonly encountered in higher power
density prototypes;
- integrated with low-power peripherals (minimum number of parasitic
components);
- with integrated control system, including a self-contained Supervisory Control
and Data Acquisition (SCADA), with direct RS-232 downloadable link to a
diagnostic portable computer or remote monitoring station.
DESCRIPTION/SCOPE
By the end of the HyTEF 1998/00 program, Hydrogenics will deliver:
- Design and assembly of a 2KW advanced developmental model (ADM) of an air
breathing PEM system including:
- a fuel cell stack that can operate without pressurization or reactant
recirculation;
- a protective system enclosure;
- a controller, providing self-attended Supervisory Control and Data
Acquisition (SCADA).
- Demonstration of the system coupled to a demonstration appliance or to a
renewable fuel supply.
MILESTONES AND DELIVERABLES
The first year of the project will be devoted to the assembly of the system,
while the second year will be devoted to demonstrating the prototype and to
operational experience. This translates into the following milestones:
1. Sourcing (July 1998)
2. Design and assembly of the stack (November 1998)
3. Design and assembly of the enclosure and integration of the stack with a
controller (June 1999)
4. Testing of assembled system (September 1999)
5. Coupling to a demonstration application or to a renewable fuel source
(January 2000)
6. Final Report (March 2000)
BENEFITS:
This advanced technology development, with world-wide export potential, will
advance the state-of-the-art in the field of strategic importance to Canada in
the 21st century, a field complimentary to the high-pressure, high-KW leadership
already established for Canada by other Canadian fuel cell manufacturers.
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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 $645,000
Contributors: $ %
CANADA* 200,000 31
PROPONENT 432,000 67
VIKING TOOL CO. 13,000 2
*CANADA'S CONTRIBUTION WILL BE $100,000 IN FY 1998/99 AND $100,000 IN FY1999/00.
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, 2000. The Proponent shall make appropriate changes
to the Draft Final Report as required and deliver the Final Report
ON OR BEFORE MAY 30, 2000. All reports shall be to the satisfaction
of the Minister.
1.2 TECHNICAL MEETINGS.
The Proponent shall hold one Technical Review Meeting to discuss the
progress on the Project. The date for this meeting shall be chosen
in consultation with the Minister's representative and it shall be
held on or before January 31, 1998.
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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