Industry Canada
PROJECT # 731-452522
TECHNOLOGY PARTNERSHIPS CANADA
CONTRIBUTION AGREEMENT
DEVELOPMENT & DEMONSTRATION FOR COMMERCIALIZATION
This Agreement made this 29th day of July 1997
Between: HER MAJESTY THE QUEEN IN RIGHT OF CANADA
as represented by the Minister of Industry (hereinafter referred
to as the "Minister")
AND: DynaMotivc Technologies Corporation, a corporation duly incorporated
under the laws of the province of British Columbia,
(hereinafter referred to as "DynaMotive")
INTRODUCTION
(i) The Minister is charged with certain duties and functions which the
Minister is required to carry out with the public policy objectives of
strengthening the national economy, promoting sustainable development,
increasing the international competitiveness of Canadian industry, goods
and services, and encouraging the fullest and most efficient development
and use of science and technology;
(ii) The Technology Partnerships Canada Program is designed to promote economic
growth and create jobs in Canada, in knowledge-intensive sectors of the
economy, by strategically focussing its funding in results-oriented, near-
market projects that involve activities that xxxxxx innovation, rapid
commercialisation and value-added production.
iii) DynaMotive has requested financial contribution from the Minister under the
Technology Partnerships Canada Program to develop and commercialize the
BioTherm and BioLime processes for the purpose of producing BioOil and
thermal combustion additives, with the specific intent of commercially
exploiting the Project results; and
(iv) It is in this context of expected results that the Minister has agreed to
contribute to the Eligible Costs of the Project.
In consideration of their respective obligations which are set out below, the
parties agree as follows:
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Technologies Partnerships Partenariat technologique Canada
Canada 10th floor, 000 Xxxxxx Xxxxxx, 00xx floor, 000 Xxxxxx
Xxxxxx, XXXXXX, Xxxxxxx X0X 0X0 XXXXXX, Xxxxxxx X0X 0X0
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1.0 The Agreement
1.1 Deadline for Signature
This Agreement must be signed by DynaMotive and received by the Minister on or
before August 15, 1997 failing which it will be null and void.
1.2 Entire Agreement
This Agreement is made pursuant to the Technology Partnership Canada Program,
constitutes the entire agreement between the parties and supersedes all previous
documents, negotiations, arrangements, undertakings and understandings related
to its subject matter.
1.3 Definitions
For the purposes of this Agreement,
(a) "Agreement" means this agreement, including Schedule A ( Statement of Work),
Schedule B (Costing Memorandum), Schedule C (Projected Sales and Royalties) and
Schedule D ( Project Fact Sheet for News Release).
(b) "Contribution" means the funding provided by the Minister under this
Agreement.
(c) "Commencement Date" means April 01, 1997, which is the date by which the
Project must be commenced.
(d) "Commercial Production" means operation of certain Special Purpose Equipment
for purposes of producing Resulting Products on a term supply contract for three
years or longer.
(e)
"Completion Date" means March 31, 2000, which is the date by which the Project
must be completed.
(f) "Effective Date" means April 1, 1997, which is the first day of the period
during which Eligible Costs incurred will be contributed to by the Minister
under this Agreement.
(g) "Eligible Costs" means those costs incurred with respect to the activities
set out in Schedule A (Statement of Work, Appendix B) in accordance with
Schedule B (Costing Memorandum).
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(h) "Fiscal Year" means the federal government fiscal year beginning on April 1
and ending on the following March 31.
(i) "Gross Project Revenues" means all sales, revenues, receipts, monies and
considerations made or received by any person, including DynaMotive, directly or
indirectly attributable to the sale, lease or other transfer of the Resulting
Products, whether received in cash, or by way of benefit, advantage, or
concession, without deduction for doubtful accounts or bad debts. A Resulting
Product will be deemed sold, leased or transferred at the time the transaction
is booked, in accordance with generally accepted accounting principles, applied
on a consistent basis. Transactions with related persons (as that term is
defined in the Income Tax Act) will be deemed made in an amount equal to the
highest price obtained for a similar product in the preceding calendar year.
(j) "Interest Rate" means the Bank Rate, as defined in the Interest And
Administrative Charges Regulations, in effect on the due date plus 3% per annum,
compounded monthly.
(k) "Intellectual Property" means all intellectual property rights in the
Project Technology, including, without limitation, all patents, copyrights,
industrial designs, design patents, trade-marks, and any registrations or
applications for registration of the same.
(1) "Project" means the development and commercialization of the BioTherm and
BioLime processes for the purpose of producing BioOil and coal combustion
additives as more fully described in the Statement of Work (Schedule "A").
(m) "Project Technology" means all technology and technical data conceived,
produced, developed or reduced to practice in carrying out the Project,
including, without limitation, all designs, specifications, data, drawings,
plans, reports, patterns, models, prototypes, practices, inventions, methods,
processes or other information.
(n) "Resulting Products" means
(i) Combustion additives (BioLime (TM) and Noxolene (TM)) produced at any
BioLime plant anywhere in the world and BioOil produced at any BioTherm
plant anywhere in the world for uses other than the production of
BioLime and Noxolene(TM).
(ii) all other commercial applications which incorporate results of the
Project; and
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(iii) all other commercial applications which are made using Project
Technology, Intellectual Property or Special-Purpose Equipment.
(o) "Sharing Ratio" means the percentage set out in paragraph 3.1(a); and
(p) "Special-Purpose Equipment" means equipment (excluding jigs, tools, dies and
fixtures), including ancillary systems, instrumentation, special test equipment,
prototypes and pilot plants to demonstrate the product, service, process or
system to he commercialized, that is purchased, leased, manufactured or
otherwise acquired for the purposes of the Project, the item cost of which
exceeds $250,000 (except for prototypes and pilot plants where no minimum cost
applies).
2.0 The Project
2.1 DynaMotive will carry out the Project in a diligent and professional
manner using qualified personnel.
2.2 Completion of Project
DynaMotive will
(a) commence the Project on or before April 1, 1997; and
(b) complete the Project in accordance with the Statement of Work (Schedule "A")
on or before the Completion Date.
2.3 Material Changes
(a) No material changes will be made to the estimated total cost, scope, nature,
location, financing or timing of any element of the Project or the ownership
control or senior management of DynaMotive, without the prior written consent of
the Minister.
(b) DynaMotive will inform the Minister, in a timely fashion, of any factor or
event that it becomes aware of that may materially affect the outcome of the
Project.
2.4 Disposition of Material Assets
DynaMotive will not, without the prior written consent of the Minister, sell,
transfer or otherwise dispose of, nor cease to use for the purposes of the
Project, nor remove nor relocate nor transfer to a use other than the Project,
any material asset acquired for the Project. the cost of which has been
contributed to by the Minister (except in the ordinary course of business for
replacement, refurbishment or improvement purposes, provided
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that the replacement will be of equal or greater quality than the components
being replaced and will not reduce the effectiveness of the Project).
2.5 Dividend Restriction
DynaMotive will not make any dividend payments or other shareholder
distributions that would prevent it from implementing the Project or that would
prevent it from making the royalty payments required in this Agreement.
3.0 The Contribution
3.1 Sharing, Ratio and Contribution Ceiling
Subject to all the other provisions of this Agreement, the Minister will make a
repayable Contribution to DynaMotive , with respect to the Project, of the
lesser of:
(a) 37 % of the Eligible Costs; and
(b) $8,235,795.
3.2 Annual Contribution Distbursment Limits
Disbursement of the Contribution will not exceed the following amounts in each
of the following Fiscal Years:
1997 - 1998 $ 2,068,261
1998 - 1999 $ 2,411,070
1999 - 2000 $ 3,756,464
and the Minister will have no obligation to pay any amount in any other Fiscal
Years. No portions of these maximum annual amounts can be rolled over to
previous or subsequent Fiscal Years, without the prior written consent of the
Minister, who will consider any such requests on a case-by-case basis.
3.3 Eligible Supported Cost Period
The Minister will not contribute to any Eligible Costs incurred by DynaMotive
prior to the Effective Date nor after the Completion Date.
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3.4 Project Financing and Progress
The Minister will have no obligation to make all or part of the Contribution
unless the Minister remains satisfied with the overall financing of the Project
and the progress of the Project.
3.5 Environmental Protection Measures
The Minister, being satisfied that any potentially adverse environmental effects
that may be caused by the Project are insignificant, will have no obligation to
make all or part of the Contribution unless DynaMotive has incorporated and
utilized environmental protection measures in relation to the Project that
satisfy the requirements of all regulatory bodies having jurisdiction over
DynaMotive or the Project, or both, and certifies to the Minister that it has
done so.
3.6 Annual Environmental Compliance Certification
Any certification required pursuant to subsection 3.5 must be provided together
with the first claim for payment under this Agreement, and subsequent
certifications must be provided annually.
3.7 Set-off Rights of Minister
The Minister may set off against the Contribution, any amounts owed by
DynaMotive to Her Majesty in Right of Canada, including amounts pursuant to any
other agreement for which the Minister is responsible, and agreements under the
Defence Industry Productivity Program.
4.0 Claims for Payment
4.1 Claim Procedures
The Minister will pay the Contribution to DynaMotive in respect of Eligible
Costs Incurred on the basis of itemized claims which will:
(a) be submitted in writing not more frequently than quarterly;
(b) be certified by a senior officer of DynaMotive;
(c) be accompanied by details of all costs being claimed, substantiated by such
documents as may be required by the Minister, and presented in accordance with
the major elements identified in Schedule A (Statement of Work);
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(d) be accompanied by confirmation of any Statement of Work milestones completed
during the claim period; and
(e) include a deduction for any Eligible Costs included in previous claims which
have not been paid.
4.2 Hold-Back Rights
The Minister will have no obligation to pay more than 90% of the Contribution
prior to the date on which the Minister has approved the final claim referred to
in subsection 4.3.
4.3 Final Claim
Within 90 days of the Completion Date, the final claim for payment will be
submitted by DynaMotive, accompanied by:
(a) an itemized statement of all Eligible Costs incurred and paid in performance
of the Project
(b) certification by a senior officer of DynaMotive that the Eligible Costs
referred to in the itemized statement:
(i) have been incurred and paid,
(ii) are related to the activities described in the Statement of Work
(Schedule "A"); and
(iii) are in compliance with the requirements set out Costing Memorandum
(Schedule "B"); and
(c) a final report of the Project in accordance with subsection 7.5.
Upon approval by the Minister of We final claim, the Minister will pay any
outstanding amount of the Contribution.
4.4 Audit Rights
The Minister may require that any claim submitted for payment be certified by
DynaMotive auditor or by an auditor approved by the Minister.
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4.5 Overpayment by Minister
Where for any reason,
(a) DynaMotive is not entitled to the Contribution; or
(b) the Minister determines that the amount of the Contribution disbursed
exceeds the amount to which DynaMotive is entitled,
DynaMotive will repay to the Minister, promptly and no later than 30 days from
notice from the Minister, the amount of the Contribution disbursed or the amount
of the excess, as the case may be, together with interest at the Interest Rate
from the date of the notice to the day of repayment to the Minister in full. Any
such amount is a debt due to Her Majesty in Right of Canada and is recoverable
as such.
5.0 Royalty Payments
5.1 Royalty Rate
DynaMotive will pay to the Minister a royalty of 2% of Gross Project Revenues
and will terminate when cumulative repayments have reached $16,000,000. Payment
will be made annually to the Minister 45 days after the end of the DynaMotive's
fiscal year end, December 31. The first royalty payment will be due February 15,
2003.
5.2 Royalty Base
The royalty in subsection 5.1 is payable on Gross Project Revenues derived from
sales after December 31, 2001, to facilities with a nameplate generating
capacity over 50 MWe and sales after December 31, 2002 to facilities of any
size. Revenues derived from sales of resulting products produced in the pilot
and demonstration facilities are exempt from royalty base while operating in as
a pilot or demonstration facility.
5.3 Royalty Statements and Payments
DynaMotive will provide to the Minister a statement, certified by DynaMotive's
senior financial officer of the Gross Project Revenues generated during the
period beginning on the date specified in subsection 5.2, and ending on the last
day of DynaMotive's fiscal year. The statement and royalty payment will be
provided to the Minister no later than 45 days after the last day of
DynaMotive's fiscal year and annually thereafter.
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5.4 Late Payments
DynaMotive will pay interest calculated and compounded monthly on overdue
royalty payments, at the Interest Rate from the date on which the royalty
payment is due until payment in full. Such interest is payable without notice to
DynaMotive. and in addition to any remedies of the Minister for default by
DynaMotive, as set out in section 12.0 of this Agreement.
6.0 Intellectual Property and Special-Purpose Equipment
6.1 Ownership of Technology
DynaMotive will obtain and retain title to all Intellectual Property and Project
Technology.
6.2 Commitment to Exploitation in Canada
(a) DynaMotive will, within a reasonable time and to the extent that it is
reasonable in accordance with sound business ,judgment
(i) produce the Resulting Products in Canada; and
(ii) promote, distribute and sell the Resulting Products in Canada and
elsewhere;
except in the case of the production of BioLime and BioOil at foreign facilities
owned by DynaMotive.
(b) DynaMotive will perform all value-added engineering, design, and
manufacturing; in Canada, except for construction and certification of
facilities and sourcing of locally available components, as per Appendix "C" of
the Statement of Work.
6.3 Limitation on Transfer of Technology
(a) DynaMotive will not, without the prior written consent of the Minister,
(i) grant any right in or transfer title to the Project Technology,
Intellectual Property, or Special-Purpose Equipment, including the
assignment, sale, licence and lease to any person; or
(ii) make use of the Project Technology, Intellectual Property,
Special-Purpose Equipment or any part thereof.
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for the purpose of producing or manufacturing outside Canada any of the
Resulting Products or any product that is substantially the same as any of the
Resulting Products and is made using Project Technology or Intellectual
Property, except in the case of the production of BioLime and BioOil at foreign
facilities owned by DynaMotive.
(b) Patent Disclosures
Notwithstanding paragraph (a), DynaMotive does not require the consent of the
Minister to make any disclosure of information required by law for the purpose
of obtaining a patent;
(c) Licence for Use Only
Notwithstanding paragraph (a), DynaMotive does not require the consent of the
Minister to licence or sub-licence for use of any of the Project Technology or
Intellectual Property in conjunction with the sale of any of the Resulting
Products;
(d) Compliance by Licensees
DynaMotive will impose the restriction on transfer outlined in paragraph (a) on
a11 licensees, and other transferees of title to or any right to use any of the
Project Technology or Intellectual Property; and
(e) Sub-Contractors and Consultants
DynaMotive will ensure that no sub-contractor or consultant acquires any rights
to the Project Technology, Intellectual Property and Special-Purpose Equipment
without the prior written consent of the Minister.
6.4 Patent Protection
(a) DynaMotive will apply for appropriate patent protection for any inventions
resulting from the Project.
(b) If DynaMotive elects not to apply & appropriate patent protection in respect
of inventions resulting from the Project, DynaMotive will
(i) so advise the Minister forthwith; and
(ii) if so requested by the Minister, assign the invention to Her Majesty the
Queen in Right of Canada, together with all patents, patent applications
and rights to obtain patents therefor.
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6.5 Transfer of Special Purpose Equipment into Production in Canada
If DynaMotive transfers Special Purpose Equipment to commercial production in
Canada. DynaMotive will pay to the Minister, the greater of an amount equal to
that of:
(a) multiplying the proceeds of disposition of the Special-Purpose Equipment by
the Sharing Ratio; and
(b) multiplying the fair market value of the Special-Purpose Equipment, on the
date of the transfer to commercial production by the Sharing Ratio,
but in no event will the amount payable exceed the amount of the Contribution
paid by the Minister under this Agreement. DynaMotive will make such payment by
way of conditional royalty stream as described in section 5.0. In the event that
tile Cumulative royalties are less than the above amount by December 31, 2011,
then DynaMotive will pay the difference to the Minister within 45 days.
6.6 Disposition of Special-Purpose Equipment
If DynaMotive transfers to commercial production outside of Canada, transfers
outside of Canada, sells, leases or otherwise disposes of any Special- Purpose
Equipment, DynaMotive will pay to the Minister the greater of an amount equal to
that of:
(a) multiplying the proceeds of disposition of the Special-Purpose Equipment by
the Sharing Ratio; and
(b) multiplying the fair market value of the Special-Purpose Equipment on the
date of the transfer to commercial production, transfer outside of Canada, sale,
lease or other disposition by the Sharing Ratio,
but in no event will the amount payable exceed the amount of the Contribution
paid by the Minister under this Agreement. DynaMotive will make such payment
within 90 days of transfer to commercial production outside of Canada, transfer
outside of Canada, sale, lease or other disposition of any Special-Purpose
Equipment.
Any repayment made by DynaMotive to the Minister with regards to the disposition
of Special Purpose Equipment will be credited towards the total cumulative
royalty payment cap referred to in Section 5.0.
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7.0 Monitoring and Reporting
7.1 Annual Financial Statements
DynaMotive will provide the Minister with a copy of its audited annual financial
statement within one hundred and twenty (120) days of the end of each of
DynaMotive's fiscal years.
7.2 Access Accounts and Records
DynaMotive will, at its own expense, preserve and make available for audit and
examination by the Minister or his representatives the books, accounts and
records of the Project and of the information necessary to calculate any amount
owing to the Minister under this Agreement. The Minister will have the right to
conduct such additional audits at his expense as he may consider necessary using
the audit staff of tile Minister. tile Audit Services Group of Consulting and
Audit Canada, an independent auditing firm or DynaMotive's external auditors.
Any licence agreement for the production of the Resulting Products between
DynaMotive and a third party will contain similar provisions to permit the
Minister to audit the calculation of royalties payable under this Agreement.
7.3 Access to Project
DynaMotive will provide the representatives of the Minister reasonable access to
DynaMotive's premises to inspect and assess the progress of the Project or any
element thereof and supply promptly on request such data as the Minister may
reasonably require for statistical or project evaluation purposes.
7.4 Access to Third-PArty Information
DynaMotive will, to the extent practicable, assist the Minister with the
implementation of this Agreement and facilitate access by the Minister to from
third parties.
7.5 Project Progress Reports
DynaMotive will provide the Minister with semi-annual progress reports
commencing on September 30, 1997 and ending with the final report within 60 days
following the Completion Date. The reports will include:
(a) a description of the progress in performance of the Statement of Work in
comparison with the milestones contained in the Statement of Work;
(b) sufficient information to enable the Minister to assess the Project's
contribution to jobs and economic growth;
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(c) an update of the Project cost estimates;
(d) an indication of any delay in completing the Project;
(e) an update of the projected market and any changes in the projected sales and
royalties as set out in Schedule "C";
(t) a cumulative list summarizing any acquisition and Current holdings of
Special-Purpose Equipment; and
(g) an indication of any planned transfer to commercial production, transfer
outside of Canada, sale, lease or other disposition of Special-Purpose
Equipment.
7.6 Commercial Exploitation Reports
From April 1, 1997 until the end of the royalty period, DynaMotive will continue
to provide reports to the Minister on an annual basis which will indicate:
(a) whether the Project is achieving its projected commercial and economic
objectives including job creation;
(h) an update of the projected market and any changes in the projected sales and
royalties as set out in Schedule "C"; and
(c) an indication of any completed or planned transfer to commercial production,
transfer outside of Canada, sale, lease or other disposition of Special-Purpose
Equipment.
8.0 Special Conditions, Sourcing of Major Plant Componentry
8.1 The nature of the technology being developed and the business contemplated
by DynaMotive makes commercial exploitation of the technology outside of Canada
a necessity. DynaMotive shall perform all value-added engineering, design, and
manufacturing in Canada, except for construction and certification of foreign
facilities and sourcing of locally available components, as per appendix "C" of
the Statement of Work.
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9.0 Representations, Warranties and Undertakings
9.1 Power and Authority of Recipient
DynaMotive represents and warrants that it is duly incorporated and validly
existing and in good standing under the laws of Canada and has the power and
authority to carry on its business, to hold property and to enter into this
Agreement and undertakes to take all necessary action to maintain itself in good
standing and to preserve its legal capacity.
9.2 Authorized Signatories
DynaMotive represents and warrants that the signatories to this Agreement have
been duly authorized to execute and deliver this Agreement on its behalf.
9.3 Binding Obligations
DynaMotive represents and warrants that the execution, delivery and performance
of this Agreement have been duly and validly authorized and that when executed
and delivered, this Agreement will constitute a legal, valid and binding
obligation of DynaMotive enforceable in accordance with its terms.
9.4 No Pending Suits or Actions
DynaMotive warrants that it is under no obligation or prohibition, nor is it
subject to or threatened by any actions, suits or proceedings which could or
would prevent compliance with the Agreement, and will advise the Minister
forthwith of any such occurrence during the term of this Agreement;
9.5 No Gifts or Inducements
DynaMotive represents and warrants that it has not, nor has any person offered
or promised to any official or employee of Her Majesty the Queen in Right of
Canada, for or with a view to obtaining this Agreement, any bribe, gift or other
inducement, and it has not nor has any person on its behalf employed any person
to solicit this Agreement for a commission, fee or any other consideration.
9.6 Compliance with Environmental Protection Requirements
DynaMotive warrants and undertakes that it will maintain environmental
protection measures in relation to the Project that satisfy the requirements of
all regulatory bodies having jurisdiction over DynaMotive or the Project and
certify to the Minister annually its compliance with such requirements.
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9.7 Incrementality of Contribution
DynaMotive represents and warrants that the Project would not be undertaken
without the financial assistance of the Minister under this Agreement.
10.0 Other Government Assistance
10.1 Disclosure
DynaMotive hereby acknowledges that for the purposes of this Agreement, except
for scientific research and experimental development tax credits, no other
federal, provincial or municipal government assistance has been requested or
received by DynaMotive for the Eligible Costs of this Project.
10.2 Continuing Disclosure Obligation
DynaMotive will inform the Minister promptly in writing of any other federal,
provincial or municipal government assistance (except for scientific research
and experimental development tax credits) to be received for Eligible Costs of
the Project and the Minister will have the right to reduce the Contribution
under this Agreement to the extent of any such assistance.
11.0 Dispute Resolution
11.1 Optional Mediation or Arbitration
If a dispute arises concerning the application or interpretation of this
Agreement, the parties will attempt to resolve the matter through good faith
negotiation. and may, if necessary and the parties consent in writing, resolve
the matter through mediation by a mutually acceptable mediator or arbitration in
accordance with the Commercial Arbitration Code set out in the schedule to the
Commercial Arbitration Act (Canada), and all regulations made pursuant to that
Act.
12.0 Default and Recovery
12.1 Events of default
The Minister may declare an event of default has occurred if:
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(a) DynaMotive becomes insolvent or is adjudged or declared bankrupt or if it
goes into receivership or takes the benefit of any statute from time to time in
force relating to bankrupt or insolvent debtors;
(b) an order is made which is not being contested or appealed by DynaMotive or a
resolution is passed for the winding-up of DynaMotive or it is dissolved;
(c) DynaMotive has intentionally submitted false or misleading information to
the Minister or made a false or misleading representation;
(d) in the opinion of the Minister, acting, reasonably, a material adverse
change in risk the Project has occurred;
(e) any term, condition or undertaking in this Agreement is not complied with in
any material respect; or
(f) DynaMotive neglects or fails to pay to the Minister any amount in accordance
with this Agreement;
provided that the Minister will not declare an event of default has occurred by
reason of paragraphs (c), (e) or (f) unless the Minister has given notice to
DynaMotive of the condition or event which in the Minister's opinion constitutes
an event of default and DynaMotive has failed, within 30 days of receipt of the
notice, to demonstrate to the satisfaction of the Minister that it has either
corrected the condition or event complained of or demonstrated that it has taken
such steps as are necessary to correct the condition or event and so notified
the Minister.
12.2 Remedies on Default
If the Minister declares that an event of default has occurred, the Minister may
exercise one or more of the following remedies:
(a) suspend any obligation of the Minister to contribute or continue to
contribute to the Eligible Costs of the Project including any obligation to pay
any amount owing prior to the date of such suspension;
(b) terminate any obligation of the Minister to contribute or continue to
contribute to the Eligible Costs of the Project, including any obligation to pay
any amount owing prior to the date of such termination;
(c) require DynaMotive to repay to the Minister all or part of the Contribution
which has been paid by the Minister to DynaMotive, together with interest from
the date of demand at the Interest Rate;
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(d) require DynaMotive to pay to the Minister all or part of the royalties and
other amounts due under this Agreement;
(e) if an event of default has occurred in relation to paragraph 12.1 (a) or
(b), or as a result of the failure of DynaMotive to comply with the provisions
of article 5.0 or subsections 6.1, 6.2 or 6.3, direct DynaMotive, and DynaMotive
will immediately comply, to transfer and deliver to the Minister, at no cost to
the Minister, title to, possession of, and all rights of DynaMotive in the
Intellectual Property; and
(f) direct DynaMotive and DynaMotive will immediately comply. to transfer and
deliver to the Minister, at no cost to the Minister, title to, possession of and
all rights of DynaMotive in the Special-Purpose Equipment.
12.3 Remedies Cumulative
The Minister may exercise any or all of the remedies set out in subsection 12.2.
provided that in exercising any remedy in accordance with paragraph 12,2(c) or
(d), in respect of any default other than a breach of paragraph 12.1(f), the
Minister will credit DynaMotive for any royalties paid to the Minister Cinder
this Agreement.
12.4 No Waiver
The fact that the Minister refrains from exercising a remedy he is entitled to
exercise Under this Agreement will not constitute a waiver of such right and any
partial exercise of a right will not prevent the Minister in any way from later
exercising any other right or remedy under this Agreement or other applicable
law.
12.5 Remedies Fair and Reasonable
DynaMotive acknowledges that in view of the public policy objectives served by
the Minister's agreement to make the Contribution, the fact that the
Contribution comes from public monies, and that the amount of damages or loss
sustained by the Crown in the event of default is difficult to ascertain, that
it is fair and reasonable that the Minister be entitled to exercise any or all
of the remedies provided for in this Agreement and to do so in the manner
provided for in this Agreement if an event of default occurs.
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13.0 Announcements
13.1 Consent to Public Announcement
DynaMotive hereby consents to a public announcement by or on behalf of the
Minister containing any of the information in the documents attached hereto as
Schedule D (Project Fact Sheet for News Release).
13.2 Confidentiality Obligation
The Minister will inform DynaMotive of the date on which the public announcement
is to he made and DynaMotive will not disclose the existence of this Agreement
until such date.
14.0 Notice
l4.1 Form and Timing of Notice
Any notice, information or document provided for under this Agreement, shall be
effectively given if delivered or sent by letter or facsimile, postage or other
charges prepaid. Any notice that is delivered shall have been received on
delivery; any notice sent by facsimile shall be deemed to have been received one
working day after having been sent,and any notice mailed shall be deemed to have
been received eight (8) calendar days after being mailed.
14.2 Change of address
DynaMotive or the Minister may change the address which they have Stipulated in
this Agreement by notifying the other of the new address.
14.3 Addresses
Any notice to the Minister will be addressed to:
Director of Environmental Technologies
Technology Partnerships Canada
10th Floor, Journal Tower North
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X OC8
Fax No: (000) 000-0000
Any notice to DynaMotive will be addressed to:
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Xxx Xxxx, Xxxxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx X.X. X0X 0X0
Fax No: 000-000-0000
15.0 Term of Agreement
15.1 This agreement will terminate the later of:
(a) Payment to the Minister by DynaMotive of all amounts due pursuant to this
Agreement; or
(b) December 31, 2011.
16.0 General Conditions
l6.1 Compliance with Laws
DynaMotive will comply with all federal, provincial and municipal laws governing
DynaMotive or the Project, including hut not limited to statutes, regulations,
by-laws and ordinances.
16.2 Members of the House of Commons and the Senate
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 who is a member of the
Senate shall, directly or indirectly, be a party to or be concerned in this
Agreement.
16.3 Annual Appropriations
Any payment by the Minister under this Agreement Agreement is subject to there
being all appropriation for the fiscal year in which the payment is to be made.
16.4 Confidentiality
Subject to Section 13.0 and to applicable laws, including including the Access
to Information Act shall keep confidential and shall not disclose the contents
of this Agreement nor the transactions contemplated hereby without the consent
of all parties.
16.5 No Assignment of Agreement
-20-
Neither this Agreement, nor any part thereof nor any amount thereunder shall be
assigned by DynaMotive without the prior written consent of the Minister.
16.6 Compliance with Post-Employment Provisions
DynaMotive confirms 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, will derive a direct
benefit from this Agreement unless that individual is in compliance with the
applicable post-employment provisions.
16.7 No Partnership Created
The parties declare that nothing in this Agreement shall be construed as
creating a partnership, joint venture or agency relationship between the
Minister and DynaMotive.
16.8 Binding Agreement
This Agreement is binding on the parties and their successors and permitted
assigns.
16.9 Severability
Any provision of this Agreement prohibited by law or otherwise ineffective will
be ineffective only to the extent of such prohibition or ineffectiveness and
will be severable without invalidating or otherwise affecting the remaining
provisions of the Agreement.
16.10 Signature in Counterparts
This Agreement may be signed in counterparts, each of which when taken together,
will constitute an original Agreement.
-21-
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.
HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
as represented by the Minister of Industry
Per:/s/
-----------------------------------------
Technology Partnerships Canada 31/7/97
DYNAMOTIVE TECHNOLOGIES CORPOATION
Per:/s/
-----------------------------------------
Title: President & CEO
-----------------------------------------
-23-
2. KEY ACTIVITIES
To commercialize the BioLime technology, DynaMotive must accomplish the
following:
A. Scale up of Production and Expand Scope of Waste Feedstock:
The primary focus will be on scaling up the BioTherm pyrolysis process to a one
tonne per hour pilot plant (current bench-scale process is 10 kg/hour) and to
diversify the process to make bio-oil from various organic feedstock such as
forest waste, agricultural waste, sewage sludge, and municipal solid waste.
The company expects to commission and performance performance test the pilot
plant by December 1998.
B. BioLime Application Trials:
The general objective for these trials is to identify the boiler type(s) which
can best apply BioLime and to verify the economics of the technology. Each trial
will examine suitable locations and methods of BioLime injection, conduct
performance evaluations and investigate any long term impact on the boilers.
This activity will take place concurrently with the above task and will conclude
in March 1999.
C. Commercial Demonstration of BioLime:
Regulated utilities are reluctant to incorporate process technology which has
not been tested and proven on a commercial scale. DynaMotive intends to Sponsor
the Construction and operation of BioLime/BioTherm demonstration plants to
support up to a 50 MW class coal combustor.
This activity will start in July 1998 and conclude in March 2000. Major
milestone include the commissioning of the demonstration BioTherm plant in
November 1999 and the commissioning of the demonstration BioLime plant December
1999.
A timeline highlighting major activities, tasks, and milestones in attached in
Appendix A.
3. COST BREAKDOWN
The attached cost breakdown details project costs supported by TPC. (Appendix B)
4. LIST OF ANY SPECIAL PURPOSE EQUIPMENT
The attached component list summarizes expected equipment costs in all stages of
the project and includes a list potential Canadian suppliers for individual
items where appropriate. (Appendix C)
-24-
IMAGE OMITTED
-25-
IMAGE OMITTED
-26-
Appendix B: Cost Breakdown 1997/98
---------------------------------------------------------------------------------------------------------------------------------
eligibility cat. Apr 97 May 97 Jun 97 Jul 97 Aug 97 Sep 97 Oct 97 Nov 97 Dec 97 Jan 98 Feb 98 Mar 98
---------------------------------------------------------------------------------------------------------------------------------
Revenue - BioLime Sales 0 0 0 0 0 0 0 0 0 0 0 0
Cost of Goods Sold 0 0 0 0 0 0 0 0 0 0 0 0
Net Loss (profit) 2 0 0 0 0 0 0 0 0 0 0 0 0
Labour Costs 1 16,244 16,310 16,376 27,390 33,743 39,221 64,897 65,162 97,802 73,532 73,832 81,038
Operating/Subcontracts 1 28,115 28,161 28,208 53,828 43,784 57,760 182,730 183,032 183,335 44,147 44,220 50,700
Employee Benefits (@20%) 1 6,211 6,224 6,237 8,440 9,711 10,806 15,942 15,995 22,523 17,669 17,729 19,170
Marketing Personnel 1 14,811 14,811 14,811 14,811 14,811 14,811 14,811 14,811 14,811 14,811 14,811 14,811
Admin. Captial Exp. 1 0 0 51,171 0 6,170 8,171 17,577 0 21,983 22,086 0 2,558
Special Purpose Equipment 1 24,159 24,199 24,239 24,279 0 0 333,436 333,986 710,994 712,168 713,344 423,039
Patent Expenditures 1 0 0 0 38,947 0 0 0 0 39,270 0 0 0
Changes in Stocks 1 0 0 0 0 0 0 0 0 0 0 0 0
Materials 1 3,116 3,122 3,127 7,566 5,552 100,113 5,571 5,580 5,589 5,598 5,608 5,617
Travel/Other 1 1,103 1,105 1,107 2,156 2,159 2,163 5,880 5,890 5,900 2,177 2,181 2,184
Indirect Overheads 2 29,175 29,237 29,300 39,647 45,615 50,761 74,884 75,132 105,797 82,996 83,278 90,047
Mktg. Travel & Promotion 2 4,007 4,013 4,020 10,693 17,366 4,040 10,713 17,386 4,060 10,733 17,407 4,080
Communications 2 590 591 592 634 667 696 814 816 967 863 865 899
Lease & Occupancy Charges 2 2,098 2,098 8,431 12,351 11,291 10,507 11,282 11,282 12,055 9,294 9,294 9,770
Amortization Pilot Plant 2 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642
Royalties 2 0 0 0 0 10,000 0 0 0 0 0 0 0
Eligible 1 93,759 93,932 145,276 177,418 115,931 233,045 640,843 624,455 1,102,206 892,188 871,724 599,116
Ineligible 2 55,511 55,581 61,984 82,967 105,211 85,647 117,336 124,259 142,521 123,529 130,485 124,439
----------------------------------------------------------------------------------------------------------------------------------
Total Costs 149,270 149,513 207,260 260,385 221,142 318,692 758,179 748,714 1,244,727 1,015,717 1,002,209 723,555
----------------------------------------------------------------------------------------------------------------------------------
TPC Supported (cat 1. @37%) 34,691 34,755 53,752 65,645 42,894 86,227 237,112 231,049 407,816 330,110 322,538 221,673
----------------------------------------------------------------------------------------------------------------------------------
TPC Contribution Rate 37% FY'97 Eligible 5,589,893
Totals Ineligible 1,209,470
TPC Support 2,068,261
Appendix B: Cost Breakdown 1998/99
---------------------------------------------------------------------------------------------------------------------------------
eligibility cat. Apr 98 May 98 Jun 98 Jul 98 Aug 98 Sep 98 Oct 98 Nov 98 Dec 98 Jan 99 Feb 99 Mar 99
---------------------------------------------------------------------------------------------------------------------------------
Revenue - BioLime Sales 0 0 0 0 0 0 0 0 31,491 31,543 31,595 31,648
Cost of Goods Sold 0 0 0 0 0 0 0 0 37,423 37,488 37,554 37,620
Net Loss (profit) 2 0 0 0 0 0 0 0 0 5,931 5,945 5,959 5,973
Labour Costs 1 81,368 81,700 92,412 92,788 93,166 59,964 60,208 86,551 65,508 88,386 95,843 95,913
Operating/Subcontracts 1 50,783 63,723 157,906 158,166 158,428 145,749 145,989 357,436 228,837 229,215 229,593 369,465
Employee Benefits (@20%) 1 19,989 19,920 22,065 22,142 23,127 16,336 17,260 22,424 20,153 26,190 27,579 27,606
Marketing Personnel 1 18,576 17,898 17,911 17,924 22,466 21,715 26,091 25,568 25,611 32,900 32,366 32,411
Admin. Captial Exp. 1 2,594 0 0 0 5,861 0 2,132 0 0 8,681 0 0
Special Purpose Equipment 1 423,738 44,863 44,937 45,011 45,085 45,160 45,234 426,857 0 0 0 542,856
Patent Expenditures 1 0 0 0 75,841 0 0 0 0 76,469 0 0 0
Changes in Stocks 1 0 0 0 0 0 0 0 226,703 2,778 0 0 0
Materials 1 5,626 13,349 41,594 41,663 41,732 34,036 34,092 48,134 52,062 52,148 52,234 52,320
Travel/Other 1 2,188 2,192 7,840 7,853 7,866 7,879 7,892 13,596 16,469 16,496 23,498 23,525
Indirect Overheads 2 93,895 93,570 103,645 104,011 108,634 76,735 81,076 105,332 94,668 123,026 129,549 129,676
Mktg. Travel & Promotion 2 6,130 6,140 6,150 14,330 19,085 5,494 7,567 7,579 7,592 15,787 22,602 9,017
Communications 2 1,161 1,163 1,207 1,209 857 729 944 1,043 1,005 1,198 1,228 1,230
Lease Occupancy Charges 2 15,090 15,090 16,167 16,167 16,323 13,038 13,211 15,672 14,675 13,317 13,939 13,939
Amortization Pilot Plant 2 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642
Royalties 2 0 0 0 0 10,000 0 0 0 0 0 0 0
Eligible 1 604,862 243,643 384,663 451,388 397,730 330,838 338,899 338,899 487,888 454,015 461,114 1,144,097
Ineligible 2 135,918 135,605 146,812 155,359 174,541 115,638 122,440 122,440 142,521 178,915 192,919 179,476
---------------------------------------------------------------------------------------------------------------------------------
Total Costs 740,781 379,249 531,475 616,747 572,271 446,476 461,339 1,356,536 631,400 632,930 654,033 1,323,574
---------------------------------------------------------------------------------------------------------------------------------
TPC Supported (cat 1. @37%) 223,779 90,148 142,325 170,714 147,160 122,410 125,393 446,689 180,519 167,986 170,612 423,316
---------------------------------------------------------------------------------------------------------------------------------
TPC Contribution Rate 37% FY'98 Eligible 6,516,405
Totals Ineligible 1,830,404
TPC Support 2,411,070
Appendix B: Cost Breakdown 1999/2000
---------------------------------------------------------------------------------------------------------------------------------
eligibility cat. Apr 99 May 99 Jun 99 Jul 99 Aug 99 Sep 99 Oct 99 Nov 99 Dec 99 Jan 2000 Feb 2000 Mar 2000
---------------------------------------------------------------------------------------------------------------------------------
Revenue - BioLime Sales 31,700 31,752 31,805 31,857 31,910 31,962 32,015 32,068 32,121 32,174 32,227 32,281
Cost of Goods Sold 37,686 37,752 37,819 37,885 37,952 38,018 38,085 38,152 38,219 38,286 38,354 38,421
Net Loss (profit) 2 5,986 6,000 6,014 6,028 6,042 6,056 6,070 6,084 6,098 6,112 6,126 6,141
Labour Costs 1 69,600 38,246 38,252 8,065 25,406 12,895 71,671 5,511 56,918 2,971 2,977 2,983
Operating/Subcontracts 1 154,038 433,048 154,086 433,096 14,642 154,159 14,690 14,715 14,739 14,763 14,788 14,812
Employee Benefits (@20%) 1 23,129 16,735 16,747 10,719 14,197 11,705 23,470 11,126 21,325 10,548 10,561 10,573
Marketing Personnel 1 36,317 35,685 35,714 35,743 35,773 35,802 35,832 40,252 39,822 39,859 39,897 39,935
Admin. Captial Exp. 1 2,488 0 0 0 2,168 2,682 6,092 21,128 35,523 0 0 1,462
Special Purpose Equipment 1 542,856 1,864,841 779,129 2,337,388 236,273 1,251,676 0 236,273 0 0 0 0
Patent Expenditures 1 0 0 0 110,511 0 0 0 0 111,427 0 0 0
Changes in Stocks 1 0 0 0 0 0 0 57,342 0 68,156 0 0 0
Materials 1 0 0 0 0 0 0 0 0 0 0 0 0
Travel/Other 1 17,035 24,009 20,120 12,744 9,658 1,543 1,543 0 0 0 0 0
Indirect Overheads 2 108,645 78,613 78,665 50,351 66,689 54,982 110,247 52,264 100,174 49,546 49,607 49,668
Mktg. Travel & Promotion 2 11,116 11,134 11,153 18,803 25,756 11,909 12,630 15,462 15,488 22,446 29,405 15,564
Communications 2 1,464 1,351 1,353 1,244 1,310 1,266 1,297 1,564 1,635 1,632 1,635 1,637
Lease & Occupancy Charges 2 19,673 17,016 17,016 14,490 15,931 14,883 15,538 16,767 18,046 17,910 17,910 17,910
Amortization Pilot Plant 2 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642 19,642
Royalties 2 0 0 0 0 10,000 0 0 0 0 0 0 0
Eligible 1 845,464 2,412,565 1,044,049 2,948,266 338,117 1,470,461 210,640 329,005 347,910 68,141 68,222 69,766
Ineligible 2 166,526 133,756 133,843 110,558 145,369 108,738 165,424 111,783 161,083 117,289 124,325 110,562
----------------------------------------------------------------------------------------------------------------------------------
Total Costs 1,011,990 2,546,321 1,177,891 3,058,824 483,487 1,579,198 376,064 440,789 508,992 185,430 192,547 180,328
----------------------------------------------------------------------------------------------------------------------------------
TPC Supported (cat 1. @37%)312,822 892,649 386,298 1,090,858 125,103 544,071 77,937 121,732 128,727 25,212 25,242 25,813
----------------------------------------------------------------------------------------------------------------------------------
TPC Contribution Rate 37% FY'99 Eligible 10,152,606
Totals Ineligible 1,589,255
TPC Support 3,756,464
-29-
STATEMENT OF WORK - APPENDIX C
EQUIPMENT LIST
Pilot-scale Facility : 1 ton per hour.
Item Estimated Cost Potential Canadian Suppliers
Feedstock Receiving and supply
Wheeled Loader 5000
Conveyors 60000
Screen 15000 Megatech, Xxxxx Mfg,
Material Storage Bins 500000 Salton
Dryer 200000
Hoppers, feed bins 40000 Salton
Reclaimers included with bins Salton
Cyclones 10000 Industra, Meltech
Airlock Feeders 28000 Megatech
Biotherm Plant
Gas Fired Burners 70000 Wardstrom Gas
Heat Exchangers 100000 Inproheat, Enermax Fabricators
Hot Gas Mixer 4000 Megatech, Xxxxx Mfg.
Pyrolyzer 150000 Megatech, Xxxxx Mfg.
Cyclones 7000 Industra, Meltech
Pumps 22000 Xxxxxxx Xxxxxx, Viking
Instruments and Controls 100000 Miltronics
Motors 0 Lesson
Quench condenser 80000 Megatech, Xxxxx Mfg.
Electrostatic Precipitator 120000 Industra
Tanks 20000 Industra, Meltech
Fans and Blowers 60000 Xxxxxxx Electric
Duct Incinerator 30000 Wardstrom Gas
Electrical 50000
Piping and Valves 100000
BioLime Process
BioLime Generator and Tanks 250000 Megatech, Xxxxx Mfg.
Air Compressor 7000
Instruments and controls 90000 Miltronics
Piping and Valves 100000
Pumps and Mixers 150000
Electrical 50000
Cooling Towers 35000
Electrical 75000
Civil/ Structural 40000
Note: Items left blank under "Potential Canadian Suppliers" indicate that these
items are subject to local availability.
-30-
Commercial Demonstration Facilities - 50MW equivalent
Item Estimated Cost Potential Canadian Suppliers
Feedstock Receiving and supply
Wheeled Loader 13195
Conveyors 158341
Screen 39585 Megatech, Xxxxx MI.
Material Storage Bins 1319508 Salton
Dryer 527803
Hoppers, feed bins 105581 Salton
Reclaimers Salton
Cyclones 26390 Industra, Meltech
Airlock heelers 73892 Megatech
Biotherm Plant
Gas Fired Burners 184731 Wardstrom Gas
Heat Exchangers 253902 lnproheat, Enermax Fabricators
Hot Gas Mixer 10556 Megatech, Xxxxx Mfg.
Pyrolyzer 395652 Megatech, Xxxxx Mfg.
Cyclones 18473 Industra, Meltech
Pumps 58058 Xxxxxxx Xxxxxx, Viking
Instruments and Controls 263902 Miltronics
Motors Lesson
Quench condenser 211121 Megatech, Xxxxx Mfg.
Electrostatic Precipitator 316682 Industra
Tanks 52780 Industra, Meltech
Fans and Blowers 156341 Xxxxxxx Electric
Duct Incinerator 79170 Wardstrom Gas
Electrical 131951
Piping and Valves 263902
BioLime Process
BioLime Generator and Tanks 659754 Megatech (If located in Canada)
Air Compressor 18473
Instruments and controls 237511 Miltronics
Piping and Valves 263902
Pumps and Mixers 395852
Electrical 131951
Cooling Towers 92386
Electrical 197926
Civil/ Structural 106551
Note: Items left blank under "Potential Canadian Suppliers" indicate that these
items are subject to local availability.
-31-
COSTING MEMORANDUM
Schedule "B"
PREFACE
(a) This Costing Memorandum is intended to support the determination of Eligible
Costs and is not intended to replace or modify the elements of the Statement of
Work or any cost breakdown included therein.
(b) In the case of any conflict of interpretation arising out of this Costing
Memorandum and the Statement of Work, the contents of the Statement of Work will
prevail.
1.0 GENERAL
1.1 The total cost of the Project is the sum of the applicable direct and
indirect costs which are reasonably and properly incurred and/or allocated in
the performance of the Project, less any applicable credits. These costs will be
determined in accordance with the Recipient's cost accounting practices, as
accepted by the Minister and applied consistently over time.
1.2. Costs will be eligible only if they are incurred by the Recipient, relate
directly to the purpose of the Agreement, are for activities in the Statement of
Work and are considered to be reasonable in the opinion of the Minister.
1.3 This Costing Memorandum applies equally to all goods or services (including
labour) acquired from member companies, related parties or associates. These
acquisitions will be valued at cost and will not include any markup for profit,
return on investment, administration or overhead except as provided for in this
Agreement, and will not exceed fair market value. The Minister will not be
obligated to accept any of these costs as eligible unless access is provided to
the relevant records of the related entity.
1.4 The Goods and Services Tax will be an Eligible Cost only where the amount of
tax is not refundable, in whole or in part, by Revenue Canada Excise as an Input
Tax Credit or as a Rebate.
1.5 A cost is considered reasonable if, in nature and amount, it does not exceed
that which would be incurred by an ordinary prudent person in the conduct of a
competitive business.
-32-
1.6 In determining reasonableness of a particular cost, consideration will be
given to:
(a) whether the cost is of a type generally recognized as normal and necessary
for the conduct of the Recipient's business or performance of this Project.
(b) the restraints and requirements by such factors as generally accepted sound
business practices, arm's length bargaining, federal, provincial and local laws
and regulations, nature of the Project, and any special conditions set out in
this Agreement;
(c) the action that a prudent business person would take in the circumstances,
considering their responsibilities to the owners of the business, their
employees, customers, the Government and public at large;
(d) significant deviations from the established practices of the Recipient which
may unjustifiably increase the Eligible Costs of the Project; and
(e) the specifications, delivery schedule and quality requirements of the
particular contract as they affect costs.
2.0 Eligible Costs
2.1 Direct Labour
(a) Eligibility
(i) The eligibility categories of direct labour normally consist of engineers,
scientists, computer programmers, technologists, technicians, draftspersons,
researchers, laboratory and experimental shop labour, professional project
managers and market analyst, as set out in the Statement of Work.
(ii) Where approved in the Statement of Work, a direct labour cost may be
claimed for the work performed in an eligible category by qualified management
and administrative personnel. The payroll rate acceptable for such personnel
will not exceed the level of comparable technical experts in the same or most
similar category or industry.
(b) Calculation of Direct Labour
(i) The Recipient may claim only that time spent directly on the Project,
excluding indirect time, non-Project related time, holidays, vacation, paid
sickness, etc.
-33-
(ii) The payroll rate is the actual gross pay rate for each employee (normal
periodic remuneration before deductions). The payroll rate excludes all premiums
(e.g., overtime), shift differentials and any reimbursement or benefit conferred
in lieu of salaries or wages, except as noted in the next paragraph.
(iii) Fringe benefits (CPP, EI, holidays, vacations, etc.) are ineligible. An
allowance of 20% of direct labour may be claimed instead.
2.2 Direct Materials
(a) Direct materials, sourced internally or externally, that are consumed in
carrying out the Project, including those utilized in the construction of models
or prototypes, are eligible. Materials generally considered as expendable are to
be specifically identified in the Statement of Work.
(b) All materials purchased directly for the Project will be charged at the net
laid down price, after deducting all trade discounts and similar items.
Materials issued from the Recipient's general stocks will be charged to the
Project in accordance with the method used consistently by the Recipient in
pricing material inventories. Excess materials will be credited to the Project
at the price originally charged.
2.3 Special Purpose Equipment
(a) be an Eligible Cost, the Special Purpose Equipment must be necessary for the
performance of the Project, be described in sufficient detail in the Statement
of Work so as to be readily identifiable, and the cost specified in the
Statement of Work.
(b) If the Special Purpose Equipment is to be modifled or integrated by the
Recipient during the Project, the costs related thereto will be eligible only if
identified in the Statement of Project.
(c) Eligible Costs for Special Purpose Equipment will include the net laid down
cost to the Recipient, after deducting trade discounts and cash discounts for
prompt payment.
(d) Periodic payments under a capital lease are Eligible Costs to a maximum
equal to the price of the Special Purpose Equipment if it were purchased at the
commencement of the lease period; all interest and carrying charges are to be
excluded. For operating leases, the Eligible Cost is the actual lease payments
incurred during the performance of the Project.
(e) Labour and material costs required in the modification or adaptation of the
Special Purpose Equipment for the purposes of the Project are eligible.
-34-
(f) Costs of construction or alteration of plant facilities to accommodate the
Special Purpose Equipment, unless otherwise allowed in the Statement of Work,
and any profit, fees, general and administrative overhead expenses are not
eligible.
2.4 Subcontractors and Consultants
The Recipient may contract out part of the Project, including testing and
evaluation, to a subcontractor, consultant, university, research institute
or any other qualified organization. Project work to be contracted out will be
described in the Statement of Work, or will be approved by the Minister, in
writing, prior to being undertaken.
2.5 Other Eligible Costs
Also eligible are other direct costs, meaning those applicable costs
not falling within the other categories of article 2.0, but
which can be specifically identified and measured as having been incurred in the
performance of the Project, and which are so identified and measured
consistently by the Recipient's costing system, as accepted by the Minister. In
general, these could include, but are not limited to, the following cost
elements:
(a) Travel Costs
Eligible travel costs are those which are deemed necessary to the performance of
the Project. To be eligible, travel costs must be clearly documented as to the
purpose of each trip. Travel expenses, at economy rates, will be charged at
actual costs, but only to the extent that they are considered reasonable by the
Minister. The rates to be charged will not exceed those established by Treasury
Board guidelines, a copy of, which will be provided to the Recipient on request.
(b) Communications Costs
Where communication costs are a direct requirement of the Project (e.g.. data
transfer technology), these must be explicitly forecast in the estimated costs,
must relate only to the Project and may not be part of an allocated cost or
service.
(c) Audit of Project Costs
If expressly approved in writing by the Minister, Eligible Costs may include
the cost of professional accountants certifying the accuracy of any costs
claimed.
(d) Patent Costs
-35-
If stated in the Statement of Work or subsequently approved in writing by the
Minister, Eligible Costs may include the costs directly related to obtaining
patent protection, in Canada and abroad, for Intellectual Property developed
under this Agreement, including the costs of maintaining the protection and
defending against challenges by third parties.
(e) Other Direct Operating Costs
Other direct operating costs considered necessary for the successful
implementation of the Project are eligible if identified in the Statement of
Work, or subsequently approved in writing by the Minister.
2.6 Indirect Costs
Indirect costs are to be claimed using the approach specified in the approved
Statement of Work. The costing principles used in determining the approach are
as follows:
(a) Indirect costs (overhead) are those costs which, though necessarily having
been incurred during the Project for the conduct of the Recipient's business in
general, cannot be identified and measured as directly applicable to the
Project.
(b) Eligible indirect costs may include, but are not necessarily restricted to,
such items as:
(i) Indirect materials and supplies (For supplies of similar low-value,
high-usage items the costs of which meet the above definition of direct material
costs, but for which it is economically unreasonable to account for in the
manner prescribed for direct costs, then they may be deemed to be indirect
costs for purposes of the Project);
(ii) Indirect labour;
(iii) Service expenses: expenses of a general nature such as power, heat, light,
operation and maintenance of general assets and facilities;
(iv) Fixed/period charges: recurring charges such as property taxes, rentals and
reasonable provision for depreciation; and
(v) General and administrative expenses: including remuneration of executive and
corporate officers, office wages and salaries and expenses such as stationery,
office supplies, postage and other necessary administration and management
expenses.
-36-
(c) Indirect costs will be accumulated in appropriate indirect cost pools,
reflecting the Recipient's organizational or operational lines, and these pools
subsequently allocated to activities in accordance with the following two
principles:
(i) The costs included in a particular indirect cost pool should have a
similarity of relationship with each activity to which that indirect
cost pool is subsequently distributed. In addition, the costs included in an
indirect cost pool should be similar enough in their relationship to each
other that the allocation of the total costs in the pool provides a result
which would be similar to that achieved if each cost within that pool
were separately distributed; and
(ii) The allocation basis for each indirect cost pool should reflect, as
far as possible, the causal relationship of the pooled costs to the activities
to which these costs are distributed.
3.0 CREDITS
The applicable portion of any income, rebate, allowance, or any other credit
relating to any applicable direct or indirect costs, received by or accruing
to the Recipient, will be credited to the cost of the Project.
4.0 NON-ELIGIBLE COSTS
Notwithstanding that the following costs may have been or may be reasonably and
properly incurred by the Recipient during the performance of the Project, they
will be considered as non-Eligible Costs unless specifically authorized in the
Statement of Work (Schedule A) or otherwise in writing by the Minister:
(a) Allowance for interest on invested capital, bonds, debentures, bank or other
loans together with related bond discounts and finance charges;
(b) Legal, accounting and consulting fees in connection with financial
reorganization, security issues, capital stock issues and prosecution of claims
against the Minister;
(c) Losses on investments, bad debts and expenses for the collection thereof;
(d) Losses on other agreements;
(e) Federal and provincial income taxes, excess profit taxes or surtaxes and/or
special expenses in connection therewith;
TPC PROJECT No. 731-452552
TECHNOLOGY PARTNERSHIPS CANADA
AMENDMENT Number 1
This amendment made this 2nd day of February 1998
Between: HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the
Minister of Industry (hereinafter referred to as the "Minister")
And: DynaMotive Technologies Corporation, a corporation duly
incorporated under the laws of British Columbia,
(hereinafter referred to as "DynaMotive").
INTRODUCTION
(i) The Minister and DynaMotive entered into a Contribution Agreement dated
the 29th day of July, 1997 under the "Technology Partnerships Canada Program
(the "Contribution Agreement"); and
(ii) The Minister and DynaMotive now wish to amend the Contribution Agreement
In consideration of their respective obligations set out in the Contribution
Agreement, the parties agree to amend the Contibution Agreement as follows:
1.0 At Project #, page 1 of Agreement:
DELETE: "731-452522"
SUBSTITUTE: "731-452552"
--------------------------------------------------------------------------------
Technologies Partnerships Partenariat technologique Canada
Canada 10th floor, 000 Xxxxxx Xxxxxx, 00xx floor, 000 Xxxxxx
Xxxxxx, XXXXXX, Xxxxxxx X0X 0X0 XXXXXX, Xxxxxxx X0X 0X0
2
2.0 At 1.3(e) Completion Date, page 2 of Agreement:
DELETE: "March 31, 2000"
SUBSTITUTE: "March 31, 2001"
3.0 At 3.2 Annual Contribution Disbursement Limits, page 5 of Agreement:
DELETE: Subsection 3.2 in its entirety
SUBSTITUTE:
"3.2 Annual Contribution Disbursement Limits
Unless the Minister agrees otherwise, the disbursement of the Contribution will
not exceed the following amounts in each of the following Fiscal Years:
1997 - 1998 $ 504,073
1998 - 1999 $2,623,980
1999 - 2000 $4,075,692
2000 - 2001 $1,032,050
and the Minister will have no obligation to pay any amount in any other Fiscal
Years. No portions of these maximum annual amounts can be rolled over to
previous or subsequent Fiscal Years, without the prior written consent of the
Minister, who will consider any such requests on a case-by-case basis."
4.0 At Statement of Work, Schedule A to Agreement:
DELETE: pages 24, 25, 26, 27 and 28
SUBSTITUTE: amended pages 24, 25. 26, 27, 28 and 28A (copy attached)
All other provisions of the Contribution Agreement remain unchanged.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date above written.
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA, as represented by the Minister of Industry.
Per: /s/
-------------------------------------------------
Technology Partnerships Canada
DynaMotive Technologies Corporation
Per: /s/
-------------------------------------------------
Title:
-------------------------------------------------
TPC PROJECT No. 731-452552
TECHNOLOGY PARTNERSHIPS CANADA
AMENDMENT Number 2
This amendment made this 11th day of March 1998
Between: HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the
Minister of Industry (hereinafter referred to as the "Minister")
And: DynaMotive Technologies Corporation
INTRODUCTION
(i) The Minister and DYNAMOTIVE TECHNOLOGIES CORPORATION entered into a
Contribution Agreement dated 01-Aug-97 under the Technology Partnerships Canada
Program (the "Contribution Agreement"), and
(ii) The Minister and DYNAMOTIVE TECHNOLOGIES CORPORATION now wish to amend the
Contribution Agreement.
In consideration of their respective obligations set out in the Contribution
Agreement, the parties agree to amend the Contibution Agreement as follows:
--------------------------------------------------------------------------------
Technologies Partnerships Partenariat technologique Canada
Canada 10th floor, 000 Xxxxxx Xxxxxx, 00xx floor, 000 Xxxxxx
Xxxxxx, XXXXXX, Xxxxxxx X0X 0X0 XXXXXX, Xxxxxxx X0X 0X0
2
1.O At the section of the Agreement governing Annual Contribution Disbursement
Limits,
DELETE: The dollar amount shown for Fiscal Year 1997/1998.
SUBSTITUTE:
"Unlimited, subject to the Sharing Ratio and the Contribution Ceiling"
All other provisions of the Contribution Agreement remain unchanged.
IN WITNESS WHEREOF the parks hereto have executed this Agreement as of the date
first above written.
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA, as represented by the Minister of Industry.
Per: /s/
-------------------------------------------------
Technology Partnerships Canada
DynaMotive Technologies Corporation
Per: /s/
-------------------------------------------------
Title:
-------------------------------------------------
TPC: 731-452552
Technology Partnerships Canada
An Agency of Industry Canada
Monday, February 26, 2001
Xxxxxx Xxxxxxxx
Dynamotive Technologies Corporation
105-1700 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 602
Canada
Re: TPC Contribution Agreement #730-452522
Dear Mr Kingston:
This letter is to inform you that the subject Agreement is hereby amended as
follows:
at article 3.2 delete "2000 - 2001 $1,032,050"
and substitute with "2000-2001 unlimited"
All provisions of the Contribution Agreement remain in full force and effect,
except as modified by this Amendment Agreement.
Sincerely,
/s/
Xxxxxxx Xxxxxxx
A/Director, Environmental Technologies
Technology Partnerships Canada
Canada
Technology Partnerships Canada
An Agency of
Industry Canada
March 29, 2001
DynaMotive Technologies Corporation
000-0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attn: Xx. Xxxxxxxx Xxxxx
Re: TPC Contribution Agreement # 730-452552 Amendment #4
Dear Xx. Xxxxx,
This letter is to inform you that the subject Agreement is hereby amended as
follows:
Delete 1.3(e) in its entirety and replace with the following:
1. 3(e) "Completion Date" means June 30, 2001, which is the date by which the
Project must be completed.
All provisions of the Contribution Agreement remain in full Force and effect,
except as modified by this Amendment Agreement.
Sincerely,
/s/
Xxxxxxx Xxxxxxx
A/Director, Environmental Technologies
Technology Partnerships Canada
Technology Partnerships Canada
An Agency of Industry Canada
TPC AGREEMENT NO. 730-452552 AMENDMENT NO. 05
TECHNOLOGY PARTNERSHIPS CANADA
BIO OIL DEMONSTRATION PROJECT AMENDMENT AGREEMENT
This Agreement made
Between: HER MAJESTY THE QUEEN IN RIGHT OF CANADA
as represented by the Minister of industry (hereinafter referred to
as the "Minister")
And: DYNAMOTIVE ENERGY SYSTEMS CORPORATION (formerly Dynamotive Technologies
Corporation), a corporation duly incorporated under the laws of British
Columbia, having its head office located at 105-1700 Xxxx 00xx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx (hereinafter referred to as the "Proponent" or
"Dynamotive ")
INTRODUCTION
(i) The Minister and the Proponent entered into a Contribution Agreement dated
the 29th day of July, 1997 under the Technology Partnerships Canada (TPC)
Program (tile "Contribution Agreement") as amended by Amendment No. 1 dated
February 2, 1998, Amendment No. 2 dated March 11, 1998, Amendment No. 3 dated
February 26, 200 I in(] Amendment No. 4 dated March 29, 2001;
(ii) The Proponent has indicated that certain aspects of the current project,
namely BioLime, are producing results below target specifications, whereas other
aspects of the current project, namely BioOil, are meeting expectations and, as
a result, the Proponent wishes to refocus the remainder of the project on the
development of a scaled-up BioOil pilot demonstration plant in Canada and the
testing of BioOil fuel in industrial boilers and engine applications;
(iii) In order to meet these revised objectives, the Proponent and the Minister
agree that the scope and timing of the original project need to be significantly
revised; and
(iv)The Minister and the Proponent now wish to amend the Contribution Agreement.
Canada
Page 2
In consideration of their respective obligations set out in the Contribution
Agreement, the Parties agree to amend the Contribution Agreement as follows:
1. This Amendment must be signed by the Proponent and received by the Minister
on or before May 31st, 2002, failing which it will be null and void.
2. Article 1.3 (a) is deleted and replaced with the following:
1.3 (a) "Agreement" means this agreement, including Schedule A (Statement of
Work), Schedule B (Costing Memorandum), Schedule C (Reporting Requirements) and
Schedule D (Project Fact Sheet for News Release).
3. Article 1.3 (e) is deleted and replaced with the following:
1.3 (e) The Proponent shall ensure that the Project is completed on or before
June 30th, 2003 ("Project Completion Date"), unless otherwise agreed to in
writing by the Minister.
4. Paragraph 1.3 (i) is deleted and replaced with the following:
1.3(i) "Gross Business Revenues" means all revenues, receipts, monies and other
considerations of whatever nature received by the Proponent, whether in cash, or
by way of benefit, advantage, or concession, and without deductions of any
nature, but 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.
5. Paragraph 1.3 (1) is deleted and replaced with the following:
1.3 (1) "Project" means the development and application of the BioTherm process
for the purpose of producing BioOil, as more fully described in the Statement of
Work (Schedule "A").
6. Paragraph 1.3 (n) is deleted and replaced with the following:
1.3 (n) "Resulting Products" means BioOil; and all other commercial applications
which incorporate results of the Project; and all other commercial applications
which are made using Project Technology, Intellectual Property or Special
Purpose Equipment.
File No.: 730-452552
Page 3
7. Section 3.2 is deleted and replaced with the following:
3.2 All payments by the Proponent Financing Minister for Eligible Costs incurred
since June 30th, 2001 are hereby suspended until the Proponent demonstrates to
tile Minister's satisfaction that it has raised at least US$4,000,000 in new
equity, the Minister's payment obligations shall resume only when a financial
arrangement satisfactory to the Minister has been achieved. Currency conversion
to Canadian dollars, if required, shall be set at the time the funds tire
accessed.
8. Sections 5.1, 5.2 and 5.3 are deleted and replaced with the following:
5.1 Royalty Rate and Royalty Basis
The Proponent will pay to the Minister a royalty of 2.5% of annual Gross
Business Revenues during the Royalty Period.
5.2 Royalty Period
The Royalty Period will begin on January 1st, 2003 and will end on the earliest
of December 31, 2011 or when a cumulative royalty royalty ceiling of $16,000,000
is reached.
5.3 Royalty Statements and Payments
The Proponent will provide to the Minister an annual statement of the Gross
Business Revenues, certified by the Proponent's Chief Financial Officer, within
four (4) months of the end of each Proponent fiscal year (December 31st),
together with the related royalty payment. The first statement and related
royalty payment must be provided to the Minister by April 30st, 2004 in respect
of the fiscal year ending December 3l, 2003, and by April 30th each year
thereafter in regard to tile previous fiscal year. Payments shall be made by
cheque to the order of tile Receiver General and sent to the Minister.
9. Sections 7.5 and 7.6, Schedule C (Projected Sales and Royalties) and Schedule
C1 (Report on Sales and Royalties) are deleted and replaced with the attached
Schedule C (Reporting Requirements). For purposes of Section 4.1 and 4.3, all
reports are to be submitted in accordance with the revised reporting
requirements set out in Schedule C.
10. Section 8.1 is deleted and replaced with the following:
8.1 The nature of the technology being developed and the business
contemplated by Dynamotive makes commercial exploitation of the outside Canada a
necessity. Dynamotive shall perform all value-added engineering, design and
manufacturing in Canada, except for construction and certification of foreign
facilities and sourcing of locally available components.
File No.: 730452552
Page 4
11. Schedule A (Statement of Work) is deleted and replaced with the attached
Schedule A.
12. All provisions of the Contribution Agreement remain in full force and
effect, except as modified by this Amendment Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Amendment Agreement as
of the date first above written.
HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
as represented by the
Minister of Industry
Per: /s/ 16.5.02
----------------------------------------------- -----------
Technology Partnerships Canada Date
Xxxx Xxxxxx- Acting Deputy Executive Director
DYNAMOTIVE ENERGY SYSTEMS CORPORATION
Per: /s/
---------------------------------------------- -----------
Date
Xxxxxx Xxxxxxxx - President and CEO
File No.: 730-452552
Page 5
SCHEDULE A - STATEMENT OF WORK
The following of Work represents revised and/or additional work elements to be
completed by the Proponent henceforth:
1. Project Description
This project involves the development and demonstration of DynaMotive's fast
pyrolysis technology, hereafter referred to as BioTherm, resulting in the
production of up to 70% BioOil and equal parts of char and no-condensable gases
for the balance of product. The BioOil product is a liquid fuel, which has 55%
by volume of the energy of diesel oil and 40% by weight. It is targeted to
form a renewable fuel for turbine engines in particular and has a well defined
composition for various feedstocks such as wood, wood & bark or bagasse.
The Project industrial level demonstration plant targets a scale up of
DynaMotive's fast pyrolysis process to 200 tons per day continuous process at a
Canadian mill site in British Columbia where fossill fuel reductions in
industrial boilers and heat production for mill operations will take place.
The production of BioOil non-condensable gases will form a closed loop system
resulting in substantial reduction of fossil fuel usage and elimination of a
serious wood waste disposal and pollution problem. BioOil will also undergo
testing in pulp mill lime kiln applications and other types or industrial
boilers and engines (gas turbine and diesel). The enviromental impact of
manufacturing BioOil from organic waste to produce electricity results in
100% displacement of an equal energy equivalent of non-renewable fossil fuels
such as coal for power generation.
As a result of the demonstration project, DynaMotive will demonstrate the
continuous production of BioOil in an industrial setting and test and validate
of pyrolysis products as outlined in the Statement of Work details.
The ultimate target market will be for Dynamotive to supply turnkey systems
for BioOil production coupled to power generation systems driven by renewable
organic waste.
To be in a position to DynaMotive's pyrolysis technology amongst other areas,
the following is required:
- Scaling and validating the pyrolysis technology to full characterization.
- Testing, validating and demonstrating BioOil and char applications.
- Testing, validating and demonstrating BioOil production facilities coupled
with forestry operations, in the Canadian Industrial Pilot Program for 200
tons per day.
- Research and development into higher value derivative products based on
DynaMotive pyrolysis products as a feedstock
File No.: 730-452552
Technology Partnerships Canada
An Agency of Industry Canada
TPC PROJECT No. 730-452552 AMENDMENT NO. 6
TECHNOLOGY PARTNERSHIPS CANADA
AMENDMENT AGREEMENT
This Agreement made
Between: HER MAJESTY THE QUEEN IN RIGHT OF CANADA,
represented by the Minister of Industry
(hereinafter referred to as the "Minister")
And DYNAMOTIVE ENERGY SYSTEMS CORPORATION
(formerly Dynamotive Technologies Corporation), a corporation
duly incorporated under the laws of British Columbia, having
its head office located at 105-1700 Xxxx 00xx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx (hereinafter referred to as
"the Proponent"),
INTRODUCTION
(i) The Minister and the Proponent entered into a Contribution Agreement dated
the 29th day of July, 1997 under the Technology Partnerships Canada Program (the
"Contribution Agreement") as amended by Amendment No. I dated February 2, 1998,
Amendment No. 2 dated March 11, 1998, Amendment No. 3 dated February 26, 2001,
Amendment No. 4 dated March 29, 2001 and Amendment No. 5 dated May 23, 2002;
(ii)The Minister and the Proponent now wish to amend the Contribution Agreement.
In consideration of their respective obligations set out in the Contribution
Agreement, the parties agree to amend the Contribution Agreement as follows:
1.0 AMENDMENT
2
1.1 The Contribution Agreement is amended as follows:
(a) Article 1.3 (e) is deleted and replaced with the following:
1.3(e) The Proponent shall ensure that the Project is completed on or before
June 30, 2004 ("Project Completion Date"), unless otherwise agreed to in writing
by the Minister.
(b) Article 5.2 Royalty Period is deleted and replaced with the following:
5.2 Royalty Period
The Royalty Period will begin on January 1st, 2003 and will end on the earliest
of December 31, 2012 or when a cumulative royalty ceiling of $16,000,000 is
reached.
(c) Schedule A - Statement of Work Annex A, Forms A, B, C,D and E-1 to E-5 are
deleted and replaced with the ones attached.
(d) Schedule C - Reporting Requirements, Forms TPC - 1, TPC - 2, TPC-3 and
TPC - 4 are deleted and replaced with the ones attached.
TPC Project No.730-452552
3
All provisions of the Contribution Agreement remain in full force and effect,
except as modified by this Amendment Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Amendment Agreement
through duly authorized representatives.
HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the
Minister of Industry
Per:
--------------------------------------------- ------------
Technology Partnerships Canada (TPC) Date
Kash Ram, A/Director Environmental Technologies, TPC
DYNAMOTIVE ENERGY SYSTEMS CORPORATION
Per: /s/
---------------------------------------------- -----------
Date
Xxxxxx Xxxxxxxx - President and CEO
TPC Project No,73O-452552
Page 6
2. Key Activities
DynaMotive will pursue the following research, development, and testing
programs.
a) Pyrolysis Process Research & Development
The recently commissioned BioTherm2 pilot plant (10 tpd) and the BioTherm1
(2tpd) pilot plants form the foundation of our process technology program.
Operation and optimization of these plants provide the knowledge required to
scale up the technology, develop production cost projections and expand the
scope of feedstock types and compositions that can be reliably and consistently
converted into BioOil.
The objectives of the pilot plant operations are:
- Validate and optimize BioOil production using various commercially available
feedstock types and compositions including whitewood, bark and hardwoods.
- Refine and validate the production cost assumptions used for projecting
economic performance of commercial scale facilities.
- Optimize the performance and capacity of the Biotherm2 (10 tpd) plant to
develop the maximum baseline design for subsequent scale ups.
- Produce BioOil and char to support application test programs.
b) BioOil and Char Characterization and Product Testing
BioOil and pyrolysis char are new fuel by a process. In order to effectively
market these products full characterization, detailed testing, and performance
validation for each specific application is required and the results necessary
to quantify potential customer benefits and develop confidence in our technology
and products. DynaMotive has identified a number of near term applications for
BioOil and char and designed development and testing programs targeted at these
markets.
The objectives of the product testing programs are to:
- Test and validate the required to burn BioOil in industrial boilers (i.e.
institutional heating, greenhouses), sawmill lumber drying systems, pulp mill
lime kilns, and industrial gas turbines.
- Develop and execute testing programs with leading industrial partners to
facilitate development of long-term BioOil sales agreements.
- Test and validate the use of char as a feedstock for charcoal briquette
manufacture and facilitate development of long term char sales agreements.
- Test and validate the use of char as a solid fuel for combustion applications
including use as a heat source during BioOil production.
File No.: 730452552
Page 7
c) Derivative Product Research and Development
The complex chemistry of BioOil and the unique characteristics of pyrolysis char
make these products suitable as feedstock for other processes and products.
DynaMotive has identified many product areas worthy of further research and
development, with three prioritized for investigation over the short term.
Research and development programs are planned for:
- BioOil based resins for various applications including adhesives.
- BioOil based synthesis gasses for reformation into higher value liquid fuels.
- Char based activated carbons for gas/liquid filtering applications.
d) Canadian Industrial Pilot Program (200 tpd)
DynaMotive will develop an industrial pilot plant to be collocated with a
sawmill in western Canada. The plant will demonstrate the feasibility of BioOil
production from typical BC forest industry waste residues while providing BioOil
and char in sufficient volume for full-scale application demonstration programs.
The objectives of the industrial pilot program are:
- Test, validate and optimize the pyrolysis technology at the 200 tpd plant
capacity.
- Test and optimize concepts and designs for full integration of BioOil
production with sawmill operations.
- Refine and validate the production cost assumptions used for projecting
economic performance of large commercial scale facilities.
- Produce BioOil and char to support full-scale application test programs.
3. Project Schedule
Refer to Annex A, Form A.
4. Milestones
Refer to Annex A, Form B.
File No.: 730-452552
Page 8
5. Cost Breakdown
Current Fiscal Year Cost Breakdown by Major Activities - Refer to Annex A,
Form C.
Cost Breakdown by Fiscal Year - Refer to Annex A, Forms D-1 and D-2.
6. Other Descriptions
Refer to Annex A, Forms E1-E5.
7. Non-eligible / Non-supported Activities
In addition to the activities described above, DynaMotive also exploits
pyrolysis development projects in the United Kingdom.
File No.: 730-452552
