<PAGE> 1
EXHIBIT 10.18
RESEARCH AGREEMENT FOR A COOPERATIVE PROJECT
BETWEEN UNIVERSITE DU QUEBEC A TROIS-RIVIERES, a
corporate body legally constituted,
represented jointly by Mr. Gilles BEAUDRY,
Dean of Advanced Studies & Research and
Andre BROUSSEAU, Vice-Rector & Secretary
General; duly mandated to this effect,
hereinafter referred to as
THE UNIVERSITY
AND HYDROGENICS CORPORATION, a corporate body
legally constituted represented by Boyd
TAYLOR duly mandated to this effect,
hereinafter referred to as
THE COMPANY
AND Dr. Tapan K. BOSE, Director of the Hydrogen
Research Institute, Department of Physics,
Faculty of Science and Engineering,
Universite du Quebec a Trois-Rivieres,
hereinafter identified in this agreement as
THE PRINCIPAL INVESTIGATOR
PREAMBLE
Whereas THE UNIVERSITY and THE COMPANY wish to jointly support a research
project in hydrogen energy.
Whereas THE COMPANY has received approval ( October 17, 1996 ) from the
Department of Natural Resources Canada hereinafter referred to as the
5 CONTRIBUTOR, for a cost shared grant within the program designated as
"Hydrogen Energy R&D", for a project designated as "Developmental
Prototype of a Hybrid Power Source for Arctic Communications - Hydrogen
Thermoelectric / Fuel Cell (HTEF) Generator".
See Appendix IV - Signed copy of the Department of Natural Resources
10 October 17, 1996 contribution agreement.
See Appendix V - Copy of the contribution grant application submitted to
Department of Natural Resources, titled "Development
Prototype of a Hybrid Power Source for Arctic
Communications Hydrogen Thermoelectric / Fuel Cell (HTEF)
15 Generator"
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Research Agreement Hydrogenics / Hydrogen Research Institute
Therefore, the mentioned parties agree to the following:
CLAUSE 1.- RESEARCH PROJECT
THE COMPANY agrees to subsidise together with THE CONTRIBUTOR the research
program proposed.
THE UNIVERSITY shall execute itself, in Quebec for the benefit of THE
5 COMPANY and in compliance with the provision under CLAUSE 8. - COMMERCIAL
EXPLOITATION RIGHTS, the work related to the project and appoints
Professor Tapan K. BOSE, Director of the Hydrogen Research Institute,
Department of Physics of the Faculty of Science and Engineering as THE
PRINCIPAL INVESTIGATOR. The said research work described in Appendix I
10 will start after the signature of the present agreement.
CLAUSE 2.- PROGRESS REPORTS
THE UNIVERSITY and THE PRINCIPAL INVESTIGATOR agree to submit to THE
COMPANY a copy of any scientific report that shall be produced within the
context of the project or any other reports required by THE CONTRIBUTOR in
compliance with the administrative rules of the grant.
CLAUSE 3.- DURATION OF THE AGREEMENT
15 Notwithstanding the official signing date of this document, this
agreement shall become effective the 1st day of October 1996. The
research portion of the agreement, involving the services of THE
UNIVERSITY, will run for a six month period ending March 31, 1997, as per
the CONTRIBUTOR's contract. The Royalty agreement between THE COMPANY and
20 THE UNIVERSITY shall remain in effect until the earlier of the termination
by notice in accordance with provisions of this Agreement, or until
September 30, 2006, ten (10) years from the effective start date of the
Agreement.
CLAUSE 4.- BUDGET AND MODES OF PAYMENT
THE COMPANY shall provide THE UNIVERSITY with a total sum of $ 30,542
( see appendix V for details of project cash flow ) in Canadian dollars.
25 THE UNIVERSITY shall invoice monthly on the first of each month the
COMPANY for the work performed in the month preceding the invoice, and
will include a report on the progress achieved in the period covered by the
invoice. THE COMPANY will then invoice THE CONTRIBUTOR for both THE
COMPANY'S and THE UNIVERSITY'S claimable work by the fifteenth of each
30 month. Upon receiving payment from THE CONTRIBUTOR on this invoicing, THE
COMPANY will pay THE UNIVERSITY. This payment sequence will also apply to
any end-of-contract holdbacks, typically 10%, that THE CONTRIBUTOR may
impose on the project.
If requested by the COMPANY, an expense account certified by the Head
35 Accountant of THE UNIVERSITY, or its representative, shall be supplied to
THE COMPANY at the end of the agreement. It is understood that all
documents
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pertaining to the project related expenditures remain the property of THE
UNIVERSITY; they may however be consulted as needed during THE UNIVERSITY's
office hours.
CLAUSE 5. - EQUIPMENT OWNERSHIP
The prototype demonstrator or article resulting from this research
5 project remain the property of the COMPANY. Equipment and/or materials
purchased by the COMPANY for purposes relating to the project remain the
property of the COMPANY. Similarly, equipment and/or materials purchased
by the UNIVERSITY for purposes relating to the project remain the property
of THE UNIVERSITY.
CLAUSE 6. - EXCHANGE OF CONFIDENTIAL INFORMATION
10 THE COMPANY and THE UNIVERSITY may participate in a co-operative exchange
of confidential information in order to facilitate work relative to the
project and this agreement. THE COMPANY and THE UNIVERSITY shall take all
reasonable precautions to protect and prevent any inadvertent disclosure
of this information, To this effect, access to confidential information
15 shall be limited to personnel of THE COMPANY or of THE UNIVERSITY on a
"need-to-know" basis. Each party must also take proper precautions so as to
prevent and protect the disclosure of information to any third party.
All personnel (researchers, technicians, research professionals or others)
with access to confidential information on the activities pertaining to the
20 execution of this project must sign a confidentiality agreement, a model of
which being attached to this agreement (Appendix II).
Unless under written authorisations, the conditions of this agreement,
which relate to this project, are confidential.
CLAUSE 7. - PUBLICATION AND PUBLICITY
If the UNIVERSITY wishes to publish on or make publicity or advertising
25 on any part of the whole of the project, written approval to do so has to
be obtained from the COMPANY.
CLAUSE 8. - COMMERCIAL EXPLOITATION RIGHTS
8.1. Commercial exploitation of the results and the intellectual
property
The results and the intellectual property include, but are not
restricted to, the patents, the technical information, the
know-how, the copyrights, the models, the patterns, the
drawings, the specifications, the prototypes, the inventions
30 improvements and/or discoveries developed within the context
of the said project and that are not public property.
This agreement specifically acknowledges that THE COMPANY is
and shall remain owner of all rights on intellectual property
and patents arising from the said research project.
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THE COMPANY reserves the right of first refusal for the
commercial exploitation of the results and the intellectual
property specific to this research agreement.
However, in recognition of the UNIVERSITY's work, THE COMPANY
5 agrees to grant 4% of the total sales generated by the product,
a Hybrid Power Source for Arctic Communications, which a second
prototype was developed under this project, as stipulated in the
terms and conditions of commercial exploitation of Appendix II.
The amount paid to the UNIVERSITY is separate to the 2% of revenue
payable to the THE CONTRIBUTOR( See Appendix IV; Department of Natural
Resources Contribution Agreement , Item # 6.).
8.2. Patents
THE UNIVERSITY, THE COMPANY and THE PRINCIPAL INVESTIGATOR
10 accept with the agreement herein to act promptly in the
preparation, filing and prosecution of any new patent
applications and, if necessary, to all actions relative to
counterfeiting. Additionally, THE UNIVERSITY and THE PRINCIPAL
INVESTIGATOR agree to act promptly in the signing of all
documents required to proceed with the preparation and the
15 filing of patent applications.
The parties agree to keep each other informed of any possible
developments arising from the research. Notwithstanding the
preceding, THE COMPANY has a right of final decision in the
matter of patent applications, filing and protection when
20 assuming financial responsibility.
This agreement does not grant any rights to Intellectual
Property produced or obtained by a Party independently of the
Project before or after the Project starts. If a Party needs
such Intellectual Property to perform work in the course of the
25 Project, a license for that limited purpose is granted by this
agreement and terminates at the end of the Project, but any
other license must be negotiated.
For the purpose of this Agreement, "Intellectual Property" is
defined as all rights to inventions, patents, copyright
material, trade secrets, and proprietary information. "Arising
30 Intellectual Property" is Intellectual Property that is
developed in the Project. "Commercial Exploitation" is to use,
reproduce, and modify Intellectual Property, and to manufacture,
use, and sell articles embodying or made by use of Intellectual
Property.
8.3. Use and disclosure of the results and the intellectual property by
THE UNIVERSITY and THE PRINCIPAL INVESTIGATOR
THE COMPANY recognizes the role of THE UNIVERSITY in teaching,
training and research. With respect to such role, and inasmuch
35 as adequate measures of protection have been taken, THE
UNIVERSITY shall be allowed to use the results and the
intellectual property as a tool for teaching, research and
publications within the normal context of diffusion of
knowledge, this including the publication of master and doctoral
thesis
40 For its part, THE UNIVERSITY understands that the disclosure of
technical information could cause the loss of a commercial value
on any
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product hereof and/or the research. For this reason, THE
UNIVERSITY shall inform THE COMPANY of any expected disclosure
of information pertaining to this project by submitting a copy
of the text(s) at least forty-five (45) days before the
5 submission of publication of articles, abstracts, and/or
conference proceedings. If THE COMPANY does not oppose to such
disclosure in writing within thirty (30) days following receipt
of the text(s), THE UNIVERSITY may disclose the information. In
the event of opposition by THE COMPANY, the reasons for such
opposition must be expressed in writing and both parties will
10 cooperate to find additional measures to protect and/or prevent
such a disclosure that would result in loss of commercial value
for the data. In the event of an unsolved conflict between the
parties, the COMPANIES decision will be deemed as final.
CLAUSE 9.- MODIFICATIONS TO THE AGREEMENT
The written consent of both parties is required to do any change and/or
15 modification or to cancel any condition or terms of this agreement.
CLAUSE 10.- CIRCUMSTANCES BEYOND CONTROL
No party may be held responsible to the other party for any defect or
delay in the execution of the program causes by circumstances beyond
their control including, but not limited to, natural disasters, fires,
work strikes, or any governmental measures, the latter including
20 intervention by the Quebec or Ontario Securities Commission.
CLAUSE 11. - INTEGRALITY OF THE AGREEMENT
This agreement, including the appendices, constitutes the contract in its
entirety between the parties and replaces any prior agreements,
contracts, propositions, representations, negotiation, or oral or written
agreements previously entered into by the parties hereto. The agreement
may only be subsequently altered or modified by an instrument in writing,
25 signed by the parties, which expressly states the intention of affecting
this Agreement.
In the case of inconsistency between the statement of work and
deliverables and the rest of this agreement, the rest of this agreement
prevails. No forbearance by a Party implies any broader, continuing, or
30 future forbearance. If a court finds part of this agreement invalid, the
remainder is valid in accordance with its most reasonable interpretation.
This agreement does not create a relationship of agency, employment,
partnership or joint venture.
CLAUSE 12. - ANNULMENT
In the event of default, one of the hereto mentioned parties may
terminate this agreement with a ninety (90)-day written notice to the
other party. If the party in default refuses or neglects to correct its
35 inadequacies, the annulment shall be effective at the expiration or the
ninety (90)-day limit.
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CLAUSE 13. - ANNULMENT FOR OTHER REASONS
Notwithstanding the arrangements of CLAUSE 12. - ANNULMENT, either of the
parties may withdraw from this agreement if one of the following
conditions exists:
a) the Hydrogen Research Institute ceases to exist.
b) the CONTRIBUTOR terminates his contribution to the project.
5 c) THE UNIVERSITY is no longer able to realize or meet the objectives
of the project.
In the event that this clause is applied, a party must give a ninety
(90)-day written notice to the other party in order to allow sufficient
time to discuss the best possible course of action in invalidating this
10 project and to protect the results acquired to date.
CLAUSE 14. - NOTICE
All written communication between the parties in accordance with this
agreement shall be addressed as follows:
For THE COMPANY Mr. Boyd TAYLOR
Director
Hydrogenics Corporation
180 Geary Avenue
Toronto, ON
Canada M6H 2B9
For THE UNIVERSITY: Professor T. K. BOSE
Director
Hydrogen Research Institute
Universite du Quebec a Trois-Rivieres
(UQTR)
3351 boulevard des Forges, C.P.500
Trois-Rivieres, QC
CANADA G9A 5H7
Any change of address by one of the parties must be communicated to the
15 other party by registered mail.
All written communication sent by one party to the other shall be
considered valid and in accordance with this agreement it delivered in
one of the following manners: acknowledged, registered or personal
delivery.
CLAUSE 15. - JURIDICAL RELATIONS
It is understood and agreed that nothing in the present agreement shall
20 be interpreted as constituting a relation of mandatory agent between THE
COMPANY and THE UNIVERSITY.
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CLAUSE 16. - UPHOLDING OF THE AGREEMENT
Any clause found to be illegal shall not result in cancellation of
this agreement and the remainder of this agreement shall continue
with complete authority.
CLAUSE 17. - ARBITRATION
The parties agree to negotiate all disputes arising from this
Agreement in good faith after receiving written notification of
5 the existence of a dispute from any party.
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 bourne
10 equally by the parties. See Appendix IV Clause 23 for a similar
arrangement between THE COMPANY and THE CONTRIBUTOR.
CLAUSE 18. - APPLICABLE LAWS
This agreement shall be interpreted according to the Laws in
effect in the Province of Quebec.
CLAUSE 19. - INTERVENTION
Intervening in this agreement is Dr. Tapan K. BOSE, PRINCIPAL
15 INVESTIGATOR, who has read this agreement and, having done so,
accepts all the terms and conditions in so much as he is concerned
and bound by such, agrees to inform all the members of his
research group at THE UNIVERSITY of their obligations in virtue to
this agreement.
CLAUSE 20. - WAIVER
A failure by any of the parties to assert rights arising from any
20 breach or default of this Agreement or an acceptance of payments
shall not be regarded as a waiver of rights. No waiver or
toleration implies any continuing or future waiver of rights.
CLAUSE 21.- LANGUAGE
The parties have expressly agreed that this agreement be drawn up
in English. Les parties aux presentes ont expressement requis que
la presente entente soit redigee en anglais.
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IN WITNESS WHEREOF, this agreement has been executed and duly
authorised by representatives of the parties:
FOR THE UNIVERSITY FOR THE COMPANY
/s/ GILLES BEAUDRY /s/ BOYD TAYLOR
------------------------------ -----------------------
GILLES BEAUDRY BOYD TAYLOR
DEAN ADVANCED STUDIES & RESEARCH PRINCIPAL AND DIRECTOR
[SIG]
------------------------------ -----------------------
WITNESS WITNESS
/S/ ANDRE BROUSSEAU 1996, 11, 25
---------------------------------- {SEAL}
ANDRE BROUSSEAU VICE-RECTOR &
SECRETARY GENERAL
------------------------------
WITNESS
FOR THE PRINCIPAL INVESTIGATOR
/S/ TAPAN K. BOSE
------------------------------
TAPAN K. BOSE
DIRECTOR
HYDROGEN RESEARCH INSTITUTE
[SIG]
------------------------------
WITNESS
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APPENDIX
Appendix I List of Deliverables from THE UNIVERSITY to THE COMPANY
Appendix II Confidentiality Agreements
IIa Principal Investigator - Professor T.K. Bose
IIb Scientist - Dr. R. Gopal
Appendix III Licensing Conditions
Appendix IV Signed copy of the Department of Natural Resources October
17, 1996 contribution agreement
Appendix V Copy of the contribution grant application submitted to
Department of Natural Resources, titled "Development
Prototype of a Hybrid Power Source for Arctic Communications
Hydrogen / Thermoelectric / Fuel Cell (HTEF) Generator"
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APPENDIX I
LIST OF DELIVERABLES FROM THE UNIVERSITY TO THE COMPANY
By the end of the HTEF contract, the Hydrogen Research
Institute should have delivered to Hydrogenics the
following products and services:
5 1. Acceptance certification of hydrogen sub-components and
hydrogen storage before incorporation into the HTEF;
2. Collaboration in the design and assembly;
3. Control and data acquisition of the system;
4. Functional testing and proofing of the assembled HTEF;
10 5. Any other task required to achieve the objectives of the
enclosed R&D proposal.
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APPENDIX II
CONFIDENTIALITY AGREEMENTS
A. Principal Investigator - Dr. T.K. Bose
B. Scientist - Dr. R. Gopal
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APPENDIX II A
CONFIDENTIALITY AGREEMENT
The present agreement has intervened between Dr. T.K. Bose, hereinafter
referred to as "THE DEPOSITORY" and Hydrogenics Corporation hereinafter
referred to as "THE OWNER".
Whereas THE DEPOSITORY and THE OWNER wish to exchange information relating
5 to a hybrid thermoelectric/fuel cell generator for Arctic communications.
And whereas THE OWNER wishes to disclose to THE DEPOSITORY a given
information relating to the present agreement that THE OWNER considers
exclusive and confidential.
THE PARTIES HAVE AGREED TO THE FOLLOWING:
10 1. For a period of seven (7) years from the signing of this agreement,
THE DEPOSITORY must by all possible means prevent the disclosure to a
third party of confidential information obtained from THE OWNER
pertaining to the aforementioned object, unless dispositions to the
contrary as hereinafter described, and should then take the same
15 precautions as for his own exclusive and confidential information.
2. All confidential information sent by a party to another will be
considered confidential unless clearly identified as
non-confidential.
3. Any report or document resulting from this exchange of information
between the parties must follow the same rules, with respect to
20 confidentiality as the ones applied to the exchange of information
between the parties.
4. The confidential information shall include but not be limited to the
financial and strategic aspects of the activities undertaken by the
parties heretofore described in this agreement and/or to the
technical information for which both parties acknowledge a
commercial value.
25 5. However, any portion of information shall not be considered
CONFIDENTIAL and THE DEPOSITORY shall have no obligation relative to
it if:
a) its dissemination has been approved in writing by THE
DEPOSITORY
30 b) it becomes public knowledge by means of publication,
inspection of the product or otherwise, and without
any wrongdoing by THE DEPOSITORY.
6. All written data made by THE OWNER or THE DEPOSITORY by virtue of
this agreement are and shall remain THE OWNER's property and all
35 these written data or copies thereof must be promptly returned to THE
OWNER or destroyed upon written request.
7. Information disclosed verbally or without markings of confidentiality
is temporarily presumed to be confidential if there are indications
that it might be confidential.
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8. This agreement shall not be interpreted as granting or conferring any
rights by means of license expressly, implicitly or otherwise for any
invention, discovery, improvement conceived or rendered usable
before or after the signing of this agreement.
5 9. The parties shall not be held liable by any clause or element of this
agreement to develop or market a product and/or program as a result
of this agreement, nor shall parties be restricted in their efforts
to improve their existing product and systems or to conceive and
develop new products and systems.
Moreover, the participation in the exchange of information in virtue of
10 this agreement shall not constitute or imply a commitment by one of the
parties to endorse or recommend a product or service supplied by the other
party.
IN WITNESS WHEREOF, the parties hereto have agreed that this agreement
shall come into force on 1 October 1996.
<TABLE>
<CAPTION>
THE DEPOSITORY THE OWNER
<S> <C>
/s/ TAPAN K. BOSE /s/ BOYD TAYLOR
-------------------------------- ---------------------------
TAPAN K. BOSE BOYD TAYLOR
Director Principal and Director
Hydrogen Research Institute Hydrogenics Corporation
Universite du Quebec a Trois-Rivieres 180 Geary Avenue
(UQTR) Toronto, ON
3351 boulevard des Forges, C.P.500 Canada M6H 2B9
Trois-Rivieres, QC
CANADA G9A 5H7
</TABLE>
[UNIVERSITE DU QUEBEC A TROIS-RIVIERES STAMP]
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APPENDIX II B
CONFIDENTIALITY AGREEMENT
The present agreement has intervened between Dr. Ravi Gopal, hereinafter
referred to as "THE DEPOSITORY" and Hydrogenics Corporation hereinafter
referred to as "THE OWNER".
5 Whereas THE DEPOSITORY and THE OWNER wish to exchange information relating
to a hybrid thermoelectric / fuel cell generator for Arctic
communications.
And whereas THE OWNER wishes to disclose to THE DEPOSITORY a
given information relating to the present agreement that THE
OWNER considers exclusive and confidential.
10 THE PARTIES HAVE AGREED TO THE FOLLOWING:
1. For a period of seven (7) years from the signing of this agreement,
THE DEPOSITORY must by all possible means prevent the disclosure to
a third party of confidential information obtained from THE OWNER
pertaining to the aforementioned object, unless dispositions to the
15 contrary as hereinafter described, and should then take the same
precautions as for his own exclusive and confidential information.
2. All confidential information sent by a party to another will be
considered confidential unless clearly identified as
non-confidential.
3. Any report or document resulting from this exchange of information
between the parties must follow the same rules, with respect to
20 confidentiality as the ones applied to the exchange of information
between the parties.
4. The confidential information shall include but not be limited to the
financial and strategic aspects of the activities undertaken by the
parties heretofore described in this agreement and/or to the
technical information for which both parties acknowledge a
25 commercial value.
5. However, any portion of information shall not be considered
CONFIDENTIAL and THE DEPOSITORY shall have no obligation relative to
it if:
a) its dissemination has been approved in writing by
30 THE DEPOSITORY
b) it becomes public knowledge by means of publication,
inspection of the product or otherwise, and without
any wrongdoing by THE DEPOSITORY.
6. All written data made by THE OWNER or THE DEPOSITORY by virtue of
this agreement are and shall remain THE OWNER's property and all
35 these written data or copies thereof must be promptly returned to
THE OWNER or destroyed upon written request.
7. Information disclosed verbally or without markings of confidentiality
is temporarily presumed to be confidential if there are indications
40 that it might be confidential.
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8. This agreement shall not be interpreted as granting or conferring any
rights by means of license expressly, implicitly or otherwise for any
invention, discovery, improvement conceived or rendered usable before
or after the signing of this agreement.
5 9. The parties shall not be held liable by any clause or element of this
agreement to develop or market a product and/or program as a result
of this agreement, nor shall parties be restricted in their efforts
to improve their existing product and systems or to conceive and
develop new products and systems.
Moreover, the participation in the exchange of information in virtue of
10 this agreement shall not constitute or imply a commitment by one of the
parties to endorse or recommend a product or service supplied by the
other party.
IN WITNESS WHEREOF, the parties hereto have agreed that this agreement
shall come into force on 1 October 1996.
<TABLE>
<CAPTION>
THE DEPOSITORY THE OWNER
<S> <C>
/s/RAVI GOPAL /s/ BOYD TAYLOR
------------------------------ --------------------------
RAVI GOPAL BOYD TAYLOR
Scientist Principal and Director
Hydrogen Research Institute Hydrogenics Corporation
Universite du Quebec a Trois-Rivieres 180 Geary Avenue
(UQTR) Toronto, ON
3351 boulevard des Forges, C.P.500 Canada M6H 2B9
Trois-Rivieres, QC
CANADA G9A 5H7
</TABLE>
[UNIVERSITE DU QUEBEC A TROIS-RIVIERES STAMP]
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APPENDIX II
ROYALTIES AND COMMERCIAL EXPLOITATION
-------------------------------------
TERMS AND CONDITIONS
Guidelines relative to the terms and conditions prevailing for the
commercial exploitation and royalties arising from the research
project "Developmental Prototype of a Hybrid Power Source for
Arctic Communications - Hydrogen Thermoelectric / Fuel Cell
5 (HTEF) Generator".
1. PRODUCTS
The products for which THE UNIVERSITY agrees to a right of first
refusal to THE COMPANY are:
a) the results arising from this PROJECT, whether
patentable or not.
b) any product or process which could be the result
10 of an invention arising form this PROJECT and
which could be protected under the Patent Laws
of Canada or elsewhere.
c) any article, kit, equipment, system, unit, or
any product or its component part that results
from the use of the Project's technology.
2. TERMS OF COMMERCIAL EXPLOITATION
THE UNIVERSITY recognises the COMPANY's exclusive ownership of the
15 research project's intellectual property, and cannot therefore
grant to a third party a license to exploit the technology arising
from the project without the COMPANY's written approval.
3. LICENSING
THE COMPANY has the right to grant one or more sub-licenses to
third parties.
4. IMPROVEMENT
THE UNIVERSITY shall have the right to modify the product(s) for
20 possible improvement(s). However, THE UNIVERSITY shall communicate
to THE COMPANY the improvement(s) so as adequate measures of
protection may be taken. Any improvement shall be part of the
terms and conditions for commercial exploitation.
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5. DURATION OF THE TERMS AND CONDITIONS
The Royalty agreement between THE COMPANY and THE UNIVERSITY shall
remain in effect until the earlier of the termination by notice in
accordance with provisions of this Agreement, or until September
30, 2006, ten (10) years from the effective start date of the
Agreement.
6. ROYALTIES
6.1 Rights To Royalties
-------------------
5 The royalties payable to the UNIVERSITY are based
upon the net sales price of each commercial item
sold by the COMPANY or by one of its sub-licensees.
The net sales price is defined at Article 7 of this
Appendix.
6.2 Application of the Royalties
----------------------------
The percentage of the royalties set by virtue of
the aforementioned provisions shall apply to the
10 net sales price of items sold by the COMPANY. It
will not apply to other products developed by the
COMPANY under other research contracts or
otherwise.
6.3 Value of the Royalties
----------------------
The sale of the product resulting from the project
will carry a royalty of 4% of net sales price as
15 per CLAUSE 3.- DURATION OF THE AGREEMENT
6.4 Use of the Royalties
--------------------
Royalties will be dispensed in the form of Research
and Development grants awarded to the UNIVERSITY's
Hydrogen Research Institute. Such grants may
represent the COMPANY's in-kind contribution to
larger "matching grant" projects, or may be the
20 integral contribution to a project that the
UNIVERSITY would exercise on behalf of the COMPANY.
However, if in a given year the royalties amount to
less than $5,000, such royalties will be disbursed
as a lump sum payment to the UNIVERSITY, as opposed
to a Research and Development Grant.
7. NET SALES PRICE OF EACH AND EVERY ITEM SOLD
The gross sales price is defined as the sales price charged or
25 billed to the first purchaser. The net sales price, for the
calculation for royalties, shall be the gross sales price for each
item minus the share of the agent, direct and indirect taxes and
custom duties, and other fees applicable to the product, trade or
quantity discounts actually allowed and taken in such amounts as
are customary in the trade, amounts repaid or credited by reason
30 of timely rejections or returns, in accordance with the rules
and regulations in effect in the countries and territories of
sales.
A sale exists only if payment is received, and is considered
cancelled if money received is refunded.
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APPENDIX IV
SIGNED COPY OF THE DEPARTMENT OF NATURAL RESOURCES OCTOBER 17,
1996 CONTRIBUTION AGREEMENT
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APPENDIX V
COPY OF THE CONTRIBUTION GRANT APPLICATION SUBMITTED TO DEPARTMENT
OF NATURAL RESOURCES, TITLED "DEVELOPMENT PROTOTYPE OF A HYBRID
POWER SOURCE FOR ARCTIC COMMUNICATIONS HYDROGEN
THERMOELECTRIC/FUEL CELL (HTEF) GENERATOR"
