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EXHIBIT 10.9
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 INCORPORATED, incorporated under
the laws of Canada (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 costs incurred by the Proponent in the
period between OCTOBER 1, 1996 and MARCH 31, 1997 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, 1997.
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 $100,000.
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, 1997.
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 $100,000 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 license 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.
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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 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 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
CETC/Energy Technology Branch
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: XX. XXXXXX HAMMERLI, P.ENG.
SENIOR RESEARCH ADVISOR, HYDROGEN & FUEL
CELLS
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
E-MAIL: XXXXXXXX@XXX.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.
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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 Canada.
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
Oct 17/96 /s/ XXXXXX XXXXX
------------------ ----------------------------------------
Date Xxxxxx Xxxxx, Manager
Transportation Energy Technologies
CETC/Energy Technology Branch
Department of Natural Resources
HYDROGENICS CORPORATION INCORPORATED
Oct 09/96 /s/ XXXX XXXXXX XXXXXX
------------------ ----------------------------------------
Date Xxxx Xxxxxx Xxxxxx, Principal and Director
Hydrogenics Corporation Incorporated
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SCHEDULE A
STATEMENT OF WORK
BACKGROUND:
Power sources are required for stationary and remote locations in Northern
Canada for commmunications' equipment, etc. Current power sources, such as
rechargeable batteries, must be derated because of the cold climate and
they require frequent maintenance, which is expensive in many locations in
this part of Canada.
OBJECTIVE/PURPOSE:
The main objective of this Project is to develop a prototype power
generator, referred to as the Hydrogen ThErmoelectric Fuel Cell (HTEF)
generator, with high reliability and a larger power output. The prototype
will be a hybird system of a thermoelectric and a fuel cell generator with
hydrogen as the common fuel. The prototype device is being
DESCRIPTION/SCOPE:
Task 1. Design a power source suitable for off-grid arctic applications
(using "off-the-shelf components") of at least 50 to 100 xxxxx,
consisting of a thermoelectric generator and fuel cell stack with
hydrogen as the common fuel.
Task 2. Construct a working prototype of the HTEF power source, which will
include the following major components:
a) a fuel cell stack of 12 Volts and having a maximum current
rating of 9 Amperes;
b) a flameless catalytic hydrogen burner capable of sustaining
a temperature of at least +200 degrees C at the surface of
a heat sink;
c) a thermoelectric generator capable of producing electricity
at 12 Volts and 0.5 Amperes from a temperature differential
of at least 150 degrees C;
d) an enclosure protecting the HTEF inner components from
Arctic weather conditions;
e) a suitable stand for the HTEF plus enclosure.
Task 3. Test the Prototype HTEF to at least - 40 degrees C, and make
modifications as necessary.
Task 4. Retest the Prototype HTEF.
BENEFITS:
The Prototype HTEF has no moving parts and uses hydrogen as the fuel.
Therefore, there will be Zero Emissions from this device. Increased
reliability, relative to rechargeble batteries and lower costs are
expected benefits. The system can easily be scaled up in principle,
thereby opening other marketing opportunities in off-grid applications.
Canadian jobs will be created if the Project is successful.
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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 $234,037
CONTRIBUTORS: $ %
CANADA 100,000 43
PROPONENT 115,537 49
VIKING TOOL CO. 6,500 3
HYDROGEN RESEARCH INSTITUTE, UQTR 12,000 5
Eligible Costs:
1. Salaries at competitive rates
2. Materials for the Project
3. Travel expenses provided Treasury Board Guidelines are observed,
i.e., no first class or business class fares, etc.
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 & MEETINGS
1.1 TECHNICAL REPORTS
The Proponent shall prepare Monthly 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, 1997. The Proponent shall make appropriate changes
to the Draft Final Report as required and deliver the Final Report
on or before May 30, 1997. 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, 1997.
1.3 REVENUE REPORTS AND PAYMENTS
The Proponent shall provide to the Minister not later than 30 days
after the end of March and 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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