-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GNOQ8DBzOnddQdUYEe7TljFAJEjdp43bNJO+E9OXzaJPQYxvGrBfKc8S0EAHfR0O SeHsN5OCxA8mKb5SXpuLIg== 0000950130-01-000614.txt : 20010206 0000950130-01-000614.hdr.sgml : 20010206 ACCESSION NUMBER: 0000950130-01-000614 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 26 FILED AS OF DATE: 20010205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVERA FUEL CELLS INC CENTRAL INDEX KEY: 0001126124 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 333-49500 FILM NUMBER: 1525260 BUSINESS ADDRESS: STREET 1: 15 ACORN PARK CITY: CAMBRIDGE STATE: MA ZIP: 02140 BUSINESS PHONE: 6174986000 MAIL ADDRESS: STREET 1: 15 ACORN PARK CITY: CAMBRIDGE STATE: MA ZIP: 02140 S-1/A 1 0001.txt AMENDMENT NO. 1 TO FORM S-1 As filed with the Securities and Exchange Commission on February 5, 2001 Registration No. 333-49500 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- NUVERA FUEL CELLS, INC. (Exact Name of Registrant as Specified in Its Charter) -------------- Delaware 3629 04-3403793 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. EmployerIdentification -------------- Number) Acorn Park Cambridge, MA 02140 (617) 498-7300 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) -------------- Mark A. Brodsky President and Acting Chief Executive Officer Nuvera Fuel Cells, Inc. Acorn Park Cambridge, MA 02140 (617) 498-7300 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------- Copies to: Richard D. Truesdell, Jr. David P. Falck John G. Crowley Jeffrey J. Delaney Davis Polk & Wardwell 450 Lexington Avenue Pillsbury Winthrop LLP One Battery Park Plaza New York, New York 10017 New York, New York 10004 (212) 450-4000 (212) 858-1000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] -------------- CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Proposed Title of Each Class Maximum Proposed Maximum of Securities to be Amount to be Offering Price Aggregate Amount of Registered Registered(1) Per Unit(2) Offering Price(2) Registration Fee - ---------------------------------------------------------------------------------------- Common Stock, par value $.01 per share........ 4,600,000 $20.00 $92,000,000 $24,288(3)
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Includes 600,000 shares that the underwriters have the option to purchase to cover over-allotments. (2) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933. (3) Previously paid. -------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Explanatory Note This registration statement contains two forms of prospectus: one to be used in connection with a U.S. and Canadian offering of the registrant's common stock, and one to be used in a concurrent international offering of the common stock outside the United States and Canada. The international prospectus will be identical to the U.S. prospectus except that it will have a different front cover page, underwriting section and back cover page. The U.S. prospectus is included herein and is followed by the alternate front cover page, alternate underwriting section and alternate back cover page to be used in the international prospectus, each of which has been labeled "Alternative Page for International Prospectus." ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subject to Completion Preliminary Prospectus dated February 5, 2001 PROSPECTUS 3,200,000 Shares [LOGO OF NUVERA FUEL CELLS] Common Stock ----------- This is Nuvera Fuel Cells, Inc.'s initial public offering. Nuvera is selling all of the shares. The U.S. underwriters are offering 3,200,000 shares in the U.S. and Canada and the international managers are offering 800,000 shares outside the U.S. and Canada. We expect the public offering price to be between $18.00 and $20.00 per share. Currently, no public market exists for the shares. We have applied for quotation of the shares on the Nasdaq National Market under the symbol "NVRA." Investing in the common stock involves risks that are described in the "Risk Factors" section beginning on page 6 of this prospectus. -----------
Per Share Total --------- ----- Public offering price............................. $ $ Underwriting discount............................. $ $ Proceeds, before expenses, to Nuvera Fuel Cells, Inc. ............................................ $ $
The U.S. underwriters may also purchase up to an additional 480,000 shares from Nuvera, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. The international managers may similarly purchase up to an additional 120,000 shares from Nuvera. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2001. ----------- Merrill Lynch & Co. Lehman Brothers ABN AMRO Rothschild LLC Bear, Stearns & Co. Inc. ----------- The date of this prospectus is , 2001. [ARTWORK] TABLE OF CONTENTS
Page ---- Summary.................................................................. 1 Risk Factors............................................................. 6 Special Note Regarding Forward-Looking Statements........................ 21 Use of Proceeds.......................................................... 22 Dividend Policy.......................................................... 22 Capitalization........................................................... 23 Dilution................................................................. 24 Selected Financial Data.................................................. 25 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 27 Unaudited Pro Forma Condensed Financial Information...................... 38 Business................................................................. 43 Management............................................................... 74 Related Party Transactions............................................... 85 Principal Stockholders................................................... 93 Description of Capital Stock............................................. 96 Shares Eligible for Future Sale.......................................... 99 United States Federal Income Tax Considerations for Non-U.S. Holders of Common Stock............................................................ 101 Underwriting............................................................. 103 Legal Matters............................................................ 107 Experts.................................................................. 107 Where You Can Find Additional Information................................ 108 Index to Financial Statements............................................ F-1
--------------- You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors." Unless the context otherwise requires, all references in this prospectus to "Nuvera," "we," "us" or "our" refer to Nuvera Fuel Cells, Inc., formerly Epyx Corporation, and its wholly-owned subsidiary, Nuvera Fuel Cells Europe S.r.l., formerly De Nora Fuel Cells S.p.A., during the periods following the merger described below and to their predecessors during the periods prior to the merger. Nuvera Fuel Cells, Inc. Our Business We are a designer and developer of fuel processors, proton exchange membrane fuel cell stacks, power modules and integrated fuel cell systems for stationary and transportation applications. By combining our fuel processors and fuel cell stacks into an integrated unit, we are designing, developing and testing power modules in the 1 kW, 5 kW and 10 kW power ranges. We plan to market our products both as components to be integrated with other technologies and as power modules or integrated fuel cell systems. We believe our fuel cell technologies will provide power and heat that are more energy efficient, environmentally cleaner and quieter than the current electric transmission grid, most current backup power alternatives and the internal combustion engine. We plan to bring to market our first premium power stationary products in 2002, our first residential stationary products in 2003 and our first transportation products in 2005. A fuel processor is a device that extracts hydrogen from most hydrocarbon fuels, such as gasoline, in a process known as reforming. A fuel cell is a device in which a fuel--typically hydrogen--reacts with an oxidant--typically oxygen--to produce electricity without combustion. A fuel cell stack is an assembly of fuel cells. Proton exchange membrane fuel cell stacks are fuel cell stacks in which the electrochemical reaction between hydrogen and oxygen takes place on a thin, plastic sheet which allows hydrogen protons to pass through while barring the passage of electrons. Our power modules, which form part of our integrated fuel cell systems, include a fuel processor, a fuel cell stack and other components necessary to produce DC power. Our integrated fuel cell systems combine our power modules with additional components and an inverter or power conditioner to convert DC power produced by the fuel cell stack into the AC power required by some electrical equipment and transmissions systems. Our Heritage Nuvera was formed in April 2000 through the merger of De Nora Fuel Cells S.p.A., the fuel cell subsidiary of the Italian engineering and electrode manufacturing concern De Nora S.p.A., and Epyx Corporation, the fuel processing subsidiary of the American business and technology consulting firm Arthur D. Little, Inc. Simultaneously with the merger, Amerada Hess, a leading independent energy company, purchased 5% of our capital stock from AD Little. Amerada Hess increased its equity ownership in Nuvera to 11% in July 2000 and to 16% in January 2001. As a result of the merger, we believe we are well positioned to compete in global stationary and transportation markets due to our ability to integrate our fuel processors and our fuel cell stacks into power modules and integrated fuel cell systems that we expect will generate clean, reliable and efficient energy using a variety of commonly available hydrocarbon fuels. 1 Our Target Markets We are targeting specific sectors of both the stationary and transportation markets for electrical power and heat. Within the stationary market, we are focusing on premium power, residential power and, to a lesser extent, small commercial power applications. . Premium Power Market. We plan to target the telecommunications sector of this market as the first market in which we will commercialize our products because of the willingness of participants in this sector to pay a premium for reliable, high quality power. We intend to bring our first commercially available premium power products to the telecommunications market in 2002. We expect that these products will be 1 kW to 5 kW power modules suitable for manufacturers of telecommunications backup systems, telephone switching centers and cellular transmission towers. . Residential Power Market. We are designing our residential power modules to generate between 1 kilowatt and 5 kilowatts of electrical power, depending on the needs of specific geographical markets around the world. In the U.S. residential market, our products will initially be focused on standby and primary electrical power. We believe the demand for our products in the European and Japanese residential markets will be focused primarily on combined heat and electrical power applications. We intend to bring our first commercially available residential products to market in 2003. In the transportation market, we plan to offer original equipment manufacturers and automobile manufacturers the choice of purchasing fuel processors or fuel cell stacks separately as components. We believe our gasoline fuel processing technology will facilitate the continued use of the existing fuel delivery infrastructure. Our fuel cell stacks for transportation applications are being designed for compactness, durability, and suitability for low-cost manufacturing. Our fuel processors and fuel cell stacks for transportation applications are being designed for integration into transportation power modules which will generate between 30 kilowatts and 250 kilowatts of electrical power to provide power for passenger car, bus and truck applications. We intend to bring our first commercially available transportation products to market in 2005. Our Strategy Our objective is to extend our leadership in the design, development and testing of fuel cell technologies and to bring about the successful commercialization of our products. Key elements of our strategy to achieve this objective include: . extending our technology leadership, . exploiting our design integration advantage, . exploiting our multi-fuel advantage, . focusing on early-adopter markets, . exploiting our multi-market advantage and . leveraging strategic relationships. --------------- We plan to maintain corporate and operational facilities in both Cambridge, Massachusetts and Milan, Italy. Our principal executive offices are located at Acorn Park, Cambridge, Massachusetts 02140 and our telephone number is (617) 498-7300. 2 The Offering Common stock offered by Nuvera: U.S. offering....................... 3,200,000 shares International offering.............. 800,000 shares ----------------- Total................... 4,000,000 shares Shares outstanding after the offering... 18,943,824 shares
Use of proceeds................... We intend to use the net proceeds of the offering for working capital and capital expenditures and general corporate purposes, including: . approximately $36.0 million to fund research and product development, . approximately $18.0 million for establishing new manufacturing facilities and for other capital expenditures over the next 18 months, and . approximately $10.0 million for expanding marketing and sales efforts. Risk factors...................... See "Risk Factors" and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of the common stock. Proposed Nasdaq National Market symbol............................ NVRA The number of shares outstanding after the offering: . excludes 2,465,736 shares reserved for issuance under our 2000 stock incentive plan, of which options to purchase 655,088 shares at a weighted average exercise price of $16.08 per share have been issued, . assumes that the underwriters' over-allotment options to purchase up to an additional 600,000 shares are not exercised, and . assumes the 14-for-1 stock split we will effect before the completion of the offering, unless we indicate otherwise. 3 Summary Financial Data You should read the summary historical and pro forma financial data of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) set forth below in conjunction with our consolidated financial statements and the notes thereto, "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information appearing elsewhere in this prospectus. The statement of operations data for the years ended December 31, 1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and 1999 are derived from the audited consolidated financial statements and the notes thereto of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus. The statement of operations data for the nine months ended September 30, 1999 and 2000 and the balance sheet data as of September 30, 2000 are derived from the unaudited consolidated financial statements and the notes thereto of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of our results of operations and financial position as of the end of and for such periods. Historical results are not necessarily indicative of the results that may occur in the future, and interim results are not necessarily indicative of the results that may be expected for any other interim period or a full year. As described in note 2 of the notes to our consolidated financial statements included elsewhere in this prospectus, the merger of De Nora Fuel Cells S.p.A. and Epyx Corporation has been accounted for under the purchase method of accounting and was treated as a reverse acquisition because, among other factors, the stockholder of De Nora Fuel Cells S.p.A. received the largest voting interest in the combined enterprise. Therefore, De Nora Fuel Cells S.p.A. was considered the acquiror for accounting purposes and recorded Epyx's assets and liabilities based upon their fair values at the date of acquisition. Since the transaction has been accounted for as a reverse acquisition, the summary financial data set forth below for all periods prior to the merger on April 4, 2000 represents the financial position and results of operations of De Nora Fuel Cells S.p.A. The summary financial data set forth below for periods subsequent to April 4, 2000 includes the financial position and results of operations of both De Nora Fuel Cells S.p.A. and Epyx. Accordingly, the summary financial data for the nine months ended September 30, 2000 is not comparable to the summary financial data for the nine months ended September 30, 1999 or to the years ended December 31, 1997 through 1999. The summary pro forma statement of operations data set forth below are derived from the unaudited pro forma condensed statements of operations of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) contained under "Unaudited Pro Forma Condensed Financial Information." The unaudited pro forma statement of operations data for the year ended December 31, 1999 and the nine months ended September 30, 2000 give effect to the merger as if it had occurred as of January 1, 1999. We have prepared the unaudited pro forma condensed statements of operations for informational purposes only and they are not necessarily indicative of what would have occurred had the merger occurred at that date or the results that may occur in the future. In accordance with SEC rules, the pro forma condensed statement of operations for the nine months ended September 30, 2000 and the year ended December 31, 1999 excludes $20.3 million of in-process research and development expense that is reflected in our unaudited historical consolidated statement of operations for the nine months ended September 30, 2000. The as adjusted balance sheet data set forth below give effect to the sale of the shares of our common stock in this offering, after deducting underwriting discounts and commissions and our estimated offering expenses. 4
Year Ended December 31, Nine Months Ended September 30, ------------------------------------------- --------------------------------- Pro Forma Pro Forma 1997 1998 1999 1999 1999 2000 2000 --------- --------- --------- ---------- --------- ---------- ---------- (Dollars in thousands, except per share amounts) Statement of Operations Data: Revenues Sales and contracts.... $ -- $ -- $ 574 $ 1,032 $ 436 $ 1,714 $ 1,775 Lease.................. 350 284 95 219 96 55 55 --------- --------- --------- ---------- --------- ---------- ---------- Total revenues......... 350 284 669 1,251 532 1,769 1,830 --------- --------- --------- ---------- --------- ---------- ---------- Cost of revenues Sales and contracts.... -- -- 216 3,963 255 2,862 4,761 Lease.................. 106 178 86 210 37 17 17 --------- --------- --------- ---------- --------- ---------- ---------- Total cost of revenues.............. 106 178 302 4,173 292 2,879 4,778 In-process research and development............ -- -- -- -- -- 20,300 -- Research and development expense, net........... 1,119 1,988 1,004 3,814 373 3,267 4,859 Selling, general and administrative expense................ 465 403 644 8,106 903 7,794 9,974 --------- --------- --------- ---------- --------- ---------- ---------- Loss from operations... (1,340) (2,285) (1,281) (14,842) (1,036) (32,831) (17,781) --------- --------- --------- ---------- --------- ---------- ---------- Interest expense........ -- -- 2 2 -- 41 41 Other (income) expense, net.................... -- -- 7 7 54 (38) (38) --------- --------- --------- ---------- --------- ---------- ---------- Loss before income tax benefit................ (1,340) (2,285) (1,290) (14,851) (1,090) (32,834) (17,784) Income tax benefit...... -- -- -- 1,149 -- 3,385 3,672 --------- --------- --------- ---------- --------- ---------- ---------- Net loss................ $ (1,340) $ (2,285) $ (1,290) $ (13,702) $ (1,090) $ (29,449) $ (14,112) ========= ========= ========= ========== ========= ========== ========== Net loss per common share--basic and diluted................ $ (.19) $ (.33) $ (.18) $ (.98) $ (.16) $ (2.49) $ (.99) ========= ========= ========= ========== ========= ========== ========== Shares used in computing basic and diluted net loss per common share.. 7,000,000 7,000,000 7,000,000 14,000,000 7,000,000 11,843,566 14,288,172 ========= ========= ========= ========== ========= ========== ==========
As of December 31, As of September 30, ------------------ ------------------- Actual As Adjusted 1998 1999 2000 2000 --------- ---------------- ----------- (In thousands) Balance Sheet Data: Cash and cash equivalents.............. $ -- $ 19 $12,212 $78,492 Working capital (deficiency)........... (5,280) 183 12,710 78,990 Accounts receivable--stockholders...... 115 400 1,115 1,115 Due from stockholder................... -- -- 1,304 1,304 Total assets........................... 2,158 2,340 71,606 137,886 Notes payable--stockholder............. -- 545 -- -- Due to stockholder..................... 5,248 -- -- -- Total non-current liabilities.......... 201 207 2,077 2,077 Total stockholders' equity (deficit)... (5,104) 282 63,806 130,086
5 RISK FACTORS Investing in our common stock will provide you with an equity ownership interest in Nuvera. As one of our stockholders, your investment will be subject to risks inherent in our business and our industry, as well as other risks relating to this offering. The price of our common stock may decline. You should carefully consider the following factors as well as other information contained in this prospectus before deciding to invest in shares of our common stock. RISKS RELATING TO NUVERA We have only been in business for a short time, and you have a limited basis for evaluating our performance We were formed in April 2000 by the merger of De Nora Fuel Cells S.p.A., the fuel cell subsidiary of De Nora S.p.A., and Epyx Corporation, the fuel processing subsidiary of Arthur D. Little, Inc. As a result, we are in the early stage of development and our proposed operations are subject to the risks inherent in the growth of a new business enterprise, including the absence of any significant operating history. We do not expect to produce our first commercially viable product until at least 2002. Accordingly, there is only a limited basis upon which you can evaluate our business and prospects. An investor in our common stock should consider the challenges, expenses and difficulties that we will likely face, and the problems and delays we may encounter, as a development stage company seeking to design, develop, build, test and commercialize new products in a variety of evolving markets around the world. As a development stage company, it will be difficult for us to predict future results and you should not rely on historical results as an indicator of future performance. We may have difficulty completing the integration of the former operations of De Nora Fuel Cells S.p.A. and Epyx Corporation Prior to the merger in April 2000, De Nora Fuel Cells S.p.A. and Epyx Corporation were separate corporate entities, wholly owned by unaffiliated companies. For the merger to be successful, we will need to complete the integration of the products, technologies, systems and personnel of the two companies. The integration of these two companies is complicated by the fact that the former Epyx and its related operations and personnel are located in Cambridge, Massachusetts while the former De Nora Fuel Cells and its related operations and personnel are located in Milan, Italy. The integration effort may disrupt our research, development and commercialization efforts, affect our ability to execute our corporate strategy, distract our management, result in the loss of key personnel or dilute our other resources. In addition, we rely on AD Little and De Nora and its affiliates for a number of services, including financial reporting, accounting and other administrative services. If the services provided by these entities are inadequate, interrupted or terminated, our business may be harmed. We are in the process of implementing our own systems for some of these functions. We cannot assure you that each implementation will be completed in a timely manner or on a cost-effective basis. We have a history of operating losses and anticipate continued losses and negative cash flow Our business has generated significant operating losses and negative cash flow since our inception and we expect our losses to continue. As of September 30, 2000, we had an accumulated deficit of approximately $37.0 million. We have not achieved profitability and expect to continue to incur net losses until we can produce sufficient revenues to cover our costs, which will primarily be incurred in research and product development activities to achieve the commercialization of our products. We expect the cost to produce our pre- commercial stationary prototypes during 2001 and our initial commercial stationary products during 2002 to be higher than their sales price. Furthermore, even if we achieve our objective of bringing our first 6 commercial stationary product to market in 2002, we anticipate that we will continue to incur losses and generate negative cash flow until we can cost- effectively produce and sell our products to the mass market. We may never become profitable. Even if we do achieve profitability, we may be unable to sustain or increase profitability or positive cash flow. We may not meet our product development and commercialization milestones and we may never complete the development of commercially viable products We have established product development and commercialization milestones that we use to assess our progress toward developing commercially viable products. These milestones relate to technology and design improvements as well as to dates for achieving development goals and conducting field trials and other demonstrations of our products. While we have been aggressive in setting our internal milestones and have been generally successful in meeting them, we cannot guarantee that we will successfully achieve our milestones in the future. Our product development efforts are subject to unanticipated and significant delays and technical or other problems. If we do experience delays in meeting our development goals, if our products exhibit technical defects or are unable to meet cost or performance goals, including power output, emissions, useful life or reliability, our commercialization schedule could be delayed beyond 2002, which is our goal for bringing our first premium power products to market. Failure to meet publicly announced milestones may have a material adverse effect on our operations and our stock price. We do not know when or whether we will successfully complete the development of commercially viable products. We must complete substantial additional research, development and testing on our technologies before we will have commercially viable products. This is particularly true in the areas of fuel processing and fuel cell system integration, which involve complex technologies and processes. In addition, while we are conducting tests to predict the durability and overall operating lives of our products, we will not have tested or evaluated our technologies over their projected useful lives prior to commercialization. Our success will depend upon our products and technologies meeting acceptable cost and performance criteria, and upon their timely introduction into the marketplace. Failure of our field trials could negatively affect demand for our products We are currently conducting laboratory tests and trials of our fuel processors and our fuel cell stacks at our facilities, at our customers' facilities and in the field. We plan to conduct additional laboratory tests and field trials in the future. We do not plan, however, to conduct field trials of our power modules or our integrated fuel cell systems until September 2001. We may encounter problems and delays during these laboratory tests and field trials for a number of reasons, including the failure of our technology or the technology of third parties. Many of these potential problems and delays are beyond our control. Any problem or perceived problem with our field trials, including the failure of the membranes or catalysts used in our fuel cell stacks or fuel processors to meet performance criteria, could materially harm our reputation and impair market acceptance of, and demand for, our products, which would substantially harm our business, financial condition and ability to achieve profitability. We have no experience manufacturing our products on a commercial basis To date, we have focused primarily on research and development and have no experience manufacturing fuel processors, fuel cell stacks, power modules or integrated fuel cell systems on a commercial basis. We do not know whether or when we will be able to develop efficient, low-cost manufacturing capabilities and processes that will enable us to meet the quality, price, engineering, design and production standards or production volumes required to successfully market our products. Even if we are successful in developing our manufacturing capability and processes, we do not know whether we will do so in time to meet our product commercialization schedule in our various target markets, or to satisfy the requirements of our distributors or customers. 7 Based on our commercialization plan, we anticipate that our existing production facilities will provide sufficient manufacturing and assembly capacity through 2002, and that we will need to develop joint ventures or develop additional large-scale manufacturing and assembly capacity in order to achieve mass market production by 2003. If our business grows more quickly than we anticipate, our existing production facilities will quickly become inadequate and we may need to seek out new or additional space, or identify suitable third-party manufacturers, earlier than 2003, at considerable cost to us. If our business does not grow as quickly as we expect, our existing production facilities would in part represent excess capacity for which we may not recover the cost; in that circumstance, our revenues may be inadequate to support our committed costs and our planned growth, and our gross margins and business strategy would suffer. To the extent any manufacturing relationships that we establish are exclusive in nature, we may be unable to enter into other arrangements at a time when the manufacturer with which we form a relationship is not successful in manufacturing our products or has reduced its commitment to manufacturing our products. If we cannot reduce the costs of our products, market acceptance of these products could be delayed or prevented Fuel cells currently cost significantly more than many established competing technologies, such as internal combustion engines and batteries. We expect the production costs of our initial stationary commercial products to be higher than their sales price. As a result, we believe that we will need to reduce the unit production cost of our products relative to competing technologies over time to maintain our ability to offer our products to customers in a cost-effective manner on a large commercial scale. Our ability to achieve cost reductions will depend on manufacturing process and engineering design enhancements; the degree to which some of these enhancements can be attained is not currently ascertainable. Our ability to achieve cost reductions will also depend on entering into suitable manufacturing and distribution relationships, as well as increasing sales volumes so we can achieve economies of scale. There can be no assurance that we will obtain higher production levels or that sales prices will ever exceed our production costs. We may not be able to establish strategic marketing and distribution relationships We are in the early stages of developing our marketing and distribution network. In order to expand our customer base in our target markets, we believe that we must enter into strategic marketing or distribution alliances or similar collaborative relationships, in which we ally ourselves with companies that have particular expertise in, or more extensive access to, the end users in these markets. For example, since our strategy in the European and Japanese residential markets calls for the provision of combined heat and power applications, it will be essential for us to establish relationships with manufacturers of furnaces, water heaters and boilers in order to integrate our power modules with their cogeneration technologies and distribute our combined co-branded products to homes. Similarly, we believe a critical prerequisite to entry into the transportation market will be the establishment of joint ventures or similar relationships with one or more vehicle manufacturers or their suppliers. One of our leading competitors in the market for transportation-related fuel cell systems has a well-established relationship with two leading automobile manufacturers, which is a significant competitive advantage because it provides this competitor with preferred access to broad market opportunities. Similarly, competitors in the stationary power market have strategic relationships with leading suppliers of power generation technology and electric utilities. Currently, we have no formal strategic marketing or distribution relationships in our core markets. We may not be able to identify or establish appropriate marketing or distribution relationships on a timely basis. Even if we enter into these types of relationships, we cannot assure you that the distributors with which we form relationships will focus adequate resources on selling our products or will be successful in selling them. In addition, we cannot assure you that we will be able to finalize collaborative relationships on favorable terms, and providing volume price discounts and other allowances along with significant costs incurred in customizing our products may reduce the potential profitability of these relationships. To the extent any distribution relationships that we establish are exclusive in nature, we may be 8 unable to enter into other arrangements at a time when the distributor with which we form a relationship is not successful in selling our products or has reduced its commitment to marketing our products. Failure to develop sufficient distribution and marketing relationships in our target markets will adversely affect our commercialization schedule and will limit our access to market opportunities. We depend upon third party suppliers for the development and supply of key components for our products We purchase several key components of our products from other companies. There are limited suppliers for some of the key components of our products. A supplier's failure to develop and supply components in a timely manner, or to supply components that meet our quality, quantity or cost requirements or technical specifications, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us, could harm our ability to manufacture our products. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers. We do not know when or whether we will secure long-term supply relationships with suppliers of all required components and subsystems for our integrated fuel cell systems, or whether such relationships will be on terms that will allow us to achieve our objectives. Failure to secure relationships with entities who will supply the required components for our products may impair our ability to carry out our business plan. We face intense competition and may be unable to compete successfully There are many companies engaged in all areas of traditional and alternative electric power generation in the United States, Canada, Europe and Asia, including, among others, major electric, oil, chemical, natural gas, automotive and specialized electronics firms, as well as universities, research institutions and government-sponsored companies. Each of our target markets is currently served by existing manufacturers with existing customers and suppliers. These manufacturers use proven and widely accepted technologies such as internal combustion engines and turbines as well as coal, oil and nuclear powered generators. Other entities are engaged in developing commercial forms of alternative power generation such as solar and wind power, low-emission reciprocating diesel engines, flywheel systems and microturbines. There are also a number of companies and other entities located in the United States, Canada, Europe and Asia that are developing fuel processors, fuel cell stacks utilizing proton exchange membrane fuel cell technology and integrated fuel cell systems. We also compete with companies that are developing applications, stationary, transportation and otherwise, using other types of fuel cell technologies, such as solid oxide and molten carbonate. These entities may have the research, manufacturing, marketing and sales capabilities to complete development and commercialization of commercially viable fuel cell products more quickly and effectively than we can. Many of our competitors have substantially greater financial, research and development, manufacturing, marketing and human resources, established relationships with original equipment manufacturers, name-brand recognition and established positions in the markets that we have targeted for penetration. Our stockholders AD Little and De Nora may compete with us by developing non- proton exchange membrane fuel cell technologies prior to 2004 and in the proton exchange membrane fuel cell market thereafter Under the investment and exchange agreement relating to the merger, with some exceptions, AD Little and De Nora, two of our stockholders, have agreed to not compete with us in reformate fueled direct hydrogen or direct methanol- fueled proton exchange membrane fuel cell systems until April 2004. In connection with the merger, we agreed to license non-exclusively to AD Little until 2010 various intellectual property rights 9 pertaining to gas-to-liquids fuel processing and fuel conversion for internal combustion engines. Accordingly, after April 2004, it is possible that AD Little and De Nora may compete with us in the development of proton exchange membrane fuel cell systems. The investment and exchange agreement does not restrict AD Little or De Nora from competing with us in the development of alternative power generation technologies other than proton exchange membrane fuel cell technology. For example, AD Little is currently involved in technology consulting for clients in various technologies, including solid oxide fuel cell, microturbine and photo-voltaic technologies. In some instances, this work involves AD Little scientists who also participated in the early-stage development of our fuel processor technology. AD Little's principal business is consulting in the area of technology product research and development for commercial and governmental clients worldwide. In light of the current businesses conducted by AD Little, De Nora and their respective affiliates, and the license that we granted to AD Little, it is possible that AD Little, De Nora or their affiliates may compete with us in the development of alternative power generation technologies other than proton exchange membrane fuel cell technologies both before and after April 2004. In addition, Amerada Hess, one of our other stockholders, is not restricted from competing with us in any fuel cell technology or distributed generation market. We cannot assure you that AD Little, De Nora, Amerada Hess or their respective affiliates will not compete with us and, to the extent that any of them are successful, that such competition will not materially adversely affect our business, prospects, financial condition or results of operations. We may have difficulty managing the expansion of our operations We are undergoing rapid growth in the number of our employees, the size of our physical plant in both Cambridge and Milan and the scope of our operations. For example, we began with 80 employees in April 2000 and will have approximately 195 by mid 2001. In order to manage our growth effectively, we must implement and improve our operational systems, procedures and controls. We are currently in the process of installing a new management information system. If we are unsuccessful or experience delays in implementing or improving our operational systems, procedures and controls, our business may be adversely affected. If we are successful in achieving market penetration of our products, we are likely to experience a significant strain on our management, operational and technical resources. We may have difficulty coordinating our Cambridge and Milan operations and managing the distribution challenges associated with producing our fuel cell stacks in Milan and shipping them to Cambridge for integration with our fuel processors. Our failure to manage our growth effectively would have a material adverse effect on our business, financial condition and ability to achieve or sustain profitability. We may not be able to sell our products if they are not compatible with the products and processes of third-party manufacturers or our potential customers Our success will depend upon our ability to make our products compatible with the products of third-party manufacturers, such as vehicle manufacturers or their suppliers, and the ability of these manufacturers to sell their products containing our fuel cell components or power modules. In addition, some of our products will be successful only if our potential customers redesign or modify their existing products or processes to fully incorporate our products and technologies. Our failure to make our products and technologies compatible with the products and processes of third-party manufacturers or the failure of potential customers to redesign or make necessary modifications to their existing products and processes to accommodate our products would significantly impair or preclude our ability to sell our products. We cannot predict with any degree of certainty whether we will be able to make our products compatible with the products and processes of third- party manufacturers to create a sufficient market for our products. Furthermore, we cannot assure you that third-party manufacturers will be able to market their products containing our components or power modules successfully, or that they will not alter their acceptance of our fuel cell technologies in favor of other energy product 10 solutions. Any integration, design, manufacturing or marketing problems encountered by third-party manufacturers or customers that will integrate our products could also adversely affect the market for our products and our financial results. Our failure to protect our intellectual property could result in the loss of valuable assets and lead to expensive litigation Proton exchange membrane fuel cell technologies were first developed in the 1950s and we do not believe we can achieve a significant proprietary position on the basic technologies used in integrated fuel cell systems. Similarly, fuel processor technology has been practiced on a large scale in the petrochemical industry for decades. Nonetheless, our ability to compete effectively against other companies will depend, in part, on our ability to protect our proprietary technologies, product designs and manufacturing processes through a combination of patent and trade secret protection, non- disclosure agreements and other arrangements. We do not know whether any of our pending patent applications will be granted or, in the case of patents issued or to be issued, that the claims allowed are or will be sufficiently broad to protect our technologies or processes. Moreover, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States and any resulting patents may be difficult to enforce. There can be no assurance that our competitors will not either independently develop proprietary information that is the same or similar to ours or obtain access to our proprietary information. In addition, there can be no assurance that we would prevail if third parties assert challenges to our intellectual property rights. If other parties believe we are infringing their patents, we could incur substantial costs defending patent infringement suits. If we conclude that other parties are infringing our patents, we could incur substantial costs prosecuting patent infringement suits. If we are found to be infringing third party patents, we do not know whether we will be able to obtain licenses to use such patents on acceptable terms, if at all. Failure to obtain needed licenses could delay or prevent the development, manufacture or sale of our products. Moreover, some foreign countries provide significantly less patent protection than the United States. Competitors' products may, in the future, infringe upon our patents and the cost of protecting our rights may be substantial, if not cost prohibitive, thereby undermining our ability to protect our technologies effectively. We rely, in part, on contractual provisions with our employees and third parties to protect our unpatented information, know-how and trade secrets. These agreements may be breached, for example, through reverse engineering, and we may not have adequate remedies for any breach. Our trade secrets may also be known without breach of such agreements or may be independently developed by competitors. If we are unable to continue to maintain the proprietary nature of our technology and processes, our competitors may be able to limit or eliminate any competitive advantages we may have, thereby harming our business prospects. While we are not currently engaged in any material intellectual property litigation, we could become subject to lawsuits in which it is alleged that we have infringed the intellectual property rights of others or commence lawsuits against others who we believe are infringing upon our rights. Any future involvement in intellectual property litigation could result in significant expense to us, adversely affecting the development of sales of the challenged product or intellectual property and diverting the efforts of our technical and management personnel, whether or not such litigation is resolved in our favor. We have historically relied on government contracts to fund research and development, and failure to receive funds allocated under these contracts may limit our ability to reach the commercialization stage Government research and development contracts historically have been our single most important source of cash flow and are expected to continue to represent a significant source of our cash flow in the future. In the first nine months of 2000, approximately 36% of our research and development costs were offset by government funding. In 1999, approximately 43% of the research and development costs of De Nora Fuel Cells S.p.A. and approximately 66% of the research and development costs of Epyx Corporation were offset by government funding. 11 Generally, our government research and development contracts are subject to the risk of termination at the convenience of the contracting agency. The government may also terminate or suspend our contracts if we materially fail to comply with the terms and conditions of the contracts, for example, by failing to meet our cost share obligations and reporting requirements, or if the government has notice or reasonable cause to believe that we are insolvent or otherwise unable to meet our cost share obligations. Furthermore, these contracts, irrespective of the amounts allocated by the contracting agency, are subject to periodic appropriations and the results of government or agency sponsored audits of our cost reduction efforts and our cost projections. We can only receive funds under these contracts, ultimately made available to us periodically, as a result of governmental appropriations processes. Accordingly, we cannot be sure that we will receive the full amounts allocated under our research and development contracts. We also cannot be sure that we will be able to finance or otherwise meet the cost sharing requirements of these contracts, which are conditions to receiving any amounts allocated under these contracts. Failure to receive the full amounts allocated under any of our existing government research and development contracts could materially adversely affect our commercialization plans. We currently serve as subcontractor to AD Little on the three U.S. government contracts under which we receive government funding. If the government terminates its contracts with AD Little, we will no longer receive funds under these contracts. Because AD Little is responsible for billing, collecting funds from the government and reimbursing our research and development expenses under these contracts, we are subject to the risk of delays in receiving these payments. Our government contracts could restrict our ability to commercialize our technology Our U.S. research and development contracts with government agencies are subject to the risk of termination at the convenience of the contracting agency, potential disclosure of our confidential information to third parties and the exercise of "march-in" rights by the government. March-in rights refer to the right of the U.S. government or government agency to exercise its non- exclusive, royalty-free, irrevocable worldwide license to any technology developed under contracts funded by the government if the contractor fails to continue to develop the technology. In addition, these "march-in" rights permit the U.S. government to take title to these patents and license the patented technology to third parties if the contractor fails to utilize the patents. Under regulations governing our government contracts, the government has rights to the data produced or delivered to it under these contracts and may disclose our confidential information to third parties unless the data have been developed at our private expense and embody trade secrets or are commercial or financial and confidential or privileged. In addition, under the Freedom of Information Act, any document that we submit to the government or to a contractor under a government contract is subject to public disclosure, unless exempted as a trade secret or as confidential commercial or financial information. As a condition to our research and development contracts funded by the European Union, we must grant the Joint Research Centre of the European Union a non-exclusive, royalty-free license and right to access and use patents, registered designs, copyrights and other information generated by any contractor or subcontractor working on the project. Under AD Little's contract under which we conduct some of our research relating to 50 kW fuel processors for transportation applications as subcontractor, the Department of Energy can require us to obtain or produce components for these fuel processors from sources located in the United States rather than foreign countries. We depend entirely upon vehicle manufacturers to purchase our products for transportation applications The sole market for the transportation applications of our products is and will continue to be car, bus and other vehicle manufacturers. We cannot guarantee that those manufacturers which have expressed interest in or conducted demonstrations of our products will ultimately place commercial orders for our transportation products. Each of these manufacturers has a strong investment in and commitment to the use of the internal 12 combustion engine, and some have invested in alternative technologies that may compete with our products. The failure of car, bus and other vehicle manufacturers to use our fuel cell technologies in their vehicles would have a material adverse effect on our business and financial results. The development of automobile models is a lengthy process. Based on discussions with automobile manufacturers, we anticipate that there will be a delay of at least three years between a decision by an automobile manufacturer to produce commercial vehicles powered by our fuel cell technologies and the actual production of such vehicles. The length of the decision-making process and the success of our commercialization plans will affect any demand for our transportation products by automobile manufacturers and, consequently, our financial position, results of operations and cash flows. We could be liable for environmental damages resulting from our research, development or manufacturing operations Our business exposes us to the risk of harmful substances escaping into the environment, resulting in potential personal injury or loss of life, damage to or destruction of property, and natural resource damage. Depending on the nature of the claim, our current insurance policies may not adequately reimburse us for costs incurred in settling environmental damage claims, and in some instances, we may not be reimbursed at all. Our business is subject to numerous international, federal, state and local laws and regulations that govern environmental protection and human health and safety. These laws and regulations have changed frequently in the past and it is reasonable to expect additional and more stringent changes in the future. Our operations may not comply with future laws and regulations and we may be required to make significant unanticipated capital and operating expenditures. If we fail to comply with applicable environmental laws and regulations, governmental authorities may seek to impose fines and penalties on us or to revoke or deny the issuance or renewal of operating permits and private parties may seek damages from us. Under those circumstances, we might be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damage claims. We have recently appointed our Acting Chief Executive Officer and are actively seeking a chief financial officer Mark A. Brodsky became our Acting Chief Executive Officer effective January 1, 2001. He is expected to resign as Executive Vice President, Finance and Development of one of our stockholders, AD Little, upon the execution of a formal employment agreement with us, at which time he will become our Chief Executive Officer. It may take some time for Mr. Brodsky to be fully integrated into our company. We are actively seeking a chief financial officer. We may have difficulty locating a suitable individual for chief financial officer. Any chief financial officer we appoint may take some time to be fully integrated into our company. Our future plans could be harmed if we are unable to attract or retain key personnel We have attracted a specialized workforce, including scientists, engineers and researchers. Based on our planned expansion, we will require a significant increase in the number of our employees and outside contractors. Our future success, therefore, will depend, in part, on attracting and retaining additional qualified management, sales and marketing and technical personnel and establishing and maintaining relationships with outside contractors. We do not know whether we will be successful in hiring or retaining qualified personnel, including a chief financial officer. We cannot assure you that the expense of this internal expansion will not exceed the net revenues generated. Since new management team members will not have a proven track record with us, we cannot assure you that they will be successful in overseeing their functional areas. We cannot guarantee that our sales and marketing team will successfully compete against the more extensive and well- funded sales and marketing operations of our current and future competitors. Our inability to hire qualified 13 personnel on a timely basis, or the departure of key employees, including Mark A. Brodsky, Jeffrey Bentley, Michele Tettamanti, James Calvin Cross III, William Mitchell and Antonio Maggiore, could harm our business and our expansion and commercialization plans. We do not have employment agreements with all of our key employees. We may be unable to obtain the additional capital needed to operate and grow our business, thereby requiring us to curtail or cease operations We will continue to have significant capital requirements in connection with our development activities and transition to commercial operations. In addition to the proceeds from this offering, we will require substantial additional funds to continue the research, development and testing of our technologies and products, to obtain patent protection relating to our technologies when appropriate and to manufacture and market our products. Except for the line of credit available to Nuvera Fuel Cells Europe S.r.l., or Nuvera Europe, we have no current arrangements with respect to any additional financing. The commitment of our stockholders to contribute up to $30 million of capital will terminate upon completion of this offering if the proceeds of this offering to Nuvera exceed $30 million. Consequently, there is no assurance that any additional financing will be available on commercially attractive terms, in a timely fashion, in sufficient amounts, or at all. We may have to issue stock to obtain financing, which may dilute your investment. If adequate funds are not available, we may have to scale back our operations, including our product development, manufacturing, marketing and distribution activities, all of which could cause us to lose both customers and market share to the extent we achieve it and ultimately cease operations. We are subject to risks inherent in international operations Since we plan to market our products and technologies both inside and outside the United States, we will be subject to the risks inherent in international operations. For the nine months ended September 30, 2000, we derived 87% of our revenues from sales or leases to or contracts with non-U.S. entities. We have limited experience developing and manufacturing our products to comply with the commercial and legal requirements of international markets. We may, in the future, also be subject to tariff regulations, non-tariff trade barriers and requirements for export licenses, particularly with respect to the export of some products, including catalysts. We face numerous challenges in international markets, including unexpected changes in regulator y requirements (including increases in duty rates), fluctuations in currency exchange rates, longer accounts receivable requirements and collections, difficulties in managing international operations and establishing international distribution channels, potentially adverse tax consequences, restrictions on repatriation of earnings and the burdens of complying with a wide variety of foreign laws. We currently do not intend to enter into any hedging or other similar agreements or arrangements to protect us against any currency risks. Intangibles represent a substantial percentage of our assets, the amortization of which will adversely affect our earnings As of September 30, 2000, our balance sheet reflected $52.2 million of intangible assets, or 73% of our total assets as of that date. The intangible assets consist of goodwill and other identifiable intangibles relating to our April 2000 merger. Amortization of these intangibles, which will occur over the next 5 to 7 years, will have a negative impact on earnings. In addition, we continuously evaluate whether events and circumstances have occurred that indicate the remaining balance of intangible assets may not be recoverable. When factors indicate that assets should be evaluated for possible impairment, including a determination that the revenue and expense assumptions used to value the intangible assets are not being realized, we may be required to reduce the carrying value of our intangible assets, which could have a material adverse effect on our financial results during the periods in which such a reduction is recognized. There can be no assurance that we will not be required to write down intangible assets in future periods. 14 Any acquisitions we make could disrupt our business and harm our financial condition Although we are not currently negotiating any acquisitions, as part of our growth strategy, we may review opportunities to acquire other businesses or technologies that would complement our products, expand the breadth of our target markets or enhance our technical capabilities. Acquisitions entail a number of risks that could materially and adversely affect our business and operating results, including: . problems integrating the acquired operations, technologies or products with our existing business and products; . constraints arising from increased expenses and working capital requirements; . constraints on our ability to incur additional debt; . dilution of our stock if we issue additional securities; . disruption of our ongoing business, diversion of capital and distraction of our management; . difficulties in retaining business relationships with suppliers and customers of the acquired companies; . difficulties in coordinating and integrating overall business strategies, sales and marketing and research and development efforts; . potential liabilities of businesses and facilities acquired; . difficulties in maintaining corporate cultures, controls, procedures and policies; . difficulties evaluating risks associated with entering markets in which we lack prior experience; and . potential loss of key employees. RISKS RELATING TO THE FUEL CELL INDUSTRY Market acceptance for fuel cell technologies may never develop or may take longer to develop than we anticipate Fuel cell technologies represent an emerging market, and we do not know whether potential distributors will want to purchase products using these technologies or whether potential end-users will want to use them. Because we and our competitors are designing products to capitalize on markets that currently utilize or are serviced by products from traditional and well- established power generation sources, such as the existing electric grid, engine generators and internal combustion engines, we and our competitors may face significant resistance from end users to adopt a new and alternative power source technology. In particular, if we are unable to reduce the cost of production of our products, we may be unable to reduce the price of our products to commercially viable levels. If a mass market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred to develop our products and may be unable to achieve profitability. The development of a mass market for our products may be affected by many factors that are out of our control, including: . the price of competitive products; . the future costs of gasoline, ethanol, methanol, natural gas, kerosene, propane, butane, home heating oil, diesel, hydrogen and other fuels used by fuel processors and fuel cell stacks; . consumer reluctance to try new products; . industry standards; 15 . consumer perceptions of the safety and performance of these products; and . regulatory requirements. Due to these and other factors, we cannot predict with any degree of certainty what our revenues and profitability, if any, will be in future periods. If we do achieve future profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future. If we fail to do so, our common stock price could suffer. Alternatives to fuel cell technologies could render our products uncompetitive or obsolete Proton exchange membrane fuel cell technology is one of a number of alternative energy products being developed today as a supplement to or replacement for the electric grid and internal combustion engine, including microturbines, solar power and wind power. Other types of fuel cell technologies are being actively pursued by a number of companies, and the technologies of choice for fuel cell stacks and processors have not yet been identified by customers. Improvements are also being made to the existing electric grid and internal combustion engine. Technological advances in alternative energy products, improvements in the electric grid or internal combustion engine or other fuel cell technologies may render our products uncompetitive or obsolete prior to commercialization or afterwards. Accordingly, if we are unable, for technical, legal, financial or other reasons, to adapt in a timely manner to changing market conditions or user requirements, our business, financial condition and results of operations could be seriously harmed. For example, it is possible to meet the vehicle emission requirements imposed by California and certain U.S. northeastern states, discussed below, by using technologies other than proton exchange membrane fuel cell technologies. Vehicles powered by batteries can receive full credit and vehicles powered by certain low emission internal combustion engines and hybrid vehicles which combine internal combustion or micro-turbine engines with batteries can receive partial credit toward the zero emission vehicle component of some of these laws. We can offer no assurance that automobile manufacturers will use fuel cell technologies in their vehicles to meet regulatory requirements as opposed to other available alternatives. Their failure to do so could have a material adverse effect on our business and financial results. Changes in government laws and regulations and electric utility industry restructuring may adversely affect demand for, or the viability of, products using fuel cell technologies The market for electricity generation products is heavily influenced by federal and state governmental regulations and policies concerning the electric utility industry. Changes in current regulatory standards could deter further investment in the research and development of alternative energy sources, including fuel cell technologies, and could result in a significant reduction in the potential market demand for products using fuel cell technologies. We cannot predict how the deregulation and restructuring of the electric and natural gas industry will affect the market for our products. For example, electric utility companies commonly charge fees to industrial customers for disconnecting from the grid, for using less electricity or for having the capacity to use power from the grid for backup purposes. Though these fees are not currently charged to residential customers, in connection with electric utility restructuring, it is possible that electric utility companies could charge similar fees to residential customers in the future. The imposition of these fees could increase the cost to customers of using residential fuel cell products and could make our residential products less attractive, thereby harming our revenue and profitability. To date, the interest by automobile manufacturers in proton exchange membrane fuel cell technology has been driven in large part by environmental laws and regulations, mainly in California, under the California Low-Emission Vehicle Program, which was adopted in 1990, and, to a lesser extent, certain U.S. northeastern 16 states. These laws and regulations set forth vehicle emission limitations and some of them require the manufacture and sale of "zero emission vehicles." Since their adoption, many of these laws and regulations have been challenged by automobile manufacturers and oil companies and may continue to be challenged in the future by these or other companies. For example, these industry groups have petitioned state regulators to revise or revoke these laws and regulations, in the case of the California law, and have sought judicial review of these laws and regulations, in the case of the New York and Massachusetts laws. As a result of these actions, these states have delayed the implementation of the "zero emission vehicle" component of their respective laws and have made more flexible the means by which automobile makers can meet the "zero emission vehicle" requirement. There can be no assurance that these laws and regulations will not be subject to further challenges or that these laws and regulations will not change in the future. Changes in these laws and regulations could further delay the implementation of the "zero emission vehicle" component of these laws and regulations and could result in the application of currently existing federal or other laws and regulations that limit vehicular emissions, but do not require the manufacture of zero emission vehicles which, in turn, could result in automobile manufacturers abandoning their interest in proton exchange membrane fuel cell-powered vehicles. In addition, if current laws and regulations in California and certain of the U.S. northeastern states are not kept in force or if further environmental laws and regulations are not adopted in these jurisdictions as well as in other jurisdictions, demand for vehicular proton exchange membrane fuel cell technologies may be limited. Under those laws and regulations requiring the manufacture and sale of "zero emission vehicles," manufacturers may satisfy the "zero emission vehicles" requirement in part through the sale of certain forms of "super ultra-low emission vehicles." We are designing our transportation fuel processors to meet the super ultra-low emission vehicle standards of the California Low-Emission Vehicle program and similar standards of certain of the U.S. northeastern states as they are enacted at the time of design. If these laws and regulations change, however, there can be no guarantee that our products will meet the requirements of these laws and regulations at the time we intend to bring these products to market or any other time in the future. Our business may become subject to future government regulation that may adversely affect our ability to sell our stationary products Once we begin to commercialize our stationary products, they may become subject to existing federal, state and local regulations governing electric and gas utilities and other entities. Our residential products and the installation of these products will likely become subject to oversight and regulation at the local level in accordance with state and local ordinances relating to pipeline connections, building codes and other safety related matters. Any government regulation may depend, in part, upon whether an integrated fuel cell system is placed outside or inside a home or business. At this time, we cannot anticipate which jurisdictions, if any, will impose regulations upon our products or the installation of our products. We also cannot anticipate the extent to which any existing or new regulations may adversely affect our ability to sell our products. Because fuel cell technologies are still in the developmental stage, industry-specific government regulations governing fuel cell technologies and their design, storage, transportation or installation do not yet exist. Significant government regulation has, however, covered the more traditional production of electrical energy. Accordingly, we believe governments may impose industry-specific regulations in the markets in which we plan to offer our products. Any new government regulation of our products, whether at the federal, state or local level, including any regulations relating to the installation and servicing of our products, may increase our costs and the price of our products and may have a negative effect on our revenue and profitability. Our products use flammable fuels which are inherently dangerous substances Our fuel cell products use hydrogen, natural gas and propane, which are flammable fuels that could leak and combust if ignited by another source. These dangers are present in any home appliance that uses 17 similar fuels, such as a gas furnace, stove or dryer and in automobiles which operate on gasoline, propane and natural gas. Any accidents involving our products or other products using similar flammable fuels could materially suppress demand for, or heighten regulatory scrutiny of, our products. We may also be exposed to product liability or other tort claims arising from a malfunction or the inadequate design of our products. Since our products use flammable fuels that are inherently dangerous substances, accidents involving our products could lead to personal injury or physical damage. Although we attempt to reduce the risk of these types of losses through liability limitation clauses in our agreements and insurance coverage, we cannot assure you that our efforts will effectively limit our liability or that we will not be held responsible for damages beyond the scope of our insurance coverage. Any liability for damages resulting from malfunctions or design defects could be substantial and could materially adversely affect our business and results of operations. In addition, a well-publicized actual or perceived problem could adversely affect the market's perception of our products resulting in a decline in demand for our products and could divert the attention of our management, which may materially adversely affect our financial condition and results of operations. RISKS RELATING TO THE OFFERING Our quarterly operating results are likely to be volatile in the future Because we are in the early stages of selling our products, with relatively few customers, we expect our order flow to continue to be uneven from period to period. Because a significant portion of our expenses are fixed, a small variation in the timing of recognition of revenue can cause significant variations in operating results from quarter to quarter. As a result, quarter to quarter comparisons of our revenues and operating results may not be meaningful. In addition, given the current stage of development of our products and the uncertainty of market acceptance of our products, we cannot predict our future revenues or results of operations accurately. It is likely that in one or more future quarters our operating results will fall below the expectations of securities analysts and investors. If this happens, the trading price of our common stock may be materially and adversely affected. Our common stock price is likely to be volatile The market price for our common stock is likely to be as volatile as the stock market in general and the market for technology-related stocks, including the stock of our competitors, which has been volatile. The market has experienced significant price and volume fluctuations that are often unrelated to the operating performance of particular companies. In addition, announcements of technological innovations or new competing technologies by our competitors, investor perception of our industry or our prospects, as well as our failure to meet the expectations of securities analysts or investors, may have a significant effect on the market price of our common stock. In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation. We may be involved in securities class action litigation in the future. Such litigation often results in substantial costs and a diversion of management's attention and resources and could harm our business, prospects, results of operations, or financial condition. We will be controlled by our significant stockholders as long as they own a majority of our common stock, which may lead to conflicts of interest Upon the completion of this offering, Arthur D. Little, Inc., De Nora New Energy Investments B.V. and Amerada Hess Corporation will retain approximately 77% of our outstanding common stock, or approximately 75% if the underwriters exercise in full their options to purchase additional shares. These stockholders will have the ability to exert significant influence over our board of directors and its policies as long as they own a majority of our common stock. For instance, these stockholders will be able to control the outcome of all stockholder votes, including votes concerning director elections, charter and bylaw amendments 18 and possible mergers, corporate control contests and other significant corporate transactions. As described in the section of this prospectus entitled "Related Party Transactions--New Stockholders' Agreement," prior to the completion of this offering, we will enter into a new stockholders' agreement with some of our existing stockholders, including these principal stockholders, which will contain provisions relating to the composition of our board of directors and registration rights. The new stockholders' agreement also contains provisions requiring 66 2/3% supermajority approval of various corporate actions, including mergers, substantial acquisitions, dividends, and approval or modification of our annual operating budget. These provisions may prevent us from taking actions that may be beneficial to our company or to you as a stockholder. Conflicts of interest may arise between us and AD Little and De Nora in a number of areas relating to our past and ongoing relationships as a result of the merger in April 2000 and AD Little's and De Nora's continued controlling interest in us. These may include: . the cost and quality of the substantial services rendered by AD Little, De Nora and affiliates of De Nora to us under various services and lease agreements with AD Little, De Nora and affiliates of De Nora; . disputes over AD Little's and De Nora's respective indemnification or other continuing obligations under the investment and exchange agreement effecting the merger and other agreements; and . disputes with respect to intellectual property rights assigned or licensed under various agreements in connection with the merger. Because of these ongoing relationships, it is possible that the decisions concerning the operation or interpretation of these agreements could be made from perspectives other than solely from our interests. We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. There has been no prior public market for our common stock Before this offering, there has been no public market for our common stock. An active trading market for our shares may not develop or be sustained following this offering. Purchasers in this offering may not be able to resell their shares at prices equal to or greater than the initial public offering price. The initial public offering price will be determined through negotiations between us and the underwriters and may not be indicative of the market price for these shares following this offering. Provisions of Delaware law and of our charter and bylaws may make a takeover more difficult Provisions in our certificate of incorporation and bylaws and in the Delaware corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt which is opposed by our management and board of directors. Public stockholders who might desire to participate in such a transaction may not have an opportunity to do so. We have a staggered board of directors, which makes it difficult for stockholders to change the composition of the board of directors in any one year. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors. In addition, upon completion of this offering, our board of directors will have the authority to issue shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by you. Your rights will be subject to, and may 19 be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock. Future sales of our common stock could adversely affect our stock price Substantial sales of our common stock in the public market following this offering, or the perception by the market that such sales could occur, could lower our stock price or make it difficult for us to raise additional equity capital in the future. After this offering, we will have 18,943,824 shares of common stock outstanding. Of these shares, the 4,000,000 shares sold in this offering will be freely tradeable. All the remaining 14,943,824 shares are subject to 180-day lock-up agreements. Up to 14,943,824 shares may be available for sale in the public market 180 days after the date of this prospectus, subject to compliance with Rule 144 under the Securities Act. Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the underwriters, may release stockholders from their lock-up agreements with the underwriters at any time and without notice, which would allow for an earlier sale of shares in the public market. Certain of our stockholders have the right to include 14,698,824 shares of our common stock in any registration of common stock made by Nuvera for its own account or for the account of other stockholders of Nuvera. In addition, after this offering, we also intend to register 2,465,736 shares of common stock for issuance under our 2000 stock incentive plan. Options to purchase 655,088 shares of common stock are issued and outstanding under the 2000 stock incentive plan, none of which have vested. We cannot predict if future sales of our common stock, or the availability of our common stock for sale, will harm the market price for our common stock or our ability to raise capital by offering equity securities. We will have broad discretion as to the use of the net proceeds from this offering Our board of directors and our management will have broad discretion over the use of the net proceeds of this offering. Investors will be relying on the judgment of our board of directors and our management regarding the application of the net proceeds of this offering. 20 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus, including the sections entitled "Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions and may differ materially from actual events or results. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors." These factors may cause our actual results to differ materially from any forward-looking statement. Although we believe that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results. 21 USE OF PROCEEDS We will receive net proceeds from this offering of $66,280,000, or $76,882,000 if the over-allotment options are exercised in full, assuming an initial public offering price of $19.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and our estimated offering expenses, including approximately $374,000 payable to Fineurop Soditic as compensation for its advisory services in connection with this offering. We intend to use these net proceeds for working capital and capital expenditures and general corporate purposes, including: . approximately $36.0 million to fund research and product development, . approximately $18.0 million for establishing new manufacturing facilities and for other capital expenditures over the next 18 months, and . approximately $10.0 million for expanding marketing and sales efforts. We may also use a portion of the net proceeds of this offering to acquire or make investments in businesses that are complementary to our business. The amount and timing of our actual expenditures will depend upon numerous factors, including completion of our product development activities, ability to commercialize our products and market acceptance of our products. Further, the amounts above are only broad estimates and we have not determined with any certainty the amounts we plan to spend on any of the areas listed above or the timing of these expenditures. As a result, our management will have broad discretion to allocate the net proceeds from this offering and our use of the net proceeds may change substantially. Pending their use, we plan to invest these proceeds in government securities and other short-term, investment-grade securities. DIVIDEND POLICY We have never declared or paid any cash dividends on our common stock. We intend to retain our future earnings, if any, to finance the operation and expansion of our business. Accordingly, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. 22 CAPITALIZATION The following table sets forth our cash and cash equivalents and total capitalization as of September 30, 2000 and as adjusted to reflect the sale by us of 4,000,000 shares of common stock pursuant to this offering, assuming an initial public offering price of $19.00 per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and the estimated offering expenses that we expect to pay. You should read this table together with our consolidated financial statements and the notes thereto appearing elsewhere in this prospectus.
As of September 30, 2000 --------------------- Actual As Adjusted -------- ----------- (In thousands) Cash and cash equivalents................................ $ 12,212 $ 78,492 ======== ======== Stockholders' equity: Common Stock, $.01 par value per share, 28,000,000 shares authorized, actual; 14,943,824 shares issued and outstanding, actual; 28,000,000 shares authorized, as adjusted; 18,943,824 shares issued and outstanding, as adjusted............................. $ 149 $ 189 Additional paid-in capital............................ 100,957 167,197 Accumulated other comprehensive income (loss)......... (257) (257) Deficit accumulated during the development stage...... (37,043) (37,043) -------- -------- Total stockholders' equity......................... 63,806 130,086 -------- -------- Total capitalization............................ $ 63,806 $130,086 ======== ========
The outstanding share information above excludes an aggregate of 2,465,736 shares of common stock currently reserved for issuance under our 2000 stock incentive plan, of which options to purchase 655,088 shares at a weighted average exercise price of $16.08 per share have been issued. 23 DILUTION Our net tangible book value as of September 30, 2000 was approximately $11.6 million or $.78 per share of common stock. Net tangible book value per share is determined by dividing our tangible net worth, total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding at that date. After giving effect to the sale by us of the 4,000,000 shares of common stock in this offering, at an assumed initial public offering price of $19.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and the receipt and application of the net proceeds, our pro forma net tangible book value as of September 30, 2000 would have been $77.9 million, or $4.11 per share of common stock. This represents an immediate increase in net tangible book value to existing stockholders of $3.33 per share and an immediate dilution to new investors of $14.89 per share. The following table illustrates this share dilution: Assumed initial public offering price per share................... $19.00 Net tangible book value per share as of September 30, 2000..... $ .78 Increase in net tangible book value per share attributable to new investors................................................. 3.33 ----- Pro forma net tangible book value per share after this offering...................................................... 4.11 ------ Dilution per share to new investors............................... $14.89 ======
Dilution is determined by subtracting net pro forma tangible book value per share after the offering from the initial public offering price per share. The following table sets forth as of September 30, 2000, the number of shares of common stock purchased from us, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by the new investors purchasing shares in this offering. We have assumed an initial public offering price of $19.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and we have not deducted estimated underwriting discounts and commissions and offering expenses in our calculation:
Shares Purchased Total Consideration ------------------ -------------------- Average Price Number Percent Amount Percent Per Share ---------- ------- ------------ ------- ------------- Existing stockholders.... 14,943,824 79% $ 36,886,000 33% $ 2.47 New investors............ 4,000,000 21 76,000,000 67 19.00 ---------- --- ------------ --- Total................. 18,943,824 100% $112,886,000 100%
The total consideration paid by the existing stockholders includes $15,885,000 of payables to De Nora S.p.A. and AD Little which were converted to common stock since the inception of De Nora Fuel Cells S.p.A. and Epyx Corporation and $6,000,000 of cash contributed to capital in May 2000 under the terms of the investment and exchange agreement. The foregoing tables also assume no exercise of the underwriters' over- allotment options or of outstanding stock options after September 30, 2000. There are issued and outstanding options to purchase 655,088 shares of common stock under our 2000 stock incentive plan, at a weighted average exercise price of $16.08 per share. To the extent these options are exercised, there will be further dilution to new investors. 24 SELECTED FINANCIAL DATA You should read the selected historical financial data of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) set forth below in conjunction with our consolidated financial statements and the notes thereto, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information appearing elsewhere in this prospectus. The statement of operations data for the years ended December 31, 1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and 1999 are derived from the audited consolidated financial statements and notes thereto of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus. The statement of operations data for the years ended December 31, 1995 and 1996 and the balance sheet data as of December 31, 1995, 1996 and 1997 are derived from our unaudited financial statements not included in this prospectus. The statement of operations data for the nine months ended September 30, 1999 and 2000 and the balance sheet data as of September 30, 2000 are derived from the unaudited consolidated financial statements and notes thereto of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus. The unaudited financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of our results of operations and financial position as of the end of and for such periods. Historical results are not necessarily indicative of the results that may occur in the future, and interim results are not necessarily indicative of the results that may be expected for any other interim period or a full year. As described in note 2 of the notes to our consolidated financial statements included elsewhere in this prospectus, the merger of De Nora Fuel Cells S.p.A. and Epyx Corporation has been accounted for under the purchase method of accounting and was treated as a reverse acquisition because, among other factors, the stockholder of De Nora Fuel Cells S.p.A. received the largest voting interest in the combined enterprise. Therefore, De Nora Fuel Cells S.p.A. was considered the acquiror for accounting purposes and recorded Epyx's assets and liabilities based upon their fair values at the date of acquisition. Upon consummation of the merger, approximately $71.6 million was allocated to developed technology, in-process research and development, assembled workforce, patents, deferred income taxes and goodwill. Upon consummation of the merger, the in-process research and development in the amount of $20.3 million was expensed and is reflected in our unaudited consolidated statement of operations for the nine months ended September 30, 2000. Our statement of operations for the nine months ended September 30, 2000 also includes $4.4 million for amortization of the developed technology, assembled workforce, patents and goodwill over estimated useful lives of six, four, five and seven years, respectively. Since the transaction has been accounted for as a reverse acquisition, the selected financial data set forth below for all periods prior to the merger on April 4, 2000 represents the financial position and results of operations of De Nora Fuel Cells S.p.A. The selected financial data set forth below for periods subsequent to April 4, 2000 includes the financial position and results of operations of both De Nora Fuel Cells S.p.A. and Epyx. Accordingly, the selected financial data for the nine months ended September 30, 2000 is not comparable to the selected financial data for the nine months ended September 30, 1999 or to the years ended December 31, 1995 through 1999. 25
Nine Months Year Ended December 31, Ended September 30, ----------------------------------------------------- --------------------- 1995 1996 1997 1998 1999 1999 2000 --------- --------- --------- --------- --------- --------- ---------- (In thousands, except share and per share amounts) Statement of Operations Data: Revenues Sales and contracts.... $ -- $ -- $ -- $ -- $ 574 $ 436 $ 1,714 Lease.................. 203 203 350 284 95 96 55 --------- --------- --------- --------- --------- --------- ---------- Total revenues......... 203 203 350 284 669 532 1,769 --------- --------- --------- --------- --------- --------- ---------- Cost of revenues Sales and contracts.... -- -- -- -- 216 255 2,862 Lease.................. 30 30 106 178 86 37 17 --------- --------- --------- --------- --------- --------- ---------- Total cost of revenues.............. 30 30 106 178 302 292 2,879 --------- --------- --------- --------- --------- --------- ---------- In-process research and development............ -- -- -- -- -- -- 20,300 Research and development expense, net........... 180 189 1,119 1,988 1,004 373 3,627 Selling, general and administrative expense................ 125 324 465 403 644 903 7,794 --------- --------- --------- --------- --------- --------- ---------- Loss from operations... (132) (340) (1,340) (2,285) (1,281) (1,036) (32,831) Interest expense........ -- -- -- -- 2 -- 41 Other (income) expense, net.................... -- -- -- -- 7 54 (38) --------- --------- --------- --------- --------- --------- ---------- Loss before income tax benefit................ (132) (340) (1,340) (2,285) (1,290) (1,090) (32,834) Income tax benefit...... -- -- -- -- -- -- 3,385 --------- --------- --------- --------- --------- --------- ---------- Net loss................ $ (132) $ (340) $ (1,340) $ (2,285) $ (1,290) $ (1,090) $ (29,449) ========= ========= ========= ========= ========= ========= ========== Net loss per common share--basic and diluted................ $ (.02) $ (.05) $ (.19) $ (.33) $ (.18) $ (.16) $ (2.49) ========= ========= ========= ========= ========= ========= ========== Shares used in computing basic and diluted net loss per common share.. 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 7,000,000 11,843,566
As of December 31, As of September 30, ------------------------------------------ ------------------- 1995 1996 1997 1998 1999 2000 ------- ------- ------- ------- ------ ------------------- (In thousands) Balance Sheet Data: Cash and cash equivalents............ $ -- $ -- $ -- $ -- $ 19 $12,212 Working capital (deficiency)........... (1,189) (1,579) (2,762) (5,280) 183 12,710 Accounts receivable-- stockholders........... -- -- -- 115 400 1,115 Due from stockholder.... -- -- -- -- -- 1,304 Total assets............ 493 572 1,031 2,158 2,340 71,606 Notes payable-- stockholder............ -- -- -- -- 545 -- Due to stockholder...... 1,241 625 2,185 5,248 -- -- Total non-current liabilities............ 123 161 174 201 207 2,077 Total stockholders' equity (deficit)....... (1,050) (1,431) (2,542) (5,104) 282 63,806
26 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements, the notes to those financial statements and other financial information appearing elsewhere in this prospectus. In addition to historical information, the following discussion and other parts of this prospectus contain forward-looking statements that reflect our plans, estimates, intentions, expectations and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the "Risk Factors" section and elsewhere in this prospectus. Overview Our Formation We were formed in April 2000 through the merger of De Nora Fuel Cells S.p.A. and Epyx Corporation. We design and develop fuel processors, proton exchange membrane fuel cell stacks, power modules and integrated fuel cell systems for stationary and transportation applications. Under the terms of the merger, the stockholder of De Nora Fuel Cells S.p.A. received 50% of the capital stock of Epyx in exchange for 100% of the capital stock of De Nora Fuel Cells S.p.A. Immediately after the merger, this stockholder controlled four of the eight seats on our board of directors. Accordingly, the merger was accounted for under the purchase method of accounting and was treated as a reverse acquisition because, among other factors, this stockholder received the largest voting interest in the combined enterprise. De Nora Fuel Cells S.p.A. was considered the acquiror for accounting purposes and recorded Epyx's assets and liabilities based upon their fair values at the date of acquisition. Since the transaction has been accounted for as a reverse acquisition, the consolidated financial statements of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) and other financial information included in this prospectus for all periods prior to the merger on April 4, 2000 represent the financial position, results of operations and cash flows of De Nora Fuel Cells S.p.A. These financial statements and financial information for periods subsequent to April 4, 2000 include the financial position, results of operations and cash flows of both De Nora Fuel Cells S.p.A. and Epyx. Accordingly, our results of operations for the nine months ended September 30, 2000 are not comparable to the nine months ended September 30, 1999 or to the years ended December 31, 1997 through 1999. The historical financial statements and the notes thereto of Epyx Corporation (a development stage company) as of and for the years ended December 31, 1997, 1998 and 1999 and as of and for the three months ended March 31, 2000 and 1999 are included elsewhere in this prospectus. De Nora Fuel Cells S.p.A. began its fuel cell research operations in 1989 and conducted its activities as an integral part of the overall operations of its indirect parent company, Norfin S.p.A. Epyx began its operations in July 1991 and all fuel cell development activities were conducted as an integral part of the overall operations of its parent company, AD Little. Accordingly, the financial statements of De Nora Fuel Cells S.p.A. and Epyx have been prepared on a carve-out basis for the purpose of presenting the financial position, results of operations and cash flows of Nuvera. 27 Value of Shares Exchanged. The following is a summary of the value of the shares exchanged in the reverse acquisition and the allocation of that value to the assets and liabilities of Epyx at the date of acquisition (dollars in thousands): Value of shares exchanged: Value of 100% interest in Epyx on April 4, 2000 (45% interest in the combined enterprise)............................................... $72,000 Acquisition costs incurred by De Nora Fuel Cells S.p.A.............. 100 ------- Total............................................................. $72,100 ======= Allocation of value of shares exchanged: Tangible net assets acquired........................................ $ 500 Intangible assets acquired--developed technology, assembled workforce and patents.............................................. 15,600 Deferred income tax liabilities..................................... (5,225) In-process research and development................................. 20,300 Goodwill............................................................ 40,925 ------- Total............................................................. $72,100 =======
Nuvera was valued on a 100% basis for the purpose of allocating the value of the shares exchanged to the identifiable intangible assets. For accounting purposes, the effective consideration for a 100% interest in Epyx was a 45% minority equity interest in Nuvera retained by AD Little. On the date of acquisition, Amerada Hess purchased a 5% minority equity interest in Nuvera from AD Little in an arm's length transaction for $10 million. Included in the investment agreement between Amerada Hess and AD Little was an option to acquire an additional 700,000 shares of our common stock held by AD Little at a per share price equal to the midpoint of the range between $14.29 and the fair market value at the date of exercise. After considering a number of factors including an outside appraisal, our management concluded that the fair market value as of April 4, 2000 of the stock option acquired by Amerada Hess was $2 million and the fair market value as of April 4, 2000 of the 5% minority equity interest in Nuvera was $8 million. Since Amerada Hess purchased a minority equity interest in Nuvera for cash in an arm's length transaction on the date of acquisition, our management considered this transaction to be the most relevant measurement of value of a minority interest in the equity of Nuvera on April 4, 2000. Accordingly, the fair market value of the consideration to acquire a 100% interest in Epyx was estimated to be $72.1 million, including $100,000 in merger costs. Overall Methodology to Allocation of Value. All identifiable intangible assets were assigned a portion of the value of the shares exchanged in the merger on the basis of their calculated allocations in accordance with the provisions of Accounting Principles Board (APB) Opinions No. 16, "Business Combinations" and No. 17, "Intangible Assets." Intangible assets identified were developed technology, in-process research and development, an assembled workforce and patents. The excess of the value of the shares exchanged over the fair value of identifiable intangible net assets was allocated to goodwill. The developed technology and in-process research and development were determined using the income method. Revenue and expense projections as well as technology assumptions were prepared through 2015 based on information provided by management. Revenue assumptions reflect probable contract revenues from various governmental and commercial funding sources, as well as projected product sales. Total revenues include research and development/prototype revenue, stationary revenue and transportation revenue. The total revenues were analyzed for each of the three primary categories of products: developed/existing technology, in-process technology, and future technology. For each category, revenue was projected based on the expected development of technology for each product. Existing technology revenue relates to the actual sales of prototype products that incorporate the existing technology. 28 Cost of revenues, depreciation and general and administrative expenses were estimated based on management's projections, review of market and industry data, and discussions with management. Research and development expenses were divided into: . costs to complete projects related to current technology, . costs for developed products that have already been introduced to the market ("maintenance research and development") and . costs to complete future technologies. Total research and development was allocated between costs to complete and maintenance based on an allocation of a majority of the expenses to costs to complete with the remainder allocated to maintenance based on management estimates. In 2000, approximately 15% of the costs related to maintenance, while the balance related to costs to complete in-process projects. The research and development that was in-process at the valuation date was assumed to have been completed by the end of 2003. The remaining research and development costs were allocated between maintenance and costs to complete future technologies. The income tax rate was based on an estimated federal and state corporate tax rate of 40%. The patents were valued utilizing the relief from royalty method of the income approach and the assembled workforce was valued on a replacement cost basis. The relief from royalty method is based on the premise that in lieu of ownership, a firm would be willing to pay a royalty for the use of patent technology. An assembled workforce is the presence of a skilled employee base that is knowledgeable about company procedures and possesses expertise in certain fields that are important to continued profitability and growth of the company. The developed technology, assembled workforce, patents and goodwill will be amortized on a straight-line basis over their useful lives of 6, 4, 5 and 7 years, respectively. Development Stage Company We are a development stage company. Since inception, we have incurred approximately $37.0 million in losses, including $20.3 million resulting from the write-off of our in-process research and development in connection with the merger, which was recorded in the nine months ended September 30, 2000. Our losses have resulted principally from costs incurred in research and development and from general and administrative costs associated with our operations. Research grants from the U.S. and Italian governments and the European Union have been our single most important source of cash flow. We have primarily depended upon advances, loans and capital contributions from our stockholders to meet our remaining financing needs. We expect to continue to incur losses as we expand our product development and commercialization program and prepare for the commencement of manufacturing operations. We expect that losses will fluctuate from quarter to quarter and that such fluctuations may be substantial as a result of, among other things, the number of products we produce and test and potential design changes required as a result of testing. There can be no assurance that we will manufacture or sell our products successfully or ever achieve or sustain profitability. Revenues Our major source of revenues is the sale and lease of fuel cell stacks and fuel processors to end-users. Given the early state of fuel cell technology, our sales practice in our initial years was to test the fuel cell stack prototypes by leasing them to customers. In 1999, we began to offer our prototype fuel cell stacks for sale to customers in addition to leasing them. Accordingly, our fuel cell stack revenues are now primarily generated through sales and not through leases. Revenues from prototype fuel processors are primarily generated through 29 long-term contracts where title does not pass to the customer. Under these long-term contracts, we design and develop customized fuel processors for our customer's use to test and measure the commercial viability of fuel cell systems. Most contracts specify minimum performance standards to be maintained. Some contracts require us to install the equipment and to provide support during the testing period. Customers are required to share the test data results with us. The customer returns the fuel processor at the end of the test period. Revenues on products where title passes to the customer and that are sold without the right to return and without customer acceptance are recognized when the product has been shipped and we have met our obligations under the sales contract. Revenues on products requiring us to also perform installation, primarily fuel cell stacks, are recognized when the installation is complete. Provisions for warranty are estimated and accrued at the time of sale. Estimates of the warranty reserve are reviewed and revised periodically and accruals for such provisions are recorded in the accounting period in which the revisions are made. Revenues on long-term contracts, primarily prototype fuel processors used for research and development purposes where title does not pass to the customer, are recognized on the percentage-of-completion method based on the costs incurred to date as compared to the estimated total costs for each contract. Management has estimated the total costs to complete these contracts and compared these costs to the contractual revenue. On contracts for which a loss is expected, a liability for the entire loss expected on the contract is accrued. We have recorded a reserve for estimated losses on uncompleted contracts of $657,000 as of September 30, 2000. Estimates of total cost to complete the contract are reviewed and revised periodically and accruals for estimated losses for such revisions are recorded in the accounting period in which the revisions are made. Revenues from consulting contracts are recognized as services are performed. Lease revenues are recognized ratably over the lease period. Under arrangements in which a third party funds a portion of the research and development costs on a specific project, the direct materials and labor costs of that project are recorded as a cost of revenue, while overhead and general and administrative expenses allowable for inclusion in the cost reimbursement calculation are recorded as selling, general and administrative expenses. Cost of Revenues Cost of revenues includes all the costs attributable to the sale and the lease of our products, including direct material, direct labor, overhead, installation and delivery. Cost of lease revenues primarily represents depreciation expense on fuel cell stacks held for lease which is recorded on a straight-line basis over an estimated average useful life of 4.4 years. Research and Development Expense, Net Research and development expense, which includes personnel costs, manufacturing expenses and outsourcing services, consists of expenditures for research conducted by Nuvera and include the net costs incurred under research grants with the U.S. and Italian governments and the European Union. The research grants, which generally require us to absorb 12% to 70% of the total costs incurred for a particular development project, qualify as best-efforts arrangements and, therefore, are recorded as an offset to our research and development expenses. Contracts are deemed to be best-efforts arrangements when all of the following elements are met: . the sole or principal customer is the U.S. or Italian government or European Union; 30 . the activities performed qualify as research and development under Statement of Financial Accounting Standards, or SFAS, No. 2, "Accounting for Research and Development Costs"; . we retain a right to the data and results of the research and development; . the total costs at the inception of the contract are expected to exceed the amount of the grant; and . we are obligated to perform only on a best-efforts basis to achieve the agreed-upon objectives. The total costs incurred under these arrangements and the total amount of funding netted against research and development during the years ended December 31, 1997, 1998 and 1999, the nine months ended September 30, 1999 and 2000, and cumulative from inception to September 30, 2000 were as follows (dollars in thousands):
Nine Months Cumulative From Ended March 30, 1989 December 31, September 30, (Inception) to -------------------- ------------- September 30, 1997 1998 1999 1999 2000 2000 ------ ------ ------ ------ ------ --------------- Research and development costs incurred............ $1,751 $3,409 $1,757 $1,021 $5,630 $16,351 Government funding offset against costs............. 632 1,421 753 648 2,003 6,673 ------ ------ ------ ------ ------ ------- Research and development expense, net.............. $1,119 $1,988 $1,004 $ 373 $3,627 $ 9,678 ====== ====== ====== ====== ====== =======
Selling, General and Administrative Expense Selling, general and administrative expense is primarily comprised of personnel costs, sales expenses, administrative services, professional fees, rents and stock-based compensation expense as well as the amortization of goodwill and other intangible assets resulting from the merger. Allocations from Norfin S.p.A. and AD Little The financial statements of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus include allocations of general corporate overhead expenses related to the corporate headquarters and common support activities of Norfin S.p.A. and AD Little, including information technology, financial, treasury, legal, insurance and other corporate functions as well as certain costs of operations including office rent and facility charges. These costs have been allocated to Nuvera using methodologies primarily based on headcount and usage. The total costs allocated to Nuvera were $1.629 million and $302,000 during the nine months ended September 30, 2000 and 1999, and $465,000, $465,000 and $403,000 for the years ended December 31, 1999, 1998 and 1997. Although management believes the allocations are reasonable, the costs of these services to Nuvera may not be indicative of the costs that would have been incurred if De Nora Fuel Cells S.p.A and Epyx Corporation had been stand alone entities. Non-Cash Stock Compensation Expense On October 10, 2000, we granted 245,000 shares of our common stock contributed to us by AD Little to certain of our long-term employees, including some of our executive officers, in recognition of their past service to us. We have provided $1.8 million of loans to the grantees to enable them to pay the income taxes related to the grants. The loans will carry interest at a rate of 8.5% per year and the principal of and interest on these loans will be forgiven from repayment by the employee over a period of two years if the employee remains an employee of Nuvera. The grants were fully vested immediately. We will record additional compensation expense as these loans are forgiven in an amount equal to the principal and accrued interest forgiven. In addition, we will record stock-based compensation expense of approximately $4.7 million in the three months ended December 31, 2000 relating to this grant. In connection with these transactions, AD Little made an additional capital contribution to us of approximately $2.2 million in November 2000. 31 The portion of the stock grants collateralizing the employee loans will be accounted for under variable plan accounting. Therefore, additional stock- based compensation will be recorded in the future on the collateralized grants based on the difference between the value of the common stock at date of grant and the fair value of the common stock at each reporting date. Our stockholders also approved our 2000 stock incentive plan in September 2000, pursuant to which options to purchase up to 2,465,736 shares of our common stock may be granted to employees, directors and consultants. The options will vest over a period of 4 years from the date of grant. In November 2000, we granted options to purchase 17,276 shares of our common stock at an exercise price of $14.29 per share to non-employees under our 2000 stock incentive plan. We will record stock-based compensation of $184,000 during the three months ended December 31, 2000. The fair value of the stock options at the date of grant was measured using the Black-Scholes option pricing model based on an estimated fair value of $19.00 per share representing the midpoint of the expected offering range for our common stock in this initial public offering, a risk-free interest rate of 6.0% per year, an expected option life of 2 years, no dividends and a volatility of 84.4%. Additional stock-based compensation will be recorded over the four-year vesting period based on the difference between the fair value of the common stock at the date of grant and the fair value of the common stock at each reporting date. In November 2000, options to purchase 637,812 shares of our common stock (309,498 shares at an exercise price of $14.29 per share and 328,314 shares at an exercise price of $17.86 per share) were granted to certain key employees under our 2000 stock incentive plan. To the extent these options are granted at an exercise price below the fair market value at the date of grant, we will record deferred compensation for the difference between the fair market value at the date of grant and the exercise price. We will record deferred compensation of approximately $1,834,000 relating to these option grants to employees based on an estimated fair market value of $19.00 per share representing the mid-point of the offering range for our common stock in this initial public offering. The deferred compensation will be amortized and recognized as stock-based compensation expense as the options vest over the related four-year vesting period. In connection with stock options granted to employees in the three months ended December 31, 2000, we will record stock- based compensation expense of $153,000. Accounts Receivable-Stockholders Accounts receivable-stockholders consists primarily of amounts that AD Little owes us in respect of various research and development services we have provided under three U.S. government contracts under which we currently serve as subcontractor to AD Little and receive government funding. As of September 30, 2000, AD Little owed us $1,095,000 in respect of these services. Due from Stockholder Due from stockholder consists of commitments made by AD Little in the investment and exchange agreement and over-reimbursement of expenses paid on our behalf by AD Little. In the investment and exchange agreement, AD Little represented and warranted that Epyx had a net worth of $500,000 immediately prior to the merger. As a result of expected losses on long-term contracts, Epyx's net worth immediately prior to the merger was $(286,000). Accordingly, we have recorded as an asset an amount due from stockholder of $786,000. As of September 30, 2000, AD Little owed us $518,000 in respect of the over- reimbursement of expenses paid on our behalf by AD Little. Currency Translations We translate financial statements denominated in foreign currency in accordance with SFAS No. 52, "Foreign Currency Translation." The reporting currency for all periods presented is the U.S. dollar. Balance 32 sheet accounts are translated at the end of period exchange rate and statement of operations accounts at the average exchange rate for the period. Because the local currency is the functional currency, translation gains and losses are recorded in accumulated other comprehensive income (loss) and transaction gains and losses are reflected in other (income) expense, net in determining net loss. Results of Operations Comparison of the Nine Months Ended September 30, 2000 to the Nine Months Ended September 30, 1999 Revenues. Sales and contracts revenues increased $1.278 million, or 293%, to $1.714 million in 2000 from $436,000 in 1999. Approximately $1.125 million of this increase in revenue was due to the inclusion of Epyx in the 2000 period. All of Epyx's $1.125 million in revenue was derived from long-term contracts where title does not pass to the customer. The remaining $153,000 increase in sales and contracts revenue was due to the delivery of 60 fuel cell stacks with a total electrical power of 385 kW in the 2000 period compared to 27 fuel cell stacks with a total electrical power of 119 kW in the 1999 period. Lease revenues decreased $41,000 to $55,000 in 2000 from $96,000 in 1999 due to fewer cell stacks on lease as a result of a change in our sales practices as described above under "Revenues." Two customers accounted for 51% of our revenues in 2000. Three customers accounted for 85% of our revenues in 1999. No other customers accounted for more than 10% of our revenues in 2000 or 1999. Cost of revenues. Cost of sales and contracts revenues increased $2.607 million to $2.862 million in 2000 from $255,000 in 1999 due primarily to $1.324 million in amortization of developed technology and patents resulting from the merger and $1.149 million due to the inclusion of Epyx in the 2000 period. Cost of lease revenues decreased to $17,000 in 2000 from $37,000 in 1999 due to fewer fuel cell stacks under lease. In-process research and development. Upon consummation of the merger, the in-process research and development that was acquired in the merger was expensed in the amount of $20.3 million in the nine months ended September 30, 2000 since it had not yet reached technological feasibility and had no other alternative use. Research and development expense, net. Research and development expense, net, increased $3.254 million to $3.627 million in 2000 from $373,000 in 1999. Approximately $3.133 million of this increase was due to the inclusion of Epyx in the 2000 period and $78,000 was due to amortization of the assembled workforce. The total amount of research grants offset against costs increased $1.355 million to $2.003 million in 2000 from $648,000 in 1999. The inclusion of Epyx in 2000 accounted for $1.328 million of the increase in research grants. Selling, general and administrative expense. Selling, general and administrative expense increased $6.891 million to $7.794 million in 2000 from $903,000 in 1999 due primarily to $2.959 million in amortization of goodwill and other intangible assets resulting from the merger and $3.808 million due to the inclusion of Epyx in the 2000 period. Interest expense. Interest expense was $41,000 for the nine months ended September 30, 2000 due to borrowings from Norfin S.p.A., the parent company of one of our stockholders, and due to borrowings under our line of credit. There was no interest expense for the nine months ended September 30, 1999. Other (income) expense, net. Other (income) expense, net of $(38,000) and $54,000 for the nine months ended September 30, 2000 and 1999, respectively represents foreign currency transaction (gains)/losses. Income tax benefit. The income tax benefit of $3.385 million for the nine months ended September 30, 2000 primarily relates to the amortization of the intangibles recorded in the merger, excluding goodwill. There was no income tax benefit in 1999. 33 Comparison of the Year Ended December 31, 1999 to the Year Ended December 31, 1998 Revenues. Sales and contracts revenues were $574,000 for the year ended December 31, 1999 compared to zero for the year ended December 31, 1998 due to the delivery of 20 fuel cell stacks in 1999. Lease revenues decreased $189,000, or 67%, to $95,000 for the year ended December 31, 1999 from $284,000 for the year ended December 31, 1998. The increase in sales and contracts revenue and the decrease in lease revenue are directly related to a change in our sales practices as described above. Three customers accounted for 71% of our revenues in 1999 and two customers accounted for 89% of our revenues in 1998. Cost of revenues. Cost of sales and contracts revenues was $216,000 or 38% of revenues for the year ended December 31, 1999 compared to zero for the year ended December 31, 1998. Cost of lease revenues was $86,000 or 91% of lease revenues for the year ended December 31, 1999 compared to $178,000 or 63% of lease revenues for the year ended December 31, 1998 due to fewer fuel cell stacks leased in 1999 as a result of a change in our sales practices described above. Research and development expense, net. Research and development expense, net, decreased $984,000, or 49%, to $1.004 million for the year ended December 31, 1999 from $1.988 million for the year ended December 31, 1998 primarily due to the completion of a contract with Italy's National Agency for Alternative Energy in 1998. The total amount of research grants offset against costs for the years ended December 31, 1999 and 1998 were $753,000 and $1.421 million, respectively. Selling, general and administrative expense. Selling, general and administrative expense increased $241,000, or 60%, to $644,000 for the year ended December 31, 1999 from $403,000 for the year ended December 31, 1998 primarily due to professional fees and other costs incurred to establish De Nora Fuel Cells S.p.A. as a separate subsidiary in October 1999 and to an increase in other infrastructure costs following its establishment. Interest expense. Interest expense was $2,000 for the year ended December 31, 1999 due to borrowings from Norfin S.p.A. There was no interest expense for the year ended December 31, 1998. Other (income) expense, net. Other (income) expense, net of $7,000 for the year ended December 31, 1999 represents foreign currency transaction losses. No foreign currency transaction gains or losses were realized for the year ended December 31, 1998. Comparison of the Year Ended December 31, 1998 to the Year Ended December 31, 1997 Revenues. As described above, we did not offer fuel cell stacks for sale in 1998 or 1997. Lease revenues decreased $66,000 or 19%, to $284,000 for the year ended December 31, 1998 from $350,000 for the year ended December 31, 1997 due to the expiration of a lease contract with a major customer. Two customers accounted for 89% of our revenues in 1998 and 85% of our revenues in 1997. Cost of revenues. Cost of lease revenues was $178,000 or 63% of revenues for the year ended December 31, 1998 compared to $106,000 or 30% of revenues for the year ended December 31, 1997 due to depreciation expense on fuel cell stacks held for lease in 1998. Research and development expense, net. Research and development expense, net, increased $869,000, or 78%, to $1.988 million for the year ended December 31, 1998 from $1.119 million for the year ended December 31, 1997 due to our research and development activities related to a contract with Italy's National Agency for Alternative Energy. The total amount of research grants offset against costs for the years ended December 31, 1998 and 1997 were $1.421 million and $632,000, respectively. 34 Selling, general and administrative expense. Selling, general and administrative expense decreased $62,000 or 13%, to $403,000 for the year ended December 31, 1998 from $465,000 for the year ended December 31, 1997 due to savings in professional fees and other related costs. Liquidity and Capital Resources Summary Our cash requirements depend on numerous factors, including completion of our product development activities, ability to commercialize our products, market acceptance of our products and other factors. We expect to devote substantial capital resources to continue our development programs directed at commercializing our products in our target markets, hire and train additional staff, expand our research and development activities, develop and expand our manufacturing capacity, acquire or make investments in businesses that are complementary to our business and begin production activities. During the years ended December 31, 1997, 1998 and 1999, the nine months ended September 30, 2000 and cumulative for the period from inception to September 30, 2000, we have incurred net losses of $1.340 million, $2.285 million, $1.290 million, $29.449 million and $37.043 million, respectively. Since inception, our operations have been financed primarily from advances, loans and capital contributions by our stockholders and grants awarded under our government-sponsored research and development contracts. In addition, we have raised additional funds through the issuance of common stock to Amerada Hess and, to a lesser extent, bank financing. We anticipate incurring substantial additional losses over at least the next several years. On November 3, 2000, Nuvera, Nuvera Europe, AD Little, Norfin International S.A., De Nora New Energy Investments B.V. and Amerada Hess entered into a capital contribution agreement. Norfin International S.A. is the parent of De Nora New Energy Investments B.V. Under this agreement, AD Little, Norfin International S.A. and Amerada Hess agreed to provide up to a maximum aggregate of $30 million to Nuvera when needed to sustain its operations. Pursuant to this agreement, the obligation of Norfin International S.A. and AD Little is 50.0% each until Norfin International S.A. and AD Little have contributed, in the aggregate, $1 million under the agreement. Thereafter, the obligation of each stockholder is 46.8% for Norfin International S.A., 42.2% for AD Little and 11.0% for Amerada Hess. Subsequent to the purchase by Amerada Hess in January 2001 of 747,194 of our shares from AD Little, the parties amended the capital contribution agreement to adjust the commitment percentages to 46.8% for Norfin International S.A., 37.2% for AD Little and 16.0% for Amerada Hess. All unexercised or undischarged rights and obligations to provide capital contributions to Nuvera under the investment and exchange agreement, including that of AD Little and De Nora Energy Investments to contribute at least $8 million each to Nuvera by December 31, 2000, were waived under the capital contribution agreement. The capital contribution agreement will terminate on the earlier of the date of the consummation of this offering with proceeds to Nuvera of at least $30 million, the date on which capital contributions under the capital contribution agreement by AD Little, Norfin International S.A. and Amerada Hess exceed $30 million or December 31, 2001. We believe that our cash balance of $3.2 million as of December 31, 2000, as well as anticipated government funding, revenues from sales and contracts and the commitments we have received from our principal stockholders under the capital contribution agreement will provide us with sufficient capital to fund a base level of operations for the next 12 months. However, this level of capital would be insufficient for us to continue to pursue our product development and commercialization efforts and this would affect our ability to achieve our milestones and become profitable. With the net proceeds from this offering, in lieu of the further stockholder commitments, and the other sources described above, we expect to be able to continue to adequately fund our product development and commercialization efforts and other operations for at least the next 12 months. 35 Due primarily to the net losses described above, our cash used by operating activities was $1.683 million, $2.647 million, $1.797 million, $0.934 million and $6.978 million for the years ended December 31, 1997, 1998 and 1999 and the nine months ended September 30, 1999 and 2000, respectively. Prior to 2000, capital expenditures have generally been for replacement property and laboratory and equipment upgrades. In 2000, we began to develop and expand our manufacturing capabilities to facilitate commercialization. Approximately $200,000 was spent during the nine months ended September 30, 2000, and an additional $800,000 is expected to be spent to complete the initial phase of development and expansion. We do not expect significant additional expenditures for our manufacturing facilities until 2002 as we prepare for expansion in 2003. In addition, we plan to implement new management information systems in Milan and Cambridge during 2001 at an approximate cost of $800,000. To fund our operating losses and finance our capital expenditures we have relied primarily upon advances, loans and capital contributions by our stockholders, including $21.1 million of capital contributions and sales of common stock in 2000. Accordingly, cash provided by financing activities was $1.669 million, $3.199 million, $1.957 million, $441 million and $20,487 million for the years ended December 31, 1997, 1998 and 1999 and the nine months ended September 30, 1999 and 2000, respectively. Capital Contributions by Stockholders In connection with the establishment of De Nora Fuel Cells S.p.A. as a separate subsidiary on October 1, 1999, its sole stockholder, De Nora New Energy Investments B.V., forgave $7.058 million of advances owed to it by De Nora Fuel Cells S.p.A. The debt forgiveness has been treated as a contribution to capital in our consolidated financial statements. In the investment and exchange agreement, AD Little and De Nora New Energy Investments B.V., each committed to provide up to $11 million in additional cash to fund our operations through December 31, 2000, as needed. In accordance with this commitment, AD Little and De Nora New Energy Investments B.V. each contributed $3 million to us during April 2000. The $6 million has been treated as a contribution to capital. The capital contribution requirements of the investment and exchange agreement have been superseded by the $30 million capital contribution agreement described above. Simultaneous with the merger on April 4, 2000, Amerada Hess purchased 700,000 shares of our common stock and an option to acquire additional shares as discussed above from AD Little for $10 million. On July 31, 2000, Amerada Hess purchased 943,824 newly-issued shares of our common stock from us for an aggregate price of $15 million. In January 2001, Amerada Hess purchased 747,194 shares of our common stock from AD Little for aggregate consideration of $12.5 million plus an additional amount per share equal to half the difference between the per-share price paid by Amerada Hess and the offering price of shares in this offering, provided that the additional amount shall not exceed an aggregate of $2.5 million. Related Party Loans In October 1999, Norfin S.p.A., the parent of De Nora New Energy Investments B.V., agreed to loan De Nora Fuel Cells S.p.A. up to 2 billion Italian lira, or approximately $987,000 to fund its working capital needs. De Nora Fuel Cells S.p.A. borrowed a total of $864,000 under this arrangement ($545,000 remained outstanding as of December 31, 1999). The loan, plus accrued interest, was fully repaid in March 2000 using proceeds received from borrowings under the line of credit referred to below. Interest expense of $2,000 and $7,000 was recorded in 1999 and 2000, respectively. Line of Credit On March 21, 2000, De Nora Fuel Cells S.p.A. entered into a financing agreement with an Italian bank to provide up to 2 billion Italian lira, or approximately $987,000, under a line of credit. The line of credit bears interest at a variable rate (5% per year at September 30, 2000), has no stated maturity date and is guaranteed by Norfin S.p.A. In March 2000, De Nora Fuel Cells S.p.A. borrowed approximately $759,000 36 under the line of credit. These borrowings were repaid in June 2000 using proceeds received from the capital contributions by our stockholders in connection with the merger. The full amount of the line of credit was available as of September 30, 2000. Recent Accounting Pronouncements In June 1998 the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. We will adopt SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133 will have no material impact on our financial position and our results of operations. In December 1999, the SEC released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition. We believe that our revenue recognition practices for sales are substantially consistent with SAB No. 101. Our revenue practices for government and other contracts fall within and are in compliance with AICPA Audit and Accounting Guide, "Audits of Federal Government Contractors", and AICPA Statement of Position ("SOP") No. 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts." SAB No.101 did not modify the principles of the Audit and Accounting Guide or SOP No. 81-1. We do not expect that SAB No. 101 will have a material effect on our consolidated financial position or results of operations. Qualitative and Quantitative Disclosures About Market Risk We invest excess cash in interest-bearing, investment-grade securities and time deposits in high-quality institutions and government securities. We do not utilize derivative financial instruments, derivative commodity instruments, positions or transactions in any material manner. Accordingly, we believe that, while the investment-grade securities and time deposits we hold are subject to changes in financial standing of the issuer of such securities, the principal is not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments. Since we do invest in locations outside the United States, we are subject to cross-border risks. Since Nuvera Fuel Cells Europe S.r.l. operates in Italy, we will be subject to certain foreign currency exposure. Historically, currency translation gains and losses have been reflected as adjustments to stockholders equity, while transaction gains and losses have been reflected as components of income and loss. In the past, the translation and transaction gains and losses have not been material. However, translation and transaction gains and losses could be material in the future, depending upon changes in the exchange rate relationships between the Italian lira, the euro and the U.S. dollar. 37 UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION The following unaudited pro forma condensed statements of operations for the nine months ended September 30, 2000 and the year ended December 31, 1999 give effect to the merger of De Nora Fuel Cells S.p.A and Epyx Corporation as if it had occurred as of January 1, 1999. These unaudited pro forma condensed statements of operations have been prepared by applying pro forma adjustments to the historical consolidated financial statements of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus. The historical financial data of Epyx Corporation (a development stage company) are derived from its financial statements included elsewhere in this prospectus. The merger has been accounted for under the purchase method of accounting and was treated as a reverse acquisition because the stockholder of De Nora Fuel Cells S.p.A. received the largest voting interest in the combined enterprise. Therefore, De Nora Fuel Cells S.p.A. was considered the acquiror for accounting purposes and recorded Epyx's assets and liabilities based upon their estimated fair values at the date of acquisition. Since the transaction has been accounted for as a reverse acquisition, the historical consolidated financial statements of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) included elsewhere in this prospectus reflect the results of operations, financial position and cash flows of De Nora Fuel Cells S.p.A. for all periods prior to the merger on April 4, 2000 and reflect the results of operations, financial position and cash flows of both De Nora Fuel Cells, S.p.A. and Epyx for all periods subsequent to April 4, 2000. The pro forma adjustments, as described in the notes to the unaudited pro forma condensed financial information, are estimates based on currently available information and certain adjustments that management believes are reasonable. These unaudited pro forma condensed statements of operations are presented for informational purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the merger been consummated on January 1, 1999 nor is it necessarily indicative of future operating results or financial position. This unaudited pro forma condensed financial information should be read in conjunction with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes thereto included elsewhere in this prospectus. 38 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (Dollars in thousands, except per share data)
Historical Epyx Historical Corporation Pro Forma Nuvera Fuel January 1, Adjustments Cells, Inc. and 2000 to for the Subsidiary March 31, 2000 Merger Pro Forma --------------- -------------- ----------- ---------- Revenues Sales and contracts... $ 1,714 $ 61 $ -- $ 1,775 Lease................. 55 -- -- 55 ---------- --------- ------- ---------- Total revenues...... 1,769 61 -- 1,830 Cost of revenues Sales and contracts... 2,862 1,237 662 (A) 4,761 Lease................. 17 -- -- 17 ---------- --------- ------- ---------- Total cost of revenues........... 2,879 1,237 662 4,778 In-process research and development............ 20,300 -- (20,300)(F) -- Research and development expense, net........... 3,627 574 39 (A) 4,859 619 (G) Selling, general and administrative expense................ 7,794 300 18 (A) 9,974 1,462 (B) 400 (C) ---------- --------- ------- ---------- Loss from operations.... (32,831) (2,050) 17,100 (17,781) Interest expense........ 41 -- -- 41 Other (income) expense, net.................... (38) -- -- (38) ---------- --------- ------- ---------- Loss before income tax benefit................ (32,834) (2,050) 17,100 (17,784) Income tax benefit...... 3,385 -- 287 (D) 3,672 ---------- --------- ------- ---------- Net loss................ $ (29,449) $ (2,050) $17,387 $ (14,112) ========== ========= ======= ========== Net loss per common share- basic and diluted................ $ (2.49) $ (.29) $ (.99) ========== ========= ========== Shares used in computing basic and diluted net loss per common share.. 11,843,566 7,000,000 14,288,172 (E) ========== ========= ==========
39 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 (Dollars in thousands, except per share data)
Historical Nuvera Fuel Historical Pro Forma Cells, Inc. and Epyx Adjustments Subsidiary Corporation for the Merger Pro Forma --------------- ----------- -------------- ---------- Revenues Sales and contracts... $ 574 $ 458 -- $ 1,032 Lease................. 95 124 -- 219 --------- --------- ------- ---------- Total revenues...... 669 582 -- 1,251 Cost of revenues Sales and contracts... $ 216 $ 1,101 $ 2,646 (A) $ 3,963 Lease................. 86 124 -- 210 --------- --------- ------- ---------- Total cost of revenues........... 302 1,225 2,646 4,173 Research and development expense, net........... 1,004 2,430 154 (A) 3,814 226 (G) Selling, general and administrative expense................ 644 533 72 (A) 8,106 5,846 (B) 1,011 (C) --------- --------- ------- ---------- Loss from operations.... (1,281) (3,606) (9,955) (14,842) Interest expense........ 2 -- -- 2 Other (income) expense, net.................... 7 -- -- 7 --------- --------- ------- ---------- Loss before income tax benefit................ (1,290) (3,606) (9,955) (14,851) Income tax benefit...... -- -- 1,149 (D) 1,149 --------- --------- ------- ---------- Net loss................ $ (1,290) $ (3,606) $(8,806) $ (13,702) ========= ========= ======= ========== Net loss per common share-basic and diluted................ $ (.18) $ (.52) $ (.98) ========= ========= ========== Shares used in computing basic and diluted net loss per common share.. 7,000,000 7,000,000 14,000,000 (E) ========= ========= ==========
40 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION (A) The adjustment reflects the recognition of amortization of the developed technology, assembled workforce and patents on a straight-line basis over an estimated useful life of 6 years, 4 years and 5 years, respectively. The amortization expense adjustment for the period from January 1, 2000 to March 31, 2000 is allocated as follows:
Research and Selling, Development General and Cost of Expense, Administrative Description Revenues net Expense Total ----------- -------- ----------- -------------- -------- Amortization of developed technology................... $379,000 $ -- $ -- $379,000 Amortization of assembled workforce.................... 13,000 39,000 18,000 70,000 Amortization of patents....... 270,000 -- -- 270,000 -------- ------- ------- -------- Total....................... $662,000 $39,000 $18,000 $719,000 ======== ======= ======= ========
The amortization expense adjustment for the year ended December 31, 1999 is allocated as follows:
Research and Selling, Development General and Cost of Expense, Administrative Description Revenues net Expense Total ----------- ---------- ----------- -------------- ---------- Amortization of developed technology............... $1,517,000 $ -- $ -- $1,517,000 Amortization of assembled workforce................ 49,000 154,000 72,000 275,000 Amortization of patents... 1,080,000 -- -- 1,080,000 ---------- -------- ------- ---------- Total................... $2,646,000 $154,000 $72,000 $2,872,000 ========== ======== ======= ==========
(B) The adjustment reflects the recognition of amortization of goodwill of $1,462 and $5,846 for the period from January 1, 1999 to April 3, 2000 and for the year ended December 31, 1999 on a straight-line basis over an estimated useful life of 7 years. (C) Effective October 1, 1999, De Nora Fuel Cells S.p.A entered into services agreements with De Nora S.p.A and Norfin S.p.A for certain administrative assistance. Effective April 4, 2000, Epyx Corporation entered into a lease and administrative services agreement with AD Little at a rate of $2,460 per employee per month. In accordance with the rules and regulations of the SEC governing the preparation of pro forma information for carve-out businesses, the pro forma adjustments reflect what the allocated or omitted corporate costs would have been had the merger taken place and the agreements entered into at January 1, 1999. Effective January 1, 2001, Nuvera entered into a new agreement with AD Little for the sublease of space and use of facilities, equipment and services. The new agreement is expected to approximate a rate of $2,460 per employee per month which represents the previous rate. 41 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION--(Continued) Accordingly, the adjustment reflects the recognition of selling, general and administrative expense pursuant to these agreements for the nine months ended September 30, 2000 and the year ended December 31,1999 assuming these agreements were in place at January 1, 1999, which expense is allocated as follows:
Nine Months Ended Year Ended September 30, December 31, Agreement 2000 1999 - --------- ------------- ------------ De Nora S.p.A services agreement.................. $ -- $ 230,000 Norfin S.p.A services agreement................... -- 124,000 AD Little lease and administrative services agreement........................................ 400,000 657,000 -------- ---------- Total........................................... $400,000 $1,011,000 ======== ==========
(D) The adjustment reflects the income tax effect of the pro forma adjustments for the merger at a rate of 40%. (E) Pro forma shares used in computing basic and diluted net loss per common share for the nine months ended September 30, 2000 and the year ended December 31, 1999 gives effect to the issuance of the shares in connection with the merger as if it had occurred on January 1, 1999. (F) In accordance with the rules and regulations of the Securities and Exchange Commission governing the preparation of pro forma financial statements, material non-recurring charges which will be included in income within 12 months following the merger are not reflected in the unaudited pro forma condensed statements of operations. Accordingly, the unaudited pro forma condensed statements of operations for the nine months ended September 30, 2000 and the year ended December 31, 1999 exclude the $20.3 million of in- process research and development expense that is reflected in our unaudited historical consolidated statements of operations for the nine months ended September 30, 2000. (G) The adjustment reflects the lower government reimbursement rates that would have been in effect for Epyx Corporation for the period from January 1, 2000 to April 3, 2000 and for the year ended December 31, 1999 assuming the merger had occurred on January 1, 1999. 42 BUSINESS Overview Nuvera is a designer and developer of fuel processors, proton exchange membrane fuel cell stacks, power modules and integrated fuel cell systems for stationary and transportation applications. We are a leading developer of fuel processors that can be operated on most commonly available hydrocarbon fuels. Our fuel processors and proton exchange membrane fuel cell stacks have been successfully tested and evaluated by major automobile and appliance manufacturers, research institutions and industrial energy companies. To date, we have built and tested approximately 38 fuel processors and 306 fuel cell stacks. By combining our fuel processors and fuel cell stacks into an integrated unit, we are designing, building and testing power modules in the 1 kW, 5 kW and 10 kW power ranges. Fuel processors extract hydrogen from most hydrocarbon fuels, such as gasoline, in a process known as reforming. A fuel cell is a device in which a fuel reacts with an oxidant to produce electricity without combustion, with heat and water as byproducts. Most fuel cells, including ours, use hydrogen as the fuel and oxygen as the oxidant. A fuel cell stack is an assembly of fuel cells combined in series to obtain the desired level of electric power, or voltage. Proton exchange membrane fuel cell stacks are fuel cell stacks in which the electrochemical reaction between hydrogen and oxygen takes place on a thin, plastic sheet that permits hydrogen protons to pass through while barring the passage of electrons. Our power modules, which form part of our integrated fuel cell systems, include a fuel processor, a fuel cell stack, a fuel supply subsystem, an air supply subsystem and a water management loop. Our integrated fuel cell systems combine our power modules with a thermal management system, a microprocessor-based control unit, a battery and an inverter or power conditioner to convert DC power produced by the fuel cell stack into the AC power required by some electrical equipment and transmissions systems. Our objective is to extend our leadership in the design, development and testing of fuel cell technologies and to bring about the successful commercialization of our products. We plan to market our products both as components to be integrated with other technologies and as power modules or integrated fuel cell systems. We intend to accelerate the commercialization of our products by initially targeting the stationary market, specifically the premium power market, a market we believe will be the first to adopt fuel cell technology on a widespread basis. We believe this strategy of initially targeting the premium power market will enable us to compete more effectively in residential, transportation and other markets. Accordingly, we plan to bring to market our first premium power stationary products in 2002, our first residential stationary products in 2003 and our first transportation products in 2005. In its 2000 report entitled "Fuel Cells: On the Verge," Business Communications Co., Inc. states that the current fuel cell technology market is approximately $218 million, and that it will grow at an annual average rate of over 60% to approximately $2.4 billion by 2005. We expect that the demand for fuel cell technologies will continue to increase as fuel cell technologies gain market acceptance and become cost-competitive with traditional generating technologies. We expect this demand to be driven by the increasing worldwide need for distributed, off-grid electric power, as well as consumer preference for smaller, environmentally cleaner power sources with long operating lives. We believe our fuel cell technologies will provide power and heat that are more energy efficient, environmentally cleaner and quieter than the current electric transmission grid, most current backup power alternatives and the internal combustion engine. We intend to leverage our core technological strengths by establishing strategic alliances and other relationships with selected technology companies, component suppliers, manufacturers, distributors and end-users, a strategy that we believe will help us gain access to a stable customer base and provide us with global marketing, distribution and servicing advantages over our competitors. 43 Our Heritage Nuvera was formed in April 2000 through the merger of De Nora Fuel Cells S.p.A., the fuel cell subsidiary of the Italian engineering and electrode manufacturing concern De Nora S.p.A., and Epyx Corporation, the fuel processing subsidiary of the American business and technology consulting firm Arthur D. Little, Inc., or AD Little. Prior to the merger, De Nora and AD Little had been conducting research, development and testing of fuel cell technologies since 1989 and 1991, respectively. In 1998, the two companies worked together to develop, produce and demonstrate a 300 W propane-fueled power module that combined De Nora's fuel cell stack and AD Little's fuel processor. Both companies recognized that by combining their complementary technologies, they could develop, produce and market power modules and integrated fuel cell systems in a manner that could give them a long-term competitive advantage. The merger was completed in an investment and share exchange transaction whereby De Nora New Energy Investments B.V., the parent of De Nora Fuel Cells S.p.A. and a subsidiary of Norfin S.p.A., received 50% of the capital stock of Epyx Corporation in exchange for Epyx receiving 100% of the capital stock of De Nora Fuel Cells, S.p.A. Epyx Corporation was renamed Nuvera Fuel Cells, Inc., and De Nora Fuel Cells S.p.A., subsequently renamed Nuvera Fuel Cells Europe S.p.A. and later becoming Nuvera Fuel Cells Europe S.r.l., became our wholly- owned subsidiary. Simultaneously with the merger, Amerada Hess, a leading independent energy company, purchased 5% of Nuvera's capital stock from AD Little. Amerada Hess increased its equity ownership in Nuvera to 11% in July 2000 and to 16% in January 2001. De Nora S.p.A. is part of the Oronzio De Nora Group, a family-owned group of companies established in 1923, which employs over 700 people worldwide. The Oronzio De Nora Group is a long-time technology licensor and supplier of membrane electrolyzers for the chlor-alkali industry and a large worldwide supplier of catalyst-coated metal electrodes for the chlor-alkali industry. Invited by Italy's National Agency for Alternative Energy, or ENEA, to study the viability of fuel cell technology, De Nora began in 1989 to develop and advance proton exchange membrane fuel cell technology by capitalizing on its technical expertise in membrane-based electrochemical processes. Since 1993, De Nora has worked together with automobile manufacturers, utility and energy companies, universities and research institutions to design and develop its proton exchange membrane fuel cell stacks. De Nora's past experience in entering into cooperative joint ventures for production and commercialization of industrial equipment for electrochemical plants and electrodes in North and South America, Asia and Europe led it to explore an alliance with Epyx in the field of fuel cell technologies. In September 1999, De Nora S.p.A. established De Nora Fuel Cells S.p.A. as its fuel cell subsidiary. In 1991, the U.S. Department of Energy selected AD Little to conduct a study of proton exchange membrane fuel cell technology. Since then, AD Little has worked together with the U.S. Department of Energy and numerous automobile and appliance manufacturers, research institutions and industrial energy companies to design and develop fuel processors capable of reforming a variety of hydrocarbon fuels into hydrogen for use in fuel cell stacks. In December 1997, AD Little established Epyx Corporation as its fuel processor subsidiary. Between 1997 and 2000, Epyx conducted demonstrations that integrated its fuel processors with the fuel cell stacks of seven different fuel cell stack companies, including De Nora, and recognized the advanced technological design of De Nora's fuel cell stacks. We plan to maintain corporate and operational facilities in both Cambridge, Massachusetts and Milan, Italy. As a result of the merger, we believe we are well positioned to compete in global stationary and transportation markets due to our ability to integrate our fuel processors and our fuel cell stacks into power modules and integrated fuel cell systems that we expect will generate clean, reliable and efficient energy using a variety of commonly available hydrocarbon fuels. 44 Favorable Industry and Market Trends We believe a number of industry and market trends indicate significant opportunities for our fuel cell technologies in the stationary and transportation markets. Increasing demand for lower-cost, continuous and reliable primary and backup electrical power worldwide Demand for electricity is rising rapidly and is expected to continue to rise, in part as a result of technological advances and economic expansion in the United States and other industrialized nations. According to the U.S. Department of Energy, Energy Information Administration's report Annual Energy Outlook 2000, a projected 300 gigawatts of new generating capacity will be needed by 2020 to meet the growing demand for electricity in the United States and to offset planned retirements of existing generating capacity. The report projects that by 2020, annual investment in new generating capacity will be nearly $30 billion. Internationally, the U.S. Department of Energy, Energy Information Administration's report International Energy Outlook 2000, projects that global electricity consumption is expected to rise from approximately 12 trillion kilowatt-hours in 1997 to approximately 22 trillion kilowatt-hours in 2020. High electricity prices are one of the key drivers of demand for alternatives to conventional utility service. For example, in 1997, 12 West European countries had residential electricity prices between 10 and 20 cents/kWh and Japan had residential electricity prices averaging 21 cents/kWh, while the U.S. average was approximately 8.5 cents/kWh. Even within the United States, in 1998, prices in some states exceeded 13 cents/kWh. In addition to the need for lower-cost electricity, there is significant evidence that some users are demanding a more reliable source of power than is currently available on the existing power grid. Reliability requirements have intensified with respect to some industries such as telecommunications, where the proliferation of computers, the Internet and communication networks calls for more reliable power than is available on the current electric grid. In 1999, the Electric Power Research Institute estimated that deficient power quality and related power disturbances cost the U.S. economy over $30 billion annually. In March 2000, the U.S. Department of Energy released a report of the findings and recommendations of its Power Outage Study Team. This panel of U.S. Department of Energy, national laboratory and academic experts provided recommendations based on a review of six power outages and two power system disturbances that took place in the United States between early June and early August 1999. Their recommendations to help avoid future power outages included lowering barriers to entry for distributed generation and adopting energy- efficient technologies. Moreover, many developing countries have inadequate or no existing electric power infrastructure. According to International Energy Outlook 2000, net electricity consumption of developing countries in 1997 was 3,489 billion kilowatt-hours, and is expected to increase by an average of 4.3% annually to 9,203 billion kilowatt-hours in 2020. The limited financial capabilities of many of these countries are increasing the demand for sources of power, such as proton exchange membrane fuel cell technologies, that require less capital investment than enhancements of the current electric grid. Increasing regulation of and attention to the environmental effect of hydrocarbon emissions and the generation, transmission and distribution of electricity Because the use of the internal combustion engine in transportation applications is a major source of air pollution, increasingly stringent government laws and regulations requiring vehicle emission reductions and increases in efficiency have been enacted or proposed on both national and regional levels in the United States and many other industrialized nations. The first of these laws, adopted by the State of California, as amended, requires that at least 10% of the new cars and certain light duty trucks sold in California by large and 45 intermediate volume vehicle manufacturers be "zero emission vehicles" by 2003. Manufacturers can meet this requirement through the sale of specific combinations of conventional or new vehicle classes, such as low, ultra-low, super ultra-low and zero emission vehicles. Manufacturers can also meet this requirement by the use of emission credits which are granted if manufacturers meet emission standards more stringent than, or produce more zero emission vehicles than, required by the law. Various northeastern states, such as New York and Massachusetts, have adopted laws similar to the California law. The U.S. federal government has also promulgated vehicle emission laws and regulations, but these laws do not currently require the manufacture of zero emission vehicles. In Europe, automobile manufacturers that are members of the European Automobile Manufacturers' Association have agreed voluntarily to reduce carbon dioxide emissions by 25% to 140 g/km by 2008, and possibly to 120 g/km by 2012. In addition to these initiatives, the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the Kyoto Protocol, addressed the release of carbon dioxide, a byproduct of burning fossil fuels, into the atmosphere. The Kyoto Protocol, if ratified by each signatory nation, will require the reduction of six "greenhouse" gases, including carbon dioxide, over the next 10 years. Signatories to the treaty include the United States, Japan and the European Community. In addition to these regulatory requirements, we believe that, irrespective of government regulation, the desire of consumers to reduce air pollution is rising. We also believe that the changes in vehicle and engine manufacturing objectives and strategies that will be required to meet the regulatory and market-driven demands will provide a significant market opportunity for fuel cell technologies, which we believe are capable of providing power that is environmentally cleaner than the internal combustion engine. Despite the increasing demand for power, there is difficulty in finding suitable locations for additional generating plants and transmission towers because of environmental concerns regarding emissions from generating plants and local zoning laws. As a result, we expect the market for alternative sources of power generation, such as fuel cell technologies, to expand. Continuing privatization and deregulation of utilities Utility deregulation is creating new challenges and opportunities in the electric power industry in the United States and internationally. Due in part to regulatory changes designed to encourage competition, vertically integrated utilities in the United States are being separated into their generation, transmission and distribution components so that they will no longer be integrated providers of electricity to a captive geographic area. In the United States, legislatures and regulatory organizations at the federal, state and local level are revising the manner in which electric service is provided. Most legislation aims to create competitive markets in the generation and marketing of power while leaving the distribution function as a regulated operation, much the way natural gas was deregulated in the late 1980s and early 1990s. New entrants have become significant participants in the generation of electricity as the industry moves toward open competition. Internationally, such as in some European countries, deregulation and privatization of the electric industry have already occurred. Deregulation in Germany is also rapidly creating a market for reliable and inexpensive alternative sources of heat and power. In April 1995, Japan amended its Electricity Business Act, seeking to deregulate the power generation industry and to allow non-traditional suppliers to engage in direct sales of electricity. In May 1999, the Japanese legislature approved measures to implement limited retail competition. We believe the continuing deregulation of utilities in the United States and internationally will allow new entrants into the electricity generation business, as customers will be free to choose power producers and marketers. Continuing consumer demand for higher fuel efficiency and fuel economy We expect that consumers will continue to demand fuel efficient automobiles due in part to volatile and unpredictable fluctuations in oil prices and high prices for gasoline, particularly in Europe and Japan. We 46 believe that automotive applications of our products will provide consumers not only with higher fuel efficiency, but also lower noise and vibration, improved performance and potentially lower capital and maintenance costs. While environmental considerations may have provided the initial impetus for automobile manufacturers to seek alternatives to the internal combustion engine, we believe that fuel cell technologies offer an opportunity to deliver products that are more attractive to consumers than the current internal combustion engine. In addition, European and Japanese residential consumers have begun to realize that cogeneration of heat and electricity offers efficiencies relative to reliance upon separate sources of heat and power. Fuel cell stacks produce heat as a co-product of electricity generation. This heat, along with the waste heat of the fuel processor, can be used directly or in conjunction with a heat generating device, such as a boiler, to provide hot water for space heating or domestic use. * * * There remain a number of technical and logistical obstacles to commercial acceptance of fuel cell technologies, including: . current fuel cell technology does not have the proven dependability that many of the existing alternative technologies have in our target markets, because, for example, the membranes we purchase from third party suppliers have a limited life and are not yet manufactured to consistent quality or performance specifications; . fuel processing technology is complex and not fully developed, particularly with respect to the integration of fuel cell stacks and fuel processors, because, for example, the catalysts we purchase from third party suppliers have a limited life and are not yet manufactured to consistent quality or performance specifications; . the high manufacturing costs currently associated with the production of fuel cell products make many commercial applications in our target markets prohibitively expensive; and . the difficulty of integrating fuel cell systems into existing products, in particular, for transportation applications. For more discussion of the obstacles to widespread market acceptance of fuel cell technologies, please read the section of this prospectus entitled "Risk Factors." Our Products We design and develop fuel processors, fuel cell stacks, power modules and integrated fuel cell systems for stationary and transportation applications. We plan to market our products selectively as components to be integrated with other technologies and as power modules or integrated fuel cell systems. We believe the competitiveness of our products will depend on several factors, including the application and the environment in which they will be operated, which, in turn, will determine the particular fuel and fuel processing technology and the ultimate cost to the customer. We continue to seek to reduce the size and manufacturing expense of our products, which we believe is necessary for their commercial acceptance. There are a number of other technological obstacles to a commercially viable product as well. To our knowledge, none of our competitors in proton exchange membrane fuel cell technology that compete in our target markets is substantially closer to meeting these developmental challenges than we are. 47 Fuel Processors All proton exchange membrane fuel cells require hydrogen in order to generate electricity. There is currently a limited infrastructure for the supply of pure hydrogen. In addition, storing hydrogen on-board vehicles on a mass-market basis is currently impractical. A fuel processor, the central component of which is a fuel reformer, extracts hydrogen from commonly available fuels. Our fuel processors have demonstrated the ability to extract hydrogen from a number of commonly available hydrocarbon fuels, including gasoline, ethanol, methanol, natural gas, kerosene, propane, butane, home heating oil and diesel. The extracted hydrogen can be used in fuel cell stacks to produce electricity and heat. Three basic techniques are used to separate hydrogen atoms from hydrocarbon fuels. Hydrogen can be separated from carbon atoms through catalytic reactions in a process known as steam reforming, through fuel decomposition at high temperatures in a process known as partial oxidation, and through the use of both catalytic reactions and fuel decomposition at high temperatures in a process known as autothermal reforming. Our fuel reformers, which are the central components of our fuel processors, can be designed to utilize steam reforming, autothermal reforming or partial oxidation technologies, depending upon the needs of a particular market and the application within that market. We intend to focus on steam and autothermal reforming technologies as we continue to develop our fuel processors. Steam reforming yields higher fuel efficiencies but requires greater space and may be used in residential markets in which size is not a determining factor. The Department of Energy defines fuel efficiency of a fuel processor as the ratio of the lower heating value of the hydrogen generated by a fuel processor to the lower heating value of the feedstock fuel fed to the fuel processor. Autothermal reformers are more likely to be used in automotive applications and in those residential markets that favor more compact power systems, given their smaller size. [GRAPHIC] "Diagram of Fuel Processing Technology Hydrogen Production Options" 48 A fuel processor consists of a fuel reformer, a shift reactor, carbon monoxide cleanup devices, a catalyst subsystem, fuel, water and air management systems and a residual gas burner known as the anode tail gas burner. Air entering the reformer through tubes and heated by the air preheater vaporizes the hydrocarbon fuel and water as they enter the reformer, thereby producing, in the presence of catalysts, hydrogen gas, carbon monoxide and residual fuel. The shift reactor converts carbon monoxide to carbon dioxide and produces additional hydrogen gas in a catalytic reaction known as the water-gas shift. In the final step, the carbon monoxide cleanup catalyst subsystem removes the remaining carbon monoxide, a known poison to the fuel cell stack. Any remaining hydrogen that is not used in the fuel cell stack is fed into the anode tail gas burner, where it is combusted to produce heat which is used in other parts of the fuel reforming process. The following diagram illustrates the processing of hydrocarbon fuel by steam reforming in a fuel processor: [GRAPHIC] "Illustration of the processing of hydrocarbon fuel by steam reforming in a fuel cell processor." 49 Our fuel processors contain all the components necessary to power a fuel cell stack. Moreover, our fuel processors enhance most of the key performance parameters of an integrated fuel cell system, such as the electrical efficiency of a fuel cell stack, emissions and byproduct heat. The Department of Energy defines electrical efficiency of a fuel cell stack as the ratio of the gross electrical energy generated by a fuel cell stack to the hydrogen energy value fed to the fuel cell stack. We have built and tested fuel processors capable of powering a fuel cell stack in the 500 W to 250 kW power range achieving fuel efficiencies that approach the theoretical maximum, namely between 70% and 90%, depending on the fuel and reforming technology used. The Department of Energy defines fuel efficiency of a fuel processor as the ratio of the lower heating value of the hydrogen generated by a fuel processor to the lower heating value of the feedstock fuel fed to the fuel processor. To date, we have built and tested approximately 38 fuel processors, comprising a total of about 1 megawatt of hydrogen energy production capability and have delivered 6 fuel processors, comprising a total of about 170 kilowatts of hydrogen energy production capability to automobile manufacturers and other companies for testing and evaluation. We believe our fuel processors will provide the following benefits: . Our multi-fuel capability will permit flexibility and cost- effectiveness, as well as use in many applications, thereby providing a critical link to rapidly commercializing our integrated fuel cell systems and competing in multiple markets. . Our extensive knowledge of advanced fuel processor catalysts has enabled us to develop fuel processors that are sufficiently compact for practical applications in our target markets, including transportation applications, where size and weight are critical factors. . Our carbon monoxide clean up technology will reduce the carbon monoxide in the hydrogen-rich gas stream produced by the fuel processor to acceptable levels before the hydrogen gas stream enters the fuel cell stack, resulting in enhanced performance of the fuel cell stack. . Our control systems and carbon monoxide cleanup technology will enable our fuel processors to meet rigorous changes in demands for power. . Our fuel processors, capable of reforming gasoline, can utilize the existing fuel refining and distribution infrastructure, thereby giving us an advantage in the transportation market. . Our fuel processor anode tail gas burner design incorporates low emission technologies that currently meet vehicle emission standards established on national and regional levels in the United States, including the super ultra-low emission vehicle standards established by the California Low-Emission Vehicle program. While some of our competitors' fuel processors may be able to provide comparable benefits, we believe that only a few of them are capable of reforming gasoline. In addition, although a few of our competitors are capable of reforming a number of hydrocarbon fuels, we are not aware of any other company whose fuel processors have the ability to reform the variety of hydrocarbon fuels that our fuel processors are able to reform. Nevertheless, we intend to continue improving the design of our fuel processors, diminishing their size, in particular, for transportation applications, minimizing their cost and making them more compatible for integration with the technology and products of end-users, manufacturers and distributors and for integration with our fuel cell stacks. 50 Fuel Cell Stacks Fuel cell stacks combine hydrogen and air to make electricity, heat and water without combustion, harmful byproducts or noise. The basic fuel cell technology was invented over 100 years ago and has offered significant promise as an alternative power solution to increase energy efficiency, reduce pollution and minimize dependence on imported oil. Proton exchange membrane technologies, first developed in the 1950s, made it possible to create fuel cells that delivered higher power density and operated at lower temperatures than other types of fuel cells. Since their initial development, proton exchange membrane fuel cell stacks have made technological improvements in durability, efficient use of costly components, operating life and performance, positioning them to capitalize on current opportunities in the energy market. Proton exchange membrane fuel cell stacks are well-suited for small stationary applications and transportation applications, our target markets, because they are able to deliver higher power density relative to other types of fuel cell stacks. Higher power density is expected to result in reduced weight, cost and volume and improved performance relative to other types of fuel cell stacks, such as phosphoric acid fuel cell stacks. In addition, proton exchange membrane fuel cell stacks operate at lower temperatures than other types of fuel cell stacks, i.e., less than 212(degrees)F or 100(degrees)C, allowing faster start-up time. Proton exchange membrane fuel cell stacks also respond well to changes in the demand for power. For these reasons, we believe proton exchange membrane fuel cell stacks are particularly suitable for transportation and small stationary applications. Proton exchange membrane fuel cell stacks combine pure hydrogen or hydrogen-rich streams of gas from a fuel processor and oxygen from the air to produce electricity without combustion. The core of the fuel cell consists principally of two gas diffusion electrodes, the anode and the cathode, separated by a proton exchange membrane. Gas diffusion electrodes distribute hydrogen and oxygen to the site on the proton exchange membrane where the electrochemical reaction occurs. Each of the electrodes is coated on one side with a platinum-based catalyst. The electrodes and the membrane are pressed together on both sides by flat, bipolar metallic plates and held together by a plastic gasket. Bipolar plates between the individual fuel cells of a fuel cell stack allow electrons to flow out of each fuel cell and distribute hydrogen- rich gas along the surface of the fuel cell. Hydrogen fuel is fed into the anode and air enters through the cathode. In the presence of the platinum-based catalyst, each hydrogen molecule splits into two protons and two electrons. The electrons from the hydrogen molecules flow through an external circuit creating an electric current. Protons from the hydrogen molecules are transported through the proton exchange membrane and combine at the cathode with the electrons and oxygen from the air to form water and generate byproduct heat. Individual fuel cells are positioned between electrically conducting bipolar plates and combined into fuel cell stacks. The voltage of a stack of fuel cells is proportional to the number of fuel cells. The number of fuel cells in a stack and the cell surface area determine the amount of electrical power and heat that can be generated. The DC power produced by a fuel cell stack is either applied directly to a DC load or converted to AC power by an inverter. Through the use of a heat exchanger, the heat generated in the process can be used in cogeneration heating or cooling applications. 51 The following diagram illustrates the electrochemical reaction that produces electricity in a fuel cell: [GRAPHIC] "Illustration of the electrochemical reaction that produces electricity in a fuel cell." 52 We have built and tested fuel cell stacks in the 100 W to 50 kW power range that have achieved electrical efficiencies of between 50% and 55% in tests conducted by third parties. The Department of Energy defines electrical efficiency of a fuel cell stack as the ratio of the gross electrical energy generated by a fuel cell stack to the hydrogen energy value fed to the fuel cell stack. Our fuel cell stacks feature sheet metal bipolar plates, gas diffusion electrodes and advanced catalysts, all of which we believe will contribute to the durability and electrical efficiency of our fuel cell stacks and reduce the cost of production and operation. To date, we have built and tested approximately 306 fuel cell stacks, comprising a total of about 1,200 kilowatts, and have delivered approximately 123 fuel cell stacks, comprising a total of about 680 kilowatts, to automobile manufacturers, utility and energy companies, universities and research institutions. We believe our fuel cell stacks will provide the following benefits: . The advanced gas diffusion electrodes and catalysts that we use will significantly increase the efficient operation of our fuel cell stacks. . Our proprietary stack design utilizing sheet metal bipolar plate technology will facilitate low-cost, high-volume assembly. . Our fuel cell stacks are designed to withstand severe vibration and shock and have been delivered to and successfully tested by the TNO Institute of Environmental Sciences, Energy Research and Process Innovation on behalf of the Dutch navy. . Our advanced stack-sealing structures will reduce maintenance costs by permitting us to bypass a damaged fuel cell and continue the operation of the fuel cell stack with a reduction in power. Our products use high quality components that we believe contribute to their durability and reliability. However, the sheet metal bipolar plates we use in our fuel cell stacks, while contributing to durability and electrical efficiency, may be heavier than bipolar plates used by some of our competitors and may thus be a disadvantage in the transportation market. Other types of fuel cells, such as solid oxide fuel cells, may have a higher tolerance for relatively impure fuels and may provide higher grade heat for cogeneration; however, we believe that proton exchange membrane fuel cells are more suitable for our target markets. We continue to seek ways in which to reduce the cost of manufacturing our fuel cell stacks and to make them more compatible for integration with the technology and products of end-users, manufacturers and distributors and integration with our fuel processors. 53 Power Modules and Integrated Fuel Cell Systems By combining our fuel processors and our fuel cell stacks into an integrated design, we believe that our power modules and integrated fuel cell systems will cleanly and efficiently produce electricity from most commonly available hydrocarbon fuels, including gasoline. Our power modules, which form part of our integrated fuel cell systems, include a fuel processor, a fuel cell stack, a fuel supply subsystem, an air supply subsystem and a water management loop. Integrated fuel cell systems combine our power modules with a thermal management system, a microprocessor-based control unit, a battery and an inverter or power conditioner to convert DC power produced by the fuel cell stack into the AC power required by some electrical equipment and transmissions systems. The following diagram illustrates an integrated fuel cell system: [GRAPHIC] "Illustration of an integrated fuel cell system." 54 Depending on the needs of a particular market, both geographical and by application, we believe that we will be able to build integrated fuel cell systems by combining our power modules . with the technologies of manufacturers of furnaces, water heaters and boilers for cogeneration applications that will produce heat and electricity in European and Japanese residences and . with power electronics and control systems that will provide AC power for United States residences and premium power applications. We are designing our power modules and integrated fuel cell systems to achieve electrical efficiencies of between 35% and 45%, depending on the fuel used and power range. The Department of Energy defines electrical efficiency of a power module or an integrated fuel cell system as the ratio of the electrical energy generated in the conversion of the feedstock fuel to the total energy contained in the fuel. These electrical efficiencies are greater than or equal to the electrical efficiencies of power generated for the existing electrical grid. Further, we anticipate that the power generated by our power modules and integrated fuel cell systems will not be subject to efficiency loss from transmission through the electric grid because the units will be located closer to the point of consumption. Accordingly, our power modules and integrated fuel cell systems should offer efficiency greater than or equal to the efficiency of the existing electrical grid. To date, we have built and tested 7 integrated fuel cell systems, operating on propane and natural gas, in the 300 W to 5 kW power ranges. We believe our power modules and integrated fuel cell systems will provide the following benefits: . Our integrated design control should yield efficiencies in overall cost, size and energy. We believe our power modules and integrated fuel cell systems can be manufactured less expensively than those of our competitors, due in part to our ability to use low-cost components developed with our proprietary technologies, such as our patented high temperature membrane technology. . We expect to be able to design our power modules and integrated fuel cell systems for cogeneration, non-cogeneration, baseload and load- following applications, depending on the particular requirements of each customer within our target markets. . Our technology can be scaled up or down between 500 watts and 250 kilowatts with minimal loss in performance, thereby placing us in a position to meet the growing needs of both the stationary and transportation markets. . The small size and relatively lightweight design of our power modules and integrated fuel cell systems should facilitate easy transportation and installation with minimal site preparation in stationary applications, compared to alternative means of producing power for stationary applications such as back-up battery systems. We expect our products designed for transportation applications to fit into the engine cavity of a standard mid-size vehicle. We believe that some of our competitors are also able to offer some of the integration advantages that we offer. In addition, some of our competitors have been developing power modules and integrated fuel cell systems for a longer period of time and thus may have greater experience in developing integration efficiencies, or are manufacturers with established marketing and distribution channels that may give them a better understanding of the needs of end-users. We are continuing our efforts to improve upon our integration efficiencies and seek to build smaller, less expensive power modules and integrated fuel cell systems for commercial sale. Our Target Markets We are targeting specific sectors of both the stationary and transportation markets for electrical power. Within the stationary market, we are focusing on premium power, residential power and, to a lesser extent, 55 small commercial power applications. In the premium power market, we intend to provide a reliable power supply for telecommunications and industrial equipment applications. In the U.S. residential power market, we intend to focus on providing standby and primary electrical power. In the European and Japanese residential power markets, we intend to address demands for both heat and electrical power, such as space heating and air conditioning. In the small commercial power market, we expect that our products will provide an alternate source of heat and electricity for small businesses. Within the transportation market, we are initially focusing our efforts on light duty vehicles. Stationary Market In its 1999 report Small-Scale Power Generation: How Much? What Kind?, Business Communications Co., Inc. states that fuel cells have emerged as one of the most promising technologies for meeting growing worldwide energy needs. They project that during the period between 1998 and 2003, distributed generation, defined as "any small scale power generation technology that provides electric power at a site closer to customers than central station generation," will grow at an average annual rate of 14.9% in the United States and 28.4% worldwide. They further project that the annual market in 2003 for fuel cells for stationary applications can be expected to reach $1.1 billion in the United States. We expect this trend to grow beyond 2003 as fuel cells gain market acceptance and fuel cell product cost begins to challenge the product cost of traditional generating technologies. According to a report published in 1999 by Allied Business Intelligence, Inc., total global stationary fuel cell generating capacity is expected to grow to 13,669 megawatts in 2010. Premium Power Market The premium power market is one in which customers are willing to pay a premium for a secure and reliable source of quality power. Frost & Sullivan estimated in 2000 that the market for standby, auxiliary, highly reliable and high quality power--known as uninterruptible power supply--would grow from $4.93 billion in 1999 to $11.59 billion in 2006, a compound annual growth rate of 13.0%. We intend initially to focus on telecommunications applications within the premium power market in an attempt to address the rapidly growing need for reliable, high quality power. Because of the willingness of participants in this market to pay a premium for increased reliability, our strategy is to target the telecommunications sector as our first commercial market. We intend to bring our first commercially available premium power stationary products to the telecommunications market in 2002. We expect that these products will be 1 kW to 5 kW power modules suitable for manufacturers of telecom backup systems, telephone switching centers and cellular transmission towers. As the premium power market develops, we also intend to design and develop power modules under 10 kilowatts for industrial equipment and industrial vehicles, such as forklifts. In Japan, we believe the premium power market will also call for higher power applications of our products in the 10 kW to 50 kW power range, for example, for use in automatic teller machines. Residential Power Market We believe that residential customers will purchase integrated fuel cell systems for their homes in order to reduce their total energy cost and increase the quality and environmental safety of the energy they use. We believe that the demand for our products in the European and Japanese residential markets will be focused primarily on combined heat and electrical power, or cogeneration, applications. We plan to focus first on the German residential market for cogeneration, as we believe that the deregulation of utilities in Germany sets the stage for alternative sources of power. Within this market, we expect our power modules in the 1 kW to 3 kW power range to be integrated and distributed with the cogeneration systems of third parties. In the United States, there is also a growing need for alternative sources of electrical power. According to the Energy Information Administration's May 1998 report Deliverability on the Interstate Natural Gas Pipeline System, there were 55.1 million residential natural gas customers in the United States in 1996; these customers have access to a fuel source from which our fuel processors can extract hydrogen for use in a fuel cell stack. In addition, the American Gas Association estimates that 70% of newly-built single-family homes use natural gas 56 heating, and the National Propane Gas Association reported that 4.5 million households in the United States use propane as the main heating fuel, which can also be converted into hydrogen by our fuel processors. Within the residential market, we believe demand for our integrated fuel cell systems in the 5 kW power range will first arise from new home construction, off-grid applications and grid-enhancement. In Japan, as deregulation of utilities progresses in the next five to six years, we plan to provide power modules in the 1 kW power range that will be integrated with the cogeneration systems of third parties. We plan to bring to market our first commercially available residential stationary products in 2003. We are designing our residential power modules, approximately the size of a home furnace or boiler, to generate between 1 kilowatt and 5 kilowatts of electrical power, depending on the needs of specific geographical markets around the world. We expect that our residential power modules for the European and Japanese markets, when combined with the technologies of third parties with whom we intend to form manufacturing, marketing or distribution relationships, will be able to create enough heat to provide households with hot water as well as electrical power. We believe we will have the ability to vary and modify our basic residential power modules to accommodate a variety of applications. We expect that our residential power modules will operate: . connected to the electric utility grid; . on a stand-alone basis; or . in dual mode, where the fuel cell stack operates in parallel with the grid or, when the grid is unavailable, on a stand-alone basis. Small Commercial Power Market We expect that with the deregulation of utilities, commercial enterprises will increasingly adopt on-site power generation systems. These commercial enterprises will seek power sources that are less expensive or more reliable than the current electric grid, as well as those that provide cogeneration of heat and electricity. As residential customers select distributed generation solutions to meet their energy needs, we expect small commercial enterprises, requiring up to 50 kilowatts of power, to choose similarly distributed sources of power. Although we are not currently developing our products for the small commercial power market, we expect to monitor the development of this market and capture future opportunities as they arise. Transportation Market The pace at which the transportation market for our fuel cell technologies will develop is largely dependent upon the business strategy of automobile manufacturers. Nevertheless, in order for our transportation products to be attractive to manufacturers, we plan to focus on reducing cost and size, minimizing start-up and transient response times and optimizing life span. We believe that automobile manufacturers, depending on their needs, will purchase our fuel processors and our fuel cell stacks separately as components to be integrated into vehicles operating entirely on fuel cell systems or hybrid battery-fuel cell vehicles. Depending on the roll-out plans of automobile manufacturers, we plan to bring to market our first commercially available transportation products in 2005. Our fuel processors and fuel cell stacks for transportation applications are being designed for integration into transportation power modules which will generate between 30 kilowatts and 250 kilowatts of electrical power to provide power for passenger car, bus and truck applications. We are designing components of transportation power modules to meet the specifications of various automobile manufacturers so that the complete power module will fit under the hood of a mid-size vehicle. To date, based on the testing and evaluation of our components for transportation power modules, we have met or exceeded several automotive target specifications set by the Partnership for a New Generation of Vehicles for 2004, including those for 57 transient response time, emission levels and energy efficiency. The electrical efficiency of a power module or an integrated fuel cell system means the ratio of the electrical energy generated in the conversion of the feedstock fuel to the total energy contained in the fuel. The Partnership for a New Generation of Vehicles is a partnership between several agencies of the United States Government, including the Department of Defense, the Department of Energy, the Department of Transportation, the Environmental Protection Agency, the National Aeronautics and Space Administration and the National Science Foundation, and the U.S. Council for Automotive Research, which represents DaimlerChrysler, Ford Motor Corp. and General Motors Corp. The goal of the Partnership for a New Generation of Vehicles is to develop technology that can be used to create environmentally friendly vehicles that can achieve up to triple the fuel efficiency of today's vehicles with very low emissions without sacrificing affordability, performance or safety. Our transportation products are achieving super ultra-low emission vehicle standards established by the State of California and less than 10 second transient response time. The Department of Energy defines transient response time as the least amount of time that the fuel cell requires to increase its power output from 10% to 90% of its maximum power output. According to the Department of Energy, a transient response time of less than 10 seconds is necessary to meet or exceed the performance of current internal combustion engine technology. In laboratory tests, our fuel processor for transportation applications has achieved a fuel efficiency of 80%, which according to the Department of Energy is the performance necessary to meet or exceed the performance of current internal combustion engine technology. The Department of Energy defines fuel efficiency of a fuel processor as the ratio of the lower heating value of the hydrogen generated by a fuel processor to the lower heating value of the feedstock fuel fed to the fuel processor. Our goal is to produce products for transportation applications that allow vehicles to achieve up to triple the fuel economy of today's vehicles and meet all safety and environmental requirements, while maintaining the comfort, utility and performance of today's vehicles. We believe that our innovative technology will enable us to be leaders in this transformation process. Our transportation products are being designed to operate: . on currently available fuels such as gasoline or on future fuels such as alcohols or those derived from biomass; . in a fully transient mode to allow power over the complete drive cycle while maintaining super ultra-low emission vehicle standards or better emission standards; and . as primary driving power, as part of a hybrid vehicle system or as an auxiliary power unit. We believe we were the first company to demonstrate publicly the use of a fuel processor to reform gasoline into hydrogen to generate power from a fuel cell stack. We believe our gasoline fuel processing technology will give us a competitive advantage in the transportation market, as we believe it would utilize the existing fuel delivery infrastructure. We recently delivered two complete gasoline-powered fuel processors designed for testing transportation applications of fuel cell stacks. We expect to deliver two additional gasoline- powered fuel processors designed for testing transportation applications of fuel cell stacks in 2001. We believe that the hybrid battery-fuel cell vehicle market, in addition to the market for electric vehicles operating entirely on fuel cell systems, represents a significant opportunity and will expand as governments and consumers demand cost-efficient, reliable and environmentally friendly mobile electric power, particularly in urban areas. We expect that hybrid battery-fuel cell vehicles will have significantly lower emissions than hybrid battery- internal combustion engine vehicles. We believe that some manufacturers may view a hybrid battery-fuel cell vehicle as an alternative to an internal combustion vehicle that is more economically attractive than an electric vehicle operating entirely on a fuel cell system. We are actively pursuing the hybrid battery-fuel cell light duty vehicle market in addition to the market for vehicles operating entirely on fuel cell systems, and have supplied fuel processors and fuel cell stacks to seven automobile manufacturers, including Renault of France for its FEVER car project. The FEVER, or Fuel cell Electric Vehicle of Extended Range, is a fuel cell powered research car developed jointly by Renault, De Nora, Air Liquide, Ansaldo, Volvo and the Ecole des Mines de Paris, a French university. 58 Hydrogen Market We believe hydrogen may in the future become a widely used fuel as public awareness of its potential and the supply infrastructure evolve. In Europe, there are buses and cars that currently run on hydrogen, and hydrogen distribution lines already exist. For example, BMW of Germany has presented a commercial car with an internal combustion engine operating on liquid hydrogen, and a liquid hydrogen filling station has been installed at the Munich airport. The cities of Hamburg, Germany, Lisbon, Portugal and Milan, Italy have signed a cooperation protocol to expand the number of vehicles operating on hydrogen in order to reduce air pollution. Buses operating on hydrogen have been demonstrated in several cities in North America, and major automobile manufacturers have demonstrated cars operating on hydrogen. We believe we will be well positioned to capitalize on the emergence of an improved hydrogen infrastructure. Given the versatility of our technologies and the possibility of changes in industry and market demands, we may decide to enter into relationships with third parties to pursue non-core markets such as the hydrogen market, including hydrogen recovery from chemical plants. We may establish alliances with major industrial companies involved in the storage, handling and servicing of industrial gases and hydrogen recovery from chemical plants. If we enter into such alliances, we may pursue premium power stationary applications and transportation applications where hydrogen may become an extremely attractive fuel. For example, we have delivered our fuel cell stacks to a European bus manufacturer operating a prototype bus on hydrogen gas. Our Strategy Our objective is to extend our leadership in the design, development and testing of fuel processors, fuel cell stacks, power modules and integrated fuel cell systems and to bring about the successful commercialization of our products. Key elements of our strategy to achieve this objective include: Extend Our Technology Leadership We believe our comprehensive knowledge of fuel cell technology, from fuel processors to fuel cell stacks, will position us to be a market leader in the field of power modules and integrated fuel cell systems. We believe we are designing and developing the most flexible fuel cell technologies and products, due in part to the development of our fuel processor which is capable of operating on a variety of commonly available hydrocarbon fuels. The scientists in our catalysis group have conducted extensive research and development of advanced catalysts for use in fuel processors, and we intend to continue to improve the performance of such catalysts. We believe our proprietary stack design, which incorporates sheet metal bipolar plates, makes our fuel cell stacks less expensive and more robust than the fuel cell stacks of our competitors. Bipolar plates between the individual fuel cells of a fuel cell stack allow electrons to flow out of each fuel cell and distribute hydrogen- rich gas along the surface of the fuel cell. In addition, the catalysts we use in our fuel cell stacks are highly efficient and durable. We intend to continue to invest substantially in research and development and to increase the performance and functionality of our fuel cell products. We believe our concurrent research and development efforts in designing products for both stationary and transportation applications will achieve reciprocal breakthroughs; we expect that our continuing effort to meet challenging targets in one market will result in advances in our technology that will benefit the development of our products for other target markets. We believe that our technology should enable us to be an industry leader in designing and developing fuel cell technologies. Exploit Design Integration Advantage We believe we are one of the most vertically integrated developers of fuel cell technologies, and that design integration will provide us with an important competitive advantage over component suppliers. We have 59 access to materials such as catalysts and gas diffusion electrodes, and we plan to manufacture and assemble fuel processors and fuel cell stacks and integrate these components into efficient power modules and integrated fuel cell systems. The Department of Energy defines electrical efficiency of a power module or an integrated fuel cell system as the ratio of the electrical energy generated in the conversion of the feedstock fuel to the total energy contained in the fuel. We believe that such vertical integration not only prevents a bottleneck in the supply of components, but will also help us become a leader in developing and manufacturing versatile, efficient and cost effective products. For example, we have already demonstrated that our versatile and scalable technology and products have the potential to serve both stationary and transportation markets. We believe our systems integration technology will also provide key performance benefits such as quick start-up and increased electrical efficiency of our integrated fuel cell systems. For example, because we are able to configure the interfaces between our fuel processors and our fuel cell stacks, we can enhance our understanding of carbon monoxide tolerance levels and optimize start-up techniques and start-up times of our integrated fuel cell systems. Exploit Multi-Fuel Advantage Because the infrastructure for a reliable and affordable supply of hydrogen is not foreseeable in the near future, the hydrogen necessary for power generation by a fuel cell stack will need to be derived from readily available hydrocarbon fuels. We believe that the multi-fuel capability of our fuel processor, as well as our ability to deliver a fuel processor that can reform fuel by utilizing steam reforming, autothermal reforming or partial oxidation technologies, will enable us to compete in multiple markets. In addition, we expect that the multi-fuel capability of our fuel processor will enable us to compete regardless of which fuel eventually becomes the industry standard. Focus on Early-Adopter Markets We believe that the need for reliable and environmentally sound primary and backup power in premium power markets such as the telecommunications market and the need for low-cost reliability in the residential market make these sectors the most promising candidates for early adoption of fuel cell technology. We believe that due to less stringent size and cost constraints, the stationary market, in particular, the premium power market, will be the first to adopt fuel cell technology. We expect the early adoption process to start with applications where power quality is at a premium and where traditional distribution is costly. In the United States, we intend first to target applications in the telecommunications market, where we have identified telephone switching stations and cellular towers as promising applications of our technology. We believe this focus will enable us to extend our technological leadership and commercialize our products more rapidly than if we first targeted other markets. Exploit Multi-Market Advantage By simultaneously developing and testing our products in a number of markets, we believe we will be able to apply technological advances in products developed for one market to our products in other markets. For example, in order to be competitive in the transportation market, fuel cell technologies will have to meet aggressive targets for weight, volume, start-up time and cost. These targets are far more aggressive than those for fuel cell technologies in other markets and therefore require advanced research and technology. Our objective is to apply any resulting breakthroughs in developing our products for the transportation market to our products for the stationary market. We believe that our multi-market strategy will help us to achieve leadership in fuel cell technology while reducing development and manufacturing costs in the stationary market. 60 Leverage Strategic Relationships We believe strategic relationships will help us understand the requirements of customers, provide us with the engineering, testing and analytical resources to commercialize our products more rapidly, help us gain access to a stable customer base and provide us with global marketing, distribution and servicing advantages over our competitors. Since we anticipate multiple third-party distribution channels to service our customers, we also plan to form strategic alliances and other relationships with selected technology companies, component suppliers, manufacturers, distributors and end- users to facilitate the commercialization of our products. One key aspect of this strategy is to leverage the success of our joint development programs and other field tests of our products into long-term manufacturing, distributor and supplier relationships. We are currently participating in, and plan to continue to participate in, government-funded fuel cell technology research and development programs, such as with the U.S. Department of Energy, the U.S. Department of Commerce and the European Union. Marketing & Distribution We intend to market and distribute our products in two primary markets-- the stationary market and the transportation market. We believe we will be able to enter early adopter markets while we transition our products from more limited, premium-priced applications, such as telecommunications, to broader mass-market applications, such as residential. We plan to form a range of manufacturing, marketing and distribution alliances in order to commercialize our products. We believe that a multi-partner model will be effective in addressing the unique characteristics of our target markets. Stationary Market In the U.S. premium power market, we intend to work with end-users to develop products according to industry-acceptable standards. For example, we have begun to develop market alliances in the premium power market, as described below under "--Key Relationships--Market Alliances." In the residential market, our strategy is to introduce our power modules and integrated fuel cell systems into consumers' homes as an appliance that will take its place alongside furnaces, water heaters and boilers. We expect the power module to be a "connected" device with interfaces to the electric grid, the gas line, the phone system, the heating, ventilating and air conditioning system, and other appliances in the home. As the home becomes a connected network of devices, we believe an intelligent power module will be the central element of this network. We believe that the most credible entry into the residential market in the United States will involve forming a relationship with a third party that understands the residential customer and the appliance business, and who has the ability to deliver, install and maintain an integrated fuel cell system in the home for the provision of electricity. Because of the novelty of this technology in people's homes, a high quality image and a name people trust will be necessary to gain consumer acceptance. Accordingly, although we have not currently established relationships in the residential market, we plan to pursue relationships with suitable manufacturers and distributors who share our vision of the networked home. These include natural gas and propane distributors, electric and telephone utilities, manufacturers and distributors of electric and heating equipment and home builders. We expect that these manufacturers and distributors will have existing sales organizations and that some of them will have the capability, or will acquire the capability, to install and service our products. Since the European and Japanese residential markets call for the provision of combined heat and power, we intend to establish relationships with manufacturers of furnaces, water heaters and boilers in order to integrate our power modules with their cogeneration technologies and components and distribute our combined co-branded products to homes. In Europe, particularly in Germany, we believe the recently privatized utilities offer the most promising path to commercialization in the residential market. 61 We are tailoring our marketing and distribution strategies to pursue the residential market on a global basis. A number of important differences between the U.S. market, on the one hand, and the European and Japanese markets, on the other hand, will drive our global marketing and distribution approaches: . Utility deregulation is at a more advanced stage in some countries in Europe, making the utility market more attractive to third parties with whom we intend to form marketing and distribution relationships. Micro grids that serve small neighborhoods may be easier to implement and more cost effective. . Cogeneration of heat and electrical power has obtained greater penetration in Europe and Japan than in the United States. As a result, we expect to pursue relationships with European and Japanese manufacturers of heating, ventilating and air conditioning products. Transportation Market We intend to develop technology relationships with a number of automobile companies rather than relying heavily on a single alliance with one automobile manufacturer. We expect these technology relationships to lead to the production of light and heavy duty fuel cell or hybrid battery-fuel cell vehicles. We intend to manufacture key components for sale to the joint ventures we plan to establish with these manufacturers and to license our fuel cell technologies on a non-exclusive basis to the manufacturers or the joint ventures. As of September 30, 2000, we had delivered 9 fuel cell stack prototypes to major automobile and bus manufacturers for evaluation and testing. In addition, we have entered into agreements to deliver an additional 11 fuel cell stack prototypes to major automobile manufacturers for evaluation and testing. We have also built approximately 13 fuel processors designed for transportation applications. Although we have not yet established long-term supply or distribution relationships in the transportation market, we are currently engaged in joint development programs with three major automobile manufacturers and we have supplied fuel cell stacks to three others. These development programs all involve the integration of our fuel processors or fuel cell stacks into integrated fuel cell systems that have been designed by the manufacturers. Several of these programs involve joint cost and durability analyses with the manufacturers, the results of which the manufacturers will share exclusively with us. We intend to develop the Nuvera brand name around our technology and seek continued visibility for our brand once our products are integrated into vehicles. We have filed for a trademark in our name in the United States, the European Union and Japan. We value the transportation market not only for its size, but also for its rapid product development cycles, demands for low-cost performance and stringent size and weight constraints, as a result of which we believe this market will serve as the impetus for important technological innovations that we can then apply to the premium, residential and small commercial power markets. Key Relationships We believe that developing and maintaining relationships with a variety of companies is important to our research, development and commercialization efforts. Among other benefits, we believe these relationships will help us to understand the requirements of consumers, provide us with the engineering, testing and analytical resources to develop a superior product more rapidly, provide global manufacturing, marketing, distribution and servicing opportunities and enable us to lower our component costs. While we intend to develop other strategic relationships to enlarge our access to consumers, technologies and markets, the following are some of our key relationships. 62 Joint Development Programs From inception through September 30, 2000, Nuvera and its predecessor companies have received approximately $20.0 million under government-sponsored fuel cell technology research and development contracts. This research has fostered the development of advanced technologies while allowing Nuvera to retain the rights to these technologies for commercialization. We are currently involved in three programs with the U.S. Department of Energy and the U.S. Department of Commerce and five programs funded by the European Union, and we expect to enter into two additional European Union-funded programs in 2001. We will continue to evaluate government-sponsored research opportunities where the program objectives are clearly aligned with our strategy. In addition, we have entered into joint development programs with a number of companies that supply raw materials and components to us, either under the framework of a government-funded project or separately, under private agreements. We anticipate that these relationships may develop into supply relationships in the future. Some of these programs are described below. As part of a cooperative agreement AD Little has entered into with the U.S. Department of Energy to develop, design, build and demonstrate two 50 kW multi-fuel processors for transportation applications, some of our suppliers of key components or materials are working with us in cooperative joint development programs to improve and optimize the performance of our fuel cell technologies. In October 1999, AD Little entered into a 3 1/4-year cost-shared joint development contract, under which we serve as subcontractor to AD Little, with Corning, Inc., the world's largest supplier of ceramic substrates used in automotive exhaust catalyst systems as well as a major supplier to the telecommunications industry. The objective of the joint development program is to develop compact, lightweight catalyst systems and substrates specific to our fuel processors that can be economically produced and can withstand the rigorous vibration environment of transportation and some premium power applications. Under the agreement, the intellectual property rights in jointly- developed inventions will vest jointly in both parties; however, we have a royalty-free, exclusive license, including to the exclusion of Corning, to any of these inventions relating to fuel processors and fuel processing methods for the production of hydrogen. This license will automatically lapse and each party will obtain full joint ownership rights if it has been demonstrated that we are not making an effort to commercialize our fuel processors within four years of the first issuance of any patent on such inventions. We are entitled to share royalties on any jointly-owned invention. We expect to utilize the catalyst systems we develop under this program in products we demonstrate to an automotive manufacturer in early 2001. The agreement will expire on January 14, 2003. We may terminate the contract if Corning fails to comply with any of the provisions of the contract, if Corning becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors, or for our convenience, subject in all cases to payment of a termination amount to be agreed upon. In addition, under the same U.S. Department of Energy program, AD Little entered into a joint development agreement, under which we serve as subcontractor to AD Little, with United Catalysts, Inc. United Catalysts is a division of Sud-Chemie, A.G., the world's largest supplier of fuel processing catalysts. Under the agreement, we and United Catalysts are engaged in a cost- shared development program to design compact, low-cost fuel processing catalysts specifically designed for our fuel processors and based on the substrates of Corning. Intellectual property rights in jointly-developed catalysts will vest jointly in both parties; however, we have a royalty free, exclusive license under the agreement, including to the exclusion of United Catalysts, to inventions relating to fuel processors and fuel processing methods for the production of hydrogen. We are entitled to share royalties arising from jointly developed catalysts. Under this program, we have jointly developed a compact shift catalyst that lowers carbon monoxide levels and increases the concentration of hydrogen in the hydrogen-rich gas stream entering the fuel cell stack. The agreement will expire on January 14, 2003. We may terminate the contract if United Catalysts fails to comply with any of the provisions of the contract, if United Catalysts becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors, or for any reason. 63 Also under this U.S. Department of Energy program, AD Little entered into a joint development program, under which we serve as subcontractor to AD Little, with STC Catalysts, Inc. to develop preferential oxidation catalyst technology for removal of carbon monoxide from the hydrogen gas produced by the fuel processor. Under this agreement, we retain the intellectual property rights for all jointly-developed inventions applicable to use in fuel processing for use with fuel cell technologies. This agreement also provides that STC Catalysts will grant to Nuvera an exclusive, irrevocable, worldwide, royalty-free license in and to each invention developed solely by STC Catalysts applicable to use in fuel processing for use with fuel cell technologies. The agreement will expire on January 14, 2003. We may terminate the contract if STC Catalysts fails to comply with any of the provisions of the contract, if STC Catalysts becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors, or for our convenience, subject in all cases to payment of a termination amount to be agreed upon. Market Alliances In the premium power market, we entered into a memorandum of understanding with AD Little and a major telecommunications provider in July 2000. The memorandum of understanding envisions a program to develop fuel cell technology customized for the on-site generation of power for telecommunications equipment. This equipment will typically be housed in dedicated structures, either aboveground huts or community energy vaults. The power rating of the DC generators that must operate in these structures is approximately 5-10 kilowatts. Nuvera and this telecommunications provider are currently engaged in demonstrating and testing telecommunications applications of our products, including the development and demonstration of an integrated fuel cell system with a capacity of 3 kilowatts to 5 kilowatts, which is the first phase of a three-phase joint development program to develop a fuel cell power system to meet telecommunications requirements. The first phase of the program commenced in July 2000 and was completed in December 2000. This telecommunications provider is under no obligation to proceed with the second and third phases of the program; however, we have entered into discussions to proceed with the second phase of the program, which will include the installation of an integrated fuel cell system in one or more of the facilities of the telecommunications provider for the demonstration and evaluation purposes. In the transportation market, we have demonstrated our fuel processors and our fuel cell stacks to a number of automobile manufacturers and we are currently engaged in joint development programs, discussed above under "-- Marketing & Distribution--Transportation Market," with three of these companies to build our products to their specifications and jointly test the results. As part of programs funded by the U.S. Department of Energy and the European Union, we have worked together with automobile manufacturers, a European bus manufacturer, industrial companies, four universities and nine research and development institutions to develop, test and evaluate various fuel cell technologies. We intend to develop other strategic relationships and alliances to provide us with access to consumers and to traditional manufacturing, marketing, distribution and service capabilities. Supply Relationships In November 2000, we entered into an agreement with De Nora Elettrodi S.p.A., an affiliate of one of our stockholders, whereby De Nora Elettrodi will grant us exclusive access to its development efforts with respect to catalyst- coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks and shift catalysts for use in fuel processors, and supply these products to us. De Nora Elettrodi will bear all research and development costs. Once we test the prototype products and are satisfied that they meet our specifications, we will have the option to purchase on an exclusive basis and to require that De Nora Elettrodi supply to us on an exclusive basis catalyst- coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks. If we are not satisfied with any prototype product or if the parties fail in good faith to reach agreement on a purchase commitment on any product, De Nora Elettrodi will be able to sell the product to any third party and 64 we will waive any right to have the product sold exclusively to us. Pricing to us on products with respect to which we do not exercise our exclusivity option and on all other De Nora Elettrodi products other than shift catalysts will be at least as favorable as pricing to any other customer of De Nora Elettrodi and will in any event be 10% below catalogue prices. Under the agreement, De Nora Elettrodi will retain title to any intellectual property rights in the products it supplies to us. We will have the right to distribute, sell or otherwise dispose of the products as incorporated into any of our products and the right to use any De Nora Elettrodi trademarks or trade names in connection therewith. Neither party may assign its rights or delegate the performance of its obligations under the agreement to a third party without the prior written consent of the other party, which consent is not to be unreasonably withheld, except that either party may assign its rights or delegate the performance of its obligations under the agreement to any affiliates or to any purchaser of all or substantially all of the assets of the business to which the agreement relates without the consent of the other party. The agreement terminates December 31, 2004 and is automatically renewable for successive one-year terms unless either party notifies the other party that it wishes to terminate the agreement at least six months prior to the end of each year. In addition, either party may terminate the agreement immediately by written notice if the other party breaches any term of the agreement materially and fails to cure such default within 60 days written notice of such breach or if the other party is the subject of a bankruptcy petition which has not been vacated within 30 days. Product Development and Commercialization Technology Development and Product Engineering Our approximately 20,000 square feet of technology development facilities leased in Cambridge and Milan together contain approximately 38 test stations, for the purpose of designing, developing and testing fuel processors, fuel cell stacks, power modules, carbon monoxide clean-up devices, catalysts and electronic controls for use in premium power, residential and transportation applications. Our advanced research and development facilities allow design optimization and verification testing, accelerated-aging testing, failure mode and effects analysis, and endurance testing in an effort to accelerate the development and commercialization of our integrated fuel cell systems. Our total research and development expense, before any offset for amounts received by De Nora Fuel Cells S.p.A. and Epyx Corporation from governments, government agencies and our customers, was $2.520 million in 1997, $8.176 million in 1998 and $8.843 million in 1999. Fuel Processor Product Development The mandate of our fuel processor development team, located in Cambridge, Massachusetts, is to improve the performance, cost and reliability of our fuel processors. This team uses extensive computer-aided analysis to develop and refine fuel processor designs. Evaluation of fuel processor catalysts and other components is conducted in sub-scale and full-scale test reactors. Specialized test stands are used to evaluate heat exchangers and other critical components. We have constructed a fuel processor test facility in Cambridge that allows 24- hour testing and extensive monitoring of performance. In 2000 we built 15 fuel processors, 6 of which are located in this facility. We also collect additional performance and endurance data from fuel processor tests conducted in the laboratories of our customers. Fuel Cell Stack Product Development Our current generation of fuel cell stacks is approaching the commercialization stage. As a result, we are focusing on increasing the durability and reducing the cost of our current generation fuel cell stacks, while 65 turning to the development of next generation fuel cell stacks. We are refining the design of our current fuel cell stacks in our Milan facility, where we had 16 fuel cell stack test stations installed by the end of 2000. These test stations will be used to evaluate stacks, sub-stacks and single cell configurations under conditions designed to simulate real world conditions. In our Milan facility we are developing direct methanol fuel cell stacks, high temperature proton exchange membranes and composites to replace structural elements of the fuel cell stack. Our advanced research and development capabilities allow us to optimize fuel cell stack design through the use of computer-aided analysis and accelerated aging testing. Power Module and Integrated Fuel Cell System Product Development To date, all power module and integrated fuel cell system product development has been conducted in our Cambridge facility. In early 2001, we also plan to conduct power module and integrated fuel cell system product development in our Milan facility. Computer-aided design and packaging tools and prototype development laboratories support the engineering of our integrated fuel cell systems. We continue to develop computer and embedded control systems for our power modules and integrated fuel cell systems using dynamic models and a real-time operating system. We have separate laboratories and test facilities to test components such as control systems, power conversion devices and balance of plant components, such as pumps and valves. Pre-Commercial Testing In 2001, we expect to begin small-scale production of our initial prototype systems. As described in greater detail under "Business--Key Relationships--Market Alliances" above, a major telecommunications provider has agreed to participate in field trials and evaluations designed to test system design and performance, as well as to set final product specifications. As part of the first phase of these field trials, we demonstrated the operation of the telephone systems of AD Little and Nuvera on our 5 kW natural gas power modules in December 2000. We intend to use the data resulting from these field trials to optimize product design and speed commercialization. Continuing this process, late in 2001, we expect to produce and test prototypes that are designed to achieve specific customer product specifications. We expect that the results of our initial field trials will lead to the development and advancement of other products for our stationary markets. By 2002, we expect to conduct field trials of these stationary premium power products operating on natural gas and propane. Manufacturing and Commercialization As a first step toward commercialization, we have begun to establish a manufacturing infrastructure by hiring assembly and related support staff, installing a new management information system and developing our manufacturing processes, including defining work centers and related responsibilities. In September 2000, we completed construction of a 5,200 square foot fuel cell stack production facility in Milan with production lines that will allow us to begin manual assembly and manufacturing of our pre-commercial and initial commercial fuel cell stacks up to a volume of 1,000 one hundred-cell fuel cell stacks per year. In our 9,000 square foot Cambridge production facility completed in November 2000, we expect to be able to assemble and manufacture fuel processors and assemble up to 1,000 power modules per year with the fuel cell stacks manufactured in Milan. During 2001, we intend to produce and assemble power modules and integrated fuel cell systems in our production facility in Cambridge, with the fuel cell stacks being produced in our production facility in Milan, and the gas diffusion electrodes for the fuel cell stacks being supplied by De Nora Elettrodi S.p.A. Gas diffusion electrodes distribute hydrogen and oxygen to the site on the proton exchange membrane where the electrochemical reaction occurs. By the beginning of 2003, we plan to have semi-automated production in our Milan workshops and increase production capacity to approximately 14,000 one hundred-cell fuel cell stacks per year, while we plan to expand our production capacity to produce up to 4,000 power modules per year at or near our Cambridge production facilities. We intend to perform significant quality testing before we integrate any third-party subsystems or components into our final assembled products. We believe that we can realize both purchase economies from 66 existing vendors and economies of scale related to our product development costs as unit volume increases. Based on our commercialization plan, we anticipate that our current production facilities will provide sufficient manufacturing and assembly capacity through 2002. Thereafter, in order to achieve mass market production by 2003, we will need to enter into joint ventures or, alternatively, develop our own large-scale manufacturing and assembly capability. Historical Achievements To date, Nuvera has built and tested a substantial number of fuel processors and fuel cell stacks. We have also delivered a substantial number of fuel processors and fuel cells stacks to governmental entities, automobile manufacturers and other companies for testing and evaluation: Total Built and Tested
2001 1993 1994 1995 1996 1997 1998 1999 2000 YTD Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- Fuel Processors Units 1 1 2 3 4 4 8 15 0 38 kW 2 250 100 110 61 46 280 269 0 1,118 Fuel Cell Stacks Units 18 48 21 25 28 28 46 91 1 306 kW 14 38 72 160 88 157 160 521 1 1,211 Total Delivered 2001 1993 1994 1995 1996 1997 1998 1999 2000 YTD Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- Fuel Processors Units 1 1 1 3 0 6 kW 10 10 50 100 0 170 Fuel Cell Stacks Units 1 1 11 5 12 5 27 60 1 123 kW 1 5 47 40 47 35 119 385 1 680
In addition, some of our recent technical and commercial milestones with respect to durability, efficiency and other key commercialization requirements include: 2000 . Achieved over 1,900 hours of continuous operation on 10 kW autothermal fuel processor . Achieved over 1,100 hours of continuous operation and 450 hours of discontinuous operation on a single fuel cell stack . Achieved over 915 hours of field operation on a 5 kW fuel cell stack . Achieved 7 years of discontinuous testing on a 0.6 kW fuel cell stack . Achieved 0.65 kW/liter power density on a fuel cell stack operating on hydrogen . Achieved over 3,000 hours of field operation on ten fuel cell stacks integrated with a fuel processor 67 1999 . Developed and tested our first 10 kW autothermal stationary fuel processing unit . Developed and tested our 10 kW gasoline fuel processor which met super ultra-low emission vehicle standards . Demonstrated a 190 kW gasoline fuel processing system . Demonstrated 6 minute start-up time for an automotive fuel processor . Achieved 0.22 kW/liter power density on a fuel cell stack operating on hydrogen 1998 . Demonstrated Epyx's fuel processor capability on multiple fuels including gasoline, ethanol, methanol, natural gas, propane and kerosene . Demonstrated the integration of Epyx's fuel processor and De Nora's fuel cell stack in a 300 W application using propane as fuel . Operated a fuel processor suitable for transportation applications for 3,500 hours . Achieved 0.13 kW/liter power density on a fuel cell stack operating on hydrogen 1997 . Converted gasoline into electricity for the first time using a fuel processor and fuel cell stack . Chrysler illustrated their vision of automotive fuel cell technology at the Detroit Auto Show using our fuel processor design . Delivered three 10 kW fuel cell stacks to Renault of France for the FEVER car project Intellectual Property We rely primarily on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements and inventors' rights agreements with our employees and companies with which we engage in joint development programs, to protect our proprietary rights relating to technical know-how, designs, special materials, manufacturing techniques and test equipment and procedures for fuel processors, fuel processor components, fuel cell stacks, fuel cell stack components, power modules and integrated fuel cell systems. Fuel cell technology has existed since the 19th century and proton exchange membrane fuel cells were first developed in the 1950s. Consequently, we believe that neither we nor our competitors can achieve a significant proprietary position on the basic technologies used in power modules and integrated fuel cell systems. Despite the inability to achieve a significant proprietary position on the basic technologies of power modules and integrated fuel cell systems, we believe that certain technological advances, including the design and integration of the fuel cell system and system components, our fuel processor and its components as well as some of the low-cost manufacturing processes that we have developed, can be protected. The objective of our patent strategy is to obtain an exclusive and preferential position in product features, performance and cost compared to our competitors, while ensuring for ourselves the widest possible application and broadest 68 potential market for our products. We seek to patent the key concepts and components we believe will provide us with a significant advantage over our competitors and the inventions we consider to have commercial value. To date, patents have been issued on various aspects of our fuel processor and fuel cell stack and their components, including methods and designs for reforming fuels through partial oxidation, high temperature- tolerant polymers for use as electrolytes, low-cost sheet metal bipolar plates, ultra-lightweight structures for use in fuel cell stacks and fuel cell sealing structures. In addition, patents are pending on various technologies and methods, including catalyst systems, control systems and advanced carbon monoxide removal for fuel processors, as well as designs for reactant and coolant flow fields, designs for effective removal of byproduct water and designs and structures for operating on low pressure air for fuel cell stacks. Bipolar plates between the individual fuel cells of a fuel cell stack allow electrons to flow out of each fuel cell and distribute hydrogen-rich gas along the surface of the fuel cell. Additional inventions involve various aspects of reforming hydrocarbon fuels, including fuel processor design and reduction of carbon monoxide. Further inventions cover fuel systems and control strategies, including hydrogen and air systems, methanol and natural gas systems and stack control strategies. As of December 31, 2000, we have 9 U.S. and 16 international patents, in some cases covering the same technology in multiple jurisdictions, covering our fuel processing and fuel cell stack technology. In addition, we have 1 allowed U.S. patent application and 1 allowed European patent application. We have also submitted 10 U.S. and 47 international patent applications, including 5 European Patent Convention patent applications. We have also submitted 4 Patent Cooperation Treaty patent applications. The patents that we have obtained will expire between 2010 and 2018, and the average remaining life of our patents is approximately 15 years. It should be noted, however, that there can be no assurance that any of our pending patent applications will issue or, in the case of patents issued or to be issued, that the claims allowed are or will be sufficiently broad to protect our technology or that they will not be challenged or invalidated. There can be no assurance that our competitors will not independently develop or patent technologies that are substantially equivalent or superior to our technology. Some of our intellectual property is not covered by any patent or patent application and includes trade secrets and other know-how that is not patentable, particularly as it relates to our manufacturing processes and engineering designs. In addition, although we currently know of no such similarities that could prevent us from commercializing our products, some of our intellectual property includes technologies and processes that may be similar to the patented technologies and processes of third parties. In addition, the manufacture of our products may be dependent upon the intellectual property we develop jointly with some of our suppliers, including suppliers of catalysts and substrates. For example, under some of our joint development programs with manufacturers of catalysts and substrates for our fuel processors, we will share intellectual property rights in jointly- developed inventions, although we retain a royalty-free, exclusive license, including to the exclusion of the other party, to any inventions relating to fuel processors and fuel processing methods for the production of hydrogen. For more discussion of our intellectual property rights under these joint development agreements, please read the section of this prospectus entitled "-- Key Relationships--Joint Development Programs." There can be no assurance, however, that we will maintain relationships with any of the suppliers with which we have entered into joint development agreements, and to the extent that the processes our manufacturers use to manufacture components of our fuel processors are proprietary, we may be unable to obtain comparable components from alternative suppliers. Some of our patents, in particular, patents related to fuel processor technology, are in part the result of research and development programs funded in part by the government and are subject to the risk of the exercise of "march-in" rights by the government. March-in rights refer to the right of the government or government agency to exercise its non-exclusive, royalty-free, irrevocable worldwide license to any technology developed under contracts funded by the government if the contractor fails to take effective steps to achieve practical application of the technology. In addition, these "march-in" rights permit the government to take title to these patents and license the patented technology to third parties if the contractor fails to utilize the patents. 69 In Europe, Nuvera has entered into three association agreements with Italy's National Agency for Alternative Energy, or ENEA. Under one of these agreements, Nuvera owns a patent on certain fuel cell hardware technology. Upon the commercialization of products using such patented technology, ENEA may request Nuvera to pay royalties for recovery of a portion of the funding ENEA provided under the agreement in an amount mutually agreed between ENEA and Nuvera, but in no case greater than (Euro)668,000, or approximately $587,000, based on the September 30, 2000 exchange rate. In addition, Nuvera is a party to various development contracts funded by the European Union. Under one of these contracts, we own a patent on the development of technology relating to the humidification and cooling of a fuel cell stack achieved by the same stream of water. The European Union has no march-in rights with respect to any of the technology developed under its development contracts with Nuvera. However, pursuant to our development contracts funded by the European Union, the Joint Research Centre of the European Union has a non-exclusive, royalty-free license and right to access and use patents, registered designs, copyrights and other information generated by any contractor or subcontractor working under such contracts. In addition, we rely on confidentiality agreements to protect our unpatented information, know-how and trade secrets. We believe that our success is substantially dependent on the knowledge, experience and technical expertise of our employees. In this regard, our U.S. employees are required to enter into agreements providing for confidentiality and the assignment of rights to inventions made by them while employed by us. These agreements also contain non-solicitation clauses for the term of employment and for one year thereafter. There can be no assurance, however, that these agreements will not be breached, that we would have adequate remedies for any breach or that our trade secrets will not otherwise become known or be independently developed by competitors. Employees of Nuvera Europe are not bound by any contractual confidentiality agreements; however, Italian legislation requires employees to keep confidential the proprietary information of their employer. Italian legislation also stipulates that any invention created by an employee using the resources of his or her employer is the property of his or her employer. Raw Materials The raw materials and supplies required for the production of our principal products are generally available in quantities adequate to meet our needs. There is a limited number of suppliers for some of the key components of our products, but we do not anticipate difficulties in obtaining these components from those suppliers. Government Regulation We do not believe that we will be subject to existing U.S. federal and state regulatory commissions governing traditional electric utilities and other regulated entities. We anticipate, however, that our residential products and the installation of these products, once commercialized, will likely become subject to oversight and regulation at the local level in accordance with state and local ordinances relating to building codes, safety, pipeline connections and other safety-related matters. Any government regulation may depend, in part, upon whether an integrated fuel cell system is placed outside or inside a home or business. At this time, we cannot anticipate which jurisdictions, if any, will impose regulations upon our products or the installation of our products. We also cannot anticipate the extent to which any existing or new regulations may affect our ability to distribute, install and service our products. Once our products reach the commercialization stage and we begin distributing them to our early target markets, federal, state or local government entities or competitors may seek to impose regulations. We intend to encourage the standardization of industry codes to avoid having to comply with differing regulations on a state-by-state or locality-by-locality basis. We are also subject to various international, federal, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of pollutants into the atmosphere. Our business exposes us to the risk of harmful substances escaping into the environment, resulting in potential personal injury or loss of life, damage 70 to or destruction of property, and natural resource damage. Depending on the nature of the claim, our current insurance policies may not adequately reimburse us for costs incurred in settling environmental damage claims, and in some instances, we may not be reimbursed at all. To date, we are not aware of any claims or liabilities under these existing laws and regulations that would materially affect our results of operations or financial condition. We have made and will continue to make capital and other expenditures relating to environmental compliance. Although we currently do not expect that any capital or other expenditures relating to environmental compliance or other environmental matters will be material through 2002, we may be required to make material expenditures in the future. Environmental laws are complex, change frequently and have tended to become stringent over time. Accordingly, we cannot assure you that environmental laws applicable to our business will not change or become more stringent in the future in a manner that could materially adversely effect our results of operations or financial condition. Facilities Our principal executive offices are located in Cambridge, Massachusetts. The corporate headquarters facility, which we sublease from AD Little, comprises approximately 33,614 rentable square feet and houses our administrative, research and development, engineering, information systems, marketing, sales and service and support groups. The current agreement terminates on December 31, 2005, and will automatically be renewed for two additional terms, the first expiring on January 1, 2008 and the second on January 1, 2010, unless we notify AD Little that we wish to terminate the lease at least 18 months prior to the relevant term. Payments, which total $690,000 per year, are made on a monthly basis. In addition, we will pay to AD Little an annual service fee of $616,400, payable on a monthly basis, for our share of real estate taxes and assessments, utility charges and maintenance costs. In November 2000, we completed the construction of a 9,000 square foot production facility in Cambridge. We also occupy offices of approximately 3,000 square feet, research and development and engineering facilities with a combined area of approximately 5,000 square feet and a recently-built production facility of approximately 5,200 square feet in Milan, Italy, all of which we lease from Finisola S.p.A., the real estate company of the Oronzio De Nora Group. The leases are due to expire on June 30, 2006, and each will automatically be renewed for an additional six-year term unless either party notifies the other that it wishes to terminate the relevant lease at least six months prior to its expiration. Payments, which total 178 million Italian lira, or approximately $81,000 plus taxes, per year, based on the September 30, 2000 exchange rate are made on a quarterly basis. Competition There are a number of companies located in the United States, Canada, Europe and Japan that are developing fuel processor and proton exchange membrane fuel cell technology. Many of these companies possess greater financial and personnel resources than we do and represent significant competition. Competitors in the development of fuel processors include Gas Tech Inc., Hydrogen Burner Technology Inc., IdaTech, International Fuel Cells, Johnson Matthey plc, McDermott International and Universal Oil Products, Inc. Some of our competitors have greater financial resources, more extensive manufacturing capabilities and more relationships with suppliers and original equipment manufacturers than we do. However, we are one of the few companies that has developed a fuel processor capable of operating on a variety of commonly available hydrocarbon fuels. We believe we were the first company to demonstrate publicly the use of a fuel processor to reform gasoline into hydrogen to generate power from a fuel cell stack. We have published the results of tests and demonstrations of our fuel processors for transportation applications in a number of articles published by the Society of Automotive Engineers, Inc. Although other companies have 71 claimed to have the ability to convert gasoline into hydrogen, we are unaware of any public demonstrations of this reforming technology to generate power from a fuel cell stack. Competitors in the market for proton exchange membrane fuel cell stacks for stationary applications include Avista Labs, Ballard Power Systems, Inc., Energy Partners L.C., H Power Corp., International Fuel Cells, Plug Power Inc. and Sanyo Electric Co., Ltd. Competitors in the market for proton exchange membrane fuel cell stacks for transportation applications include Ballard Power Systems, Inc., General Motors Corporation and International Fuel Cells. A number of major automobile and manufacturing companies also have in-house proton exchange membrane fuel cell development efforts. To the extent publicly disclosed, the primary efforts of many of these companies, including Ballard Power Systems, Inc. and International Fuel Cells, appear to have been directed toward the development of proton exchange membrane fuel cell systems for automotive and large stationary power applications. Some of these competitors have a longer history in the U.S. fuel cell stack market, access to greater financial resources and more extensive manufacturing capabilities than we do, and some have established relationships with suppliers and original equipment manufacturers, including automobile manufacturers. We believe, however, that our fuel cell stacks feature several technological strengths, including our use of advanced catalysts and gas diffusion electrodes that we believe will improve operating efficiency, sheet metal bipolar plates that we believe will facilitate low-cost, high-volume assembly and advanced stack-sealing structures that we believe will reduce maintenance costs. We believe that our technology is more advanced than that of our potential proton exchange membrane fuel cell technology competitors. We plan to maintain our lead by diligent prosecution of patents, continuing research and development advancements, commercialization of our products and the formation of strategic relationships with leading companies within each of the industry groups that comprise our targeted market base. Once we begin selling our products, we intend to compete primarily on the basis of cost, reliability, efficiency and environmental considerations. We also compete with companies that are developing other types of fuel cells. There are four types of fuel cells other than proton exchange membrane fuel cells that are generally considered to have viable commercial applications: phosphoric acid fuel cells, molten carbonate fuel cells, solid oxide fuel cells and alkaline fuel cells. Each of these fuel cells differs in the component materials, as well as in its overall operating temperature. While all fuel cell types have environmental and efficiency advantages over traditional power sources, we believe that proton exchange membrane fuel cells can be manufactured less expensively and are more efficient and the most practical in small-scale applications and for our target markets. The electrical efficiency of a fuel cell stack means the ratio of the gross electrical energy generated by a fuel cell stack to the hydrogen energy value fed to the fuel cell stack. In premium power applications, our products will also compete with current conventional power sources such as batteries and providers of on-grid electricity. To be competitive with electricity provided by the grid, we believe that our products need to be at or near parity with on-grid electricity on the basis of cost and provide additional benefits. We expect that the most important additional benefit will be immunity to utility "brown-outs" and "black-outs" that have affected many areas of the U.S., particularly in the summertime. In residential applications, our products will compete with other distributed generation technologies, including reciprocating engines and solar and wind power. We believe that our integrated fuel cell systems will have a competitive advantage in that they can be more easily scaled to residential size and will be more efficient in handling the load profile of residential customers. We also believe that our integrated fuel cell systems will be quieter, environmentally cleaner and more efficient than reciprocating engines, and less expensive to install, service and maintain than solar and wind power. The electrical efficiency of a power module or an integrated fuel cell system means the ratio of the electrical energy generated in the conversion of the feedstock fuel to the total energy contained in the fuel. Unlike solar and wind power, our integrated fuel cell systems will provide continuous power. 72 In transportation applications, advanced batteries are expected to be another competitor of our products. Research and development in battery technology is being conducted to improve performance, reduce weight, lower cost and decrease recharging time to meet the requirements for an electric vehicle for the zero emission vehicle market. We believe our products can complement the use of batteries in hybrid battery-fuel cell vehicles for the zero emission vehicle market. Employees As of December 31, 2000, we had 168 employees and independent contractors, 125 based in Cambridge, Massachusetts and 43 based in Milan, Italy. Of these 168 individuals, approximately 111 were engineers, scientists and other degreed professionals. None of our U.S. employees are covered by any collective bargaining arrangements. Our employees in Italy are covered by a collective bargaining agreement pursuant to Italian law. We believe that our relationships with our employees are good. Each employee in the United States is required to execute a confidentiality and non-solicitation agreement as part of the terms of employment. Our employees in Italy are required by the Italian civil code to keep confidential our proprietary information. In addition, some of our key European employees have signed non-competition agreements. Legal Proceedings We may from time to time be involved in legal proceedings in the ordinary course of our business. We are not currently subject to any pending legal proceedings and claims in the ordinary course of business that, either individually or taken as a whole, would have a material adverse impact on our financial position, results of operations or cash flows. 73 MANAGEMENT Directors, Executive Officers and Key Employees Our directors, executive officers and key employees, and their ages and positions, as of January 1, 2001 are as follows:
Name Age Position - ---- --- -------- Directors and Executive Officers Mark A. Brodsky......... 44 Acting Chief Executive Officer, President, Director Jeffrey Bentley......... 46 Chief Operating Officer, Senior Vice President Michele Tettamanti...... 41 Chief Operating Officer, Senior Vice President James Calvin Cross III.. 35 Vice President, Technology William Leonard 34 Vice President, Engineering Mitchell............... J. Barclay Collins...... 56 Director Federico De Nora........ 32 Director John A. Gartman......... 52 Director Franco Ladavas.......... 58 Director Lorenzo C. Lamadrid..... 50 Director John Lavin.............. 53 Director Eugenio Morpurgo........ 39 Director Mauro Saponelli......... 44 Director Key Employees Antonio Maggiore........ 36 Technical Manager, Nuvera Europe Lawrence G. Clawson..... 62 Principal Engineer Srinivasa K. Prabhu..... 33 Director, Transportation Prashant S. Chintawar... 31 Senior Manager Alessandro Delfrate..... 38 Sales Manager, Nuvera Europe Giampaolo Sibilia....... 36 Production Manager, Nuvera Europe Anne O'Brien Troutman... 44 Secretary and Acting General Counsel John Raughtigan......... 40 Controller Silvio Monti............ 35 Controller, Nuvera Europe Stephen Gustave Block... 43 Program Manager Katia Franchi........... 30 Manager of Experimental Activities and Laboratories, Nuvera Europe
Directors and Executive Officers Mark A. Brodsky has been President and a director since April 2000 and Acting Chief Executive Officer since January 1, 2001. Upon execution of a formal employment agreement with us, he is expected to resign as Executive Vice President, Finance and Development of AD Little, a business and technology consulting firm and one of our significant stockholders, where he has served from July 1999, at which time he will become our Chief Executive Officer. He also supervised fuel cell technology activities at Epyx Corporation. Mr. Brodsky has been a member of the board of directors of Pyxsys Corporation, a storage systems company, since October 1999. He served on the board of directors of c-quential, Inc., a global management and technology consulting firm serving the telecommunications, information technology, media and electronics industries, from March 2000 to August 2000. From September 1996 to June 1999, Mr. Brodsky served as Commercial Director of Enron Corp., an oil and gas company, and from September 1992 to September 1996 he served as Vice President, Finance of Merrill International, an international large-scale project development company. From 1986 to 1992, he was Finance Manager for International Operations at GE Aerospace. 74 Jeffrey Bentley has been Chief Operating Officer and Senior Vice President since April 2000. Prior to joining Nuvera, Mr. Bentley was employed at AD Little since April 1986, becoming Vice President in 1996, then Chief Operating Officer of Epyx Corporation since its inception in 1997. From 1982 to 1986, he served as Manager of Manufacturing and Design Engineering at Computervision, a company specializing in the development of computer-aided design and drafting systems. Prior to 1982, he was a thermodynamic engineer and program manager for General Dynamics in San Diego, California, assisting in the development of the Tomahawk Cruise Missile. Mr. Bentley holds an S.B. and S.M. in Mechanical Engineering from the Massachusetts Institute of Technology. Michele Tettamanti has been Chief Operating Officer and Senior Vice President of Nuvera and Chief Operating Officer of Nuvera Europe since April 2000. Prior to joining Nuvera, he was Chief Operating Officer of De Nora Fuel Cells S.p.A. from October 1999. Mr. Tettamanti joined De Nora S.p.A., an affiliate of Nuvera, in 1985, becoming Sales Manager in 1995, and General Manager of the company's fuel cell division in January 1999. Mr. Tettamanti holds a degree in Industrial Chemistry from Universita degli Studi of Milan, Italy. James Calvin Cross III joined Nuvera, then Epyx Corporation, as Director, Research and Development in January 1999 and was made Director, Technology Development in January 2000 and Vice President, Technology in December 2000. Prior to holding his positions at Nuvera, Mr. Cross worked as a consultant in the Technology and Product Development division of AD Little since January 1996. From July 1993 to December 1995, Mr. Cross was a researcher at the Energy Systems Group of Battelle Memorial Institute, a non-profit research and development organization. Mr. Cross holds an S.B. in Chemical Engineering from the Massachusetts Institute of Technology, an M.S.E in Chemical Engineering from Princeton University and an M.S. in Scientific Computing from Stanford University. William Leonard Mitchell has been Vice President of Engineering since April 2000. Prior to joining Nuvera, Mr. Mitchell was employed at AD Little starting in March 1995, becoming Program Manager of the Hydrogen Technologies Unit in 1997, then Vice President of Epyx Corporation since its inception in 1997. From June 1991 to March 1995, he was a faculty member at The Pennsylvania State University. Mr. Mitchell holds a B.S. and M.S. in Mechanical Engineering from The Pennsylvania State University. J. Barclay Collins has been a director since August 2000. He has served as Executive Vice President and General Counsel of Amerada Hess Corporation, a leading independent energy company and a stockholder of Nuvera, since 1985 and has been a director of Amerada Hess since 1986. Mr. Collins has also served as director of Dime Bancorp, Inc. since 1993. Federico De Nora has been a director since April 2000. He has been employed by various entities of the Oronzio De Nora Group, an affiliate of Nuvera, since 1988, serving as Planning and Organization Manager from 1993 to 1997 and as Executive Vice President from 1998 to May 2000 of De Nora S.p.A. Since May 2000, Mr. De Nora has served as Chief Executive Officer of both De Nora Impianti S.p.A. and De Nora Elettrodi S.p.A. John A. Gartman has been a director since April 2000. He has served as Senior Vice President, Energy Marketing of Amerada Hess Corporation since September 1997. From June 1969 to September 1997, Mr. Gartman served as Vice President of Public Service Electric and Gas Company, a utilities company. Franco Ladavas has been a director since April 2000. He has served as President of Nuvera Europe since October 1999. Mr. Ladavas has also been the Industrial Strategy Director of Norfin S.p.A., the holding company of the Oronzio De Nora Group, since January 2000. Mr. Ladavas has worked for the Oronzio De Nora Group since 1968, serving as Commercial Director of De Nora S.p.A. from 1993 to 1995, Managing Director of De Nora S.p.A. and President of DNP Services from 1996 to May 2000, and a member of the board of directors of De Nora S.p.A. from 1993 to December 1999. He has also served as a member of the board of directors of Titanor Components Ltd., a subsidiary of the Oronzio De Nora Group, since July 1994, and President from June to September 2000. 75 Lorenzo C. Lamadrid has been a director since April 2000. Since July 1999, he has served as President, Chief Executive Officer and a member of the board of directors of AD Little. Mr. Lamadrid also serves as Chairman of the board of directors of c-quential, Inc. Prior to accepting his positions at AD Little, Mr. Lamadrid was employed by Western Resources Inc., serving as President of Western Resources International, Ltd. from 1996 to 1999 and as Managing Director and founding partner of The Wing Group, a leading international electric power project-development company, from 1993 to 1999. Prior to joining Western Resources, Mr. Lamadrid spent eight years with the General Electric Company. He was a corporate officer, serving as Vice President and General Manager with GE Aerospace and head of International Operations from 1986 to 1992, and a Corporate Staff Executive for strategic planning and business development from 1984 to 1986. Mr. Lamadrid was also one of the founders of the Boston Beer Company (Samuel Adams). Prior to working for GE, Mr. Lamadrid worked for six years at the Boston Consulting Group. Mr. Lamadrid holds a dual bachelor's degree in Chemical Engineering and Administrative Science from Yale University, an M.S. in Chemical Engineering from the Massachusetts Institute of Technology and an M.B.A. from the Harvard Business School. John Lavin has been a director since April 2000. He has served as a Senior Vice President of AD Little since January 1999. Mr. Lavin has also served as the Chairman of the board of directors of DiRad Technologies, Inc., a computer telephony systems company, since October 1995. From 1998 to June 1999, he was President of the Utility Cable Division of BICC Cables Corp. Previously, he held a series of executive positions at General Electric. Mr. Lavin holds a B.S.E.E. from the University of Notre Dame, an M.B.A. from Harvard Business School and an M.S.E.E. from Cornell University. Eugenio Morpurgo has been a director since April 2000. He has served as Chief Executive Officer of Fineurop Soditic S.p.A., an Italian corporate finance advisory services firm, since April 1998. From January 1993 to March 1998, Mr. Morpurgo was the head of the Mergers and Acquisitions department of SOPAF, an Italian investment bank. From 1987 to 1993, he was in the investment banking department of Deutsche Bank Group in Frankfurt, London and Milan. Prior to joining Deutsche Bank, Mr. Morpurgo spent over two years at the Corporate Finance Department of Matuschka Group in Munich, Germany. In 1984, he graduated, magna cum laude, from the University Bocconi in Milan, Italy, with a degree in Business Administration. Mauro Saponelli has been a director since April 2000. From October 1986 to June 1995, he served as Chief Financial Officer of Norfin S.p.A., and from June 1995 to the present has been serving as Chief Operating Officer of Norfin S.p.A. Key Employees Antonio Maggiore has served as Technical Manager of Nuvera Europe since April 2000. Mr. Maggiore previously worked at De Nora S.p.A. since January 1992 and was made Program Manager of the Fuel Cell Research and Development Department in April 1995, and Technical Manager of the fuel cell division in February 1999. Mr. Maggiore holds a degree in Mechanical Engineering from Milan Polytechnic. Lawrence G. Clawson joined Nuvera, then Epyx Corporation, in 1997 as Principal Engineer. From 1994 to 1997, he was a consultant at AD Little. Mr. Clawson holds an S.B. and S.M. in Mechanical Engineering from the Massachusetts Institute of Technology and an S.M. in Management from the Massachusetts Institute of Technology Sloan School of Management. Dr. Srinivasa K. Prabhu joined Nuvera, then Epyx Corporation, in January 1999 and was made Senior Manager in April 2000 and Director, Transportation in November 2000. Prior to working at Nuvera, he was Program Manager at AD Little from 1997 to 1998. Previously, Dr. Prabhu earned a M.S. in Mechanical and Environmental Engineering in 1995 and a Ph.D. in Mechanical Engineering in 1997 from Drexel University. 76 Dr. Prashant S. Chintawar joined Nuvera, then Epyx Corporation, in April 1998 and was made Senior Manager in June 2000. From May 1997 to April 1998, he was Senior Research Engineer at KSE, Inc. Previously, Dr. Chintawar earned a Ph.D. in Chemical Engineering from the University of Akron in 1997. Alessandro Delfrate has served as Sales Manager of Nuvera Europe since April 2000. Mr. Delfrate previously worked at De Nora S.p.A. since November 1996 as Product Manager in charge of product development and global sales of titanium anodes for cathodic protection. From March 1994 to October 1996, he served as Technical Manager for Nuova Polmet S.r.l., an Italian company specializing in the design and installation of cathodic protection systems for steel in concrete. Mr. Delfrate holds a degree in Chemistry from the University of Milan. Giampaolo Sibilia has served as Production Manager of Nuvera Europe since September 2000. Prior to assuming this position, Mr. Sibilia worked at ST Microelectronics, a semiconductor manufacturing company, as Equipment Engineer from 1995 to December 1997 and was made Mechanical Test Equipment Selection Leader for semiconductor testing in January 1998. Mr. Sibilia holds a degree in Aeronautical Engineering from Milan Polytechnic. Anne O'Brien Troutman joined Nuvera in October 2000 as Secretary and Acting General Counsel. From July 1988 to September 2000, she served as an attorney at AD Little and was made Vice President in July 1996. John A. Raughtigan III has served as Controller of Nuvera since January 2001. Prior to joining Nuvera, Mr. Raughtigan was the Director of Corporate Development of The Timberland Company responsible for the financial management of the licensing and brand marketing divisions from 1998 to 2000 and the Assistant Corporate Controller of Timberland from February 1993 to November 1997. Timberland designs, engineers and markets premium-quality footwear, apparel and accessories. From November 1997 to April 1998 he served as Senior Vice President of Paragon Capital, LLC. Mr. Raughtigan is a certified public accountant. Silvio Monti has served as Controller of Nuvera Europe since April 2000. From November 1994 to March 2000, Mr. Monti was Accounting Manager in charge of accounting and import export services of DNP Services S.p.A., a trading company for components used by electrochemical plants. Stephen Gustave Block has served as Program Manager since April 2000. Prior to joining Nuvera, he was a consulting engineer at AD Little since January 1996. Katia Franchi has served as Manager of Experimental Activities and Laboratories of Nuvera Europe since April 2000. Ms. Franchi previously worked at De Nora S.p.A. since July 1995 as Process Engineer of the Fuel Cell Research and Development Department, and in January 1998 was made Project Manager of projects funded by the European Union. Upon the spin-off of De Nora Fuel Cells S.p.A. from De Nora S.p.A., as of October 1999, Ms. Franchi became Manager of the Purchase Department. Ms. Franchi holds a degree in Chemical Engineering from Milan Polytechnic. Board Composition Pursuant to a stockholders' agreement that will terminate prior to the completion of this offering, AD Little, De Nora New Energy Investments B.V. and Amerada Hess voted their shares of Nuvera in such a way as to cause three directors nominated by AD Little, four directors nominated by De Nora New Energy Investments B.V. and two directors nominated by Amerada Hess to be elected to our board of directors. AD Little nominated Messrs. Brodsky, Lamadrid and Lavin; De Nora New Energy Investments B.V. nominated Messrs. De Nora, Ladavas, Morpurgo and Saponelli; and Amerada Hess nominated Messrs. Collins and Gartman. 77 Under the new stockholders' agreement that will go into effect prior to the completion of this offering, the number of our directors will be fixed at thirteen. AD Little, De Nora New Energy Investments B.V. and Amerada Hess will agree to vote their shares of Nuvera in such a way as to cause three directors nominated by AD Little, four directors nominated by De Nora New Energy Investments B.V. and two directors nominated by Amerada Hess to be elected to our board of directors. In addition, one director will be our Chief Executive Officer and three will be independent directors, as required by the listing standards of the Nasdaq National Market. For a description of this agreement, please read "Related Party Transactions--New Stockholders' Agreement." Our board of directors will be divided into three classes, each of whose members will serve for a staggered three-year term. As a result, a portion of our board of directors will be elected each year. After the appointment of our independent directors, the board of directors will consist of five class I directors, four class II directors and four class III directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the class I directors, class II directors and class III directors expire upon the election and qualification of successor directors at the annual meeting of stockholders held during the calendar years 2004, 2003 and 2002, respectively. The initial class I directors will be Messrs. Brodsky, Collins, Lamadrid and Saponelli. The initial class II directors will be a director to be named, and Messrs. De Nora and Ladavas. The initial class III directors will be Messrs. Gartman, Morpurgo and Lavin. There are no family relationships among any of our directors, executive officers or key employees. Board Committees Audit Committee We expect to form an Audit Committee composed of three independent directors. The Audit Committee will review and, as it deems appropriate, will recommend to the board of directors the internal accounting and financial controls for Nuvera and the accounting principles and auditing practices and procedures to be employed in preparation and review of the financial statements of Nuvera. The Audit Committee will also make recommendations to the board of directors concerning the engagement of independent public auditors and the scope of the audit to be undertaken by such auditors. In addition, the Audit Committee will review related party transactions. Finance Committee The Finance Committee is comprised of Messrs. Brodsky, Saponelli and Gartman. The Finance Committee reviews and, as it deems appropriate, recommends to the board of directors policies, practices and procedures relating to the compensation of our officers and other managerial employees and the establishment and administration of employee benefit plans, including our 2000 stock incentive plan. The Finance Committee also consults with our officers as may be requested regarding managerial personnel policies. Compensation Committee Interlocks and Insider Participation None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or Finance Committee. 78 Executive Compensation The following table sets forth information concerning the compensation paid to Mark A. Brodsky, our Acting Chief Executive Officer, Ashok Kalelkar, our former president, and Nuvera's four other most highly compensated executive officers during Nuvera's fiscal year ended December 31, 2000. SUMMARY COMPENSATION TABLE
Long-Term Compensation ----------------------------- Annual Compensation Awards Payouts ---------------------------- --------------------- ------- Securities Other Annual Restricted Underlying LTIP All Other Name and Principal Salary Bonus Compensation Stock Options Payouts Compensation Position ($) ($) ($) Awards ($) (#) ($) ($)(1) ------------------ ------- ------- ------------ ---------- ---------- ------- ------------ Mark A. Brodsky(2) 350,000 175,000 30,000 -- -- -- -- Acting Chief Executive Officer, President and Director Jeffrey Bentley Chief Operating Offi- 170,000 68,000 -- -- 93,240 -- 1,081,573 cer, Senior Vice President Michele Tettamanti(3) Chief Operating Offi- 72,421 -- 20,368 -- 93,240 -- -- cer, Senior Vice President James Calvin Cross III 120,000 42,000 -- -- 40,670 -- 703,100 Vice President, Technology William Leonard Mitchell 150,000 52,500 -- -- 56,000 -- 811,235 Vice President, Engineering Ashok Kalelkar(4) 157,500 55,768 Former President -- -- -- -- --
- -------- (1) Consists of stock grants to Messrs. Bentley, Cross and Mitchell of 68,054, 44,240 and 51,044 shares of common stock with a fair market value of $15.89 per share at the date of grant, and amounts contributed to benefit plans in respect of prior years on a tax deferred basis for Mr. Kalelkar. (2) Mr. Brodsky received the compensation set forth in the table in respect of his services to AD Little, which included some services to Nuvera. Other annual compensation consisted of $30,000 contributed by Nuvera to a pension plan for Mr. Brodsky's benefit. Mr. Brodsky holds 7,500 unvested restricted shares of AD Little common stock. (3) Mr. Tettamanti received a salary of 160,000,000 Italian lira or approximately $72,421, based on the exchange rate as of September 30, 2000. He also received 45,000,000 Italian lira or approximately $20,368, based on the exchange rate as of September 30, 2000, as reimbursement for the payment of taxes. (4) Mr. Kalelkar received the compensation set forth in the table in respect of his services to AD Little, which included some services to Nuvera. Mr. Kalelkar resigned as our Chief Executive Officer and President in April 2000. 79 Stock Option Grants in Last Fiscal Year The following table sets forth information concerning grants of stock options made to the executive officers named in the Summary Compensation Table under our 2000 stock incentive plan during Nuvera's fiscal year ended December 31, 2000. OPTION GRANTS IN LAST FISCAL YEAR (2000)
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grant Option Term - -------------------------------------------------------------------------------- ---------------- Number of Percent Securities of Total Underlying Options Granted Exercise or Options Granted to Employees in Base Price Expiration Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($) - ------------------------ --------------- --------------- ----------- ---------- --------- --------- Mark A. Brodsky -- -- -- -- -- -- Acting Chief Executive Officer, President and Director Jeffrey Bentley 15% 2010 1,553,685 3,262,970 Chief Operating Offi- 93,240 14.29 cer, Senior Vice President Michele Tettamanti 15% 2010 1,220,685 2,929,970 Chief Operating Offi- 93,240 17.86 cer, Senior Vice President James Calvin Cross III 6% 2010 677,696 1,423,263 Vice President, 40,670 14.29 Technology William Leonard Mitchell 9% 2010 Vice President, 56,000 14.29 933,144 1,959,742 Engineering Ashok Kalelkar -- -- -- -- -- -- Former President
80 Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values The following table sets forth information concerning option exercises by the executive officers named in the Summary Compensation Table during Nuvera's fiscal year ended December 31, 2000. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (2000) AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options at Options at December 31, 2000 (#) December 31, 2000 ($) ------------------------- ------------------------- Shares Acquired on Value Exercise Realized Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------------ ----------- -------- ----------- ------------- ----------- ------------- Mark A. Brodsky -- -- -- -- -- -- Acting Chief Executive Officer, President and Director Jeffrey Bentley -- -- -- 93,240 -- 439,560 Chief Operating Offi- cer, Senior Vice Presi- dent Michele Tettamanti -- -- -- 93,240 -- 106,560 Chief Operating Offi- cer, Senior Vice Presi- dent James Calvin Cross III -- -- -- 40,670 -- 191,730 Vice President, Technology William Leonard Mitchell -- -- -- 56,000 -- 264,000 Vice President, Engineering Ashok Kalelkar -- -- -- -- -- -- Former President
Employment Agreements with Management We intend to enter into an at will employment agreement with Mr. Brodsky, our Acting Chief Executive Officer, at which time he will become our Chief Executive Officer. We expect the employment agreement to have a term of four years and to provide for an annual salary of $250,000, a signing bonus of $100,000 and an annual bonus to be determined under a forthcoming bonus plan for our executives. The agreement also will provide for a stock option grant pursuant to our 2000 stock incentive plan for the purchase of up to 280,000 shares of our common stock. 70,000 options will vest upon the completion of this offering. The remaining options will vest at a rate of 70,000 shares on each of the first three anniversaries of the completion of this offering. If we terminate Mr. Brodsky's employment without cause, Mr. Brodsky will receive a lump sum payment equal to his salary for one year and the options scheduled to vest in the year of termination will vest immediately. If we terminate Mr. Brodsky's employment for cause, no unvested options will vest. Should a change of control occur and Mr. Brodsky is terminated without cause, any unvested options will vest immediately. If Mr. Brodsky's employment is terminated due to death or disability, he will receive his base salary through the date of his termination, the earned but unpaid portion of any bonuses and the proceeds of life insurance, and any options scheduled to vest in the year of termination will vest immediately. Under the agreement, Mr. Brodsky will agree that he will not solicit any of our employees for two years after the termination of his employment and will not compete with us for one year after the termination of his employment. The agreement also provides for a performance review between six and twelve months after commencement of employment. 81 We intend to enter into an at will employment agreement with Mr. Bentley, our Chief Operating Officer and Senior Vice President. We expect the employment agreement to provide for an annual salary of $170,000 and an annual bonus to be determined under a forthcoming bonus plan for our executives. The agreement will also provide for a stock option grant pursuant to our 2000 stock incentive plan for the purchase of up to 93,240 shares of our common stock. If we terminate Mr. Bentley's employment without cause, Mr. Bentley will continue to receive his salary for one year after termination and the earned but unpaid portion of any bonuses. In addition, if we terminate Mr. Bentley's employment without cause prior to September 2002, the options scheduled to vest in the year of termination will vest immediately, and the remaining options will vest according to the schedule in his option agreement. If we terminate Mr. Bentley's employment without cause in or after September 2002, options scheduled to vest by September 2004 will vest immediately. If we terminate Mr. Bentley's employment for cause, no unvested options will vest. Should a change of control occur prior to October 1, 200l and Mr. Bentley is terminated without cause, he will receive severance pay for one year and an additional lump sum amount equal to six months salary, and any unvested options will vest immediately. If Mr. Bentley's employment is terminated due to death or disability, he will receive his base salary through the date of his termination, the earned but unpaid portion of any bonuses and the proceeds of life insurance, and any options scheduled to vest in the year of termination will vest immediately. Under the agreement, Mr. Bentley will agree that he will not solicit any of our employees for two years after the termination of his employment and will not compete with us for one year after the termination of his employment. The agreement will also provide for a performance review between six and twelve months after commencement of employment. We intend to enter into an at will employment agreement with Mr. Cross, our Vice President, Technology. We expect the employment agreement to provide for an annual salary of $132,000 and an annual bonus to be determined under a forthcoming bonus plan for our executives. The agreement will also provide for a stock option grant pursuant to our 2000 stock incentive plan for the purchase of up to 40,670 shares of our common stock. If we terminate Mr. Cross's employment without cause, Mr. Cross will continue to receive his salary for one year after termination and the earned but unpaid portion of any bonuses. In addition, if we terminate Mr. Cross's employment without cause prior to December 31, 2002, the options scheduled to vest in the year of termination will vest immediately, and the remaining options will vest according to the schedule in his option agreement. If we terminate Mr. Cross's employment without cause after December 31, 2002, options scheduled to vest by December 31, 2004 will vest immediately. If we terminate Mr. Cross's employment for cause, no unvested options will vest. Should a change of control occur prior to October 1, 2001 and Mr. Cross is terminated without cause, he will receive severance pay for one year and an additional lump sum amount equal to six months salary, and any unvested options will vest immediately. If Mr. Cross's employment is terminated due to death or disability, he will receive his base salary through the date of his termination, the earned but unpaid portion of any bonuses and the proceeds of life insurance and any options scheduled to vest in the year of termination will vest immediately. Under the agreement, Mr. Cross will agree that he will not solicit any of our employees for two years after the termination of his employment, and will not compete with us for one year after the termination of his employment. The agreement will also provide for a performance review between six and twelve months after commencement of employment. We intend to enter into an at will employment agreement with Mr. Mitchell, our Vice President, Engineering. We expect the employment agreement to provide for an annual salary of $150,000 and an annual bonus to be determined under a forthcoming bonus plan for our executives. The agreement will also provide for a stock option grant pursuant to our 2000 stock incentive plan for the purchase of up to 56,000 shares of our common stock. If we terminate Mr. Mitchell's employment without cause, Mr. Mitchell will continue to receive his salary for one year after termination and the earned but unpaid portion of any bonuses. In addition, if we terminate Mr. Mitchell's employment without cause prior to September 2002, the options scheduled to vest in the year of termination will vest immediately, and the remaining options will vest according to the schedule in his option agreement. If we terminate Mr. Mitchell's employment without cause in or after September 2002, options scheduled to vest by September 2004 will vest immediately. If we terminate Mr. Mitchell's employment for cause, no unvested options will vest. Should a change of control occur prior to October 1, 2001 and 82 Mr. Mitchell is terminated without cause, he will receive severance pay for one year and an additional lump sum amount equal to six months salary, and any unvested options will vest immediately. If Mr. Mitchell's employment is terminated due to death or disability, he will receive his base salary through the date of his termination, the earned but unpaid portion of any bonuses and the proceeds of life insurance and any options scheduled to vest in the year of termination will vest immediately. Under the agreement, Mr. Mitchell will agree that he will not solicit any of our employees for two years after the termination of his employment, and will not compete with us for one year after the termination of his employment. The agreement will also provide for a performance review between six and twelve months after commencement of employment. 2000 Stock Incentive Plan Our board of directors has adopted the Nuvera Fuel Cells, Inc. 2000 stock incentive plan pursuant to which employees, directors who are officers or employees and consultants of Nuvera and its subsidiaries are eligible to receive stock options, restricted stock and other stock-based awards, including stock appreciation rights and rights to dividends and dividend equivalents. The purposes of the plan are to promote the interests of Nuvera and its stockholders by strengthening our ability to attract, motivate and retain employees, directors and consultants of exceptional ability and to provide a means to encourage stock ownership and a proprietary interest in Nuvera by its selected employees, directors and consultants upon whose judgment, initiative and efforts the financial success and growth of our business largely depends. Shares Available for Awards The maximum number of shares of common stock that may be issued pursuant to awards granted under the plan is 2,465,736, and no participant may receive stock options or stock appreciation rights in any calendar year that relate to more than 280,000 shares, subject to adjustment by the Finance Committee for stock splits and other events as set forth in the plan. Substitute awards, or equity awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company which we acquire or with which we combine, will not reduce the number of shares available for issuance under the plan. Material Features of the Plan Our board of directors has authorized the Finance Committee to administer the plan. The committee will have, among other powers, the power to interpret the plan, to determine the terms and provisions of the award agreements, to adopt rules and regulations relating to the plan and to make all other determinations necessary or advisable for plan administration. Decisions of the committee are final, conclusive and binding upon all parties. The Finance Committee will have sole discretion to grant to eligible participants one or more equity awards. The committee will determine the number of shares subject to any award granted to any participant. If the committee determines that a dividend or other distribution, recapitalization, stock split or other corporate transaction (as more fully described in the plan) affects the shares in such a way that an adjustment is appropriate to prevent dilution or enlargement of the benefits, or potential benefits, intended to be made available under the plan, the committee may equitably adjust: . the number and type of shares (or other securities or property) which may be made the subject of awards, . the number and type of shares (or other securities or property) subject to outstanding awards, and . the grant, purchase or exercise price with respect to any award. 83 Any shares of stock deliverable under the plan may consist of authorized and unissued shares or treasury shares. The exercise price of stock under any stock option and the grant or purchase price of restricted stock may be less than 100% of the fair market value of the stock on the date of the grant of the award. The Finance Committee will determine the times at which options and other purchase rights may be exercised and the methods by which and the forms in which payment of the purchase price may be made. The committee may determine and set forth in the award agreement the terms under which any awards vest and become exercisable. Upon a change of control as defined in the plan, all awards will generally become fully vested and exercisable. The Finance Committee may impose restrictions on restricted stock at its discretion. These restrictions may lapse as the committee determines. Without our prior written consent, no award granted under the plan may be transferred, assigned or encumbered by the individual to whom it is granted. No awards may be granted under the plan after the tenth anniversary of the effective date of the plan. Amendment and Termination The board of directors may amend, alter, suspend, discontinue or terminate the plan or any portion of the plan at any time. However, stockholder approval must be obtained if such approval is necessary to comply with any tax or regulatory requirement for which or with which the board deems it necessary or desirable to qualify or comply. In addition, the consent of the affected participants must be obtained if the amendment, alteration, suspension, discontinuation or termination would adversely affect the rights of any participant under any outstanding award. 84 RELATED PARTY TRANSACTIONS Merger and Related Transactions Investment and Exchange Agreement In April 2000, pursuant to an investment and exchange agreement, Epyx Corporation, De Nora Fuel Cells S.p.A., De Nora New Energy Investments B.V. and AD Little consummated the merger of De Nora Fuel Cells S.p.A. and Epyx Corporation by the sale of 50% of the capital stock of Epyx Corporation to De Nora New Energy Investments B.V. in exchange for 100% of the capital stock of De Nora Fuel Cells S.p.A. Epyx Corporation was renamed Nuvera Fuel Cells, Inc., and De Nora Fuel Cells S.p.A., subsequently renamed Nuvera Fuel Cells Europe S.r.l., became our wholly-owned subsidiary. As of the consummation of the merger, all of the assets of AD Little used by Epyx in the development of fuel processors and the development of fuel cell system integration expertise were transferred to Nuvera, including all intellectual property consisting of inventions, patents, patent applications, copyrights, know-how and other intellectual property rights relating to fuel reforming and fuel cell system integration, other than two U.S. Department of Energy research and development contracts relating to the design of a 50 kW proton exchange membrane fuel cell system and the design of next generation proton exchange membrane fuel cell stacks, respectively. Similarly, all of the assets of De Nora New Energy Investments B.V. and its affiliates used by De Nora Fuel Cells S.p.A. in the development and manufacture of fuel cell stacks and the development of fuel cell system integration expertise were transferred to Nuvera Europe, including all intellectual property consisting of inventions, patents, patent applications, copyrights, know-how and other intellectual property rights relating to fuel cell stacks and fuel cell system integration. Pursuant to the investment and exchange agreement, AD Little, De Nora New Energy Investments B.V. and their respective subsidiaries and affiliates are prohibited from performing any work in the reformate fueled direct hydrogen or direct methanol-fueled proton exchange membrane fuel cell systems field in competition with Nuvera prior to April 4, 2004. Accordingly, after April 2004, it is possible that AD Little and De Nora may compete with us in the development of proton exchange membrane fuel cell systems. The investment and exchange agreement also permits AD Little to work in the fields of use in which it has been provided a license pursuant to the license agreement discussed below, and to continue to work under the government contracts referred to above, provided that it grants to Nuvera a royalty-free non-exclusive license in any intellectual property arising out of these contracts. AD Little, De Nora New Energy Investments B.V. and their respective subsidiaries and affiliates may engage in government-sponsored projects in the field of reformate fueled direct hydrogen or direct methanol-fueled proton exchange membrane fuel cell systems if Nuvera is given an opportunity to pursue the project and elects not to pursue the project. The investment and exchange agreement does not restrict AD Little or De Nora from competing with us in the development of alternative power generation technologies other than proton exchange membrane fuel cell technology, including solid oxide fuel cell, microturbine and photo-voltaic technologies. In accordance with the investment and exchange agreement, as of April 10, 2000, each of AD Little and De Nora New Energy Investments B.V. made capital contributions to Nuvera in the amount of $3 million. On November 3, 2000, Nuvera, Nuvera Europe, AD Little, Norfin International S.A., De Nora New Energy Investments B.V. and Amerada Hess entered into a capital contribution agreement. Norfin International S.A. is the parent of De Nora New Energy Investments B.V. Under this agreement, AD Little, Norfin International S.A. and Amerada Hess agreed to provide up to a maximum aggregate of $30 million to Nuvera when needed to sustain its operations. Pursuant to this agreement, the obligation of Norfin International S.A. and AD Little is 50.0% each until Norfin International S.A. and AD Little have contributed, in the aggregate, $1 million under the agreement. Thereafter, the obligation of each stockholder is 46.8% for Norfin International S.A., 42.2% for AD Little and 11.0% for Amerada Hess. Subsequent to the purchase by Amerada Hess in January 2001 of 747,194 of our shares from AD Little, the parties amended the capital contribution agreement to adjust the 85 commitment percentages to 46.8% for Norfin International S.A., 37.2% for AD Little and 16.0% for Amerada Hess. All unexercised or undischarged rights and obligations to provide capital contributions to Nuvera under the investment and exchange agreement, including that of AD Little and De Nora New Energy Investments to contribute at least $8 million each to Nuvera by December 31, 2000, were waived under the capital contribution agreement. The capital contribution agreement will terminate on the earlier of the date of the consummation of this offering with proceeds to Nuvera of at least $30 million, the date on which capital contributions under the capital contribution agreement by AD Little, Norfin International S.A. and Amerada Hess exceed $30 million or December 31, 2001. In the investment and exchange agreement, AD Little represented and warranted that Epyx had a net worth of $500,000 immediately prior to the merger, and De Nora New Energy Investments B.V. represented and warranted that De Nora Fuel Cells S.p.A. had a net worth of $500,000 immediately prior to the merger. Amerada Hess Investment Agreement In connection with the merger, pursuant to a separate investment agreement, Amerada Hess purchased 700,000 shares of common stock, or 5% of our then outstanding capital stock, from AD Little, for aggregate consideration of $10 million. AD Little also granted Amerada Hess the right to purchase 700,000 additional shares of common stock of Nuvera from AD Little, upon the occurrence of specified "liquidity events" including Nuvera's initial public offering, at a price equal to the midpoint between the price per share paid by Amerada Hess in its initial purchase of shares and the price of shares in the liquidity event. The capital contribution agreement discussed above terminated the provisions of this investment agreement that related to Amerada Hess's ability to fund capital needs in lieu of AD Little. In July 2000, Amerada Hess purchased 943,824 newly-issued shares of common stock from Nuvera for aggregate consideration of $15 million. In January 2001, Amerada Hess purchased 747,194 shares of Nuvera's common stock from AD Little for aggregate consideration of $12.5 million plus an additional amount per share equal to half the difference between the per-share price paid by Amerada Hess and the offering price of shares in this offering, provided that the aggregate additional amount shall not exceed $2.5 million. Old Stockholders' Agreement In connection with the merger, Nuvera, AD Little, De Nora New Energy Investments B.V. and Amerada Hess entered into a stockholders' agreement which provides AD Little, De Nora New Energy Investments B.V. and Amerada Hess with the right, subject to certain exceptions, to include their common stock in any registration of common stock made by Nuvera for its own account or for the account of other stockholders of Nuvera. Each of the parties has waived its registration rights with respect to this offering. The stockholders' agreement, as amended, also provides that AD Little, De Nora New Energy Investments B.V. and Amerada Hess would vote their shares of Nuvera in such a way as to cause three directors nominated by AD Little, four directors nominated by De Nora New Energy Investments B.V. and two directors nominated by Amerada Hess to be elected to our board of directors. This stockholders' agreement will terminate in its entirety prior to the completion of this offering. License Agreement Under a license agreement, Nuvera granted to AD Little a royalty-free, world-wide, non-exclusive right and license, with the right to sublicense, to use all of the intellectual property rights relating to fuel reforming and fuel cell system integration that AD Little assigned and transferred to Nuvera in connection with the merger. The license terminates in 2010 and is limited to the fields of gas-to-liquids fuel processing and fuel conversion for internal combustion engines. Although under the investment and exchange agreement described above, AD Little has agreed not to compete with us in reformate fueled direct hydrogen or direct methanol-fueled proton exchange membrane fuel cell systems until April 2004, it is possible that AD Little may compete with us in the development of proton exchange membrane fuel cell systems thereafter. 86 New Stockholders' Agreement Prior to the completion of this offering, the previous stockholders' agreement among Nuvera, AD Little, De Nora New Energy Investments B.V. and Amerada Hess will terminate and Nuvera, AD Little, De Nora New Energy Investments B.V., Amerada Hess, Fineurop International Limited and Fineureka S.A. will enter into a new stockholders' agreement. We refer to AD Little, De Nora New Energy Investments B.V. and Amerada Hess below as the original stockholders. Fineurop International Limited and Fineureka S.A. are both affiliates of Fineurop Soditic, whose chief executive officer, Eugenio Morpurgo, is a director of Nuvera. The agreement will terminate on its tenth anniversary. Composition of the Board Under the new stockholders' agreement, our board of directors will consist of thirteen members, of whom four will be designated by De Nora New Energy Investments B.V., three will be designated by AD Little, two will be designated by Amerada Hess, one will be our chief executive officer and three will be independent directors, as required by the listing standards of the Nasdaq National Market. Directors will be elected to serve three-year terms on a staggered basis. An original stockholder will lose its right to designate one member of the board with each 25% decrease of its aggregate ownership of common shares as of the date of the agreement. Required Consents of the Board Under the new stockholders' agreement, without the affirmative approval of at least 66 2/3% of the board, we will not approve: . any merger, consolidation, reorganization (including conversion) or other business combination involving Nuvera or any of its subsidiaries (other than of a wholly-owned subsidiary with or into another wholly-owned subsidiary) or any acquisition of Nuvera or any of its subsidiaries by another entity; . any reorganization, recapitalization, reclassification, spin-off or combination of any securities of Nuvera or any of its subsidiaries; . any liquidation, dissolution, winding up, commencement of bankruptcy, insolvency, liquidation or similar proceedings with respect to Nuvera or any of its subsidiaries; . any acquisition by Nuvera or any of its subsidiaries, in a single transaction or a series of related transactions, of any assets, business or operations in the aggregate with a value of more than $1 million, other than as expressly specified in the annual operating budget approved by the board; . any sale, transfer, lease, pledge or other disposition by Nuvera or any of its subsidiaries (in a single transaction or a series of related transactions) of any assets, business or operations in the aggregate with a value of more than $500,000, other than as expressly specified in the annual operating budget approved by the board; . the declaration or payment of any dividend or other distribution upon any capital stock of Nuvera or any of its subsidiaries, other than dividends and distributions to Nuvera or a wholly-owned subsidiary by a wholly-owned subsidiary; . any direct or indirect purchase, redemption, retirement or other acquisition of any capital stock of Nuvera or any of its subsidiaries or any obligation or security convertible or exchangeable into any capital stock of Nuvera, other than repurchases of capital stock issued pursuant to Nuvera's stock option plans and approved by the board; . any creation, authorization, increase in the authorized amount or issuance of shares of 87 . any class or series of capital stock of Nuvera or any of its subsidiaries, . any obligation or security convertible into or exchangeable for shares of any class or series of capital stock of Nuvera or any of its subsidiaries; or . any options, warrants or other rights to acquire any class or series of capital stock of Nuvera or any of its subsidiaries, other than issuances of options to acquire common stock pursuant to our stock option plans and approved by the board and issuances of common stock upon exercise of these options; . any approval or modification of the annual operating budget of Nuvera or any of its subsidiaries, and authorization of any expenditure by Nuvera or any of its subsidiaries if as a result thereof the aggregate amount of expenditures in any category would exceed the lesser of $100,000 or 10% of the amount budgeted therefor in the approved operating budget; . any amendment, alteration or repeal of any provision of Nuvera's certificate of incorporation or bylaws (in each case including in connection with any merger, consolidation, business combination, reorganization (including conversion) or other extraordinary corporate transaction) or the filing of any resolution of the board with the Secretary of State of Delaware; . the adoption of, or any amendment or other modification to, any stock option plan, employee stock ownership plan or stock purchase or restricted stock or stock appreciation rights plan, or any issuance of common shares to any employees of Nuvera or any of its subsidiaries, other than pursuant to any such plan approved by the board; . any public offering of our common stock; . the determination that an entity is a competitor or a potential competitor of Nuvera or its subsidiary; . the appointment and nomination of independent directors; or . the designation of the board of directors of a subsidiary of Nuvera. Restrictions on Transfer Each original stockholder will agree . not to sell any shares of our common stock in the first 180 days after this offering, . not to sell more than 25% of the shares of our common stock that it owns as of the date of this prospectus prior to 540 days after the date of this prospectus and . not to sell more than 50% of the shares of our common stock that it owns as of the date of this prospectus prior to the third anniversary of the date of this prospectus. The transfer restrictions described above . do not apply to sales of shares pursuant to the exercise of registration rights under the new stockholders' agreement, . will terminate on the earlier of the third anniversary of the date of this prospectus or a change of control of Nuvera and . do not apply to transfers to affiliates and therefore do not prohibit a transfer to a plan sponsored and managed by an original stockholder for the benefit of its employees. 88 Registration Rights Under the new stockholders' agreement, AD Little, De Nora New Energy Investments B.V., Amerada Hess, Fineurop International and Fineureka, holders of 14,698,824 shares of our common stock, will have rights to cause us to register the sales of those shares under the Securities Act. Subject to some limitations, these registration rights include: . demand registration rights, two for each of AD Little and De Nora New Energy Investments B.V. and one for Amerada Hess, that the original stockholders may exercise no sooner than 180 days after the effective date of this offering, which require us to register sales of these stockholders' shares of our common stock, unless the aggregate proceeds expected to be received from the sale of the securities requested to be included in a demand registration is less than $50,000,000 and subject to the ability of our board of directors to delay the registration under some circumstances and . an unlimited number of piggyback registration rights for each of the stockholders party to the stockholders' agreement that require us to register sales of a requesting stockholder's shares when we undertake a public offering, subject to the discretion of the managing underwriter of the offering to decrease the amount that the stockholders may register. None of the registration rights described above is assignable by any stockholder to any person acquiring our common stock in any underwritten public offering or pursuant to Rule 144 under the Securities Act. Transactions with AD Little License and Services Agreement and Sublease Nuvera subleases its offices, laboratory space and production facility from AD Little. Under a license and services agreement dated as of April 4, 2000, AD Little granted to Nuvera a license to occupy and use office and laboratory space in AD Little's headquarters. The agreement terminated on December 31, 2000. The license and services fee under the agreement was $2,460 per Nuvera employee at the Cambridge facility per month. The total allocated charges for the nine months ended September 30, 2000 under this agreement were $976,000. Effective January 1, 2001, Nuvera entered into an agreement with AD Little for the sublease of space and use of facilities, equipment and services. The initial term of the agreement extends to December 31, 2005, and the agreement will automatically be renewed for two additional terms, the first expiring on January 1, 2008 and the second on January 1, 2010, unless we notify AD Little that we wish to terminate the lease at least 18 months prior to the relevant termination date. Payments for leased space, which total $690,000 per year, are made on a monthly basis. In addition, we will pay to AD Little an annual service fee of $616,400, payable on a monthly basis, for our share of real estate taxes and assessments, utility charges and maintenance costs. Charges for equipment and services will be allocated based on headcount and usage. Total costs under the new agreement will approximate the $2,460 per employee per month charge under the existing arrangement. Tax Indemnification Agreement Under a tax indemnification agreement dated October 26, 2000, AD Little has agreed to indemnify Nuvera and its subsidiaries for any income tax liabilities that may be imposed on Nuvera and its subsidiaries arising solely from Nuvera or any of its subsidiaries having been a member of AD Little's consolidated, combined or unitary group. 89 Stock Grants On October 10, 2000, we granted 245,000 shares of our common stock contributed to us by AD Little to some of our long-term employees, including some of our executive officers, in recognition of their past service to us. We provided forgivable loans to these employees in an aggregate amount of approximately $1.8 million to enable them to pay the income taxes related to the grants. The loans carry interest at a rate of 8.5% per year and will be forgiven from repayment by the employee over a period of two years if the employee remains an employee of Nuvera. These loans included loans of $539,220 to Jeffrey Bentley, one of our Chief Operating Officers and Senior Vice Presidents, $404,442 to William Leonard Mitchell, our Vice President, Engineering and $350,532 to James Calvin Cross III, our Vice President, Technology. In connection with these transactions, AD Little made an additional capital contribution to us of approximately $2.2 million in November 2000. Services Since the merger, we have subcontracted some technical and engineering services to AD Little under our contracts with other parties. In addition, we have retained AD Little for a management consulting study and two environmental, health and safety studies. AD Little charges us 85% of the rate it would charge an unaffiliated party for these services. We paid $236,100 to AD Little in respect of these services during the nine months ended September 30, 2000. AD Little has also, pursuant to the investment and exchange agreement, subcontracted to us various research and development services. We have provided these services under three U.S. government contracts under which we currently serve as subcontractor to AD Little and receive government funding. As of September 30, 2000, AD Little owed us $1,095,000 in respect of these services. Finisola S.p.A. Leases Nuvera Europe leases its offices, laboratory space and production facility from Finisola S.p.A., a subsidiary of Norfin S.p.A., which also owns De Nora New Energy Investments B.V., pursuant to leases entered into in July 2000. The leases expire on June 30, 2006, and each lease is automatically renewed for an additional six-year term unless either party notifies the other party that it wishes to terminate the relevant lease six months prior to its expiration. The total lease payments under the leases are 178 million Italian lira, or approximately $81,000, plus taxes, per year based on the September 30, 2000 exchange rate. Previously, De Nora Fuel Cells S.p.A. leased laboratory and office space from Finisola under leases entered into in October 1999 and January 2000 and providing for payments of 60 million Italian lira, or approximately $26,000 per year. These leases were terminated in connection with the new leases entered into in July 2000. Norfin S.p.A. Services Agreement In January 2000, De Nora Fuel Cells S.p.A., now Nuvera Europe, entered into a services agreement effective October 1999 with Norfin S.p.A., the parent of De Nora New Energy Investments B.V., whereby Norfin S.p.A. agreed to provide to Nuvera Europe assistance and cooperation in financial, accounting, organizational, commercial, tax and legal matters for daily fees ranging from 600,000 Italian lira, or approximately $296, to 3 million Italian lira, or approximately $1,481. The agreement terminated December 31, 2000 and automatically renewed for successive one-year terms unless either party notifies the other party that it wishes to terminate the agreement at least 60 days prior to December 31 of each year. The total costs, based on actual costs plus a mark-up, incurred by us under this agreement were 126.17 million Italian lira, or approximately $69,350, during the year ended December 31, 1999, and 678.45 million Italian lira, or approximately $329,500, during the nine months ended September 30, 2000. 90 De Nora S.p.A. Services Agreement In January 2000, De Nora Fuel Cells S.p.A., now Nuvera Europe, entered into a services agreement effective October 1999 with De Nora S.p.A., now De Nora Impianti S.p.A. its affiliate. Under the agreement, De Nora S.p.A. agreed to provide De Nora Fuel Cells S.p.A. with certain services, including assistance in protecting the intellectual property rights of De Nora Fuel Cells S.p.A., cooperation in research and development, secondment of De Nora S.p.A. personnel and assistance in import-export and other administrative matters for hourly fees of (Euro)60 or, approximately $53 based on the September 30, 2000 exchange rate, and daily fees of (Euro)350, or approximately $308 based on the September 30, 2000 exchange rate, per business trip. De Nora S.p.A. also agrees to provide De Nora Fuel Cells S.p.A. specified laboratory services for scheduled fees. The agreement terminates December 31, 2000 and is automatically renewed for successive one-year terms unless either party notifies the other party that it wishes to terminate the agreement at least 30 days prior to December 31 of each year. The total costs, based on actual costs plus a mark- up, incurred by us under this agreement were (Euro)64,400, or approximately $68,600, during the year ended December 31, 1999 and (Euro)242,300, or approximately $223,400, during the nine months ended September 30, 2000. Transactions with De Nora Elettrodi S.p.A. Services Agreement In May 2000, Nuvera Europe entered into a services agreement with De Nora Elettrodi S.p.A., an affiliate of Norfin S.p.A., whereby De Nora Elettrodi S.p.A. agrees to provide to Nuvera Europe personnel for packaging, transportation and mechanical tasks for an hourly fee of (Euro)60, or approximately $53 based on the September 30, 2000 exchange rate, and daily fees of (Euro)350, or approximately $308 based on the September 30, 2000 exchange rate, per business trip and assistance in import-export and other administrative matters for a fee of 200,000 Italian lira, or approximately $99 based on the September 30, 2000 exchange rate, per task. The agreement terminates December 31, 2000 and is automatically renewed for successive one- year terms unless either party notifies the other party that it wishes to terminate the agreement at least 30 days prior to December 31 of each year. The total costs incurred by us under this agreement were 31.6 million Italian lire, or approximately $15,800, during the nine months ended September 30, 2000. Development and Supply Agreement In November 2000, we entered into an agreement with De Nora Elettrodi S.p.A., an affiliate of one of our stockholders, whereby De Nora Elettrodi will grant us exclusive access to its development efforts with respect to catalyst- coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks and shift catalysts for use in fuel processors, and supply these products to us. De Nora Elettrodi will bear all research and development costs. Once we test the prototype products and are satisfied that they meet our specifications, we will have the option to purchase on an exclusive basis and to require that De Nora Elettrodi supply to us on an exclusive basis catalyst- coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks. If we are not satisfied with any prototype product or if the parties fail in good faith to reach agreement on a purchase commitment on any product, De Nora Elettrodi will be able to sell the product to any third party and we will waive any right to have the product sold exclusively to us. Pricing to us on products with respect to which we do not exercise our exclusivity option and on all other De Nora Elettrodi products other than shift catalysts will be at least as favorable as pricing to any other customer of De Nora Elettrodi and will in any event be 10% below catalogue prices. Under the agreement, De Nora Elettrodi will retain title to any intellectual property rights in the products it supplies to us. We will have the right to distribute, sell or otherwise dispose of the products as incorporated into any of our products and the right to use any De Nora Elettrodi trademarks or trade names in connection therewith. Neither party may assign its rights or delegate the performance of its obligations under the agreement to a third party without the prior written consent of the other party, which consent is not to be 91 unreasonably withheld, except that either party may assign its rights or delegate the performance of its obligations under the agreement to any affiliates or to any purchaser of all or substantially all of the assets of the business to which the agreement relates without the consent of the other party. The agreement terminates December 31, 2004 and is automatically renewable for successive one-year terms unless either party notifies the other party that it wishes to terminate the agreement at least six months prior to the end of each year. In addition, either party may terminate the agreement immediately by written notice if the other party breaches any term of the agreement materially and fails to cure such default within 60 days written notice of such breach or if the other party is the subject of a bankruptcy petition which has not been vacated within 30 days. Norfin S.p.A. Loan Since October 1999, Norfin S.p.A., the parent of De Nora New Energy Investments B.V., has loaned 1.65 billion Italian lira, or approximately $814,000, to De Nora Fuel Cells S.p.A., which amount was repaid in March 2000. In addition, Norfin S.p.A. currently guarantees the obligations of Nuvera Europe under a 2 billion Italian lira, or approximately $905,000, based on the September 30, 2000 exchange rate, line of credit with an Italian bank. Relationship with Fineurop Soditic S.p.A. Fineurop Soditic, whose chief executive officer, Eugenio Morpurgo, is a director of Nuvera, has assisted Nuvera Europe, formerly known as De Nora Fuel Cells S.p.A., in its formation of a business plan and in financial analysis generally. Nuvera Europe paid Fineurop Soditic 250,000,000 Italian lira, or approximately $123,000, as compensation for these services in July 2000. In August 2000, Fineurop International Limited, an affiliate of Fineurop Soditic, acquired from Norfin International S.A. 1.6% of the capital stock of De Nora New Energy Investments B.V. for $1.6 million, as well as a right to exchange such shares with De Nora New Energy Investments B.V. for 119,546 shares of Nuvera upon the earlier of June 30, 2001 or notice of the filing of a registration statement for this offering. Fineurop International exercised that right in October 2000 and subsequently transferred 36,750 of its shares of Nuvera to its affiliate Fineureka S.A. As a result, both Fineurop International and Fineureka have the right to register their shares of our common stock on the terms and conditions specified in the stockholders' agreement described above. Each of Fineurop International and Fineureka S.A. has waived its registration rights with respect to this offering. As compensation for its advisory services in connection with this offering, we have agreed to pay Fineurop Soditic a retainer of $90,000 and 0.7% of the net proceeds of this offering less the $90,000 retainer. Other Relationships Under the terms of his employment agreement with AD Little, AD Little will owe Mr. Brodsky various amounts in respect of bonuses earned and not paid and severance obligations upon his resignation as an executive officer of AD Little. We believe that each of the transactions described above to which we were a party, other than the stockholders' agreements, was entered into on terms no less favorable to us than could have been obtained with non-affiliated parties. If any conflicts of interest with any affiliated entities arise in the future we anticipate that the audit committee of our board of directors will pass on the appropriateness of any particular transaction. 92 PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding beneficial ownership of our common stock as of January 1, 2001, and as adjusted to reflect the sale of shares pursuant to this offering, by: . each person known by us to own beneficially more than 5% of our common stock; . each executive officer named in the summary compensation table on page 81; . each of our directors; and . all of our directors and executive officers as a group. In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days of January 1, 2001 through the exercise of any warrant, stock option or other right. The inclusion of such shares in this prospectus, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. Shares issuable pursuant to stock options are deemed outstanding for computing the percentage of the person holding such options but are not outstanding for computing the percentage of any other person. The percentage of beneficial ownership for the following table is based on 14,943,824 shares of common stock outstanding as of January 1, 2001, and 18,943,824 shares of common stock outstanding after the completion of this offering assuming no exercise of the underwriters' over-allotment options. Unless otherwise indicated, the address for each listed stockholder is: c/o Nuvera Fuel Cells, Inc., Acorn Park, Cambridge, MA, 02140. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to the shares of common stock beneficially owned by the stockholder.
Shares Beneficially Shares Beneficially Owned Before the Owned After the Offering Offering ------------------ ----------------------- Name and Address of Beneficial Owner Number Percent Number Percent - ------------------------------------ ---------- ------- ------------ ---------- De Nora New Energy Investments B.V. Herengracht 548 Postbus 990 1000AZ Amsterdam, The Netherlands.... 6,880,454 46.0% 6,880,454 36.3% Arthur D. Little, Inc. 25 Acorn Park Cambridge, MA 02140.................. 5,307,806 35.5% 5,307,806 28.0% Amerada Hess Corporation 1185 Avenue of the Americas New York, NY 10036................... 2,391,018 16.0% 2,391,018 12.6% Mark A. Brodsky....................... -- -- -- -- Jeffrey Bentley....................... 68,054 * 68,054 * Michele Tettamanti.................... -- -- -- -- James Calvin Cross III................ 44,240 * 44,240 * William Leonard Mitchell.............. 51,044 * 51,044 * Ashok Kalelkar........................ -- -- -- -- J. Barclay Collins(1)................. 2,391,018 16.0% 2,391,018 12.6% Federico De Nora...................... -- -- -- -- John A. Gartman....................... -- -- -- -- Franco Ladavas........................ -- -- -- -- Lorenzo C. Lamadrid(2)................ 5,307,806 35.5% 5,307,806 28.0% John Lavin............................ -- -- -- -- Eugenio Morpurgo(3)................... 119,546 * 119,546 * Mauro Saponelli(4).................... 6,880,454 46.0% 6,880,454 36.3% Shares held by all directors and executive officers as a group (including the above) (5)............ 14,862,162 99.5% 14,862,162 78.5%
93 - -------- * Less than 1% (1) Includes 2,391,018 shares held by Amerada Hess Corporation. Mr. Collins, a director of Nuvera, is Executive Vice President and General Counsel of Amerada Hess. Accordingly, Mr. Collins may be deemed the beneficial owner of these shares for the purposes of Rule 13d-3 under the Securities Exchange Act of 1934. Mr. Collins disclaims beneficial ownership of any shares of Nuvera's common stock. (2) Includes 5,307,806 shares held by Arthur D. Little, Inc. Mr. Lamadrid, a director of Nuvera, is President, Chief Executive Officer and a member of the board of directors of AD Little. Accordingly, Mr. Lamadrid may be deemed the beneficial owner of these shares for the purposes of Rule 13d-3 under the Securities Exchange Act of 1934. Mr. Lamadrid disclaims beneficial ownership of any shares of Nuvera's common stock. (3) Includes 82,796 shares held by Fineurop International Limited, and 36,750 shares held by Fineureka S.A., affiliates of Fineurop Soditic S.p.A. Mr. Morpurgo, a director of Nuvera, is Chief Executive Officer of Fineurop Soditic S.p.A. Accordingly, Mr. Morpurgo may be deemed the beneficial owner of 119,546 shares for the purposes of Rule 13d-3 under the Securities Exchange Act of 1934. Mr. Morpurgo disclaims beneficial ownership of any shares of Nuvera's common stock. (4) Includes 6,880,454 shares held by De Nora New Energy Investments B.V. Mr. Saponelli, a director of Nuvera, is Chief Operating Officer of Norfin S.p.A., the parent of De Nora New Energy Investments B.V. Accordingly, Mr. Saponelli may be deemed the beneficial owner of these shares for the purposes of Rule 13d-3 under the Securities Exchange Act of 1934. Mr. Saponelli disclaims beneficial ownership of any shares of Nuvera's common stock. (5) Includes shares held by De Nora, AD Little, Amerada Hess, Fineurop International Limited and Fineureka S.A. which may be deemed to be beneficially owned by some directors of Nuvera as indicated in notes (1), (2), (3) and (4) above. If Amerada Hess exercises the option to purchase shares from AD Little described above under "Related Party Transactions--Merger and Related Transactions--Amerada Hess Investment Agreement," the number of shares beneficially owned by AD Little after the offering will be 4,607,806, or 24.3%, and the number of shares beneficially owned by Amerada Hess after the offering will be 3,091,018, or 16.3%. 94 The following table sets forth certain information regarding beneficial ownership of the capital stock of Norfin S.p.A., AD Little and Amerada Hess as of January 1, 2001, by: . each executive officer named in the summary compensation table on page 81; . each of our directors; and . all of our directors and executive officers as a group. In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days of January 1, 2001 through the exercise of any warrant, stock option or other right. The inclusion of such shares in this prospectus, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. Shares issuable pursuant to stock options are deemed outstanding for computing the percentage of the person holding such options but are not outstanding for computing the percentage of any other person. The percentage of beneficial ownership for the following table is based on 37,500,000 shares of common stock of Norfin S.p.A. outstanding as of January 1, 2001, 17,638,480 shares of common stock of AD Little outstanding as of January 1, 2001, and 89,070,560 shares of common stock of Amerada Hess outstanding as of January 25, 2001. Unless otherwise indicated, the address for each listed stockholder is: c/o Nuvera Fuel Cells, Inc., Acorn Park, Cambridge, MA, 02140. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to the shares of common stock beneficially owned by the stockholder.
Shares of Shares of Shares of Amerada Norfin S.p.A. AD Little Hess Beneficially Owned Beneficially Owned Beneficially Owned ------------------ -------------------- --------------------- Name and Address of Beneficial Owner Number Percent Number Percent Number Percent - ------------------- ---------- ------- ---------- --------- ----------- --------- Mark A. Brodsky......... -- -- 8,619 * -- -- Jeffrey Bentley......... -- -- -- -- -- -- Michele Tettamanti...... -- -- -- -- -- -- James Calvin Cross III.. -- -- -- -- -- -- William Leonard Mitch- ell.................... -- -- -- -- -- -- Ashok Kalelkar.......... -- -- 8,220 * -- -- J. Barclay Collins (1).. -- -- -- -- 251,501 * Federico De Nora (2).... 31,875,000 85.0% -- -- -- -- John A. Gartman (3)..... -- -- -- -- 40,000 * Franco Ladavas.......... -- -- -- -- -- -- Lorenzo C. Lamadrid..... -- -- 8,593 * -- -- John Lavin.............. -- -- 4,811 * -- -- Eugenio Morpurgo........ -- -- -- -- -- -- Mauro Saponelli......... -- -- -- -- -- -- Shares held by all directors and executive officers as a group (including the above).. 31,875,000 85.0% 30,243 * 291,501 *
- -------- * Less than 1% (1) Includes 576 shares vested in the name of Mr. Collins under Amerada Hess' employee's savings and stock bonus plan. Mr. Collins has investment power but generally does not have voting power over these shares. However, shares purchased with Mr. Collins' own contributions will be voted by the plan trustee in accordance with such individual's written instructions. This amount also includes 45,000 shares held in escrow under Amerada Hess' restricted stock plan for Mr. Collins. As to these shares, Mr. Collins has voting power but not investment power. This amount also includes 203,000 shares subject to currently exercisable options. Mr. Collins does not have the right to vote or any other right of a stockholder with respect to shares of common stock underlying options held by him until they are exercised. 95 (2) Includes 30,000,000 shares held by a partnership of which Mr. De Nora is a partner. Mr. De Nora may be deemed the beneficial owner of these shares for the purpose of Rule 13d-3 under the Securities Exchange Act of 1934. Mr. De Nora disclaims beneficial ownership of these shares. (3) Includes 5,000 shares held in escrow under Amerada Hess' restricted stock plan for Mr. Gartman. As to these shares, Mr. Gartman has voting power but not investment power. This amount also includes 25,000 shares subject to currently exercisable options. Mr. Gartman does not have the right to vote or any other right of a stockholder with respect to shares of common stock underlying options held by him until they are exercised. 96 DESCRIPTION OF CAPITAL STOCK Upon completion of this offering, our authorized capital stock will consist of 28,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share. The following descriptions are summaries of the material terms of and are qualified in their entirety by reference to, our Amended and Restated Certificate of Incorporation and Bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part. Statements contained in this prospectus relating to these provisions are not necessarily complete. The descriptions of common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering in accordance with the terms of the Amended and Restated Certificate of Incorporation that we will adopt immediately prior to the closing of this offering. Common Stock As of January 1, 2001, there were 14,943,824 shares of common stock outstanding which were held of record by 36 stockholders. There will be 18,943,824 shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment options, after giving effect to the issuance and sale of the shares of common stock offered by us hereby. The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of funds legally available therefor. See "Dividend Policy." In the event of the liquidation, dissolution or winding up of Nuvera, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. The holders of common stock have no preemptive, conversion or subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and non- assessable. Preferred Stock Upon the completion of this offering, we will not have any shares of our preferred stock outstanding. Our board of directors has the authority to issue preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by our stockholders. If we issue preferred stock, it would have priority over our common stock with respect to dividends and other distributions, including the distribution of assets upon liquidation. In addition, we may be obligated to purchase or redeem our preferred stock. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Nuvera without further action by the stockholders and may adversely affect the voting and other rights of the holders of our common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including the loss of voting control to others. At present, we have no plans to issue any preferred stock. Stockholders' Agreement Prior to the completion of this offering, we will enter into a new stockholders' agreement with AD Little, De Nora New Energy Investments B.V., Amerada Hess Corporation, Fineurop International Limited and Fineureka S.A. that will contain, among other things, provisions relating to the composition of our board and registration rights. For a description of this agreement, please see "Related Party Transactions--New Stockholders' Agreement." 97 Certain Anti-Takeover Effects of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws Delaware Anti-Takeover Statute Following consummation of this offering, we will be subject to the "business combination" provisions of Section 203 of the Delaware General Corporation Law. In general, such provisions prohibit a publicly held Delaware corporation from engaging in various "business combination" transactions with any interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless: . the transaction was approved by the board of directors prior to the date the interested stockholder obtained such status; . upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or . on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. For purposes of Section 203, a "business combination" is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder. In general, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of a corporation's voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts with respect to Nuvera and, accordingly, may discourage attempts to acquire Nuvera even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price. Because our board of directors approved the transactions which resulted in AD Little, De Nora New Energy Investments B.V. and Amerada Hess becoming interested stockholders, Section 203 will not prohibit us from engaging in business combinations with these stockholders. In addition, certain provisions of our Amended and Restated Certificate of Incorporation and Bylaws, which will become effective immediately prior to the closing of this offering, and which are summarized in the following paragraphs, may be deemed to have an anti-takeover effect and may discourage takeover attempts not first approved by the board of directors, including takeovers which stockholders may deem to be in their best interests. If takeover attempts are discouraged, temporary fluctuations in the market price of our common stock, which may result from actual or rumored takeover attempts, may be inhibited. These provisions, together with the ability of our board of directors to issue preferred stock without further stockholder action, could also delay or frustrate the removal of incumbent directors or the assumption of control by stockholders, even if the removal or assumption would be beneficial to our stockholders. These provisions could also discourage or make more difficult a merger, tender offer or proxy contest, even if favorable to the interests of our stockholders, and could depress the market price of our common stock. Our board of directors believes that these provisions are appropriate to protect the interests of Nuvera and of our stockholders. Limits on written consents and special meetings of stockholders Our Amended and Restated Certificate of Incorporation provides that stockholders may not take action by written consent, but may only take action at a duly called annual or special meeting of stockholders. Our Amended and Restated Certificate of Incorporation further provides that special meetings of our stockholders 98 may be called only by the board of directors, the Chairman of the board of directors or the president or the secretary of Nuvera. These provisions could have the effect of delaying stockholder actions that are favored by the holders of a majority of our outstanding voting securities until a meeting is called. In addition, the limited ability of the stockholders to call a special meeting of stockholders may make it more difficult to change the existing board and management. Staggered board; removal and filling of vacancies Our Amended and Restated Certificate of Incorporation provides that upon the closing of this offering our board of directors shall be divided into three classes as nearly equal in size as possible with staggered three-year terms. In addition, our Amended and Restated Certificate of Incorporation provides that directors may be removed only for cause and only by the affirmative vote of holders of not less than a majority of the total voting power of all outstanding securities of Nuvera then entitled to vote. Any vacancy on the board of directors, regardless of the reason for the vacancy, may be filled only by a vote of a majority of the directors then in office or by the sole remaining director. The limitations on the removal of directors and the filling of vacancies could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, control of us. Supermajority provisions The Delaware General Corporation Law provides generally that the affirmative vote of a majority in interest of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or bylaws, unless a corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our Amended and Restated Certificate of Incorporation provides that the provisions described above may be amended only by a vote of 66 2/3% or more of all of the outstanding shares of our stock entitled to vote. Authorized but unissued shares The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject to limitations imposed by the Nasdaq National Market. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions, employee benefit plans and stockholder rights plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of the company by means of a proxy contest, tender offer, merger or otherwise. Quotation on the Nasdaq National Market We have applied for quotation on the Nasdaq National Market under the symbol "NVRA." Transfer Agent and Registrar The transfer agent and registrar for our common stock will be EquiServe Trust Company, N.A. 99 SHARES ELIGIBLE FOR FUTURE SALE Rule 144 After this offering, we will have 18,943,824 common shares outstanding, assuming no exercise of the underwriters' over-allotment options and excluding 2,465,736 common shares reserved for issuance under our stock incentive plans. All of the common shares sold in this offering will be freely tradeable under the Securities Act, unless held by our "affiliates," as that term is defined in Rule 144 under the Securities Act. In addition, 14,943,824 common shares have been issued in transactions that were not registered with the SEC and thus are "restricted securities," as that term is defined in Rule 144 under the Securities Act. Upon the expiration of the lock-up agreements discussed below between Nuvera, all of our existing stockholders, directors and executive officers and the underwriters, these common shares will become eligible for sale, subject to compliance with Rule 144 under the Securities Act as described below. In general, under Rule 144 as currently in effect, a stockholder who has beneficially owned restricted securities for at least one year can sell in any three-month period a number of shares of our common stock that does not exceed the greater of: . 1% of the number of shares of our common stock then outstanding, or approximately 189,438 common shares immediately after this offering, or . the average weekly trading volume of our common stock during the four calendar weeks immediately preceding the filing of a notice on Form 144 with respect to that sale. Sales under Rule 144 are subject to certain requirements relating to manner of sale, notice and availability of current public information about Nuvera. A stockholder who is not deemed to have been an affiliate at any time during the 90 days immediately preceding the sale and who has beneficially owned restricted securities for at least two years is entitled to sell such shares under Rule 144(k) without regard to the limitations and requirements described above. We, our executive officers and directors and all existing stockholders have agreed, with exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus without first obtaining the prior written consent of Merrill Lynch. Stock Plans An aggregate of 2,465,736 shares of our common stock are reserved for issuance under our stock incentive plans. Options to purchase 655,088 shares of common stock are issued and outstanding under our 2000 stock incentive plan, none of which have vested. We intend to file a registration statement on Form S-8 covering the sale of the shares of common stock issued under our stock incentive plans. Accordingly, the shares of common stock registered under any such registration statement will be available for sale in the public market upon issuance of such shares of common stock pursuant to the plans, unless such shares are subject to vesting restrictions and subject to limitation on resale by "affiliates" pursuant to Rule 144 and under the lock-up agreements described above. Rule 701 In general, any employee, director, officer, consultant or advisor who purchases shares from us in connection with a written compensatory plan or contract before the effective date of this offering is entitled to resell these shares 90 days after the date of this offering in reliance on Rule 144, without having to comply with some of the restrictions, including the holding period, contained in Rule 144. The SEC has indicated that Rule 701 under the Securities Act will apply to typical stock options granted by an issuer before it becomes 100 subject to the reporting requirements of the Securities Exchange Act of 1934, along with the shares acquired upon exercise of these options, including exercises after the date of this prospectus. Securities issued in reliance on Rule 701 are restricted securities and, subject to the contractual restrictions described above, beginning 90 days after the date of this prospectus, may be sold by persons other than "affiliates" subject only to the manner of sale restrictions of Rule 144 and by "affiliates" under Rule 144 without compliance with its one-year minimum holding requirement. Of the 14,943,824 shares of common stock held by existing stockholders as of January 1, 2001, 245,000 shares will be eligible for resale pursuant to Rule 701 upon the expiration of the 180-day lock-up. Registration Rights Following this offering, AD Little, De Nora New Energy Investments B.V., Amerada Hess, Fineurop International and Fineureka, holders of 14,698,824 shares of our common stock, will have rights to cause us to register the sales of those shares under the Securities Act. For a description of these rights, please see "Related Party Transactions--New Stockholders' Agreement-- Registration Rights." 101 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK The following describes the material U.S. federal income tax consequences of the ownership and disposition of common stock by a beneficial owner that is a "Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S. federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership, or a foreign estate or trust. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), and administrative interpretations as of the date of this prospectus, all of which are subject to change, including changes with retroactive effect. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to Non-U.S. Holders in light of their particular circumstances and does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction. Prospective holders should consult their tax advisors with respect to the particular tax consequences to them of owning and disposing of common stock, including the consequences under the laws of any state, local or foreign jurisdiction. Dividends As discussed under "Dividend Policy" above, Nuvera does not currently anticipate paying any cash dividends on its common stock in the foreseeable future. In the event that Nuvera does pay dividends, dividends paid to a Non- U.S. Holder of common stock generally will be subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty. In order to obtain a reduced rate of withholding for dividends paid, a Non-U.S. Holder will be required to provide an Internal Revenue Service Form W-8BEN certifying its entitlement to benefits under a treaty. In addition, in certain cases where dividends are paid to a Non-U.S. Holder that is a partnership or other pass-through entity, persons holding an interest in the entity may need to provide the required certification. The withholding tax does not apply to dividends paid to a Non-U.S. Holder that provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income taxation as if the Non-U.S. Holder were a U.S. resident. A non-U.S. corporation receiving effectively connected dividends may also be subject to an additional "branch profits tax" imposed at a rate of 30% (or a lower treaty rate) on an earnings amount that is net of the regular tax. Gain on Disposition of Common Stock A Non-U.S. Holder generally will not be subject to U.S. federal income tax on gain realized on a sale or other disposition of common stock unless: . the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States, . in the case of certain non-resident alien individuals, the individual is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are satisfied, . the Non-U.S. Holder is subject to tax under the provisions of the Code regarding the taxation of U.S. expatriates or . Nuvera is or has been a U.S. real property holding corporation at any time within the five-year period preceding the disposition or the Non-U.S. Holder's holding period, whichever period is shorter. 102 Nuvera believes that it is not, and does not anticipate becoming, a U.S. real property holding corporation. Information Reporting Requirements and Backup Withholding Nuvera must report to the IRS the amount of dividends paid, the name and address of the recipient, and the amount of any tax withheld. A similar report is sent to the Non-U.S. Holder. Under tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient's country of residence. A Non-U.S. Holder may have to comply with certain certification procedures to establish his or her non-U.S. status in order to avoid backup withholding at a 31% rate on dividends received. U.S. information reporting and backup withholding generally will not apply to a payment of proceeds of a disposition of common stock where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker. However, a Non-U.S. Holder may need to certify its non-U.S. status in order to avoid information reporting and backup withholding at a 31% rate on disposition proceeds where the transaction is effected by or through a U.S. office of a broker. In addition, U.S. information reporting requirements may apply to the proceeds of a disposition effected by or through a non-U.S. office of a U.S. broker, or by a non-U.S. broker with specified connections to the United States. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. When withholding results in an overpayment of taxes, a refund may be obtained if the required information is furnished to the IRS. 103 UNDERWRITING We intend to offer the shares in the U.S. and Canada through the U.S. underwriters and elsewhere through the international managers. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., ABN AMRO Rothschild LLC and Bear, Stearns & Co. Inc. are acting as U.S. representatives of the U.S. underwriters named below. Subject to the terms and conditions described in a U.S. purchase agreement among us and the U.S. underwriters, and concurrently with the sale of 800,000 shares to the international managers, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase from us, the number of shares listed opposite their names below.
Number of U.S. Underwriter Shares ---------------- --------- Merrill Lynch, Pierce, Fenner & Smith Incorporated............................................ Lehman Brothers Inc............................................. ABN AMRO Rothschild LLC......................................... Bear, Stearns & Co. Inc......................................... --------- Total...................................................... 3,200,000 =========
We have also entered into an international purchase agreement with the international managers for sale of the shares outside the U.S. and Canada for whom Merrill Lynch International, Lehman Brothers International (Europe), ABN AMRO Rothschild and Bear, Stearns International Limited are acting as lead managers. Subject to the terms and conditions in the international purchase agreement, and concurrently with the sale of 3,200,000 shares to the U.S. underwriters pursuant to the U.S. purchase agreement, we have agreed to sell to the international managers, and the international managers severally have agreed to purchase, 800,000 shares from us. The initial public offering price per share and the total underwriting discount per share are identical under the U.S. purchase agreement and the international purchase agreement. The U.S. underwriters and the international managers have agreed to purchase all of the shares sold under the U.S. and international purchase agreements if any of these shares are purchased. If an underwriter defaults, the U.S. and international purchase agreements provide that the purchase commitments of the non-defaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the U.S. underwriters and the international managers are conditioned on one another. We have agreed to indemnify the U.S. underwriters and the international managers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the U.S. underwriters and international managers may be required to make in respect of those liabilities. The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other 104 conditions contained in the purchase agreements, such as the receipt by the underwriters of officers' certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. Commissions and Discounts The U.S. representatives have advised us that the U.S. underwriters propose initially to offer the shares to the public at the initial public offering price on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. The U.S. underwriters may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed. The following table shows the public offering price, underwriting discount and proceeds before expenses to Nuvera. The information assumes either no exercise or full exercise by the U.S. underwriters and the international managers of their over-allotment options.
Without With Per Share Option Option --------- ------- ------ Public offering price............................ $ $ $ Underwriting discount............................ $ $ $ Proceeds, before expenses, to Nuvera............. $ $ $
The expenses of the offering, not including the underwriting discount, are estimated at $4.4 million and are payable by Nuvera. Over-allotment Options We have granted options to the U.S. underwriters to purchase up to 480,000 additional shares at the public offering price less the underwriting discount. The U.S. underwriters may exercise these options for 30 days from the date of this prospectus solely to cover any over-allotments. If the U.S. underwriters exercise these options, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to that U.S. underwriter's initial amount reflected in the above table. We have also granted options to the international managers, exercisable for 30 days from the date of this prospectus, to purchase up to 120,000 additional shares to cover any over-allotments on terms similar to those granted to the U.S. underwriters. Intersyndicate Agreement The U.S. underwriters and the international managers have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the U.S. underwriters and the international managers may sell shares to each other for purposes of resale at the public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are non-U.S. or non-Canadian persons or to persons they believe intend to resell to persons who are non-U.S. or non-Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to U.S. persons or Canadian persons or to persons they believe intend to resell to U.S. persons or Canadian persons, except in the case of transactions under the terms of the intersyndicate agreement. Reserved Shares At our request, the underwriters have reserved for sale, at the initial public offering price, up to shares offered by this prospectus for sale to some of our directors, officers, employees, distributors, 105 dealers, business associates and related persons. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. No Sales of Similar Securities We, our executive officers and directors and all existing stockholders have agreed, with exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch. Specifically, we and these other individuals have agreed not to directly or indirectly: . offer, pledge, sell, or contract to sell any common stock, . sell any option or contract to purchase any common stock, . purchase any option or contract to sell any common stock, . grant any option, right or warrant for the sale of any common stock, . lend or otherwise dispose of or transfer any common stock, . request or demand that we file a registration statement related to the common stock, or . enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise. This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. This lock-up provision does not apply if we issue common stock upon the exercise of an option outstanding on the date of this prospectus or if we issue common stock or grant options to purchase common stock pursuant to our 2000 stock incentive plan. The lock-up agreements described above may be released at any time as to all or any portion of the shares subject to such agreements at the sole discretion of Merrill Lynch. There are, however, currently no agreements between Merrill Lynch and any of our executive officers, directors or stockholders releasing them from these lock-up agreements prior to the expiration of the 180-day period. Quotation on the Nasdaq National Market We have applied for quotation of our shares on the Nasdaq National Market under the symbol "NVRA." Offering Price Determination Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us and the U.S. representatives and lead managers. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are: . the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us, . our financial information, . the history of, and the prospects for, our company and the industry in which we compete, 106 . an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues, . the present state of our development, and . the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority. Price Stabilization, Short Positions and Penalty Bids Until the distribution of the shares is completed, SEC rules may limit the underwriters and selling group members from bidding for and purchasing our common stock. However, the U.S. representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price. In connection with the offering, the underwriters may make short sales of the common stock and may purchase shares in the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are made in an amount not greater than the over-allotment option described above. The underwriters may close out any covered short position by either exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. "Naked" short sales are sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Purchases of the common stock to stabilize its price or to reduce a short position may cause the price of the common stock to be higher than it might be in the absence of such purchases. The U.S. representatives may also impose a penalty bid on underwriters and selling group members. This means that if the U.S. representatives purchase shares in the open market to reduce the underwriter's short position or to stabilize the price of such shares, they may reclaim the amount of the selling concession from the underwriters and selling group members who sold those shares. The imposition of a penalty bid may also affect the price of the shares in that it may discourage resales of those shares. Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters makes any representation that the U.S. representatives or the lead managers will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. Electronic Distribution Merrill Lynch will be facilitating Internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus is available on the website maintained by Merrill Lynch. Other than the prospectus in electronic format, the information on the Merrill Lynch website relating to this offering is not part of this prospectus. 107 LEGAL MATTERS The validity of the shares of common stock offered by this prospectus will be passed upon for Nuvera by Davis Polk & Wardwell, New York, New York and for the underwriters by Pillsbury Winthrop LLP, New York, New York. EXPERTS The financial statements of Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) as of December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999 included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing in this prospectus (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the company as a development stage enterprise), and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of Epyx Corporation (a development stage company) as of December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999 included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing in this prospectus (which report expresses an unqualified opinion and includes explanatory paragraphs relating to the company as a development stage enterprise and to the merger with De Nora Fuel Cells S.p.A.), and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act with respect to the common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement. Certain items are omitted in accordance with the rules and regulations of the SEC. For further information about us and our common stock, we refer you to the registration statement and the exhibits and any schedules to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement, including the exhibits and schedules to the registration statement, may be read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at http://www.sec.gov, from which interested persons can electronically access the registration statement, including the exhibits and schedules to the registration statement. As a result of the offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934. We will fulfill our obligations with respect to those requirements by filing periodic reports and other information with the SEC. We intend to furnish our stockholders with annual reports containing audited consolidated financial statements certified by an independent public accounting firm. We also maintain an Internet site at http://www.nuvera.com. The information contained in our website is not incorporated by reference into this prospectus or the registration statement of which it forms a part. 108 INDEX TO FINANCIAL STATEMENTS
Page ---- FINANCIAL STATEMENTS OF NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) Independent Auditors' Report............................................ F-2 Consolidated Balance Sheets............................................. F-3 Consolidated Statements of Operations................................... F-4 Consolidated Statements of Comprehensive Loss........................... F-5 Consolidated Statements of Stockholders' Equity (Deficit)............... F-6 Consolidated Statements of Cash Flows................................... F-7 Notes to Consolidated Financial Statements.............................. F-8 FINANCIAL STATEMENTS OF EPYX CORPORATION (A Development Stage Company) Independent Auditors' Report............................................ F-28 Balance Sheets.......................................................... F-29 Statements of Operations................................................ F-30 Statements of Stockholder's Deficit..................................... F-31 Statements of Cash Flows................................................ F-32 Notes to Financial Statements........................................... F-33
F-1 The accompanying financial statements give effect to the completion of a 14-for-1 split of the Company's common stock which will take place prior to consummation of the Company's initial public offering. The following report is in the form which will be furnished by Deloitte & Touche LLP upon the completion of the 14-for-1 split of the Company's common stock described in Note 12 to the financial statements and assuming that from February 2, 2001 to the date of such completion no other material events have occurred that would affect the accompanying financial statements or require disclosure therein. If the share exchange ratio changes, all references to number of shares, per share amounts and stock option data included within the consolidated financial statements will also change. INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Nuvera Fuel Cells, Inc. and Subsidiary Cambridge, Massachusetts We have audited the accompanying consolidated balance sheets of Nuvera Fuel Cells, Inc. and Subsidiary (a development stage company) (the "Company") as of December 31, 1999 and 1998, and the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. The Company is in the development stage as of December 31, 1999. As discussed in Note 1 to the financial statements, successful completion of the Company's development program and successful commercialization of its products and, ultimately, the attainment of profitable operations is dependent upon future events, including maintaining adequate financing to fulfill its development and marketing activities and achieving a level of sales adequate to support the Company's cost structure. Boston, Massachusetts November 3, 2000 ( , 2001 as to the last paragraph of Note 12) /s/ Deloitte & Touche, LLP February 2, 2001 F-2 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share amounts)
December 31, ---------------- September 30, 1998 1999 2000 ------- ------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents.................... $ -- $ 19 $ 12,212 Accounts receivable--trade (net of allowance for doubtful accounts of $25 in 2000)....... -- -- 1,017 Accounts receivable--stockholders............ 115 400 1,115 Unbilled receivable--trade (net of allowance for doubtful accounts of $25 in 2000)....... -- -- 1,749 Unbilled receivable--stockholder............. 1,650 948 54 Due from stockholder......................... -- -- 1,304 Inventories.................................. -- 628 725 Prepaid and other current assets............. 16 39 257 ------- ------- -------- Total current assets....................... 1,781 2,034 18,433 Property and equipment, net.................... 275 240 975 Intangible assets.............................. -- -- 52,166 Other long-term assets......................... 102 66 32 ------- ------- -------- Total assets............................... $ 2,158 $ 2,340 $ 71,606 ======= ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable--trade...................... $ -- $ 447 $ 2,218 Accounts payable--stockholder................ 374 335 859 Notes payable--stockholder................... -- 545 -- Advance payments from customers.............. 1,241 357 1,084 Accrued compensation and other expenses...... 198 167 905 Estimated losses on uncompleted projects..... -- -- 657 Due to stockholder........................... 5,248 -- -- ------- ------- -------- Total current liabilities.................. 7,061 1,851 5,723 Deferred income taxes.......................... -- -- 1,840 Other long-term liabilities.................... 201 207 237 ------- ------- -------- Total non-current liabilities.............. 201 207 2,077 Commitments and contingencies (Notes 8 and 12)........................................... -- -- -- Stockholders' equity (deficit): Preferred stock authorized 5,000,000 shares $.01 par value in 2000, of which none were issued and outstanding Common stock authorized 5,600,000 shares, $.04 par value, in 1998 and 1999, of which 5,600,000 shares were issued and outstanding; authorized 28,000,000 shares, $.01 par value, in 2000, of which 14,943,824 were issued and outstanding................. 222 222 149 Additional paid-in capital................... 626 7,684 100,957 Accumulated other comprehensive income (loss)...................................... 352 (30) (257) Deficit accumulated during the development stage....................................... (6,304) (7,594) (37,043) ------- ------- -------- Total stockholders' equity (deficit)....... (5,104) 282 63,806 ------- ------- -------- Total liabilities and stockholders' equity (deficit)................................. $ 2,158 $ 2,340 $ 71,606 ======= ======= ========
See Notes to Consolidated Financial Statements. F-3 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share amounts)
Nine Months Ended Cumulative From Year Ended December 31, September 30, March 30, 1989 ---------------------------------- ---------------------- (Inception) to 1997 1998 1999 1999 2000 September 30, 2000 ---------- ---------- ---------- ---------- ---------- ------------------ (Unaudited) (Unaudited) Revenues Sales and contracts... $ -- $ -- $ 574 $ 436 $ 1,714 $ 2,837 Lease................. 350 284 95 96 55 691 ---------- ---------- ---------- ---------- ---------- -------- Total revenues...... 350 284 669 532 1,769 3,528 Cost of revenues Sales and contracts... -- -- 216 255 2,862 3,108 Lease................. 106 178 86 37 17 437 ---------- ---------- ---------- ---------- ---------- -------- Total cost of revenues........... 106 178 302 292 2,879 3,545 In-process research and development............ -- -- -- -- 20,300 20,300 Research and development expense, net........... 1,119 1,988 1,004 373 3,627 9,678 Selling, general and administrative expense................ 465 403 644 903 7,794 10,421 ---------- ---------- ---------- ---------- ---------- -------- Loss from operations......... (1,340) (2,285) (1,281) (1,036) (32,831) (40,416) Interest expense........ -- -- 2 -- 41 43 Other (income) expense, net.................... -- -- 7 54 (38) (31) ---------- ---------- ---------- ---------- ---------- -------- Loss before income tax benefit................ (1,340) (2,285) (1,290) (1,090) (32,834) (40,428) Income tax benefit...... -- -- -- -- 3,385 3,385 ---------- ---------- ---------- ---------- ---------- -------- Net loss............ $ (1,340) $ (2,285) $ (1,290) $ (1,090) $ (29,449) $(37,043) ========== ========== ========== ========== ========== ======== Net loss per common share--basic and diluted................ $ (.19) $ (.33) $ (.18) $ (.16) $ (2.49) ========== ========== ========== ========== ========== Shares used in computing basic and diluted net loss per common share.. 7,000,000 7,000,000 7,000,000 7,000,000 11,843,566 ========== ========== ========== ========== ==========
See Notes to Consolidated Financial Statements. F-4 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Dollars in thousands)
Nine Months Year Ended Ended Cumulative From December 31, September 30, March 30, 1989 ------------------------- ----------------- (Inception) to 1997 1998 1999 1999 2000 September 30, 2000 ------- ------- ------- ------- -------- ------------------ (Unaudited) (Unaudited) Net loss................ $(1,340) $(2,285) $(1,290) $(1,090) $(29,449) $(37,043) Foreign currency translation adjustment............. -- (276) (382) (66) (227) (257) ------- ------- ------- ------- -------- -------- Comprehensive loss...... $(1,340) $(2,561) $(1,672) $(1,156) $(29,676) $(37,300) ======= ======= ======= ======= ======== ========
See Notes to Consolidated Financial Statements. F-5 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Dollars in thousands)
Deficit Accumulated Accumulated Total Common Stock Additional Other During the Stockholders' ------------------ Paid-in Comprehensive Development Equity Shares Amount Capital Income (Loss) Stage (Deficit) ---------- ------ ---------- ------------- ----------- ------------- Balance (deficit), January 1, 1997........ 5,600,000 $ 222 $ 626 $ 628 $ (2,679) $ (1,203) Foreign currency translation adjustment............. -- -- -- -- -- -- Net loss................ -- -- -- -- (1,340) (1,340) ---------- ----- -------- ----- -------- -------- Balance (deficit), December 31, 1997...... 5,600,000 222 626 628 (4,019) (2,543) Foreign currency translation adjustment............. -- -- -- (276) -- (276) Net loss................ -- -- -- -- (2,285) (2,285) ---------- ----- -------- ----- -------- -------- Balance (deficit), December 31, 1998...... 5,600,000 222 626 352 (6,304) (5,104) Payable to De Nora S.p.A. converted into capital........... -- -- 7,058 -- -- 7,058 Foreign currency translation adjustment............. -- -- -- (382) -- (382) Net loss................ -- -- -- -- (1,290) (1,290) ---------- ----- -------- ----- -------- -------- Balance (deficit), December 31, 1999...... 5,600,000 222 7,684 (30) (7,594) 282 Unaudited: Common stock held by former Epyx stockholders.......... 7,000,000 70 (70) -- -- -- Issuance of common stock in connection with reverse merger... 7,000,000 70 430 -- -- 500 Adjustment to reflect exchange of common stock in connection with reverse merger... (5,600,000) (222) 222 -- -- -- Adjustment to reflect assets and liabilities of Epyx at fair value in connection with reverse merger........ -- -- 71,600 -- -- 71,600 Issuance of common stock................. 943,824 9 14,991 -- -- 15,000 Capital contributions from stockholders..... -- -- 6,100 -- -- 6,100 Foreign currency translation adjustment............ -- -- -- (227) -- (227) Net loss............... -- -- -- -- (29,449) (29,449) ---------- ----- -------- ----- -------- -------- Balance (deficit), September 30, 2000 (unaudited)............ 14,943,824 $ 149 $100,957 $(257) $(37,043) $ 63,806 ========== ===== ======== ===== ======== ========
See Notes to Consolidated Financial Statements. F-6 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Cumulative From December 31, September 30, March 30, 1989 ------------------------- ----------------- (Inception) to 1997 1998 1999 1999 2000 September 30, 2000 ------- ------- ------- ------- -------- ------------------ (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net loss............... $(1,340) $(2,285) $(1,290) $(1,090) $(29,449) $(37,043) Adjustments to reconcile net loss to cash used by operating activities: In-process research and development........... -- -- -- -- 20,300 20,300 Depreciation and amortization.......... 140 202 119 130 4,913 5,647 Deferred income taxes.. -- -- -- -- (3,385) (3,385) (Decrease) increase in cash from: Receivables........... (423) (1,047) 175 422 (3,052) (3,935) Due from stockholder.. -- -- -- -- (1,304) (1,304) Inventories........... -- -- (666) -- (295) (725) Prepaid and other current assets....... (2) (2) (27) 13 (246) (257) Other long-term assets............... (103) (100) (22) (26) (20) (32) Accounts payable...... -- -- 474 -- 2,008 2,218 Accounts payable stockholder.......... 335 (49) 15 (209) 643 859 Advance payments from customers............ 52 717 (750) (214) 846 1,084 Accrued compensation and other expenses... (286) (100) (2) (109) 797 905 Estimated losses on uncompleted projects............. -- -- -- -- 657 657 Other long-term liabilities.......... 36 16 36 118 95 237 ------- ------- ------- ------- -------- -------- Cash used by operating activities............ (1,591) (2,647) (1,938) (965) (7,492) (14,774) Cash Flows from Investing Activities: Expenditures for property and equipment............. (169) (62) (78) (76) (842) (1,763) ------- ------- ------- ------- -------- -------- Cash Flows from Financing Activities: Notes payable-- stockholder........... -- -- 881 -- -- 803 Repayment of notes payable--stockholder.. -- -- (303) -- (425) (803) Borrowings under line of credit............. -- -- -- -- 759 759 Repayment of borrowings under line of credit.. -- -- -- -- (759) (759) Due to stockholder..... 1,760 2,710 1,459 1,041 -- -- Net proceeds from issuance of common stock................. -- -- -- -- 15,000 15,000 Capital contribution from stockholders..... -- -- -- -- 6,100 14,006 ------- ------- ------- ------- -------- -------- Cash provided by financing activities.. 1,760 2,710 2,037 1,041 20,675 29,006 ------- ------- ------- ------- -------- -------- Effect of exchange rate change on cash and equivalents............ -- -- (2) -- (148) (257) Increase in cash and equivalents............ -- -- 19 -- 12,193 12,212 Cash and cash equivalents, beginning of period.............. -- -- -- -- 19 -- ------- ------- ------- ------- -------- -------- Cash and cash equivalents, end of period................. $ -- $ -- $ 19 $ -- $ 12,212 $ 12,212 ======= ======= ======= ======= ======== ======== Non-cash Financing Activities: Issuance of common stock in connection with reverse merger... $ -- $ -- $ -- $ -- $ 500 $ 500 Acquisition of assets and liabilities of Epyx in connection with reverse merger... -- -- -- -- 71,600 71,600 Payable to De Nora S.p.A. converted into capital............... -- -- 7,058 7,058 -- 7,058
See Notes to Consolidated Financial Statements. F-7 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Information for the Nine Months Ended September 30, 1999 and 2000 and Cumulative From March 30, 1989 (Inception) to September 30, 2000 is Unaudited) (Dollars in thousands, except share and per share amounts) 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Nuvera Fuel Cells, Inc. and subsidiary (a development stage company) (the "Company") designs and develops fuel processors, proton exchange membrane ("PEM") fuel cell stacks, power modules and integrated fuel cell systems for stationary and transportation applications that generate clean, reliable and efficient energy. It is engaged in a single operating segment of the electric power generation industry. The Company was formed through the merger (Note 2) of De Nora Fuel Cells S.p.A. ("De Nora"), the fuel cell subsidiary of De Nora New Energy Investments B.V. ("DNNEI"), a subsidiary of Norfin S.p.A. (with its subsidiaries, "Norfin"), and Epyx Corporation ("Epyx"), the fuel processing subsidiary of Arthur D. Little, Inc. ("AD Little"), pursuant to an Investment and Exchange Agreement (the "Investment Agreement") dated April 4, 2000. De Nora began its fuel cell research operations on March 30, 1989 and conducted its activities as an integral part of the overall operations of Norfin, until October 1, 1999 when De Nora was established as a wholly owned subsidiary. Epyx began its operations in 1991 and all fuel cell development was conducted as an integral part of AD Little's overall operations until December 18, 1997 when Epyx was incorporated as a wholly owned subsidiary of AD Little. The Company is in the development stage. The successful completion of the Company's development program and successful commercialization of its products, and, ultimately, the attainment of profitable operations is dependent upon future events, including maintaining adequate financing to fulfill its development and marketing activities and achieving a level of sales adequate to support the Company's cost structure. During the years ended December 31, 1997, 1998 and 1999, the nine months ended September 30, 2000 and cumulative for the period from inception to September 30, 2000, the Company incurred net losses of $1,340, $2,285, $1,290, $29,449 and $37,043, respectively. In addition, the Company's operations have historically depended primarily upon advances, loans and contributions to capital by its stockholders and funds provided under its government-sponsored research and development contracts. The Company has obtained commitments from its principal stockholders to provide $30,000 in additional equity financing. Such commitments have been evidenced by a capital contribution agreement entered into by these stockholders on November 3, 2000. Pursuant to this agreement, the obligation of Norfin and AD Little is 50.0% each until Norfin and AD Little have contributed to the Company, in the aggregate, $1,000. Thereafter, the obligation of each stockholder is 46.8% for Norfin, 42.2% for AD Little and 11.0% for Amerada Hess Corporation ("Hess") (Note 12). This agreement will terminate on the earlier of the date of the consummation of the Company's initial public offering with proceeds to the Company of at least $30,000, the date on which capital contributions under this agreement by AD Little, Norfin and Hess exceed $30,000 or December 31, 2001. The Company believes that these commitments, as well as anticipated government funding and revenues from sales and contracts, will provide sufficient capital to fund a base level of operations for the next year. The merger transaction has been accounted for under the purchase method of accounting and was treated as a reverse acquisition as Norfin received the largest voting interest in the combined enterprise. Therefore, for accounting purposes, De Nora is deemed to have acquired Epyx's assets and liabilities, based upon their fair values as of the date of acquisition. The Company's consolidated financial statements for all F-8 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) periods prior to the merger represent the financial position, results of operations and cash flows of De Nora. The Company's consolidated financial statements for periods subsequent to April 4, 2000 include the results of both De Nora and Epyx. The financial statements of De Nora, included in the accompanying consolidated balance sheets and related statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows, have been prepared on a carve-out basis for the purpose of presenting the financial position, results of operations and cash flows of the Company. The accompanying financial statements include allocations of general corporate overhead expenses related to the corporate headquarters and common support activities of Norfin, including information technology, financial, treasury, legal, insurance and other corporate functions as well as certain costs of operations including office rent and facility charges. These costs have been allocated to De Nora using methodologies primarily based on headcount and usage. Although management believes the allocations are reasonable, the costs of these services to De Nora may not be indicative of the costs that would have been incurred if De Nora had been a stand-alone entity (Note 8). Much of De Nora's revenue has historically been derived as a subcontractor to Norfin, its parent. Since the incorporation of De Nora Fuel Cells S.p.A. in October 1999 and the merger in April 2000, all of Norfin's contracts relating to fuel cells, and a significant number of AD Little's contracts relating to fuel processors, have been assigned to the Company. Under the subcontractor arrangements with its stockholders, the Company is subject to the risk and rewards of the contracts in the same manner as if it were the prime contractor. Accordingly, for financial reporting purposes, the Company recognizes subcontractor revenues from its stockholders and discloses concentration credit risks and significant customers in the same manner as if it were the prime contractor. 2. MERGER TRANSACTION AND ALLOCATION OF VALUE OF SHARES EXCHANGED Merger Transaction Under the terms of the Investment Agreement, DNNEI received 7,000,000 newly issued shares of the Company's common stock in exchange for its ownership interest in De Nora. Simultaneously with the merger, Hess purchased 700,000 shares of the Company's common stock held by AD Little. Upon consummation of the merger, Epyx, which is the legal acquirer and surviving legal entity, changed its name to Nuvera Fuel Cells, Inc. On July 26, 2000, De Nora changed its legal form and name to Nuvera Fuel Cells Europe, S.r.l. The merger costs incurred by De Nora and Epyx were approximately $100 and $50, respectively. Immediately after the merger, DNNEI owned 50% of the Company's common stock and held control over four of the eight seats on the Company's Board of Directors, enabling them to retain voting and operating control of the Company. AD Little owned 45% of the Company's common stock and held control over three of the Board seats. Hess owned 5% of the Company's common stock and held control over one of the Board seats. The merger of De Nora and Epyx constitutes a reverse acquisition, whereby Epyx was effectively acquired by De Nora for accounting purposes. Accordingly, the value of Epyx was allocated to the assets and liabilities of Epyx based on their fair values at the date of acquisition. F-9 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Value of Shares Exchanged The Company was valued on a 100% basis for the purposes of allocating the value of the shares exchanged to the identifiable intangible assets. For accounting purposes, the effective consideration for a 100% interest in Epyx was a 45% minority equity interest in the Company retained by AD Little. On the date of acquisition, Hess purchased 700,000 shares of common stock representing a 5% minority equity interest in the Company from AD Little in an arm's length transaction for $10,000. Included in the investment agreement between Hess and AD Little was an option to acquire an additional 700,000 shares of the Company's common stock held by AD Little at a per share price equal to the midpoint of the range between $14.29 and the fair market value at the date of exercise. After considering a number of factors including an outside appraisal, the Company's management determined that the fair market value as of April 4, 2000 of the stock option acquired by Hess was $2,000 and the fair market value as of April 4, 2000 of the 5% minority equity interest in the Company to be $8,000. The value of the stock options was determined using the Black-Scholes option pricing model with the following assumptions: (1) an expected volatility of 84.4% based upon the average two-year volatility in the stock prices of comparable companies; (2) a risk-free interest rate of 6.35% per year based on the yield on a two-year U.S. Treasury Note; (3) an expected option life of 27.5 months representing the average life of the option in an IPO and non-IPO scenario; and (4) no dividend payments. Since Hess purchased a minority equity interest in the Company for cash in an arm's length transaction on the date of acquisition, after considering a number of factors including an outside appraisal, management deemed this transaction to be the most relevant measurement of value of a minority interest in the equity of the Company on April 4, 2000. Accordingly, the fair market value of the consideration to acquire a 100% interest in Epyx (a 45% minority interest in the Company) was estimated to be $72,100 including $100 in merger costs. Overall Methodology to Allocation of Value of Shares Exchanged All identifiable intangible assets were assigned a portion of the value of the shares exchanged in the merger on the basis of their calculated allocations in accordance with the provisions of Accounting Principles Board (APB) Opinions No. 16, "Business Combinations" and No. 17, "Intangible Assets". Intangible assets identified were developed technology, in-process research and development, an assembled workforce and patents. The excess of the value of the shares exchanged over the fair value of identifiable intangible net assets was allocated to goodwill. The in-process research and development was evaluated in the context of Interpretation 4 and Paragraph 11 of Financial Accounting Standards Board ("SFAS") Statement No. 2, which requires that cost to purchase research and development be charged to expense as incurred. The amounts allocated to developed technology and in-process research and development were determined using the income method. The allocation to patents was determined using the relief from royalty method. The replacement cost method was used to determine the allocation to assembled workforce. Management is primarily responsible for estimating the fair value of the assets and liabilities acquired, and has conducted due diligence in determining the fair value, including obtaining an outside appraisal. Management has made estimates and assumptions that affect the reported amounts of assets, liabilities and expenses resulting from such an acquisition. Actual results could differ from those amounts. F-10 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Value of Shares Exchanged and Related Allocation The following summarizes the overall allocation of the value of the shares exchanged: Value of shares exchanged: Value of 100% interest in Epyx on April 4, 2000 (45% interest in the combined enterprise)............................................... $72,000 Acquisition costs incurred by De Nora............................... 100 ------- Total............................................................. $72,100 ======= Allocation of value of shares exchanged: Tangible net assets acquired........................................ $ 500 Intangible assets acquired--developed technology, assembled workforce and patents.............................................. 15,600 Deferred income tax liabilities..................................... (5,225) In-process research and development................................. 20,300 Goodwill............................................................ 40,925 ------- Total............................................................. $72,100 =======
Developed and In-Process Technology While Epyx intends to market its processors to two different segments: (1) the stationary power market--where the processor remains in a fixed location; and (2) the transportation market--where the processor is installed in a vehicle, the processors for each market are not meaningfully different from one another in terms of the underlying functionality, and each processor substantially depends on the same core technology. As such, the in-process research and development has been managed as a single integrated project. Epyx's historical research and development costs have been measured relative to the development of the multi-fuel cell processor and have not been bifurcated between the two markets. Revenue, expense, cash flow and technology assumptions were prepared by management through 2015. Total revenues include research and development/prototype revenue, stationary power generation revenue and transportation revenue. The total revenues were analyzed for each of the three primary categories of products: developed/existing technology, in-process technology, and future technology. For each category, revenue was projected based on the expected development of technology for each product. Revenue assumptions reflect the probable contract revenues from various governmental and commercial funding sources, as well as projected unit sales. Unit sales, pricing and gross margins were estimated based on industry data, market research and discussions with potential end customers. Existing technology revenue relates to the sales of prototype products that incorporate the existing technology. Revenue in 2000 was entirely attributed to developed technology. The revenue stream from developed technology was assumed to cease in 2003, at which time our revenue would be generated by the product in process of research and development at the date of valuation. The indicated lifecycles of the developed technologies were based on industry and market data and management's estimate when replacement products will reach commercialization. Management projected no product sales of its processor to the stationary power generation and transportation markets until commercialization is reached in 2001 and 2003, respectively. The revenues generated by stationary power generation and transportation applications were considered to be in-process research and development. A majority of this product in-process included embedded, currently existing core technology. F-11 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Cost of revenues, depreciation and general and administrative expenses were estimated based on a review of industry and market data and management's projections of personnel and related operating costs. Research and development expenses were divided into: (1) cost to complete projects related to current technology, (2) costs for developed products that have already been introduced into the market, and (3) costs to complete future technologies. Total research and development was allocated between the costs to complete and maintenance based on management's estimate of the portion of the employee base expected to be allocated to each activity. Maintenance on developed products represented 15% of the total research and development costs in 2000, declining to 1% in 2003 as sales from developed products cease. The research and development that was in-process at the valuation date have been assumed to be completed by the end of 2003, when the transportation application reaches commercialization. The remaining research and development costs were allocated between maintenance and costs to complete future technologies. A royalty expense was charged to in-process product revenues to reflect the benefit attributed from the core technology. This royalty stream was included in the developed technology cash flow. The income tax rate was based on an estimated federal and state corporate tax rate of 40%. The resulting cash flow figures for the developed technology were discounted to the present by applying a discount rate of 32%, consistent with venture capital rates of return for start-up companies in the research and development stages. Based on this analysis, the developed technology was valued at $9,100, which is being amortized on a straight-line basis over an estimated useful life of 6 years. An additional calculation was performed to reflect the cash flows attributable to the in-process technology on a percentage completion basis. Management analyzed the percentage completion of the in-process technology at the valuation date on a chronological timeframe, completed milestones and costs incurred to date as compared to the chronological timeframe, milestones and remaining costs to be incurred to reach commercialization, management estimated the completion percentage to be approximately 70%. The resulting cash flow figures for the in-process technology were discounted to the present by applying an appropriate discount rate of 35% which is slightly higher than the discount rate applied to the developed technology. The higher discount rate represents a risk premium over the developed technology and the business as a whole due to the uncertainty of the technology advances achieved as of the date of value. The 35% is consistent with venture capital rates of return for start-up companies in the research and development stages. Based on the analysis, the in-process research and development was valued at $20,300, which was expensed upon consummation of the merger, and reflected in the Company's statement of operations for the nine months ended September 30, 2000. The Company faces certain material risks to the timely completion of its development activities and meeting its planned commercialization dates. Major risks include the ability to integrate Epyx's operations with those of the former De Nora Fuel Cells S.p.A, the ability to purchase key components from suppliers, the ability to receive future government contracts to fund a portion of development costs, restrictions which the government contracts can place on the Company's operations and technology (such as march-in rights and requirements to source components domestically), the ability to hire, train and retain qualified personnel and the ability to raise the necessary additional capital to fund the Company's development activities. F-12 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Patents The relief from royalty method is based on the premise that in lieu of ownership, a firm would be willing to pay a royalty for the use of patent technology. Actual royalty rates paid for the use of various patents in the industry were used to determine industry-specific royalty rates. As a result of the above research on patents in the industry, considering the specific nature of the subject patents, a 2.0% pretax royalty rate was assumed. Based on the analysis, the fair market value of Epyx's patents and patent applications as of April 4, 2000 was determined to be $5,400, which will be amortized on a straight-line basis over an estimated useful life of 5 years. Assembled Workforce An assembled workforce is the presence of a skilled employee base that is knowledgeable about company procedures and possesses expertise in certain fields that are important to continued profitability and growth of the company. Benefits are attributable to an assembled workforce since it can be very costly to locate, hire, and train a workforce, as evidenced by expenditures related to retaining employees and reducing turnover. The more specialized the workforce, the greater the cost of its assemblage, and the larger its benefit to the enterprise. The assembled workforce analysis estimates the allocation related to Epyx's assembled workforce by determining, on a replacement cost basis, the cost to find and interview candidates and to train new employees in their positions. Based on the analysis, the assembled workforce was valued at $1,100 which is being amortized on a straight-line basis over an estimated useful life of 4 years. Deferred Income Taxes Deferred income taxes primarily represents taxes related to the identified intangible assets (excluding goodwill) at a rate of 40%. The net deferred tax liability recorded at the date of acquisition was $5,225. Goodwill All identifiable assets acquired, including identifiable intangible assets, were assigned a portion of the cost of the acquired enterprise. The remaining value of the shares exchanged in excess of the identified assets was allocated to goodwill which is being amortized by a systematic charge to income over the periods that are expected to benefit from the asset. Accordingly, value allocated to goodwill as of April 4, 2000 was $40,925, which is being amortized on a straight-line basis over an estimated useful life of 7 years. F-13 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Pro Forma Disclosure (Unaudited) The following table presents the unaudited pro forma results of operations for the year ended December 31, 1999 and the nine months ended September 30, 2000 assuming the merger had occurred as of January 1, 1999. These pro forma results have been prepared for informational purposes only and are not necessarily indicative either of what would have occurred had the merger occurred at those dates or the results that may occur in the future.
(Unaudited) December 31, September 30, 1999 2000 ------------ ------------- Revenue........................................... $ 1,251 $ 1,830 Loss from operations.............................. (14,842) (17,781) Net loss.......................................... (13,702) (14,112) Basis and diluted net loss per common share....... $ (.98) $ (.99) Shares used in computing basic and diluted net loss per common share............................ 14,000,000 14,288,172
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation As described in Note 2, the Company completed a merger on April 4, 2000 that has been accounted for as a reverse acquisition. Accordingly, the Company's consolidated financial statements for periods prior to April 4, 2000 represent those of De Nora, which is considered to be the acquiror for accounting purposes. The consolidated financial statements for periods subsequent to April 4, 2000 include the accounts of the Company and its wholly owned subsidiary after elimination of all significant intercompany balances. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenues on products where title passes to the customer and that are sold without the right to return and without customer acceptance are recognized when the product has been shipped and the Company has met its obligations under the sales contract. Revenues on products requiring the Company to also perform installation are recognized when the installation is complete. Provisions for warranty are estimated and accrued at the time of sale. Estimates of the warranty reserve are reviewed and revised periodically and accruals for such provisions are recorded in the accounting period in which the revisions are made. The Company has recorded a warranty reserve of approximately $100 as of September 30, 2000. There were no such accruals in any of the other periods presented. Revenues on long-term contracts, primarily prototype fuel processors used for research and development purposes where title does not pass to the customer, are recognized on the percentage-of-completion method based on the costs incurred to date as compared to the estimated total costs for each F-14 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) contract. The Company has entered into long-term contracts, primarily to develop prototype fuel processors to be used for research and development. Management has estimated the total costs to complete these contracts and compared these costs to the contractual revenue. On contracts for which a loss is expected, a liability for the entire loss expected on the contract has been accrued. The Company has recorded an accrual for an estimated losses on uncompleted contracts of $657 as of September 30, 2000. There were no such accruals in any of the other periods presented. Estimates of total cost to complete are reviewed and revised periodically and accruals for estimated losses for such revisions are recorded in the accounting period in which the revisions are made. Revenues from consulting contracts are recognized as services are performed. Lease revenues are recognized ratably over the lease period. Under certain arrangements in which a third-party funds a portion of the research and development costs on a specific project, the direct materials and labor costs of that project are recorded as a cost of revenue, while overhead and general and administrative expenses allowable for inclusion in the cost reimbursement calculation are recorded as selling, general and administrative expenses. Research and Development Research and development expenses consist principally of expenditures for research conducted by the Company and include the net costs incurred under contracts that qualify as best efforts arrangements. Costs for contracts that qualify as best-efforts arrangements are recognized as research and development expenses and include the net costs incurred under the contracts. Funding related to contracts which qualify as best-efforts arrangements are recorded as an offset to the Company's research and development expenses and the Company is generally required to absorb 12% to 70% of the total costs incurred on best-efforts arrangements. Development costs generally include an allocable share of allowable indirect costs such as overhead and general and administrative expense. Contracts are deemed to be best-efforts arrangements when all of the following conditions are met: (a) the sole or principal customer is the U.S. and Italian governments or the European Union; (b) the activities performed qualify as research and development under SFAS No. 2, "Accounting for Research and Development Costs"; (c) the Company retains a right to the data and results of the research and development; (d) the total costs at the inception of the contract are expected to exceed the amount of the grant; and (e) the Company is obligated to perform only on a best efforts basis to achieve the agreed-upon objectives. The total costs incurred under these arrangements and the total amount of funding netted against research and development during the years ended December 31, 1997, 1998 and 1999, the nine months ended September 30, 1999 and 2000, and cumulative from inception to September 30, 2000 were as follows:
Year Ended Nine Months Cumulative From December 31, Ended September 30, Inception To -------------------- ------------------- September 30, 1997 1998 1999 1999 2000 2000 ------ ------ ------ --------- --------- --------------- Research and development costs incurred......... $1,751 $3,409 $1,757 $ 1,021 $ 5,630 $16,351 Government funding offset against costs... 632 1,421 753 648 2,003 6,673 ------ ------ ------ --------- --------- ------- Research and development expense, net........... $1,119 $1,988 $1,004 $ 373 $ 3,627 $ 9,678 ====== ====== ====== ========= ========= =======
F-15 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Contract costs, including indirect expenses, on U.S. government contracts are subject to audit and adjustment by the Defense Contract Audit Agency (the "DCAA"). Contract revenues for the period from April 4, 2000 to September 30, 2000 have been recorded in amounts which are expected to be realized upon final settlement. Contract costs, including indirect expenses, on European Union and Italian government contracts are audited at the time of reimbursement which is approximately eight (8) months following submission for payment. In management's opinion, the results of such audits will not have a material effect on the Company's financial position, results of operations or cash flows. Accounts Receivable--Stockholders Accounts receivable--stockholders consists primarily of amounts that AD Little owes the Company in respect of various research and development services the Company has provided under three U.S. government contracts under which we currently serve as subcontractor to AD Little and receive government funding. As of September 30, 2000, AD Little owed the Company $1,095 in respect of these services. Unbilled Receivable--Stockholders Unbilled receivable--stockholders represents accounts due from AD Little and Norfin related to services performed in which the Company is the sub- contractor that have not yet been billed by the stockholders which are expected to be billed and collected within one year. Unbilled Receivable--Trade Unbilled receivable--trade represents revenues earned on contracts that have not yet been billed which are expected to be billed and collected within one year. Due from Stockholder Due from stockholder is composed of commitments made by AD Little in the investment and exchange agreement and over-reimbursement of expenses paid on behalf of the Company by AD Little. In the investment and exchange agreement, AD Little represented and warranted that Epyx had a net worth of $500 immediately prior to the merger. As a result of expected losses on long-term contracts, Epyx's net worth immediately prior to the merger was $(286). Accordingly, the Company has recorded as an asset an amount due from stockholder of $786. As of September 30, 2000, AD Little owed the Company $518 in respect of the over reimbursement of expenses paid on our behalf by AD Little. Cash and Cash Equivalents The Company considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. Inventories Inventories consist of unbilled work-in-progress, including materials, labor, and overhead, which are valued at the lower of cost or market using the first-in, first-out method. F-16 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Property and Equipment, Net Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is provided primarily using the straight-line method over the estimated useful lives of the related assets. The Company periodically evaluates the recoverability of its long-lived assets based on the expected undiscounted cash flows and recognizes impairments, if any, based on the discounted cash flows. Intellectual Property Intellectual property including patents and know-how is carried at no value, except for the patents valued in connection with the merger (Note 2). Intangible Assets Intangible assets are being amortized on a straight-line basis over the related useful life of the asset (Notes 2 and 6). Income Taxes The operating results of De Nora have been included in the income tax returns of Norfin through October 1, 1999, at which time, De Nora was established as a new wholly owned subsidiary and began to file its own tax returns. The Company was not reimbursed for the benefits realized by Norfin from utilization of the Company's tax losses. Therefore, no asset has been recognized for such benefits in the Company's financial statements. For reporting purposes, the Company computed its income tax provision on a separate return basis using the asset and liability method prescribed by SFAS No. 109, Accounting for Income Taxes. For periods subsequent to October 1, 1999, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce the deferred tax assets to those amounts expected to be realized. Other Long-Term Liabilities Other long-term liabilities represent a severance indemnity accrual for the Company's personnel employed in Italy. The liability is based upon the employee's salary, years of service and is indexed annually for inflation. The liability is payable to the individual upon termination of their employment regardless of the reason for the termination. Stock-Based Compensation The Company accounts for stock-based employee compensation arrangements using the intrinsic value method in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees", and complies with the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". F-17 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Equity instruments issued to non-employees are accounted for in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued To Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, which ever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty's performance is complete or the date on which it is probable that performance will occur. Net Loss Per Common Share Basic and diluted net loss per share is computed using the weighted- average number of shares of common stock outstanding. As a result of the reverse acquisition the weighted-average number of shares outstanding, for the purpose of presenting net loss per common share on a comparative basis, has been retroactively restated to the earliest period presented based on the exchange ratio in the reverse acquisition. The Company had no securities or contracts outstanding which were convertible into shares of common stock during 1997, 1998, 1999 or the nine months ended September 30, 1999 and 2000. The following table illustrates the calculation of net loss per common share:
Nine Months Ended Year Ended December 31, September 30, ---------------------------------- ----------------------- 1997 1998 1999 1999 2000 ---------- ---------- ---------- ---------- ----------- Net loss................ $ (1,340) $ (2,285) $ (1,290) $ (1,090) $ (29,449) Weighted average number of common shares....... 7,000,000 7,000,000 7,000,000 7,000,000 11,843,566 Net loss per common share--basic and diluted................ $ (.19) $ (.33) $ (.18) $ (.16) $ (2.49)
Foreign Currency Translation The Company translates financial statements denominated in foreign currency in accordance with SFAS No. 52, "Foreign Currency Translation". The reporting currency for all periods presented is the U.S. dollar. Balance sheet accounts are translated at the end of period exchange rate and statement of operations accounts at the average exchange rate for the period. Because the local currency is the functional currency, translation gains and losses are recorded in accumulated other comprehensive income (loss) and transaction gains and losses are reflected in other (income) expense in determining net loss. Unaudited Interim Financial Information The consolidated statements of operations and cash flows for the nine months ended September 30, 1999 and cumulative from March 30, 1989 (inception) to September 30, 2000 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and are unaudited, but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation. The results for the interim periods are not necessarily indicative of the results to be expected for any other interim periods or the full year. F-18 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of accounts receivable. The Company's receivables are derived primarily through its stockholders, from contracts with the U.S. and Italian governments and the European Union. Amounts included in accounts receivable and unbilled receivables under these contracts at December 31, 1998, December 31, 1999 and September 30, 2000 were $1,542, $948, and $2,244, respectively. The Company does not have any balances billed but not paid by customers under retainage provisions. Two customers accounted for 85% and 89% of the revenues for the years ended December 31, 1997 and 1998, respectively. Three customers accounted for 71% of revenues for the year ended December 31, 1999. Three customers accounted for 94% of revenues for the nine months ended September 30, 1999 and two customers accounted for 51% of revenues for the nine months ended September 30, 2000. Amounts included in accounts receivable and unbilled receivables from these customers at December 31, 1998, December 31, 1999 and September 30, 2000 were $14, $147 and $1,147, respectively. The Company performs ongoing credit evaluations of its customers' financial condition and does not require collateral from its customers. The Company maintains reserves for potential credit losses. Fair Value of Financial Instruments The Company's financial instruments, including cash and cash equivalents, receivables, accounts payable and notes payable are carried at cost which approximates their fair values because of the short term nature of these instruments. Impairment of Long-Lived Assets The Company deems an asset to be impaired if a forecast of undiscounted future operating cash flows directly related to the asset, including disposal value if any, is less than its carrying amount. When evaluating and measuring impairment, assets are grouped at the lowest level for which there are identifiable, largely independent cash flows. Factors leading to impairment were a combination of historical losses and anticipated future losses. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, an estimate of fair value is based on the best information available, including prices for similar assets or the results of valuation techniques. Recently Issued Accounting Pronouncements In June 1998 the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Company will adopt SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133 will have no material impact on the Company's consolidated financial position or results of operations. F-19 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." The Company will adopt SAB No. 101 in the fourth quarter of 2000. SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition. The Company believes that its revenue recognition practices for sales are substantially consistent with SAB No. 101. The Company's revenue practices for government and other contracts fall within and are in compliance with AICPA Audit and Accounting Guide, "Audits of Federal Government Contractors", and AICPA Statement of Position ("SOP") No. 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts." SAB No. 101 did not modify the principles of the Audit and Accounting Guide or SOP No. 81-1. The Company does not expect that SAB No. 101 will have a material effect on its consolidated financial position or results of operations. 4. INVENTORIES Inventories consist of the following:
December 31, September 30, 1999 2000 ------------ ------------- Finished products.................................... $ 46 $110 Work in progress..................................... - 77 Raw materials........................................ 582 538 ---- ---- Inventories........................................ $628 $725 ==== ====
There were no inventories as of December 31, 1998. 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following:
December 31, ------------- September 30, Description Useful Life 1998 1999 2000 - ----------- ------------ ------ ----- ------------- Laboratory equipment............... 4 to 5 years $ 347 $ 382 $ 717 Furniture and fixtures............. 5 to 8 years 31 48 318 Assets held for lease.............. 4 years 650 559 500 Computer equipment................. 2 years -- -- 66 Leasehold improvements............. 5 years -- -- 159 ------ ----- ------ Total........................... 1,028 989 1,760 Less accumulated depreciation...... (753) (749) (785) ------ ----- ------ Property and equipment, net..... $ 275 $ 240 $ 975 ====== ===== ======
F-20 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 6. INTANGIBLE ASSETS Intangible assets consist of the following:
December 31, Useful --------- September 30, Description Life 1998 1999 2000 - ----------- ------- ---- ---- ------------- Assembled workforce............................. 4 years $-- $-- $ 1,100 Developed technology............................ 6 years -- -- 9,100 Patents......................................... 5 years -- -- 5,400 Goodwill........................................ 7 years -- -- 40,925 ---- ---- ------- Total......................................... -- -- 56,525 Less accumulated amortization................... -- -- (4,359) ---- ---- ------- Intangible assets, net........................ $-- $-- $52,166 ==== ==== =======
7. FINANCING (INCLUDING RELATED PARTY FINANCING) On March 21, 2000, the Company entered into a financing agreement with an Italian bank to provide up to $905 (equivalent to 2 billion lira based on the September 30, 2000 exchange rate) under a line of credit. The line of credit bears interest at a variable rate (5% per annum at September 30, 2000), has no stated maturity date and is guaranteed by Norfin. In March 2000, the Company borrowed approximately $759 under the line of credit. The borrowings under the line of credit were repaid in June 2000 using a portion of the proceeds received as capital contributions from AD Little and Norfin. The full amount of the line of credit was available as of September 30, 2000. At December 31, 1999, the Company had promissory notes outstanding to Norfin totaling $545. The promissory notes, which carried interest at a rate equal to 90 day LIBOR plus .5% (3.9137% effective rate at December 31, 1999), were repaid in March 2000 using proceeds received from borrowings under the bank line of credit. No promissory notes were outstanding as of September 30, 2000. Interest expense of $2 and $7 was recorded in 1999 and 2000, respectively. 8. RELATED PARTY TRANSACTIONS The accompanying consolidated financial statements include allocations of general corporate overhead expenses related to the corporate headquarters and common support activities of Norfin, including information technology, financial, treasury, legal, insurance and other corporate functions as well as certain costs of operations including office rent and facility charges. These costs have been allocated to De Nora using methodologies primarily based on headcount and usage. Billings reflect actual costs plus a mark-up of approximately 10%. The total costs allocated to the Company were $465, $465 and $403 for the three years ended December 31, 1999. Although management believes the allocations are reasonable, the costs of these services to De Nora may not be indicative of the costs that would have been incurred if De Nora had been a stand-alone entity. In connection with the establishment of De Nora as a separate subsidiary of Norfin in October 1999, De Nora and Norfin entered into several agreements whereby Norfin would continue to perform certain services for De Nora. The services included assistance and cooperation in financial, accounting, organizational, commercial, intellectual property, research and development, import-export, tax and legal matters. The total costs incurred by the Company under these agreements were $138 and $553 during the year ended December 31, 1999 and the nine months ended September 30, 2000, respectively. F-21 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Company leases its offices, laboratory space and production facility in Italy from Finisola S.p.A. ("Finisola"), a subsidiary of Norfin S.p.A., which also owns De Nora New Energy Investments B.V., pursuant to leases entered into in July 2000. The leases expire on June 30, 2006, and each lease is automatically renewed for an additional six-year term unless either party notifies the other party that it wishes to terminate the relevant lease six months prior to its expiration. The total lease payments under the leases are 178 million Italian lira, or approximately $81, plus taxes, per year, based on the September 30, 2000 exchange rate. The minimum lease commitments are $81 in 2001, 2002, 2003, 2004 and 2005. Previously, the Company leased laboratory and office space in Italy from Finisola under leases entered into in October 1999 and January 2000 that provided for payments of 60 million Italian lira, or approximately $26 per year. These leases were terminated in connection with the new leases entered into in July 2000. The total costs incurred by the Company under the leases were $8 and $84 for the year ended December 31, 1999 and the nine months ended September 30, 2000, respectively. In May 2000, the Company entered into a services agreement with De Nora Elettrodi S.p.A., an affiliate of Norfin S.p.A., to provide to the Company personnel for packaging, transportation and mechanical tasks for an hourly fee of approximately $53, and daily fees of approximately $308, per business trip and assistance in import-export and other administrative matters for a fee of approximately $81 per task. The agreement terminates December 31, 2000 and is automatically renewed for successive one-year terms unless either party notifies the other party that it wishes to terminate the agreement at least 30 days prior to December 31 of each year. The total cost incurred by the Company under this agreement was $16 for the nine months ended September 30, 2000. On April 4, 2000, the date of the merger, the Company and AD Little entered into a license and services agreement, pursuant to which AD Little had granted to the Company a license to occupy and use office and laboratory space in AD Little's headquarters, and AD Little had agreed to provide to the Company certain general and administrative services. The license and service fee under the agreement is $2,460 per employee of the Company at the Cambridge facility per month. The total charges during the nine months ended September 30, 2000 under this agreement were $976. The license and services agreement terminates on December 31, 2000, subject to six-month renewals by mutual consent of the parties. In addition, from the date of the merger, certain services have been subcontracted to AD Little by the Company under the Company's contractual agreements and are reflected as costs of revenue and research and development expenses in the financial statements. The rate charged between the two companies for subcontract services equals 85% of the rate a third-party would be charged by AD Little for similar services. Management believes this subcontract rate is reasonable for the services performed. The costs of certain services, including costs relating to best-efforts research and development activities, subcontracted to AD Little by the Company under the Company's contractual agreements was $237 during the nine months ended September 30, 2000. Under the terms of the Investment Agreement, AD Little and Norfin each agreed to provide up to $11,000 in cash to fund the Company's operations through December 31, 2000. In April 2000, AD Little and Norfin each contributed to capital $3,000 under this commitment. On November 3, 2000, AD Little, Norfin and Hess entered into a $30,000 capital contribution agreement (Note 1). F-22 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) A summary of the transactions with Norfin and AD Little are as follows:
Year Ended Nine Months Nine Months December 31, Ended Ended Cumulative ---------------------- September 30, September 30, Since 1997 1998 1999 1999 2000 Inception ------ ------ ------- ------------- -------------- ---------- Due to stockholders at beginning of period.... $1,473 $2,257 $ 5,248 $5,248 $ -- $ -- Due from AD Little in connection with the merger................. -- -- -- -- 786 786 Net expenditures (including collections on accounts receivables) paid (received) by stockholder on behalf of the Company........ 874 2,526 1,881 788 423 6,206 Payment to stockholders for agreements........ -- -- -- -- (4,142) (4,142) Due to stockholders converted into capital contributions......... (848) -- (7,058) -- -- (7,906) Expenses allocated from stockholder including costs under certain related party agreements............ 465 465 403 302 1,629 4,324 Foreign exchange effect................ 293 -- (474) -- -- (572) ------ ------ ------- ------ ------- ------- Due to (from) stockholders at end of period................. $2,257 $5,248 $ -- $6,338 $(1,304) $(1,304) ====== ====== ======= ====== ======= ======= Average balance due..... $1,865 $3,753 $ 3,905 $6,017 $ 1,045 $ 2,067 ====== ====== ======= ====== ======= =======
On July 31, 2000, Hess purchased 943,824 shares of newly issued common stock from the Company for an aggregate price of $15,000. The proceeds from the sale will be used for research and development, marketing and general working capital purposes or such other purposes as the Company may determine from time to time in its discretion. On August 1, 2000, the Company entered into a consulting agreement with Fineurop Soditic S.p.A., an affiliate of Fineurop International Limited, to provide financial advisory services to the Company in connection with its initial public offering. The agreement included a retainer fee of $90 which will be offset against the planned success fee equal to 0.7% of the net proceeds received from the initial public offering. 9. INCOME TAXES The operating results of the Company were included in the income tax returns of Norfin through October 1, 1999, at which time, De Nora was established as a new wholly owned subsidiary and began to file its own tax returns. The methodology for allocating tax benefit with Norfin is set forth in Note 3. Significant components of the Company's deferred tax assets (liabilities) are as follows:
December 31, ------------- 1998 1999 ------ ------ Deferred income tax assets: Net operating loss carryforwards............................... $ -- $ 54 Deferred income tax liabilities: Intangibles.................................................... -- -- ------ ------ Deferred income tax assets (liabilities)......................... -- 54 Less: valuation allowance........................................ -- (54) ------ ------ Net deferred income taxes........................................ $ -- $ -- ====== ======
F-23 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Company has established a valuation allowance because of uncertainties regarding its ability to generate sufficient taxable income in the applicable tax jurisdiction during the carryforward period to fully utilize the net operating loss carryforwards. Reconciliations of the applicable statutory rate to the effective rate are as follows:
Year Ended December 31, ------------------ 1997 1998 1999 ---- ---- ---- Applicable Italian statutory rate......................... 37 % 37 % 37 % Permanent items and other................................. -- -- (1) Less: Provision for valuation allowance on deferred tax assets................................................... -- -- (36) Parent utilization of net operating losses................ (37) (37) -- --- --- --- Effective tax rate...................................... -- % -- % -- % === === ===
At December 31, 1999, the Company had a foreign tax net operating loss carryforward available for future periods from De Nora of $54 expiring indefinitely. The Company also has available research and development credits for federal and state tax purposes of approximately $311 and $101, respectively. The federal research and development credits expire as follows: $61 in 2018, $142 in 2019 and $108 in 2020. The state research and development credits expire as follows: $20 in 2013, $46 in 2014 and $35 in 2015. Under a tax indemnification agreement dated October 26, 2000, AD Little has agreed to indemnify the Company and its subsidiaries for any income tax liabilities that may be imposed on the Company arising solely from the Company or any of its subsidiaries having been a member of AD Little's consolidated, combined or unitary group. 10. RETIREMENT SAVINGS PLAN The Company has a non-contributory 401(k) Retirement Plan for eligible full-time and part-time employees. Employees eligible to participate in the Plan must be at least 21 years of age. Under the Plan, employees may generally contribute up to 15% of their compensation, however, not in excess of IRS limitations. The Company does not make matching contributions at this time. Employees are 100% vested in their own contributions plus earnings at all times. F-24 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 11. GEOGRAPHIC SALES INFORMATION The Company operates in a single segment. Information with respect to the Company's revenues (Note 1) for the years ended December 31, 1997, 1998 and 1999, the nine months ended September 30, 1999 and 2000 and other data for the nine months ended September 30, 2000 by geographic area are as follows (revenues are attributed to geographical areas based on the location of the customer):
United Europe and States Canada Middle East Asia Total -------- ------ ----------- ---- -------- Revenues Year ended December 31, 1997..... $ 34 $-- $ 316 $-- $ 350 Year ended December 31, 1998..... 22 -- 262 -- 284 Year ended December 31, 1999..... 121 -- 548 -- 669 Nine months ended September 30, 1999............................ 144 -- 388 -- 532 Nine Months Ended September 30, 2000 Revenues......................... 606 104 789 638 2,137 Less: intercompany sales......... (368) -- -- -- (368) -------- ---- ------- ---- -------- Total revenues................. $ 238 $104 $ 789 $638 $ 1,769 ======== ==== ======= ==== ======== Loss from operations............... $(31,624) -- $(1,207) -- $(32,831) Identifiable assets................ 66,510 -- 5,096 -- 71,606
12. SUBSEQUENT EVENTS Sublease with ADL Effective January 1, 2001, the Company entered into an agreement with AD Little for the sublease of space and use of facilities, equipment and services. The initial term of the agreement extends to December 31, 2005, and the agreement will automatically be renewed for two additional terms, the first expiring on January 1, 2008 and the second on January 1, 2010, unless the Company notifies AD Little that they wish to terminate the lease at least 18 months prior to the relevant termination date. Payments for leased space, which total $690,000 per year, are made on a monthly basis. In addition, the Company will pay to AD Little an annual service fee of $616,400, payable on a monthly basis, for the Company's share of real estate taxes and assessments, utility charges and maintenance costs. Charges for equipment and services will be allocated based on headcount and usage. Development and Supply Agreement In November 2000, the Company entered into an agreement with De Nora Elettrodi S.p.A., an affiliate of Norfin, whereby De Nora Elettrodi will grant the Company exclusive access to its development efforts with respect to catalyst-coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks and shift catalysts for use in fuel processors, and supply these products to the Company. De Nora Elettrodi will bear all research and development costs. Once the Company tests the prototype products and is satisfied that they meet the Company's specifications, the Company will have the option to purchase on an exclusive basis and to require that De Nora Elettrodi supply to the Company on an exclusive basis catalyst-coated gas diffusion electrodes, catalysts and gas diffusers for use in fuel cell stacks. If the Company is not satisfied with any prototype product or if the parties fail in good faith to reach agreement on a purchase commitment on any F-25 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) product, De Nora Elettrodi will be able to sell the product to any third party and the Company will waive any right to have the product sold exclusively to the Company. Pricing to the Company on products with respect to which the Company does not exercise its exclusivity option and on all other De Nora Elettrodi products other than shift catalysts will be at least as favorable as pricing to any other customer of De Nora Elettrodi and will in any event be 10% below catalogue prices. Restricted Stock Grants On October 10, 2000, the Company granted 245,000 fully-vested shares of the Company's common stock contributed to the Company by AD Little to certain long-term employees of the Company, including some of the executive officers of the Company, in recognition of their past service to the Company. The Company will record stock-based compensation of $4,655 in October 2000 relating to these restricted share grants based on an estimated fair market value of $19.00 per share representing the mid-point of the expected offering range for the Company's common stock in this initial public offering. The Company provided forgivable loans to these employees in an aggregate amount of approximately $1,800 to enable them to pay the income taxes related to the grants. The loans will carry interest at a rate of 8.5% per year and the principal of and interest on these loans will be forgiven from repayment by the employee over a period of two years if the employee remains an employee of the Company. The Company will record additional compensation expense as these loans are forgiven in an amount equal to the principal and accrued interest forgiven. In connection with these transactions, AD Little made an additional capital contribution of approximately $2,200 to the Company on November 3, 2000. In addition, the portion of the stock grants collateralizing the employee loans will be accounted for under variable plan accounting. Therefore, additional stock-based compensation will be recorded in the future on the collateralized grants until the loan is repaid or forgiven based on the difference between the value of the common stock at date of grant and the fair value of the common stock at each reporting date. Stock Option Grants Under 2000 Stock Incentive Plan On September 14, 2000, the Company's stockholders approved the 2000 Stock Incentive Plan, pursuant to which employees, directors and consultants of the Company are eligible to receive stock options, restricted stock and other stock-based awards, including stock appreciation rights and rights to dividends and dividend equivalents. The maximum number of shares of common stock that may be issued under this plan is 2,465,736. In November 2000, the Company granted options to purchase 17,276 shares of its common stock at an exercise price of $14.29 per share to non-employees under the 2000 Stock Incentive Plan. The Company will record stock-based compensation of $184 during the three months ended December 31, 2000. The fair value of the stock options at the date of grant was measured using the Black- Scholes option pricing model based on an estimated fair value of $19.00 per share representing the midpoint of the expected offering range for the Company's common stock in this initial public offering, a risk-free interest rate of 6.0%, an expected option life of 2 years, no dividends and a volatility of 84.4%. Additional stock-based compensation will be recorded over the four- year vesting period based on the difference between the fair value of the common stock at the date of grant and the fair value of the common stock at each reporting date. In November 2000, options to purchase 637,812 shares of the Company's common stock (309,498 shares at an exercise price of $14.29 per share and 328,314 shares at an exercise price of $17.86 per share) were granted to certain key employees under the 2000 Stock Incentive Plan. The Company will record deferred F-26 NUVERA FUEL CELLS, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) compensation of $1,834 relating to these option grants to employees based on an estimated fair market value of $19.00 per share representing the mid-point of the offering range for the Company's common stock in this initial public offering. The deferred compensation will be charged to income over the four- year vesting period. AD Little Sale to Hess In January 2001, Hess purchased 747,194 shares, or 5% of the Company's outstanding common stock, held by AD Little for $12,500 plus an additional amount per share equal to half the difference between the per share price paid by Hess and the offering price of shares in the Company's initial public offering, such additional amount not to exceed $2,500. None of these proceeds were received by the Company. Subsequent to the purchase by Hess in January 2001 of 747,194 shares of the Company's common stock from AD Little, the parties amended the capital contribution agreement to adjust the commitment percentages to 46.8% for Norfin, 37.2% for AD Little and 16.0% for Hess. Initial Public Offering On November 8, 2000, the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission in connection with its plan to complete an initial public offering of its common stock. Stock Split in Connection with Initial Public Offering The Company's Board of Directors is expected to declare a 14-for-1 stock split immediately prior to the effectiveness of the Company's proposed initial public offering. The par value of the common stock will remain at the pre-split reverse merger amount of $.01 per share. All references in the consolidated financial statements and notes thereto to share prices, per share amounts, stock option plans and common shares issued and/or outstanding have been adjusted retroactively for the 14-for-1 stock split. * * * * * F-27 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholder of EPYX Corporation Cambridge, Massachusetts We have audited the accompanying balance sheets of Epyx Corporation (a development stage company) (the "Company") as of December 31, 1999 and 1998, and the related statements of operations, stockholder's deficit, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. The Company is in the development stage as of December 31, 1999. As discussed in Note 1 to the financial statements, successful completion of the Company's development program and, ultimately, the attainment of profitable operations is dependent upon future events, including maintaining adequate financing to fulfill its development activities, and achieving a level of sales adequate to support the Company's cost structure. As discussed in Note 8 to the Financial Statements, on April 4, 2000, the Company merged with De Nora Fuel Cells, S.p.A, a wholly-owned subsidiary of De Nora New Energy Investments B.V., in a transaction accounted for as a reverse acquisition. /s/ Deloitte & Touche LLP Boston, Massachusetts November 3, 2000 F-28 EPYX CORPORATION (A Development Stage Company) BALANCE SHEETS (Dollars in thousands, except per share amounts)
December 31, ---------------- March 31, 1998 1999 2000 ------- ------- ----------- (Unaudited) ASSETS Current assets: Accounts receivable--stockholder (net of allowance for doubtful accounts of $10 in 1998, $23 in 1999 and $25 in 2000)............ $ 751 $ 972 $ 1,502 Unbilled receivables--stockholder (net of allowance for doubtful accounts of $10 in 1998, $23 in 1999 and $25 in 2000)............ 297 551 807 Prepaid and other current assets............... 129 5 -- ------- ------- ------- Total current assets......................... 1,177 1,528 2,309 Property and equipment, net.................... 558 350 441 ------- ------- ------- Total assets................................. $ 1,735 $ 1,878 $ 2,750 ======= ======= ======= LIABILITIES AND STOCKHOLDER'S DEFICIT Current liabilities: Accounts payable--trade........................ 62 130 12 Advance payments from customers................ 30 41 111 Accrued compensation and other expenses........ 144 230 224 Estimated losses on uncompleted projects....... 270 899 1,479 Due to stockholder............................. 3,786 6,741 9,137 ------- ------- ------- Total current liabilities.................... 4,292 8,041 10,963 Commitments and contingencies (Note 4)........... -- -- -- Stockholder's deficit: Common stock, par value $.01 per share, 500,000, 1,000,000 and 2,000,000 shares authorized in 1998, 1999 and 2000, respectively; 500,000 shares issued and outstanding................................... 5 5 5 Deficit accumulated during the development stage......................................... (2,562) (6,168) (8,218) ------- ------- ------- Total stockholder's deficit.................. (2,557) (6,163) (8,213) ------- ------- ------- Total liabilities and stockholder's deficit.. $ 1,735 $ 1,878 $ 2,750 ======= ======= =======
See Notes to Financial Statements. F-29 EPYX CORPORATION (A Development Stage Company) STATEMENTS OF OPERATIONS (Dollars in thousands)
Cumulative From July 5, Year Ended December Three Months 1991 31, Ended March 31, (Inception) ------------------------ ---------------- to March 31, 1997 1998 1999 1999 2000 2000 ------ ------- ------- ------- ------- ------------ (Unaudited) (Unaudited) Revenues Contracts............. $1,551 $ 891 $ 458 $ 123 $ 61 $ 4,128 Lease................. -- 146 124 68 -- 270 Government............ 265 -- -- -- -- 1,125 ------ ------- ------- ------- ------- ------- Total revenues...... 1,816 1,037 582 191 61 5,523 Cost of revenues Contracts............. 1,185 701 1,101 269 1,237 4,998 Lease................. -- 286 124 68 -- 410 Government............ 265 -- -- -- -- 1,510 ------ ------- ------- ------- ------- ------- Total cost of revenues........... 1,450 987 1,225 337 1,237 6,918 Research and development expense, net........... 182 1,375 2,430 720 574 4,868 General and administrative expense................ 351 684 533 149 300 1,955 ------ ------- ------- ------- ------- ------- Net loss.............. $ (167) $(2,009) $(3,606) $(1,015) $(2,050) $(8,218) ====== ======= ======= ======= ======= =======
See Notes to Financial Statements. F-30 EPYX CORPORATION (A Development Stage Company) STATEMENTS OF STOCKHOLDER'S DEFICIT (Dollars in thousands)
Common Stock, Deficit $.01 Par Accumulated Value During The Total ------------- Development Stockholder's Shares Amount Stage Deficit ------ ------ ----------- ------------- Balance, January 1, 1997............... -- $-- $ (386) $ (386) Conversion of payable to Arthur D. Little, Inc. into common stock.......................... 500 5 -- 5 Net loss............................... -- -- (167) (167) --- ---- ------- ------- Balance, December 31, 1997............. 500 5 (553) (548) Net loss............................... -- -- (2,009) (2,009) --- ---- ------- ------- Balance, December 31, 1998............. 500 5 (2,562) (2,557) Net loss............................... -- -- (3,606) (3,606) --- ---- ------- ------- Balance, December 31, 1999............. 500 5 (6,168) (6,163) Net loss (Unaudited)................... -- -- (2,050) (2,050) --- ---- ------- ------- Balance, March 31, 2000 (Unaudited).... 500 $ 5 $(8,218) $(8,213) === ==== ======= =======
See Notes to Financial Statements. F-31 EPYX CORPORATION (A Development Stage Company) STATEMENTS OF CASH FLOWS (Dollars in thousands)
Cumulative Three Months From July 5, Year Ended December 31, Ended March 31, 1991 -------------------------- ---------------- (Inception) to 1997 1998 1999 1999 2000 March 31, 2000 ------- -------- -------- ------- ------- -------------- (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net loss............... $ (167) $ (2,009) $ (3,606) $(1,015) $(2,050) $(8,218) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization.......... 21 118 105 74 103 348 (Decrease) increase in cash from: Accounts receivable-- stockholder.......... (354) (17) (221) (320) (530) (1,502) Unbilled receivables-- stockholder.......... (202) 135 (254) (12) (256) (807) Prepaid and other current assets....... -- (129) 124 129 5 -- Accounts payable-- trade................ 23 42 68 (29) (118) 12 Advance payments from customers............ 51 (21) 11 (19) 70 111 Accrued compensation and other expenses... 42 61 86 (72) (6) 224 Estimated losses on uncompleted projects............. (44) 204 629 201 580 1,479 ------ -------- -------- ------- ------- ------- Cash used by operating activities............ (630) (1,616) (3,058) (1,063) (2,202) (8,353) ------ -------- -------- ------- ------- ------- Cash Flows From Investing Activities: Expenditures for property and equipment.............. (187) (506) (31) (20) (194) (789) ------ -------- -------- ------- ------- ------- Cash Flows From Financing Activities: Due to stockholder..... 817 2,122 3,089 1,083 2,396 9,142 ------ -------- -------- ------- ------- ------- Increase in Cash and Equivalents............ -- -- -- -- -- -- Cash and Cash Equivalents, Beginning of Period.............. -- -- -- -- -- -- ------ -------- -------- ------- ------- ------- Cash and Cash Equivalents, End of Period................. $ -- $ -- $ -- $ -- $ -- $ -- ====== ======== ======== ======= ======= ======= Non cash financing activities: Conversion of payable to Arthur D. Little, Inc. into common stock................. $ 5 $ -- $ -- $ -- $ -- $ 5 Transfer of property and equipment to Arthur D. Little, Inc. .......... -- -- 134 -- -- 134
See Notes to Financial Statements. F-32 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Information For The Three Months Ended March 31, 1999 and 2000, and Cumulative For The Period From July 5, 1991 (Inception) to March 31, 2000 is Unaudited) (Dollars in thousands, except per share amounts) 1. OVERVIEW AND BASIS OF PRESENTATION Epyx Corporation (a development stage company) (the "Company") designs, develops, markets and manufactures fuel processors that provide the hydrogen reformate to power proton-exchange membrane ("PEM") fuel cell systems. It is engaged in a single operating segment of the fuel cell industry. The Company's operations began in 1991 when the U.S. Department of Energy selected Arthur D. Little, Inc. ("AD Little") to conduct a study of proton- exchange membrane technology. This study and subsequent studies indicated that proton-exchange fuel cells did not have a ready-made source of hydrogen reformate, and accordingly, AD Little began development of fuel processors to reform a variety of hydrocarbon fuels for use in fuel cell stacks. All fuel cell development was conducted as an integral part of AD Little's overall operations until December 1997 when Epyx was incorporated as a wholly owned subsidiary of AD Little. The Company is in the development stage. The successful completion of the Company's development program and, ultimately, the attainment of profitable operations is dependent upon future events, including maintaining adequate financing to fulfill its development and marketing activities and achieving a level of sales adequate to support the Company's cost structure. The financial statements have been prepared on a carve-out basis for the purpose of presenting the financial position, results of operations and cash flows of the Company. Included within the financial statements is revenue which has been reflected by the Company for certain services subcontracted to the Company by AD Little under AD Little's contractual agreements for non-Company engagements. In addition, certain services have been subcontracted to AD Little by the Company under the Company's contractual agreements and are reflected as costs of revenue and research and development expenses in the financial statements. The rate charged between the two companies for subcontract services equals 85% of the rate a third-party would be charged for similar services. Management believes the subcontract rate is reasonable for the services performed (Note 4). The financial statements also include allocations of general corporate overhead expenses related to the corporate headquarters and common support activities of AD Little, including information technology, financial, treasury, legal, insurance and other corporate functions as well as certain costs of operations including office rent and facility charges. These costs have been allocated to the Company using methodologies primarily based on headcount and usage. Although management believes the allocations are reasonable, the costs of these services to the Company may not be indicative of the costs that would have been incurred if the Company had been a stand-alone entity. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported F-33 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenues on long-term contracts are recognized using the percentage-of- completion method based on the costs incurred to date as compared to the estimated total costs for each contract. Lease revenues are recognized ratably over the lease period. Revenues from consulting contracts are recognized as services are performed. Losses on long-term contracts are charged to operations when the total estimated cost to complete a contract exceeds the contract value. Revenue recognized on contracts in excess of related billings is reflected as unbilled receivables. Cost reimbursable contracts are billed one month in arrears, coincident with the preparation of the required billing detail. Estimated Losses on Uncompleted Projects The Company has entered into long-term contracts, primarily to develop prototype fuel processors to be used for research and development. Management has estimated the total costs to complete these contracts and compared these costs to the contractual revenue. On contracts for which a loss is expected, a liability for the entire loss expected on the contract has been accrued. The Company has recorded an accrual for an estimated losses on uncompleted contracts of $1,419, $813, and $14 as of March 31, 2000, December 31, 1999, and December 31, 1998, respectively. Contract accounting requires estimates of future costs throughout the performance period of the contract. These estimates are subject to change. Research and Development Research and development expenses consist primarily of the net costs incurred under contracts that qualify as best-efforts arrangements and expenditures for research conducted by the Company and include expenditures for research conducted by the company. All research and development costs are expensed as incurred. Revenue related to contracts which qualify as best-efforts arrangements is recorded as an offset to the Company's research and development expenses and the Company is generally required to absorb 12% to 50% of the total costs incurred on best-efforts arrangements. Development costs generally include an allocable share of allowable indirect costs such as overhead and general and administrative expenses. F-34 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) Contracts are deemed to be best-efforts arrangements when all of the following elements are met: (a) the sole or principal customer is the U.S. government; (b) the activities performed qualify as research and development under SFAS No. 2, "Accounting for Research and Development Costs"; (c) the Company retains a right to the data and results of the research and development; (d) the total costs at the inception of the contract are expected to exceed the amount of the grant; and (e) the Company is obligated to perform only on a best-efforts basis to achieve the agreed-upon objectives. The total costs incurred under these arrangements and the total revenue netted against research and development during the years ended December 31, 1997, 1998 and 1999, for the three months ended March 31, 1999 and 2000, and cumulative from July 5, 1991 (inception) to March 31, 2000 was as follows:
Three Cumulative Months Ended From July 5, Year Ended December 31, March 31, 1991 ------------------------ ------------- (Inception) To 1997 1998 1999 1999 2000 March 31, 2000 --------------- -------- ------ ------ -------------- Research and development costs incurred......... $ 769 $ 4,767 $ 7,086 $1,573 $1,703 $16,840 Government funding offset against costs... 587 3,392 4,656 853 1,129 11,972 ------ -------- -------- ------ ------ ------- Research and development expense, net........... $ 182 $ 1,375 $ 2,430 $ 720 $ 574 $ 4,868 ====== ======== ======== ====== ====== =======
Contract costs, including indirect expenses, are subject to audit and adjustment by the Defense Contract Audit Agency (the "DCAA"). Contract costs through 1996 have been finalized with the DCAA, and contract revenues for the current and prior years have been recorded in amounts which are expected to be realized upon final settlement. In management's opinion, the results of such audits will not have a material effect on the Company's financial position, results of operations or cash flows. Under non-government arrangements in which a third party funds a portion of the research and development costs on a specific project, the direct materials and labor costs of that project are recorded as a cost of revenue, and the overhead and general and administrative expenses allowable for inclusion in the cost reimbursement calculation are recorded as general and administrative expenses. Accounts and Unbilled Receivable The Company's contracts have historically been executed between AD Little and the customer. Accounts receivable represent outstanding amounts owed to AD Little, in accordance with the contracts, as the Company's efforts are being performed on a subcontract basis with AD Little. Unbilled receivables represent revenues earned, through subcontract agreements with AD Little, on contracts that have not yet been billed. Accordingly, accounts and unbilled receivables are reflected as receivable from stockholder. Fair Value of Financial Instruments The Company's financial instruments, including, receivables and accounts payable are carried at cost which approximates their fair values because of the short term nature of these instruments. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of accounts receivable. F-35 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) The Company's receivables, through AD Little, are derived primarily from contracts with various U.S. government agencies. Total accounts receivable and unbilled receivables on U.S. government contracts at December 31, 1998 and 1999 and March 31, 2000 were $980, $1,449 and $2,243, respectively. The Company does not have any balances billed but not paid by customers under retainage provisions. AD Little, on the Company's behalf, performs ongoing credit evaluations of its customers' financial condition and requires no collateral from its customers. The Company maintains reserves for potential credit losses. Property and Equipment, Net Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is provided primarily using the straight-line method over the estimated useful lives of the related assets. Impairment of Long-Lived Assets The Company deems an asset to be impaired if a forecast of undiscounted future operating cash flows directly related to the asset, including disposal value if any, is less than its carrying amount. When evaluating and measuring impairment, assets are grouped at the lowest level for which there are identifiable, largely independent cash flows. Factors leading to impairment were a combination of historical losses and anticipated future losses. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, an estimate of fair value is based on the best information available, including prices for similar assets or the results of valuation techniques. Income Taxes The operating results of the Company for all periods has been or will be included in the consolidated income tax returns of AD Little. The Company is not reimbursed for the benefits realized by AD Little from utilization of the Company's tax losses. Therefore, no asset is recognized for such benefits in the Company's financial statements. For reporting purposes, the Company computes its income tax provision on a separate return basis using the asset and liability method prescribed by SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce the deferred tax assets to those amounts expected to be realized. Comprehensive Loss Comprehensive loss for all periods presented equals net loss. Unaudited Interim Financial Information The accompanying consolidated balance sheet as of March 31, 2000, the statements of operations and cash flows for the three months ended March 31, 1999 and 2000, and the statement of stockholders' deficit for the three months ended March 31, 2000 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation. The results for the interim periods are not necessarily indicative of the results to be expected for the full year. F-36 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) Recently Issued Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS No.133 was amended by SFAS No. 137, which requires adoption of the provisions of SFAS No. 133 for periods beginning January 1, 2001. The Company does not expect that SFAS No. 133, as amended, will have a material effect on its consolidated financial position or results of operations. The Company will adopt this accounting standard on January 1, 2001, as required. In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition. The Company believes that its revenue recognition practices for contracts are substantially consistent with SAB No. 101. The Company's revenue practices for government contracts fall within and are in compliance with AICPA Audit and Accounting Guide, "Audits of Federal Government Contractors", and AICPA Statement of Position ("SOP") No. 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts." SAB No. 101 did not modify the principles of the Audit and Accounting Guide or SOP No. 81-1. The Company does not expect that SAB No. 101 will have a material effect on its consolidated financial position or results of operations. 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following:
December 31, Estimated ------------ March 31, Description Useful Life 1998 1999 2000 - ----------- ----------- ----- ----- --------- Furniture and fixtures...................... 5 years $ 173 $ 174 $ 167 Laboratory and related equipment............ 5 years 245 255 415 Leasehold improvements...................... 10 years 138 4 4 Computer equipment.......................... 2 years 142 162 203 ----- ----- ----- Total property and equipment.............. 698 595 789 Less accumulated depreciation............... (140) (245) (348) ----- ----- ----- Property and equipment, net............... $ 558 $ 350 $ 441 ===== ===== =====
F-37 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) 4. RELATED PARTY TRANSACTIONS Since inception, the Company's operations have been funded through advances from AD Little. A summary of the transactions with AD Little is as follows:
Three Months Ended Cumulative Year Ended December 31, March 31, From July 5, 1991 ------------------------ ------------- (Inception) to 1997 1998 1999 1999 2000 March 31, 2000 ------- ------- ------- ------ ------ ----------------- Due to stockholder-- beginning balance...... $ 847 $ 1,664 $ 3,786 $3,786 $6,741 $ -- Expenses allocated from AD Little.............. 169 592 906 137 306 2,147 Net expenditures (including collections on accounts receivables) paid (received) by AD Little on behalf of the Company................ 653 1,530 2,183 946 2,090 7,129 Transfer of property and equipment to AD Little................. -- -- (134) -- -- (134) Conversion of payable to AD Little into common stock.................. (5) -- -- -- -- (5) ------- ------- ------- ------ ------ ------ Due to stockholder-- ending balance......... $ 1,664 $ 3,786 $ 6,741 $4,869 $9,137 $9,137 ======= ======= ======= ====== ====== ====== Average balance due..... $ 1,256 $ 2,725 $ 5,300 $4,328 $7,939 $3,455 ======= ======= ======= ====== ====== ======
The Company's costs and expenses include allocations from AD Little for certain general and administrative services including information technology, financial, treasury, legal, insurance and other corporate functions as well as certain costs of operations including office rent and facility charges. These allocations have been estimated on bases that AD Little and the Company consider to be a reasonable reflection of the utilization of services provided to the Company. The allocation of expenses from AD Little was calculated using a ratio of total compensation costs for the Company's employees to total compensation costs for AD Little employees applied against the pool of expenses incurred by AD Little. The allocations of costs and expenses are not necessarily indicative of the costs and expenses that would have been or will be incurred by the Company on a stand-alone basis. Included in the financial statements is revenue which has been reflected for certain services subcontracted to the Company by AD Little under AD Little's contractual agreements for third party engagements. Revenue applicable to these contracts was $234, $233, $250, $114 and $0 in 1997, 1998, 1999 and the three months ended March 31, 1999 and 2000, respectively. The costs of certain services, including costs relating to best efforts research and development activities, subcontracted to AD Little by the Company under the Company's contractual agreements were $1,071, $901, $691, $197, and $223 in 1997, 1998, 1999 and the three months ended March 31, 1999 and 2000, respectively. F-38 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) 5. INCOME TAXES Significant components of the Company's deferred tax assets are as follows:
Year Ended December 31, Three ------------ Months Ended 1998 1999 March 31, 2000 ----- ----- -------------- Deferred income tax assets: Research and development credit carryforwards.... $ 80 $ 269 $ 327 Depreciation on property and equipment........... 35 40 70 Loss on uncompleted projects..................... 5 308 538 Other............................................ 10 31 23 ----- ----- ----- Total deferred income tax assets:.............. 130 648 958 Less: Valuation allowance for deferred tax assets:......................................... (130) (648) (958) ----- ----- ----- Net deferred income tax assets................. $ -- $ -- $ -- ===== ===== =====
The Company has established a full valuation allowance because of uncertainties regarding its ability to generate sufficient taxable income to utilize these deferred tax assets. A reconciliation of the expected tax rate at the U.S. statutory rate to the effective rate for each of the years ended December 31, 1997, 1998 and 1999 is as follows: Federal statutory rate............................................ (34)% State tax, net of federal impact.................................. (6) Provision for valuation allowance on deferred tax assets.......... 40 --- Effective tax rate.............................................. -- % ===
The tax rate for the three months ended March 31, 2000 is based on the expected tax rate for the full year. At December 31, 1999, the company has available research and development credits. The Company has research and development credits for federal and state tax purposes of approximately $61 and $19, respectively, in 1998, which expire in 2018 and 2013, respectively. The Company also has research and development credits for federal and state tax purposes of approximately $142 and $47, respectively, in 1999, which expire in 2019 and 2014, respectively. 6. RETIREMENT SAVINGS PLAN The Company has a non-contributory 401(k) Retirement Plan for eligible full-time and part-time employees. Employees eligible to participate in the Plan must be at least 21 years of age. Under the Plan, employees may generally contribute up to 15% of their compensation, however, not in excess of IRS limitations. The Company does not make matching contributions at this time. Employees are 100% vested in their own contributions plus earnings at all times. F-39 EPYX CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS--(Continued) 7. GEOGRAPHIC SALES INFORMATION The Company operates in a single segment. Information with respect to the Company's revenues through subcontracting arrangements with AD Little, by geographical area are as follows (revenues are attributed to geographical areas based on the location of the customer):
Three Months Year Ended Ended March December 31, 31, ------------------ ------------- 1997 1998 1999 1999 2000 ------ ------ ---- ------ ------ Revenues United States................................ $1,667 $ 917 $392 $ 191 $ 6 Asia......................................... -- 120 190 -- 49 Europe and the Middle East................... 149 -- -- -- 6 ------ ------ ---- ------ ----- Total...................................... $1,816 $1,037 $582 $ 191 $ 61 ====== ====== ==== ====== =====
8. SUBSEQUENT EVENT Merger with De Nora Fuel Cells S.p.A. On April 4, 2000, the Company completed a merger with De Nora Fuel Cells S.p.A. ("De Nora"), a wholly owned subsidiary of Norfin S.p.A and subsidiaries ("Norfin") pursuant to an Investment and Exchange Agreement dated April 4, 2000 (the "Investment Agreement"). Under the terms of the Investment Agreement, Norfin received 500,000 newly issued shares of Company common stock, or 50% of the Company's then outstanding shares, in exchange for 100% ownership interest of De Nora. Simultaneously with the merger, Amerada Hess Corporation ("Hess") purchased 50,000 shares of the Company's common stock from AD Little. Upon consummation of the merger, Epyx Corporation, which is the legal acquirer and surviving legal entity, changed its name to Nuvera Fuel Cells, Inc. Immediately after the merger, Norfin owned 50% of the Company's common stock and held control over four of the eight seats on the Board of Directors, enabling them to retain voting and operating control of the Company. AD Little owned 45% of the Company's common stock and control over three of the Board seats. Hess owned 5% of the Company's common stock and control over one of the Board seats. The merger transaction will be accounted for under the purchase method of accounting and treated as a reverse acquisition as Norfin received the controlling interest in the combined enterprise. Therefore, for accounting purposes, De Nora is deemed to have acquired the Company. * * * * * F-40 [ARTWORK] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Through and including , 2001 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. 3,200,000 Shares [LOGO OF NUVERA FUEL CELLS] Common Stock ---------------- PROSPECTUS ---------------- Merrill Lynch & Co. Lehman Brothers ABN AMRO Rothschild LLC Bear, Stearns & Co. Inc. , 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +The information in this prospectus is not complete and may be changed. We may + +not sell these securities until the registration statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ [ALTERNATIVE PAGE FOR INTERNATIONAL PROSPECTUS] Subject to Completion Preliminary Prospectus dated , 2001 PROSPECTUS 800,000 Shares [LOGO OF NUVERA FUEL CELLS] Common Stock ----------- This is Nuvera Fuel Cells, Inc.'s initial public offering. Nuvera is selling all of the shares. The international managers are offering 800,000 shares outside the U.S. and Canada and the U.S. underwriters are offering 3,200,000 shares in the U.S. and Canada. We expect the public offering price to be between $18.00 and $20.00 per share. Currently, no public market exists for the shares. We have applied for quotation of the shares on the Nasdaq National Market under the symbol "NVRA." Investing in the common stock involves risks that are described in the "Risk Factors" section beginning on page 6 of this prospectus. -----------
Per Share Total --------- ----- Public offering price............................. $ $ Underwriting discount............................. $ $ Proceeds, before expenses, to Nuvera Fuel Cells, Inc.............................................. $ $
The international managers may also purchase up to an additional 120,000 shares from Nuvera, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over- allotments. The U.S. underwriters may similarly purchase up to an additional 480,000 shares from Nuvera. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2001. ----------- Merrill Lynch International Lehman Brothers ABN AMRO Rothschild Bear, Stearns International Limited ----------- The date of this prospectus is , 2001. [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] UNDERWRITING We intend to offer the shares outside the U.S. and Canada through the international managers and in the U.S. and Canada through the U.S. underwriters. Merrill Lynch International, Lehman Brothers International (Europe), ABN AMRO Rothschild and Bear, Stearns International Limited are acting as lead managers for the international managers named below. Subject to the terms and conditions described in an international purchase agreement among us and the international managers, and concurrently with the sale of 3,200,000 shares to the U.S. underwriters, we have agreed to sell to the international managers, and the international managers severally have agreed to purchase from us, the number of shares listed opposite their names below.
Number of International Managers Shares ---------------------- --------- Merrill Lynch International...................................... Lehman Brothers International (Europe)........................... ABN AMRO Rothschild.............................................. Bear, Stearns International Limited.............................. ------- Total....................................................... 800,000 =======
We have also entered into a U.S. purchase agreement with the U.S. underwriters for sale of the shares in the U.S. and Canada for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., ABN AMRO Rothschild LLC and Bear, Stearns & Co. Inc. are acting as U.S. representatives. Subject to the terms and conditions in the U.S. purchase agreement, and concurrently with the sale of 800,000 shares to the international managers pursuant to the international purchase agreement, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase, 3,200,000 shares from us. The initial public offering price per share and the total underwriting discount per share are identical under the international purchase agreement and the U.S. purchase agreement. The international managers and the U.S. underwriters have agreed to purchase all of the shares sold under the international and U.S. purchase agreements if any of these shares are purchased. If an underwriter defaults, the international and U.S. purchase agreements provide that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the international managers and the U.S. underwriters are conditioned on one another. We have agreed to indemnify the international managers and the U.S. underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the international managers and U.S. underwriters may be required to make in respect of those liabilities. The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreements, such as the receipt by the underwriters of officers' certificates U-1 [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. Commissions and Discounts The lead managers have advised us that the international managers propose initially to offer the shares to the public at the initial public offering price on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. The international managers may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed. The following table shows the public offering price, underwriting discount and proceeds before expenses to Nuvera. The information assumes either no exercise or full exercise by the international managers and the U.S. underwriters of their over-allotment options.
Per Share Without Option With Option --------- -------------- ----------- Public offering price............... $ $ $ Underwriting discount............... $ $ $ Proceeds, before expenses, to Nuvera............................. $ $ $
The expenses of the offering, not including the underwriting discount, are estimated at $4.4 million and are payable by Nuvera. Over-allotment Options We have granted options to the international managers to purchase up to 120,000 additional shares at the public offering price less the underwriting discount. The international managers may exercise these options for 30 days from the date of this prospectus solely to cover any over-allotments. If the international managers exercise these options, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to that international manager's initial amount reflected in the above table. We have also granted options to the U.S. underwriters, exercisable for 30 days from the date of this prospectus, to purchase up to 480,000 additional shares to cover any over-allotments on terms similar to those granted to the international managers. Intersyndicate Agreement The international managers and the U.S. underwriters have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the international managers and the U.S. underwriters may sell shares to each other for purposes of resale at the public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to U.S. or Canadian persons or to persons they believe intend to resell to persons who are U.S. or Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are non-U.S. or non-Canadian or to persons they believe intend to resell to persons who are non-U.S. or non-Canadian persons, except in the case of transactions under the terms of the intersyndicate agreement. U-2 [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] Reserved Shares At our request, the underwriters have reserved for sale, at the initial public offering price, up to shares offered by this prospectus for sale to some of our directors, officers, employees, distributors, dealers, business associates and related persons. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. No Sales of Similar Securities We, our executive officers and directors and all existing stockholders have agreed, with exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch. Specifically, we and these other individuals have agreed not to directly or indirectly: . offer, pledge, sell, or contract to sell any common stock, . sell any option or contract to purchase any common stock, . purchase any option or contract to sell any common stock, . grant any option, right or warrant for the sale of any common stock, . lend or otherwise dispose of or transfer any common stock, . request or demand that we file a registration statement related to the common stock, or . enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise. This lockup provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. This lock-up provision does not apply if we issue common stock upon the exercise of an option outstanding on the date of this prospectus or if we issue common stock or grant options to purchase common stock pursuant to our 2000 stock incentive plan. The lock-up agreements described above may be released at any time as to all or any portion of the shares subject to such agreements at the sole discretion of Merrill Lynch. There are, however, currently no agreements between Merrill Lynch and any of our executive officers, directors or stockholders releasing them from these lock-up agreements prior to the expiration of the 180-day period. Quotation on the Nasdaq National Market We have applied for quotation of our shares on the Nasdaq National Market under the symbol "NVRA." U-3 [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] Offering Price Determination Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us and the U.S. representatives and lead managers. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are: . the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us, . our financial information, . the history of, and the prospects for, our company and the industry in which we compete, . an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues, . the present state of our development, and . the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority. Price Stabilization, Short Positions and Penalty Bids Until the distribution of the shares is completed, SEC rules may limit the underwriters and selling group members from bidding for and purchasing our common stock. However, the U.S. representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price. In connection with the offering, the underwriters may make short sales of the common stock and may purchase shares in the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are made in an amount not greater than the over-allotment option described above. The underwriters may close out any covered short position by either exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. "Naked" short sales are sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Purchases of the common stock to stabilize its price or to reduce a short position may cause the price of the common stock to be higher than it might be in the absence of such purchases. The U.S. representatives may also impose a penalty bid on underwriters and selling group members. This means that if the U.S. representatives purchase shares in the open market to reduce the underwriter's short position or to stabilize the price of such shares, they may reclaim the amount of the selling concession from the U-4 [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] underwriters and selling group members who sold those shares. The imposition of a penalty bid may also affect the price of the shares in that it discourages resales of those shares. Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters makes any representation that the U.S. representatives or the lead managers will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. UK Selling Restrictions Each international manager has agreed that: . it has not offered or sold and will not offer or sell any shares of common stock to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding managing, or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which do not constitute an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; . it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the common stock in, from or otherwise involving the United Kingdom; and . it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of common stock to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 as amended by the Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a person to whom such document may otherwise lawfully be issued or passed on. No Public Offering Outside the United States No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of the shares of common stock, or the possession, circulation, or distribution of this prospectus or any other material relating to our company or shares of our common stock in any jurisdiction where action for that purpose is required. Accordingly, the shares of our common stock may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering materials or advertisements in connection with the shares of our common stock may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. Purchasers of the shares offered by this prospectus may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price on the cover page of this prospectus. U-5 [ALTERNATIVE PAGE FOR INTERNATIONAL PROSPECTUS] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Through and including , 2001 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. 800,000 Shares [LOGO OF NUVERA FUEL CELLS] Common Stock ---------------- PROSPECTUS ---------------- Merrill Lynch International Lehman Brothers ABN AMRO Rothschild Bear, Stearns International Limited , 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The following table sets forth the estimated costs and expenses, other than underwriting discounts and commissions, payable by Nuvera in connection with the issuance and sale of the common stock being registered hereby.
Amount To Be Paid ---------- SEC registration fee................................................ $ 32,039 NASD filing fee..................................................... 12,000 Nasdaq National Market listing fees................................. 113,000 Transfer agent's fees............................................... 25,000 Printing and engraving expenses..................................... 225,000 Legal fees and expenses............................................. 1,500,000 Accounting fees and expenses........................................ 1,400,000 Financial advisory -- Fineurop Soditic S.p.A........................ 374,000 Blue Sky fees and expenses.......................................... 5,000 Miscellaneous....................................................... 713,961 ---------- Total............................................................. $4,400,000 ==========
Each of the amounts set forth above, other than the SEC registration fee and the NASD filing fee, is an estimate. Item 14. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) in which such person was or is or is threatened to be made a party by reason of such person being or having been a director, officer, employee or agent of the corporation; provided such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The Registrant's Amended and Restated Certificate of Incorporation provides for indemnification by the Registrant of its directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock purchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. The Registrant's Amended and Restated Certificate of Incorporation provides for such limitation of liability. II-1 The Registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law. The proposed forms of Underwriting Agreement filed as Exhibit 1 to this Registration Statement provide for indemnification of directors and officers of the Registrant by the underwriters against certain liabilities. Item 15. Recent Sales of Unregistered Securities. On December 18, 1997, the Registrant issued and sold 7,000,000 shares of its common stock, par value $.01 per share, to Arthur D. Little, Inc. in exchange for aggregate consideration of $1,000. The transaction was exempt from registration under Section 4(2) of the Securities Act because no public offering was involved. On April 4, 2000, the Registrant issued and sold 7,000,000 shares of its common stock, par value $.01 per share, to De Nora New Energy Investments B.V., a Netherlands corporation, in exchange for 100% of the capital stock of De Nora Fuel Cells S.p.A., a corporation organized under the laws of the Republic of Italy. The transaction was exempt from registration under Section 4(2) of the Securities Act because no public offering was involved. On July 27, 2000, the Registrant issued and sold 943,824 shares of its common stock, par value $.01 per share, to Amerada Hess Corporation, a Delaware corporation, in exchange for aggregate consideration of $15,000,000. The transaction was exempt from registration under Section 4(2) of the Securities Act because no public offering was involved. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about the Registrant or had access to such adequate information. On October 10, 2000, the Registrant granted 245,000 shares of its common stock, contributed to it by AD Little, par value $.01 per share, to 31 employees. The transactions were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 under the Securities Act as transactions pursuant to contracts relating to compensation. Item 16. Exhibits and Financial Statement Schedules. (a) See Exhibit Index following Signature pages. (b) None. Item 17. Undertakings (a) The undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the Registrant has been advised that in the opinion of the Securities II-2 and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cambridge, State of Massachusetts, on the 31st day of January, 2001. Nuvera Fuel Cells, Inc. By /s/ Jeffrey M. Bentley _____________________________________ Name: Jeffrey M. Bentley Title: Senior Vice President Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- * Acting Chief Executive January 31, 2001 ______________________________________ Officer, President and Mark A. Brodsky Director (Principal Executive Officer, Principal Financial Officer and Principal Chief Accounting Officer) * Director January 31, 2001 ______________________________________ J. Barclay Collins * Director January 31, 2001 ______________________________________ Federico De Nora * Director January 31, 2001 ______________________________________ John A. Gartman * Director January 31, 2001 ______________________________________ Franco Ladavas * Director January 31, 2001 ______________________________________ Lorenzo C. Lamadrid * Director January 31, 2001 ______________________________________ John Lavin * Director January 31, 2001 ______________________________________ Eugenio Morpurgo * Director January 31, 2001 ______________________________________ Mauro Saponelli /s/ Anne Troutman By:___________________________________ Name: Anne Troutman Attorney-in-fact
II-4 EXHIBIT INDEX
Exhibit Sequentially Number Description Numbered Page ------- ----------- ------------- 1.1* Form of U.S. Purchase Agreement...................... 1.2* Form of International Purchase Agreement............. 3.1* Amended and Restated Certificate of Incorporation.... 3.2* Bylaws............................................... 4.1* Form of Common Stock Certificate..................... 5.1* Opinion of Davis Polk & Wardwell..................... 10.1+ Investment and Exchange Agreement, dated as of April 4, 2000, by and among De Nora Fuel Cells S.p.A., De Nora New Energy Investments B.V., Arthur D. Little, Inc. and Epyx Corporation............................ 10.1(a)* Schedules to Exhibit 10.1............................ 10.2+ Stockholders' Agreement, dated as of April 4, 2000, by and among De Nora New Energy Investments B.V., Arthur D. Little, Inc., Amerada Hess Corporation and Epyx Corporation..................................... 10.3+ Technology, Trade Identity, Contracts & Equipment Assignment, between Arthur D. Little, Inc. and Epyx Corporation.......................................... 10.3(a) Schedules to Exhibit 10.3............................ 10.4+ License Agreement, dated as of March 31, 2000, by and between Epyx corporation and Arthur D. Little, Inc. ................................................ 10.4(a) Schedules to Exhibit 10.4............................ 10.5+ Investment Agreement, dated as of March 30, 2000, by among Amerada Hess Corporation, Arthur D. Little, Inc. and Epyx Corporation............................ 10.5(a) Schedules to Exhibit 10.5............................ 10.6+ Subscription and Share Purchase Agreement, dated as of August 2, 2000, among Fineurop International Limited, Norfin International S.A. and De Nora New Energy Investments B.V. ............................. 10.6(a) Schedules to Exhibit 10.6............................ 10.7+ Service Agreement, dated January 10, 2000, between Norfin S.p.A. and De Nora Fuel Cells S.p.A. ......... 10.7(a) Schedules to Exhibit 10.7............................ 10.8+ Service Agreement, dated January 18, 2000, between De Nora S.p.A. and De Nora Fuel Cells S.p.A. ........... 10.8(a) Schedules to Exhibit 10.8............................ 10.9+ Service Agreement, dated May 20, 2000, between De Nora Elettrodi S.p.A. and De Nora Fuel Cells S.p.A. ..............................................
Exhibit Sequentially Number Description Numbered Page ------- ----------- ------------- 10.10+ Loan Agreement, dated October 2, 1999, between Norfin S.p.A. and De Nora Fuel Cells S.p.A. ................ 10.10(a) Schedules to Exhibit 10.10........................... 10.11+ Letter Agreement, dated August 1, 2000, from Fineurop Soditic S.p.A. to Nuvera Fuel Cells, Inc. ........... 10.12+ License and Services Agreement, dated as of April 4, 2000, by and between Arthur D. Little, Inc. and Epyx Corporation.......................................... 10.12(a) Schedules to Exhibit 10.12........................... 10.13+ Tax Indemnification Agreement, dated as of October 26, 2000, between Arthur D. Little, Inc. and Nuvera Fuel Cells, Inc. .................................... 10.14+ Lease, dated October 1, 1999, between Finisola S.p.A. and De Nora Fuel Cells S.p.A. ....................... 10.15+ Lease, dated January 1, 2000, between Finisola S.p.A. and De Nora Fuel Cells S.p.A. ....................... 10.16+ Lease, dated July 1, 2000, between Finisola S.p.A. and Nuvera Fuel Cells Europe S.r.l. ................. 10.17+ Lease, dated July 1, 2000, between Finisola S.p.A. and Nuvera Fuel Cells Europe S.r.l. ................. 10.17(a) Schedules to Exhibit 10.17........................... 10.18+ Nuvera Fuel Cells, Inc. 2000 Stock Incentive Plan.... 10.19+ Form of Stock Award Letter, dated October 10, 2000... 10.20+ Form of Promissory Note and Pledge, dated October 10, 2000................................................. 10.21+ Form of Director and Officer Indemnification Agreement............................................ 10.22+ Capital Contribution Agreement, dated as of November 3, 2000, by and among Nuvera Fuel Cells, Inc., Arthur D. Little, Inc., Norfin International S.A., Nuvera Fuel Cells Europe S.r.l., De Nora New Energy Investments B.V. and Amerada Hess Corporation........ 10.23+ Credit Agreement, dated March 21, 2000, between Banca Popolare di Bergamo--Credito Varesino and De Nora Fuel Cells S.p.A. ................................... 10.24 Joint Venture Agreement, dated as of December 18, 1998, between H. Power Corp. and Arthur D. Little, Inc.................................................. 10.25 Subcontract Agreement, dated November 21, 1997, between Plug Power L.L.C. and Arthur D. Little, Inc.................................................. 10.26 Agreement, dated as of July 1999, between Arthur D. Little, Inc. and the U.S. Department of Energy....... 10.27 Subcontract Agreement, dated December 6, 1999, between Arthur D. Little, Inc. and Corning Incorporated......................................... 10.28 Subcontract Agreement, dated January 27, 2000, between Arthur D. Little, Inc. and United Catalysts Inc..................................................
Exhibit Sequentially Number Description Numbered Page ------- ----------- ------------- 10.29 Subcontract Agreement, dated March 20, 2000, between Arthur D. Little, Inc. and STC Catalysts, Inc......... 10.30 Subaward Agreement, dated November 1, 1997, between International Fuel Cells Corporation and Arthur D. Little, Inc........................................... 10.31 Purchase Order, dated March 29, 2000, and Invoice, dated May 4, 2000, between De Nora Fuel Cells S.p.A. and Arthur D. Little, Inc............................. 10.32 Purchase Order, dated May 30, 2000, and Invoice, dated June 1, 2000, between Nuvera Fuel Cells Europe S.p.A. and Arthur D. Little, Inc............................. 10.33 Letter Agreement, dated November 21, 1994, between De Nora Permelec S.p.A. and Renault...................... 10.34 Purchase Order and Contract, dated February 13, 1997, between De Nora S.p.A. and Ansaldo Richerche S.r.l. .. 10.35 Letter Agreement, dated as of July 27, 2000, between Amerada Hess Corporation and Nuvera Fuel Cells, Inc... 10.36* Form of Stockholders' Agreement among Nuvera Fuel Cells, Inc., Arthur D. Little, Inc., De Nora New Energy Investments B.V., Amerada Hess Corporation and certain other persons named therein................... 10.37 Development and Supply Agreement, dated as of November 21, 2000, by and among De Nora Elettrodi S.p.A., Nuvera Fuel Cells, Inc. and Nuvera Fuel Cells Europe S.r.l. ............................................... 21+ Subsidiaries of the Registrant........................ 23.1 Independent Auditors' Consent......................... 23.2 Independent Auditors' Consent......................... 23.3* Consent of Davis Polk & Wardwell (included in Exhibit 5.1).................................................. 24.1+ Power of Attorney..................................... 27.1+ Financial Data Schedule...............................
- -------- + Previously filed. * To be filed by amendment. EX-10.1(A) 2 0002.txt SCHEDULE TO EXHIBIT 10.1 Exhibit 10.1(a) Schedule 3.3 ------------- None Schedule 3.5 ------------ Joint Development Agreement dated September 24, 1999 between Plug Power, LLC and Epyx Joint Development Agreement dated January 12, 2000 between Cellex Power Products, Inc. and Epyx Purchase Order from Plug Power to Epyx dated November 10, 1999 for 10kW Multi- fuel Processor with Supporting Data and Service Joint Venture Agreement dated December 18, 1998 between H Power Corp. and Arthur D. Little, Inc. DOE Contract No. DE-FC02-99EE50580 dated July 21, 1999 issued to Arthur D. Little, Inc., titled Development of Fuel Processor, Durability Demonstration and l0kW Subcontract Agreement dated November 21, 1997 between Plug Power, LLC and Arthur D. Little, Inc. under DOE Contract No. DE-FC02-97EE50472 Subcontract Agreement dated January 17, 2000 between Giner, Inc. and Epyx Purchase Order for Transient Reactor dated February 2000 from Epyx to ZTON- Altamira Corporation Other Non-Material Open Purchase Orders Excluded Contracts: "Design of a 50 kW Stationary PEMFC System" "Design of next generation of PEMFC stacks with clearly superior hydrogen utilization" Schedule 3.6 ------------ None Schedule 3.11 ------------- [Balance Sheet] -------------------------------------------------- EPYX Balance Sheet as of December 31, 1999 -------------------------------------------------- Balances -------- Assets: Current Assets: Cash and Cash Equivalents Accounts Receivable $ 247,239.4 Unbilled Services 156,972.9 Other Current Assets (3,298.7) ------------- Total Current Assets 400,913.6 ------------- Property and Equipment Land Bldgs. & Leasehold Improvements 339.1 Equip., Furniture, & Fixtures 516,296.6 ------------- Property and Equipment 516,635.7 Accumulated Depreciation (140,068.2) ------------- Net Property and Equipment 376,567.5 ------------- Total Assets $ 777,481.0 ============= Liabilities and Stockholders' Equity: Current Liabilities: Accounts Payable $ 1,878.6 Accrued Compensation 31,370.1 Other Accrued Expenses (2,354.5) ------------- Total Current Liabilities 30,894.2 ------------- Intercompany Receivable/Payable 245,913.6 Total Liabilities Stockholders' Equity: Retained Earnings 500,673.3 ------------- Total Liabilities and Stockholders' Equity $ 777,481.0 ============= Schedule 3.15 ------------- MDT Retirement Plan ESOP -- Hired prior to 1-1-99 Investment Plan ADL Medical Plan -- Self funded Harvard Pilgrim HMO -- Insured Tufts HMO -- Insured ADL Dental Plan -- Self funded ADL Long Term Disability Plan -- Self funded Basic Life Insurance -- Insured Portable Optional Term Life Insurance -- Insured Dependent Life Insurance -- Insured Health Care Spending Account -- Self funded Dependent Care Spending Account -- Self funded Pre-tax Deduction Plan -- Self funded Business Travel Accident Insurance -- Insured Excess Contribution Plan Stock Incentive Plan Stock-Based Deferred Incentive Compensation Plan New ADL Stock Option Plan Senior Staff Stock Purchase Plan All of the above plans are maintained and administered by ADL and not by Epyx Schedule 3.16(a) - ---------------- License and Services Agreement between Epyx Corporation and Arthur D. Little, Inc. EXHIBIT 10.12 LICENSE AND SERVICES AGREEMENT BY AND BETWEEN ARTHUR D. LITTLE, INC. AND EPYX CORPORATION THIS LICENSE AND SERVICES AGREEMENT is made as of April 4, 2000, by and between Arthur D. Little, Inc., a Massachusetts corporation ("ADL"), and Epyx Corporation, a Delaware corporation ("Epyx"). 1. GRANT OF LICENSE. ADL hereby grants to Epyx a license to occupy and use, upon the terms and conditions set forth herein, the premises set forth on Exhibit A to this Agreement (the "Licensed Premises"), located in Buildings 15, 32 and 46 (the "Buildings") located in ADL's premises at Acorn Park, Cambridge, MA ("Acorn Park"). The Licensed Premises presently consists of approximately 14,554 rentable square feet but may be increased at the mutual consent of both parties during the Term. Epyx acknowledges that the Licensed Premises occupy only a portion of the Building and that ADL occupies and uses the remaining portions of the Building for its own office, laboratory, research and other purposes. Accordingly, Epyx agrees that it will use the Licensed Premises and the other areas of the Building and Acorn Park to which Epyx has access pursuant to this Agreement, in such a manner as to minimize any interference with the activities of ADL and to recognize and respect the business security and confidentiality needs of ADL. 2. TERM AND EXTENSIONS. 2.1 Term. The term of this Agreement shall commence on April 4, 2000, and shall, if not previously terminated in accordance with the terms hereof, terminate on December 31, 2000 (the "Initial Term"). Upon mutual agreement between Epyx and ADL, this Agreement may be extended for one or more six (6) month periods following the expiration of the Initial Term (each, an "Extension Period") at rates to be negotiated between the parties. If Epyx desires to extend this Agreement, Epyx shall provide written notice to ADL requesting such extension at least three (3) months prior to the expiration of the Initial Term or any Extension Period, as the case may be. If the term of this Agreement shall be extended on any such occasion, all of the terms and conditions of this Agreement not otherwise modified by a written agreement between the parties shall remain in full force and effect during each Extension Period. The Initial Term, together with any Extension Periods, is referred to herein as the "Term." 2.2 Early Termination. Either party may terminate this Agreement at any time with or without cause by giving the other party six (6) months prior written notice, provided that ADL may not terminate this Agreement without cause prior to the expiration of the Initial Term. In addition, this Agreement and Epyx's rights hereunder may be earlier terminated at ADL's option upon the occurrence of any of the events specified in Sections 18 or 19 below, and Epyx shall vacate the Licensed Premises immediately following any such termination. 2.3 Holdover. If, at the end of the Term (or upon any termination of this Agreement in accordance with the provisions hereof), Epyx fails to vacate all or any portion of the Licensed Premises, Epyx's occupancy shall be deemed to be a tenancy from month to month subject to all the terms and conditions thereof and hereof which may be applicable except that the Fees (as defined below) shall be and Epyx shall pay an amount equal to 300% of the amount specified as the last Fee during the Term for each month of occupancy, and ADL's charging of such amount shall in no event constitute a waiver of any other right ADL may have hereunder or at law or in equity. The parties recognize that the intent of this Agreement is to be a short-term obligation and that any holdover by Epyx will cause damages to ADL that will be difficult to calculate and accordingly the parties have agreed on the escalations of holdover fees herein set forth as the best mechanism for insuring Epyx's compliance. 3. LICENSE AND SERVICES FEE. Epyx agrees to pay to ADL, without offset or reduction, a fee (the "Fee") covering the combined license and services provided for herein during the Term. The rate of such Fee shall equal Two Thousand Four Hundred Sixty Dollars ($2,460) per average number of EPYX staff members per month. The average number of EPYX staff members shall be determined at the end of each month by adding the actual number of EPYX staff members on the first day of the month to the actual number of EPYX staff members on the last day of the month, and then dividing the sum by two. Payment for each month shall be made in advance on the first day of each month during the Term and shall be based on the average number of EPYX staff members from the previous month. Epyx shall pay the Fee on a pro-rata basis for any partial calendar month during the Term or any extension thereof. All payments of Fees are to be made at ADL's address set forth herein or at such other place as ADL shall from time to time designate in writing. The Fee shall be increased or decreased each month to reflect the actual average number of staff members per month from time to time. 4. PERMITTED USE. The Licensed Premises are to be used solely in connection with Epyx's operations relating to the development of reformer and 2 fuel cell technology and other uses that are incidental or customarily accessory thereto, such as office, administrative, and storage uses, in each case to the extent permitted by applicable law and consistent with current use, and such other uses as may be consented to by ADL in advance (which consent may be withheld by ADL in its sole and absolute discretion). Epyx agrees to conduct its business in a professional and businesslike manner and in accordance with best safety and operating practices. 5. PREMISES. 5.1 Condition of the Licensed Premises. Epyx accepts the Licensed Premises in their existing condition on the date of commencement of the Term, and acknowledges that the Licensed Premises are in good order and condition and sufficient for the uses intended by Epyx. Epyx agrees that it has had full and adequate opportunity to inspect the Licensed Premises and has done so to its satisfaction. ADL has not made nor has Epyx relied on any representations or warranties, express or implied, as to the condition of the Licensed Premises or their suitability for Epyx's use. 5.2 Common Areas. (a) The Licensed Premises are licensed together with the use for their intended purposes, in common with ADL and all others, including any other tenants and occupants of Acorn Park lawfully entitled thereto, of (i) the common facilities included in the Building between the Licensed Premises and the exterior of the Building; (ii) the parking facilities located in Acorn Park; (iii) the pipes, ducts, conduits, wires and appurtenant equipment serving the Licensed Premises; (iv) the common women's room and men's room in closest proximity to the Licensed Premises and (v) the central reception area in Building 25 of Acorn Park (collectively, the aforementioned areas shall hereinafter be referred to as the "Common Areas"). Such rights in the Common Areas shall always be subject to the right of ADL to designate and change from time to time areas and facilities so to be used and any rules and regulations established by ADL with respect to Acorn Park. Epyx's staff members whose principal office is located on the Licensed Premises also shall be entitled to use ADL's cafeteria facilities. (b) ADL's shipping and receiving facilities shall not constitute part of the Licensed Premises or the Common Areas. As and when shipments for Epyx are presented to ADL, ADL shall promptly notify Epyx, and Epyx shall promptly make available an authorized agent or employee to accept and receive such shipments, and thereafter ADL and Epyx shall cooperate 3 to make arrangements for delivery of such accepted shipments to the Licensed Premises. 5.3 Access and Parking. ADL shall provide reasonable access to the Licensed Premises 24 hours a day seven days a week and shall permit Epyx's staff members and guests to use the roads, sidewalks and parking areas located on ADL's property adjacent to the Licensed Premises. Access into the Building must be in accordance with ADL's security system and policies and procedures. ADL's government security form must be signed by Epyx and all employees who will be occupying the Licensed Premises. All visitors must sign in at the central reception area in Building 25 and be escorted by an Epyx employee at all times. 6. REPAIRS AND MAINTENANCE; DESTRUCTION BY CASUALTY 6.1 ADL Responsibilities. Subject to Sections 6.3 and 18 hereof, during the Term, ADL shall, at its own expense, maintain all structural elements and building systems of the Building (including, without limitation, the foundations and appurtenances thereto, the room, building exterior, framing, and floor slabs, all fixtures and equipment, all pipes, ducts, wiring, and lighting, and all plumbing and utility lines serving the Building, whether located within or outside the Building) in accordance with ADL's current practices. In no event shall ADL be obligated, pursuant to this Agreement, to make any capital or structural repairs or alterations to the Licensed Premises, the Building, or Acorn Park. 6.2 Epyx Responsibilities. During the Term, Epyx shall, at its own expense, maintain the Licensed Premises in good and safe order, condition, and repair, reasonable wear and tear excepted. Without limitation, Epyx shall maintain and use the Licensed Premises in accordance with all applicable laws, including those adopted after the commencement of this Agreement and those related to fire safety and environmental requirements, and all directions, rules and regulations of the proper officers of governmental agencies having jurisdiction over the Licensed Premises, the Building or Acorn Park. 6.3 Destruction by Casualty. If the Licensed Premises are damaged by fire or other casualty, and such damage renders the Licensed Premises substantially untenantable in whole or in part, then: (i) a fair and just part of the Fees shall abate until the damage is repaired to the extent necessary to render the Licensed Premises suitable for the conduct of Epyx's business; and (ii) ADL or Epyx may elect to terminate this Agreement upon thirty (30) days' prior written notice to the other, provided that Epyx may not terminate this Agreement under this Section if ADL has notified 4 Epyx of its intention to repair or restore the Licensed Premises in which event ADL shall have thirty (30) days measured from the date of notice to Epyx to commence repair or restoration to render the Licensed Premises tenantable. In the event of any such untenantability, ADL shall have no obligation or legal liability for its failure to provide alternate space, facilities or services to Epyx. 7. ALTERATIONS AND IMPROVEMENTS. Epyx shall not make any structural or nonstructural alterations, additions or improvements to the Licensed Premises without the prior written consent of ADL, which consent may be withheld by ADL in its sole and absolute discretion. 8. SERVICES, FACILITIES AND EQUIPMENT. Subject to Epyx's compliance with the obligations contained in this Agreement, ADL has also agreed to make available to Epyx certain services, and to authorize Epyx to use certain areas and equipment in or about the Licensed Premises jointly with ADL and others who may be authorized by ADL from time to time, during the term of this Agreement, as set forth in this Section. Epyx should contact Tim White, Director of Facilities, with respect to issues or questions regarding such services and he will direct and coordinate any other assistance which may be required. 8.1 Telephone System. ADL and Epyx acknowledge and agree that a common telephone system serves both the Licensed Premises and ADL's other facilities at Acorn Park. Epyx acknowledges that it must pay the cost of all telephone charges associated with Epyx's use of such telephone system (including the cost of local-calling and long-distance calling services) and that such fees are not included in this Agreement. ADL and Epyx hereby agree that Epyx shall be responsible for maintenance, repair and replacement of the telephone and facsimile sets owned by Epyx and connected to such system, and that ADL shall be responsible for all routine maintenance for such common telephone system serving the Licensed Premises. Epyx hereby agrees that it shall obtain ADL's prior written approval with respect to the installation or attachment to ADL's telephone switch, system or cables. Epyx agrees to pay for any additional system lines or equipment installed on or for its behalf after the date of this Agreement. 8.2 Security, Janitorial and Custodial Services. ADL shall provide routine security, janitorial, custodial and maintenance services to the Licensed Premises to the same general extent that ADL provides such services to the rest of Acorn Park. Such services shall not include receiving or shipping services. Epyx shall keep the Licensed Premises in a clean, orderly and safe condition. Epyx shall be responsible for removing 5 at its own expense and on a regular basis all disposed items other than normal office rubbish. Epyx shall not cause, permit or suffer any overloading of the floors in the Licensed Premises. 8.3 Mail. ADL shall deliver to the Licensed Premises, not less than once per business day, mail for Epyx received in ADL's central mail facility at Acorn Park. 8.4 Utilities. ADL shall provide utilities for the Licensed Premises, including heat, air conditioning, water/sewer and electricity during the same hours they are provided to the other office facilities at Acorn Park, subject to the reasonable availability of such utilities to ADL. ADL's obligations hereunder shall not exceed the capacities of existing connection and distribution equipment and infrastructure to safely carry or conduct said utilities. Epyx shall reimburse ADL for the cost (based upon ADL's actual third-party costs of such utilities) of (i) providing any utilities for the Licensed Premises beyond standard operating hours for Acorn Park (including any utility costs incurred as a result of such request which do not relate directly to the Licensed Premises but which result from providing the requested utilities to the Licensed Premises) and (ii) any such approved excess utility usage. 8.5 Fire and Safety. Epyx shall notify ADL immediately of any fire on the Licensed Premises. At no additional charge during the Term, ADL shall provide the services of its emergency response personnel in connection with any fire emergency reported by Epyx to the same general extent and in the same manner that response under similar circumstances would be provided to Acorn Park. Epyx shall be responsible for maintenance of all fire extinguishers and equipment within the Licensed Premises. ADL shall not under any circumstances provide emergency services in connection with spills of chemical or other hazardous wastes which emergency services shall be provided promptly by Epyx in accordance with all applicable Federal, state and local laws and regulations, and Epyx shall provide notice of any such events to ADL's emergency coordinator immediately. 8.6 Additional Services. In addition to the services described above, ADL shall provide the following services to the extent requested by Epyx: (a) ADL shall provide purchasing services to Epyx to the same general extent that services are provided to the rest of the operations at Acorn Park. Epyx agrees to pay ADL for all purchases made by ADL on 6 Epyx's behalf within ten (10) days following presentation of an invoice by ADL to Epyx for such goods. (b) Epyx shall continue to have access to ADL's computer network and ADL's ISD department shall provide support administration for the network. (c) Epyx shall continue to have access to the resources of ADL's Knowledge Resource Information Center. (d) Epyx and its employees whose principal offices are located on the Licensed Premises shall be entitled to use the services of the ADL Travel Department to the same general extent and in the same manner that such services are provided to ADL's other business operations at Acorn Park. (e) ADL shall provide accounting, tax and related financial and treasury services to Epyx as required by Epyx's business. Such services, shall include assisting Epyx in (i) keeping its books and records; (ii) preparing its financial statements; and (iii) preparing and filing its federal and state tax returns. (f) ADL shall provide contracting and related legal services to Epyx as required by Epyx's business. Epyx shall be billed for any out-of-pocket expenses incurred by ADL in the performance of such services. Invoices for such out-of-pocket expenses shall be payable within thirty days after issuance. 9. HAZARDOUS SUBSTANCES. Epyx shall not bring or create or maintain on the Licensed Premises any hazardous materials or wastes, chemicals or other substances which are subject to regulation by any governmental authority. Epyx shall indemnify ADL for any costs or liabilities incurred by ADL as a result of any breach by Epyx of the foregoing obligation. 10. RULES AND REGULATIONS. 10.1 General. Epyx shall, at its own cost and expense, comply with all applicable laws, ordinances, rules and regulations including those adopted after the commencement of this Agreement of any duly constituted governmental authority relating to the use or occupancy of the Licensed Premises and the activities conducted thereon, Epyx shall obey all of ADL's rules and regulations currently existing or hereafter promulgated 7 from time to time by ADL governing or pertaining to the Building, Acorn Park or their respective tenants and occupants. Epyx shall be responsible for paying in a prompt and appropriate manner all fines, penalties, damages, costs, and fees that may arise out of or be imposed on Epyx or ADL because of Epyx's failure to comply with the provisions of this Section or for contesting any such matters. 10.2 Other Conditions. (a) Epyx agrees not to harm the Licensed Premises or any other part of Acorn Park, or commit or permit waste, or create any nuisance or disturbance, or do any act tending to injure the activities or reputation of Acorn Park or ADL. Epyx shall not use or suffer or permit the use by any person of the Licensed Premises for any purpose other than the Permitted Use or in any manner which violates any of Epyx's governmental authorizations, which is contrary to any applicable law, ordinance, rule or regulation, which could cause injury or damage to any person or property, or which could adversely affect any insurance coverage applicable to the Licensed Premises or the activities conducted on the Licensed Premises. (b) Epyx shall load, unload and transport its supplies, materials and equipment at such times as are reasonably designated by ADL, and shall not obstruct or store any materials or items in the corridors, sidewalks, stairways, elevators, or any other area about or within the Building (except that Epyx may store materials and items in the Licensed Premises other than the Common Areas) or Acorn Park. 11. INDEMNIFICATION. Epyx shall indemnify, hold harmless and defend ADL and its employees, shareholders, directors, officers and affiliates from and against any and all costs, penalties, damages, claims, suits and liabilities (including reasonable attorney's fees) based on or arising out of (i) any breach or default by Epyx of its agreements under this Agreement; (ii) any act or omission of Epyx, its contractors, subcontractors, members, agents, affiliates, consultants, employees or invitees, or the failure of Epyx or such persons to comply with any applicable governmental or ADL laws, rules or regulations including those adopted after the commencement date of this Agreement; (iii) any accident, injury or damage to any person or property occurring in the Licensed Premises or outside of the Licensed Premises but within Acorn Park, where such accident, injury or damage results, or is caused by any act, omission, willful misconduct or 8 negligence of Epyx, its contractors, members, agents, affiliates, consultants, employees or invitees, or anyone claiming by, through or under Epyx (but excluding any loss, liability, expense or damage to the extent caused by the gross negligence or willful misconduct of ADL, its agents, contractors, subcontractors, members, agents, affiliates, consulting, employees or invitees); or (iv) Epyx's use or occupancy of the Licensed Premises (including those arising out of any damage or destruction of the Licensed Premises or ADL's property, any contamination of the Licensed Premises or ADL's property by hazardous substances, or Epyx's failure to remove or dispose of all of its property upon expiration or termination of the Term), except to the extent caused by the gross negligence or willful misconduct of ADL or its agents, servants or employees. 12. INSURANCE. 12.1 Insurance Coverage. Epyx shall carry the following insurance throughout the term of this agreement. a. Commercial general liability insurance in an amount not less than $2,000,000. Such insurance shall be written on an occurrence basis and shall cover bodily or personal injury or death of persons or damage to property on or about the Licensed Premises, including: Contractual Liability; and Fire Damage Legal Liability covering any liabilities assumed under this contract. b. Workers Compensation insurance as required by the laws of the Commonwealth of Massachusetts, and Employers Liability Insurance including occupational disease in an amount not less than $2,000,000. c. All-risk Property Insurance covering the full replacement value of all Epyx's furniture, trade fixtures and other personal property located on the Licensed Premises, against loss or damage or other insurable hazard. 12.2 Compliance. Epyx shall not violate or permit violation of any of the conditions or provisions contained in any of the insurance policies related to the Licensed Premises or ADL's property adjacent to the Licensed Premises. Epyx shall perform and satisfy the requirements of the respective insurance companies so that at all times insurance companies of good standing will be willing to write or continue such policies. Nothing herein shall prevent ADL from carrying additional insurance. 9 12.3 Evidence of Insurance. Prior to commencement of the term of this Agreement, Epyx shall give ADL certificates of insurance policies required hereunder. Each such policy shall require the insurer to give ADL 30 days written notice of any change in such policies, and shall name ADL and Master Lessor as additional insureds. The property insurance policy shall provide that proceeds are first payable to ADL. 12.4 Subrogation. ADL and Epyx hereby agree to waive all rights of subrogation against the other party to the extent that any laws or damage to the Licensed Premises is covered by any property insurance policy, including any deductibles thereunder. 13. EPYX'S FAILURE TO PERFORM. 13.1 Substituted Performance. If Epyx shall at any time fail to make any payment or otherwise to perform any of its obligations as required under this Agreement, ADL, after 10 days notice to Epyx, may (but shall be under no obligation to) make any payment or perform or cause to be performed any act to be performed by Epyx under the terms of this Agreement. ADL may enter the Licensed Premises for any such purpose and may take all such action thereon as may be necessary therefor. 13.2 Reimbursement of Expenditures. All sums paid by ADL pursuant to Section 13.1 hereof, and all costs and expenses incurred by ADL in connection with the performance of any such act, together with interest thereon at the rate of 18% per annum (or such lesser rate as may at the time be the maximum rate permitted by law) from the respective dates of ADL's making of such payment or incurring of each such cost and expense, shall be paid by Epyx to ADL on demand as if the same were additional Fees hereunder (and non-payment of which shall have the consequences of non-payment of Fees). 13.3 Interest on Overdue Fees. All overdue Fees shall bear interest at the rate of 18% per annum (or such lesser rate as may at the time be the maximum rate permitted by law) from the respective payment due dates. Such interest shall be paid by Epyx to ADL on demand as if the same were additional Fees hereunder (and non-payment of which shall have the consequences of non-payment of Fees). 14. MECHANICS' LIENS. Notice is hereby given that ADL shall not be liable for any labor or materials furnished or to be furnished to Epyx, and that no mechanics' or materialmen's liens or other liens for any such labor or materials shall attach to or affect the reversionary or other estate or interest of ADL in and 10 to the Licensed Premises, the Building or Acorn Park. Epyx agrees to indemnify and hold harmless ADL against any and all costs it may suffer on account of the same. 15. ADL'S ACCESS. ADL may at any time enter the Licensed Premises for the purposes of responding to an emergency, repairing the Licensed Premises, inspecting the Licensed Premises or the activities conducted thereon, or for purposes of showing the Licensed Premises to prospective purchasers, lessees, mortgagors or other parties involved or potentially involved in any real estate related transaction relating to the Licensed Premises or Acorn Park in general. ADL may take any action it deems reasonably necessary in order to safeguard the Licensed Premises or ADL's or any other property or the health and safety of any persons. 16. EXPIRATION OF TERM. Epyx, at the expiration of the Term or at any prior termination as herein provided, shall peaceably yield up the Licensed Premises in the same condition and repair as the same were in at the commencement of the Term, reasonable wear and use excepted. Prior to expiration of the Term or within 10 days after any earlier termination of this Agreement (whichever first occurs) Epyx shall remove from the Licensed Premises any personal property and equipment and any items for disposal. Any property, equipment or materials of Epyx not removed from the Licensed Premises as required herein shall, at ADL's sole option (a) become the property of ADL or (b) be deemed abandoned and removed and disposed of by ADL as ADL shall determine, and ADL may charge the cost of such removal and disposal and any repairs or replacements to the Licensed Premises necessitated thereby and any liabilities resulting therefrom to Epyx; provided that Epyx shall retain title to any hazardous substances left on the Licensed Premises. 17. ASSIGNMENT AND SUBLETTING. Epyx shall not under any circumstances be entitled or permitted to transfer, sublet, assign, hypothecate, mortgage, pledge, encumber or otherwise alienate this Agreement or Epyx's interest in and to all or any part of the Licensed Premises, or grant any person any license or permission to use the Licensed Premises. Any attempted transfer, subletting, assignment, hypothecation, encumbrance, license, or other alienation of this Agreement by Epyx shall be void and shall confer no rights on third parties, and shall entitle ADL at its option to terminate this Agreement. 18. EMINENT DOMAIN. 18.1 Total Taking. If the entire Premises shall be taken for public purposes, then this Agreement shall terminate as of the date Epyx is required by law to vacate the premises. 11 18.2 Partial Taking. If a substantial portion of the Licensed Premises shall be taken for public purposes, ADL shall be entitled at its option to terminate this Agreement. If such portion of the Licensed Premises shall be taken as to render the Licensed Premises unsuitable after repair and restoration for the continuance of Epyx's business in substantially the same manner as it was being conducted immediately prior to such taking, then Epyx or ADL upon 30 days' prior written notice shall have the right to terminate this Agreement as of the date Epyx is required by law to vacate such portion of the Licensed Premises. 18.3 Restoration. Subsequent to any taking of a portion of the Licensed Premises, if this Agreement is not terminated by ADL or Epyx in accordance with Section 18.2 hereof, ADL may in its sole and absolute discretion promptly commence restoration of the Licensed Premises to a complete architectural unit as similar as possible to the condition the Licensed Premises were in immediately prior to said taking. During the period of such restoration, the Fees hereunder shall be abated in its entirety, except that to the extent Epyx is able to use the Licensed Premises, the Fees shall be adjusted to reflect such use. 18.4 Proceeds. In the event of any such taking, the condemnation award and all other proceeds thereof shall be payable to ADL, and Epyx shall have absolutely no right or interest in any award. Epyx hereby irrevocably appoints ADL as its attorney in fact for purposes of collecting any such condemnation award or proceeds and of dealing with all governmental authorities with respect hereto. This power of attorney is coupled with an interest and hence is irrevocable. 19. DEFAULT AND TERMINATION OF AGREEMENT. If (a) Epyx fails to pay the Fee within five (5) days after it becomes due; or (b) Epyx fails to perform or comply with any of the other covenants, conditions or obligations of Epyx under this Agreement within ten (10) days after written notice of such default; (c) Epyx is adjudicated a bankrupt, or there is appointed a permanent receiver in insolvency or permanent trustee in bankruptcy of Epyx and the appointment is not vacated within thirty (30) days, or Epyx makes a general assignment for the benefit of creditors or files a voluntary petition for reorganization under applicable bankruptcy laws; or (d) Epyx shall have abandoned the Licensed Premises, then and in each case ADL may, at ADL's option, declare this Agreement terminated and enter the Licensed Premises or any part thereof, either with or without process of law, and expel Epyx or any person or persons occupying the Licensed Premises. 12 20. ADDITIONAL REMEDIES ON DEFAULT. Notwithstanding any termination pursuant to Section 19 above or any entry or reentry by ADL, Epyx agrees to pay, on the days originally fixed herein for the payment thereof, amounts equal to the several installments of Fees and any other amounts due hereunder as they would become due under the terms of this Agreement if it had not been terminated or if ADL had not reentered as aforesaid, and whether the Licensed Premises be re-licensed or remain vacant in whole or in part. In the event the Licensed Premises are re-licensed in whole or in part by ADL, Epyx shall be entitled to a credit in the net amount of Fees received by ADL in re-licensing, after deduction of reasonable expenses incurred in re-licensing the Licensed Premises and in collecting the Fees. Epyx shall also be liable to ADL for all expenses (including reasonable attorneys' fees) incurred by ADL in enforcing its rights under this Agreement in the event of a default by Epyx, and such expenses may be deducted from any credit otherwise due Epyx from ADL. 21. ESTOPPEL CERTIFICATE. Upon not less than fifteen (15) days prior written request, ADL and Epyx agree, each in favor of the other, to execute, acknowledge-and deliver a statement in writing certifying that this Agreement is unmodified and in full force and effect (or, if modified, setting forth the modifications and stating that this Agreement as modified is in full force and effect), and the dates to which the Fees hereunder and other charges have been paid, and any other information reasonably requested. Any such statement delivered pursuant to this Section 21 may be relied upon by any prospective purchaser or mortgagee. 22. SUBORDINATION. This Agreement shall be subject and subordinate to all mortgages and ground or underlying leases existing or hereafter placed upon the Licensed Premises. Epyx hereby acknowledges and agrees that the holder of any such mortgage or the lessor under any such lease shall not thereby become or be liable for the performance of any of ADL's obligations under this Agreement. Epyx agrees that at the request of ADL it will execute, acknowledge and deliver any and all instruments which ADL may require in order to effect such subordination and hereby irrevocably appoints ADL as its attorney-in-fact to execute, acknowledge and deliver all such instruments upon the failure or refusal of Epyx to do so. Epyx shall agree to any amendment (except relating to the Fees, the Term, or the description of the Licensed Premises) reasonably requested by such mortgagee or lessor. 23. CONSENTS. No express or implied consent to or waiver of or failure to insist on performance or observance of any covenant or condition of this Agreement shall be deemed to be a consent to or waiver to any succeeding breach of the same or any other covenant or condition. Except as provided herein, any party may assert its rights and remedies hereunder without any prior or additional 13 notice to the other party. The payment by Epyx and acceptance by ADL of Fees or other payment hereunder or silence by either party as to any breach shall not be construed as waiving any of such party's rights hereunder unless such waiver is in writing. No payment by Epyx or acceptance by ADL of a lesser amount than shall be due hereunder shall be deemed to be anything but payment on account, and the acceptance by ADL of a check for a lesser amount shall not prejudice ADL's right to recover the balance due or to pursue any other remedy which may be available to it. 24. CUMULATIVE RIGHTS. Any and all rights and remedies which either party may have hereunder shall be cumulative, and the exercise of any such rights or remedies shall not bar the exercise of any other right or remedy. 25. NOTICES. Any notice required or permitted to be given hereunder shall be given when in writing and delivered in person or forwarded by overnight or certified or registered mail, return receipt requested, to: ADL: Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 Attn: Tim White Epyx: Epyx Corporation Acorn Park Cambridge, Massachusetts 02140-2390 Attn: Chief Operating Officer or such other address as either party may have designated in a written notice to the other. Such notices shall be deemed received on the date of personal delivery or two days following the documented date of appropriate mailing. 26. ENTIRE AGREEMENT. This instrument contains the entire and exclusive agreement between the parties with respect to the Licensed Premises and supersedes and terminates all prior or contemporaneous arrangements, understandings and agreements whether oral or written. This Agreement may not be amended or modified except by a writing executed by both parties. 27. GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts. In the event any provision of this Agreement shall be determined to be invalid or unenforceable under applicable law, such provision shall insofar as possible be construed or applied in such manner as will permit enforcement; otherwise this Agreement shall be construed as if such provision were not a part hereof. 14 28. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of all successors and permitted assigns. 29. RECORDING. Epyx and ADL agree that Epyx will not record this Agreement. 30. ADL LIMITS OF LIABILITY. ADL shall not be liable to Epyx, or those claiming under Epyx, for any loss or damage to Epyx or its property in or upon the Licensed Premises or Acorn Park that may be caused by the acts or omissions of tenants or other persons occupying space in Acorn Park, or for any loss or damage resulting to Epyx or its property except for any loss or damage resulting from the gross negligence or willful misconduct of ADL, its agents, contractors and employees, provided, however, that ADL shall have no responsibility or liability for any indirect, incidental or consequential damages relating directly or indirectly to loss of business or other indirect, incidental or consequential damages, damage to computer software and related accessory equipment (including, without limitation, computer tapes, disks, other data in storage media and similar property), equipment, or unusually valuable, rare or exotic materials, works of art, and the like. In no event shall ADL ever be liable to Epyx for indirect, incidental or consequential damages. Except in the case of gross negligence or willful misconduct of ADL, ADL shall be under no responsibility or liability for failure or interruption of any of the services, repairs or replacements or for any action in connection with ADL's provision of any services or utilities to Epyx under this Agreement; and failure or omission on the part of ADL to furnish any of same shall not be construed as an eviction of Epyx, actual or constructive, nor entitle Epyx to an abatement of the Fees described herein, nor render ADL liable in damages, nor release Epyx from prompt fulfillment of any of its covenants under this Agreement. 15 IN WITNESS WHEREOF, the parties have executed this License and Services Agreement as of the date first set forth above. ARTHUR D. LITTLE, INC. By: /s/ Lorenzo C. Lamadrid ------------------------------- Name: Lorenzo C. Lamadrid Title: President & Chief Executive Officer EPYX CORPORATION By: /s/ Mark A. Brodsky ------------------------------- Name: Mark A. Brodsky Title: President 16 Exhibit A --------- Memorandum Date: March 31, 2000 To: Elliot Mark cc: Tim White From: Pat Walsh Loc: 20A/245 Ext: 5902 Subject: Space - EPYX EPYX currently occupies space in Building 15, 32, and the Pilot Plant complex. Below is a summary and cost breakdown: Monthly Yearly Building Sq. Ft. Cost Cost -------- ------- ------- ------ 15 8,261 $30,531.27 $366,375.34 32 4,015 14,838.77 178,065.25 Pilot Plant 2,278 8,419.10 101,029.29 ------ ---------- ----------- Total 14,554 $53,789.14 $645,469.89 Attached are drawings indicating the space assigned to EPYX and the Facilities Space Report. This information is as of March 31, 2000. Please let me know if you need any additional information.
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 1 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15 138 1356 1356 15 139 937 937 15 151A 140 140 01 15 151B 140 70 7930 DEPIETRO R CONS 15 153 100 100 15 153B 70 70 5409 MOSHER PD CONS 15 153C 70 70 15 153D 70 70 630 HAILES RL CONS 15 153E 70 70 15 154 440 440 15 154A 65 65 15 154B 65 65 4370 THOMPSON C CONS 15 154C 65 65 6834 POLLICA DE 15 154D 65 65 6422 CHINTAWAR PS CONS 15 154E 65 65 4265 WILLEY JM 15 154F 65 65 5307 CIOFFI CM CONS 15 154G 62 62 2996 COLE T CONS 15L 101 117 117 8314 MORRISEAU BD CONS 15L 102 121 121 4802 BOYD S CONS
NOTE 01 ##### BLDG 15 ROOM 151B ALSO SHARED WITH UNIT 0946 ########
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 2 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 102A 94 94 4035 SYLVESTER RM SUP 15L 103 54 54 932 BLOCK SG CONS 15L 103A 80 80 4880 ROUNDS III R CONS 15L 104 80 SWAVELY 80 15L 105 80 80 8863 DORSON MH CONS 15L 106 80 80 7490 ZHAO J CONS 15L 107 85 85 15L 107A 27 CLOSET 27 15L 108 510 510 15L 109 968 968 15L 110 238 238 15L 111 238 238 15L 112 168 MECH. ROOM 168 15L 113 193 193 15L 114 262 MECH. FOR DRY ROOM 262 15L 115 533 533 15L 117 124 124 865 CROSS III JC CONS 15L 118 117 117 152 MITCHELL WL SENC 15L 119 117 117 5675 BENTLEY JM DIR
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 3 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 120 130 65 8053 HAND ML SUP 65 254 MADAN S CONS 32 101 113 113 32 102 113 113 32 103 113 113 186 BARTON L CONS 32 104 174 174 32 105 114 114 32 106 113 113 32 107 114 57 513 RIZZO VG CONS 57 874 RUMSEY JW CONS 32 108 114 114 7465 POLEVAYA O CONS 32 109 114 114 32 110 114 38 8259 BOSCO T CONS 38 4494 GOODWIN M CONS 38 7519 VODUC V SUP 32 111 123 123 335 PRABHU SK CONS 32 119 115 115 6916 WOO P SENC 32 120 174 58 4461 CELONA J SUP 58 6660 HILL SA CONS 58 6446 LANDRY BP SUP 32 121 114 57 1870 KHAN AR CONS 57 4044 LIU H CONS 32 122 114 57 5956 HAGAN MR CONS 57 7374 QI FC CONS
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 4 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- 32 123 114 57 4260 BATAL JD CONS 57 6826 ZHAO J 32 124 113 57 1714 BOWERS BJ CONS 57 362 NORTHROP WF CONS 32 125 114 57 4042 JAMIL A CONS 57 4054 RIVERA A CONS 32 126 114 114 687 NOWICKI BJ CONS 32 127 173 173 32 128 114 114 32 129 114 114 32 130 113 113 32 134 164 164 5689 HAVERTY AH SUP 32 135 605 EPYX DESIGN CENTER 605 32 136A 65 65 32 136B 65 65 32 137 311 EPYX CONFERENCE 311 46 100A 1709 PILOT PLANT 1709 46 200A 297 PILOT PLANT ME22 WILSON G 297 48 100 272 SHED 5 272
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 5 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ********** TOTALS FOR GROUP 194 ********** SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 6 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########## TOTALS FOR SECTION B924 ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 7 SECTION: SECTION LEADER: UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########### GRAND TOTALS FOR COMPANY ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
EPYX Space - Building 15 Total Rentable sq. ft. 8,261 Notes: # 1: 15L/101 thru 15L/107A reflects space for cubicles only (818 sq. ft.) Aisle space has been deducted. Note #2: 15/153 reflects space for offices and cubicles only (380 sq. ft.) Entrance and aisle space has been deducted. [FLOOR PLAN APPEARS HERE] as of 3/31/00 Pat Walsh EPYX Space - Building 32 Total Rentable sq. ft. = 4,015 sq. ft. [FLOOR PLAN APPEARS HERE] Notes: Red background is Credit Union and other shared space. as of 3/31/00 Pat Walsh [PILOT PLANT COMPLEX DRAWING APPEARS HERE] Schedule 3.16(b) ---------------- See attached Schedule 3.16(b) Manufacturing Laboratory Equipment
Model # Social # - --------------------------------------------------------------------------------------------- 1. Wilton Bandsaw 8201 1162687 - --------------------------------------------------------------------------------------------- 2. Bandsaw Welder 9514720 86066 - --------------------------------------------------------------------------------------------- 3. Dremel Disk/Belt Sander 17311 76706 - --------------------------------------------------------------------------------------------- 4. 8 Work Benches - --------------------------------------------------------------------------------------------- 5. 3 Bench Vises - --------------------------------------------------------------------------------------------- 6. Heinrich Alligator Metal Shear 1 - --------------------------------------------------------------------------------------------- 7. 4 Tool Cabinets - --------------------------------------------------------------------------------------------- 8. 2 Parts Cabinets - --------------------------------------------------------------------------------------------- 9. Miller/Driller 9510039 730371 - --------------------------------------------------------------------------------------------- 10. Drill Press - 14" Floor Model 951225 123642 - --------------------------------------------------------------------------------------------- 11. Special Refractory Lathe - --------------------------------------------------------------------------------------------- 12. High-Boy Small Tool Cabinet (craftsman) - --------------------------------------------------------------------------------------------- 13. Steel Top Arc Welding Bench - --------------------------------------------------------------------------------------------- 14. TIG Electric Welder Synchro Wave 250 903056 KH526256 - --------------------------------------------------------------------------------------------- 15. Tool Grinder & Floor Stand E-7 Wl-98 - --------------------------------------------------------------------------------------------- 16. 2200 lb. Portable Floor Stand A 0203AA05122 - --------------------------------------------------------------------------------------------- 17. Misc. Assorted Small Hand Tools - --------------------------------------------------------------------------------------------- 18. Shop Vacuum - Hiele S401I 50573109 - --------------------------------------------------------------------------------------------- 19. Misc. Machine Tool Attachments - --------------------------------------------------------------------------------------------- 20. Misc. Measuring Tools - --------------------------------------------------------------------------------------------- 21. 18x24 Steel Surface Plate - --------------------------------------------------------------------------------------------- 22. 18x24 Granite Precision Surface Plate Grade B 32032 - --------------------------------------------------------------------------------------------- 23. Wilton Disc/Belt Grinder Model Ser. 901019 4200 - --------------------------------------------------------------------------------------------- 24. Drill Sharpener V-190 V-1435A - --------------------------------------------------------------------------------------------- 25. Wire Wheel Bench Grinder 632F W-699 - --------------------------------------------------------------------------------------------- 26. Carboloy Bench Grinder 623E WO-999 - --------------------------------------------------------------------------------------------- 27. 3 Tan Arbor Press (jet) AP-3 333630 - --------------------------------------------------------------------------------------------- 28. Flexible Saaft Die Grinder Series S K970758 - --------------------------------------------------------------------------------------------- 29. Borescope in Case FOI-1 F26285 - --------------------------------------------------------------------------------------------- 30. Small Tig Welder 190 GTS a90152A188109a - --------------------------------------------------------------------------------------------- 31. Parker Tube Bender (2pc) w/attachments 420 2301s / 2236S - --------------------------------------------------------------------------------------------- 32. 6C Cart (analyzers) - --------------------------------------------------------------------------------------------- 33. 2x 12kWe Dynaload Load Cells
EPYX CUSTOM HARDWARE EPYX CONFIDENTIAL
- ------------------------------------------------------------------------------------------------- Fuel Processor Prototype Inventory - ------------------------------------------------------------------------------------------------- Model No. Unit Current PO Resp. Design Date Parts Date (aka Drawing S/N Hardware Release Received H/W No.) Status Ass'd - ------------------------------------------------------------------------------------------------- 50 kWe Ethanol Model A 1 Complete - ------------------------------------------------------------------------------------------------- 2 Complete - ------------------------------------------------------------------------------------------------- 50 kWe Gasoline Model A 8008-101 1 Retired - ------------------------------------------------------------------------------------------------- 2 Complete - ------------------------------------------------------------------------------------------------- 10 kWe Model A 8035-001 1 Complete - ------------------------------------------------------------------------------------------------- 2 Complete - ------------------------------------------------------------------------------------------------- 10 kWe Model B 8037-001 1 Complete In hand - ------------------------------------------------------------------------------------------------- 8037-001 2 Complete In hand - ------------------------------------------------------------------------------------------------- 8037-001 3 Complete In hand - ------------------------------------------------------------------------------------------------- 8037-001 4 Complete Complete - ------------------------------------------------------------------------------------------------- 68191-D1-101 5 Complete G. Block 9/27/99 12/9/99 - ------------------------------------------------------------------------------------------------- 68191-D1-1Ol 6 Complete G. Block 9/27/99 12/27/99 - ------------------------------------------------------------------------------------------------- 68191-D1-101 7 G. Block 9/27/99 due 1/11/00 - ------------------------------------------------------------------------------------------------- 68191-Dl-101 8 G. Block 9/27/99 due 1/14 - ------------------------------------------------------------------------------------------------- 68191-Dl-101 9 G. Block 9/27/99 due 1/14 - ------------------------------------------------------------------------------------------------- 68191-D1-101 10 G. Block 9/27/99 due 2/14 - ------------------------------------------------------------------------------------------------- 68191-D1-101 11 G. Block 9/27/99 due 2/14 - ------------------------------------------------------------------------------------------------- 68191-Dl-101 12 G. Block 9/27/99 due 3/14 - ------------------------------------------------------------------------------------------------- 68191-Dl-101 13 G. Block 9/27/99 due 3/14 - ------------------------------------------------------------------------------------------------- Merchant H2 FPA 5064-001 1 - ------------------------------------------------------------------------------------------------- MiniPox A 93747-00 1 - ------------------------------------------------------------------------------------------------- 2 Minipox B 1-5 - ------------------------------------------------------------------------------------------------- 190 kWth Phase III FPA 8051-001 1 - ------------------------------------------------------------------------------------------------- 8051-001 2 Parts Only - ------------------------------------------------------------------------------------------------- 15 kWth ATP SR FPA ? 1 - ------------------------------------------------------------------------------------------------- 150 kWth MPR 1 - ------------------------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- Fuel Processor Prototype Inventory - --------------------------------------------------------------------------------- Date Current Assigned Comments Cat. Location To Loaded - --------------------------------------------------------------------------------- 50 kWe Ethanol Model A Cambridge, UK CCL - --------------------------------------------------------------------------------- Trailer A Storage - --------------------------------------------------------------------------------- 50 kWe Gasoline Model A Autopsy Mat'ls Report - --------------------------------------------------------------------------------- Trailer B5 Storage - --------------------------------------------------------------------------------- 10 kWe Model A Bldg 46 EP Prgm Returned 12/2/99 - --------------------------------------------------------------------------------- Epyx Entrance Marketing - --------------------------------------------------------------------------------- 10 kWe Model B Bldg 46 BTU #1 M. Sheehan - --------------------------------------------------------------------------------- Mfg Lab PPGM M. Sheehan - --------------------------------------------------------------------------------- Mfg Lab BTU #2 Gus/Nathan Mods - --------------------------------------------------------------------------------- 12/15/99 Mfg Lab Renault - --------------------------------------------------------------------------------- 1/5/00 Mfg Lab BTU #3 - --------------------------------------------------------------------------------- Mfg Lab BTU #4 D. Swavely/DMI - ------------------------- --------------------- VW Needs supports - ------------------------- --------------------- SFAA 1A Needs supports - ------------------------- --------------------- BTU #5 D. Swavely/DMI - ------------------------- --------------------- BTU #6 D. Swavely/DMI - ------------------------- --------------------- BTU #7 D. Swavely/DMI - ------------------------- --------------------- ? D. Swavely/DMI - ------------------------- --------------------- ? D. Swavely/DMI - ------------------------- --------------------- Merchant H2 FPA Allentown, PA APCI J. Cross - --------------------------------------------------------------------------------- MiniPox A Epyx Conf Rm Minipox M. Sun - --------------------------------------------------------------------------------- Minipox B Trailer B2 None AL Gray Shells - --------------------------------------------------------------------------------- 190 kWth Phase III FPA Bldg 46 DOE PRDA D. Hottle/B. Nowicki - --------------------------------------------------------------------------------- Trailer A DOE PRDA D. Hottle/B. Nowicki - --------------------------------------------------------------------------------- 15 kWth ATP SR FPA D. Hottle/B. Nowicki - --------------------------------------------------------------------------------- 150 kWth MPR Bldg 46 Comb/Chem Rafey Khan - --------------------------------------------------------------------------------- Trailer A LANL Rafey Khan - ---------------------------------------------------------------------------------
EPYX CONFIDENTIAL
- ------------------------------------------------------------------------------ TGC Prototype Inventory - ------------------------------------------------------------------------------ Model No. (aka Unit Current Design Drawing No.) S/N Hardware Release Status - ------------------------------------------------------------------------------ DOE Phase O (50 kWe) 1-2 - ------------------------------------------------------------------------------ DOE Phase I (10 kWe) N/A 1 - ------------------------------------------------------------------------------ 10 kWe Ngas Model EP 1 - ------------------------------------------------------------------------------ DOE Phase II, 10 kWe 1 Disintegrated - ------------------------------------------------------------------------------ Merchant H2 Thermal Reactor HGTGC-001 1 - ------------------------------------------------------------------------------ Mini TGC 1 - ------------------------------------------------------------------------------ 190 kWth DOE Ph III 34788-D-100 1 - ------------------------------------------------------------------------------ 2 - ------------------------------------------------------------------------------ 10 kWe NGAS TGC Model BTU 93286-16-Dl-100 1 Complete - ------------------------------------------------------------------------------ 2 Complete - ------------------------------------------------------------------------------ 68191-D1-201 3 In Process 11/1/99 - ------------------------------------------------------------------------------ 4 On Order 11/1/99 - ------------------------------------------------------------------------------ 5 On Order 11/1/99 - ------------------------------------------------------------------------------ 6 On Order 11/1/99 - ------------------------------------------------------------------------------ 7 On Order 11/1/99 - ------------------------------------------------------------------------------ 8 On Order 11/1/99 - ------------------------------------------------------------------------------ 10kWe Liquid Fuel Model SFAA 68191-D1-100 1 Complete - ------------------------------------------------------------------------------ 2 Complete - ------------------------------------------------------------------------------ 3 On Order - ------------------------------------------------------------------------------ 4 On Order - ------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------- TGC Prototype Inventory - ---------------------------------------------------------------------------------------------------------- PO Date Parts Date H/W Current Assigned Comments Resp. Received Ass'd Location To - ---------------------------------------------------------------------------------------------------------- DOE Phase O (50 kWe) Trailer B Storage Burner, CC - ---------------------------------------------------------------------------------------------------------- DOE Phase I (10 kWe) Trailer B DOE PRDA Burner, CC, Fuel Vap - ---------------------------------------------------------------------------------------------------------- 10 kWe Ngas Model EP Bldg 46 EP Pgrm Broken - ---------------------------------------------------------------------------------------------------------- DOE Phase II, 10 kWe Mfg Lab DOE PRDA Under Autopsy Disintegrated - ---------------------------------------------------------------------------------------------------------- Merchant H2 Thermal Reactor PA APCI - ---------------------------------------------------------------------------------------------------------- Mini TGC Epyx Conf MiniPox Matt's Design - ---------------------------------------------------------------------------------------------------------- 190 kWth DOE Ph III Bldg 46 DOE PRDA - ---------------------------------------------------------------------------------------------------------- In Process DOE PRDA - ---------------------------------------------------------------------------------------------------------- 10 kWe NGAS TGC Model BTU Bldg 46 BTU #1 D. Hottle/M. Dorson - ---------------------------------------------------------------------------------------------------------- Mfg Lab BTU #2 - ---------------------------------------------------------------------------------------------------------- G. Block 12/27/99 BTU #3 BTU Design Mods/DMI - ---------------------------------------------------------------------------------------------------------- G. Block due 1/14 BTU #4 - ---------------------------------------------------------------------------------------------------------- G. Block due 1/28 BTU #5 - ---------------------------------------------------------------------------------------------------------- G. Block due 2/11 BTU #6 - ---------------------------------------------------------------------------------------------------------- G. Block due 2/25 BTU #7 - ---------------------------------------------------------------------------------------------------------- G. Block due 3/10 BTU #8 - ---------------------------------------------------------------------------------------------------------- 10kWe Liquid Fuel Model SFAA 11/23/99 Mfg Lab PPGM D. Hottle/B. Nowicki - ---------------------------------------------------------------------------------------------------------- 12/22/99 Mfg Lab VW - ---------------------------------------------------------------------------------------------------------- Gunther due 1/24 Renault - ---------------------------------------------------------------------------------------------------------- Gunther due 1/31 SFAA 1A - ----------------------------------------------------------------------------------------------------------
EPYX CONFIDENTIAL
- -------------------------------------------------------------------------------- PrOx Reactor Prototype Inventory - -------------------------------------------------------------------------------- Model No. Unit Current PO resp. Date (aka Drawing S/N Hardware Parts No.) Status Received - -------------------------------------------------------------------------------- 5-Bed Test Reactor N/A 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10 kWe PrOx 1 Reactor Matt's Sketch 1 Complete - -------------------------------------------------------------------------------- PROX1B-001 2 n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 3 Complete n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 4 Complete n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 5 Complete n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 6 Complete n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 7 Complete n/a n/a - -------------------------------------------------------------------------------- PROX1B-001 8 Complete A. Jamil 12/9/99 - -------------------------------------------------------------------------------- PROX1B-001 9 In Process A. Jamil 12/9/99 - -------------------------------------------------------------------------------- 68191-D1-401 10 On Order D. Pichon due 1/14 - -------------------------------------------------------------------------------- 68191-D1-401 11 On Order D. Pichon due 1/14 - -------------------------------------------------------------------------------- 68191-D1-401 12 On Order D. Pichon due 1/28 - -------------------------------------------------------------------------------- 68191-D1-401 13 On Order D. Plchon due 2/11 - -------------------------------------------------------------------------------- 68191-D1-401 14 On Order D. Pichon due 2/25 - -------------------------------------------------------------------------------- 68191-Dl-401 15 On Order D. Pichon due 3/10 - -------------------------------------------------------------------------------- 10 kWe PrOx 2 Reactor 68197-D1-300 1 Complete - -------------------------------------------------------------------------------- 2 Complete - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- 68197-D1-301 4 Complete 11/29/99 - -------------------------------------------------------------------------------- 68197-D1-301 5 11/29/99 - -------------------------------------------------------------------------------- 68197-D1-301 6 Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-D1-301 7 Complete Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-D1-301 8 Complete Gunther 12/10199 - -------------------------------------------------------------------------------- 68197-D1-301 9 Complete Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-D1-301 10 Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-Dl-301 11 Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-D1-301 12 Gunther 12/10/99 - -------------------------------------------------------------------------------- 68197-Dl-301 13 Gunther 12/10/99 - -------------------------------------------------------------------------------- 50 kWe PrOx 1 Reactor 34788-D1-301 1 - -------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 50 kWe PrOx 2 Reactor 34788-D1-401 1 - -------------------------------------------------------------------------------- 2 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- PrOx Reactor Prototype Inventory - -------------------------------------------------------------------------------- Date Date Current Assigned Comments H/W Cat. Location To Ass'd Loaded - ------------------------------------------------------------------------------------------------- 5-Bed Test Reactor Bldg 46 Storage - ------------------------------------------------------------------------------------------------- 10 kWe PrOx 1 Reactor Bldg 46 MPR Matt's Unit - ------------------------------------------------------------------------------------------------- n/a Mat'ls Lab Renault AJ Design, MSM 9/98 Build - ------------------------------------------------------------------------------------------------- n/a Mfg Lab PPGM AJ Design, MSM 9/98 Build - ------------------------------------------------------------------------------------------------- n/a Bldg 46 MPR AJ Design, MSM 11/98 Build - ------------------------------------------------------------------------------------------------- n/a Bldg 46 BTU #1 AJ Design, MSM 11/98 Build - ------------------------------------------------------------------------------------------------- n/a Mfg Lab BTU #2 AJ Design, SKL 6/99 Build - ------------------------------------------------------------------------------------------------- n/a 12/20/99 BTU land BTU #3 AJ Design, SKL 6/99 Build - ------------------------------------------------------------------------------------------------- 12/23/99 12/27/99 BTU land BTU #4 AJ Design, SKL 11/99 Build - ------------------------------------------------------------------------------------------------- 1/4/00 BTU land VW AJ Design, SKL 11/99 Build - ------------------------------------------------------------------------------------------------- BTU land BTU #5 Dean wil Order, DMI - ------------------------------------------------------------------------------------------------- Mfg Lab SFAA 1A w/o support - ------------------------------------------------------------------------------------------------- BTU land BTU #6 - ------------------------------------------------------------------------------------------------- D. Pollica BTU #7 - ------------------------------------------------------------------------------------------------- ? - ------------------------------------------------------------------------------------------------- ? - ------------------------------------------------------------------------------------------------- 10 kWe PrOx 2 Reactor Bldg 46 BTU #1 Alex, has T/Cs, pipe, 1L - ------------------------------------------------------------------------------------------------- Mfg Lab BTU #2 - ------------------------------------------------------------------------------------------------- Alex Cube Storage - ------------------------------------------------------------------------------------------------- n/a 12/20/99 Bldg 46 PPGM Redesign, thin wal, 1.5L - ------------------------------------------------------------------------------------------------- Alex Cube BTU #3 - ------------------------------------------------------------------------------------------------- Alex Cube BTU #4 - ------------------------------------------------------------------------------------------------- 1/10/00 Mat'ls Lab Renault 2 t/c's & side hangers - ------------------------------------------------------------------------------------------------- 1/10/00 Mat'ls Lab VW 2 t/c's & side hangers - ------------------------------------------------------------------------------------------------- Mat'ls Lab SFAA 1A - ------------------------------------------------------------------------------------------------- Alex Cube BTU #5 - ------------------------------------------------------------------------------------------------- Alex Cube BTU #6 - ------------------------------------------------------------------------------------------------- Alex Cube BTU #7 - ------------------------------------------------------------------------------------------------- ? - ------------------------------------------------------------------------------------------------- 50 kWe PrOx I Reactor Bldg 46 DOE PRDA Alex - ------------------------------------------------------------------------------------------------- Trailer A DOE PRDA - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- 50 kWe PrOx2 Reactor Storage DOE PRDA Alex - ------------------------------------------------------------------------------------------------- Bldg 46 DOE PRDA Mod for 2X volume - -------------------------------------------------------------------------------------------------
EPYX CONFIDENTIAL
- -------------------------------------------------------------------------------- Miscellaneous Reactor Prototype Inventory - -------------------------------------------------------------------------------- Current Model No. (aka Hardware Design Drawing No.) Unit S/N Status Release - -------------------------------------------------------------------------------- DOE Phase III LTS 34788-Dl-201 1 Complete 4/14/99 - -------------------------------------------------------------------------------- 2 Complete 4/14/99 - -------------------------------------------------------------------------------- CDS Reactor Maria's sketch 1 Complete - -------------------------------------------------------------------------------- 68191-D1-451 2 Complete 11/22/99 - -------------------------------------------------------------------------------- 68191-D1-451 3 Complete 11/22/99 - -------------------------------------------------------------------------------- 68191-D1-451 4 Complete 11/22/99 - -------------------------------------------------------------------------------- 68191-D1-451 5 Complete 11/22/99 - -------------------------------------------------------------------------------- 68191-D1-451 6 11/22/99 - ------------------------------------------------------------------------------- 68191-D1-451 7 11/22/99 - -------------------------------------------------------------------------------- Steam Separator SS01-001 1 Complete - -------------------------------------------------------------------------------- SS01-001 2 - -------------------------------------------------------------------------------- SS01-001 3 - -------------------------------------------------------------------------------- SS01-001 4 - -------------------------------------------------------------------------------- SS01-001 5 - -------------------------------------------------------------------------------- SS01-001 6 - -------------------------------------------------------------------------------- SS01-001 7 - -------------------------------------------------------------------------------- Water Separator WS01-001 1 Complete - -------------------------------------------------------------------------------- WS01-001 2 - -------------------------------------------------------------------------------- WS01-001 3 - -------------------------------------------------------------------------------- WS01-001 4 - -------------------------------------------------------------------------------- WS01-001 5 - -------------------------------------------------------------------------------- WS01-001 6 - -------------------------------------------------------------------------------- WS01-001 7 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ Miscellaneous Reactor Prototype Inventory - ------------------------------------------------------------------------------------------------ Date Parts Date Assy Current Assigned PO resp. Received Complete Location To Comments - ------------------------------------------------------------------------------------------------ DOE Phase III LTS Mat'ls Lab DOE PRDA A. Jamll - ------------------------------------------------------------------------------------------------ Bldg 46 DOE PRDA - ------------------------------------------------------------------------------------------------ CDS Reactor BTU #1 M. Sun - ------------------------------------------------------------------------------------------------ 11/29/99 - 12/20/99 Bldg 46 BTU #2 A. Rivera - ------------------------------------------------------------------------------------------------ 11/29/99 - 1/6/00 BTU land BTU #8 - ------------------------------------------------------------------------------------------------ Gunther 12/10/99 - 1/6/00 BTU land BTU #3 - ------------------------------------------------------------------------------------------------ Gunther 12/10/99 - 1/6/00 BTU land BTU #4 - ------------------------------------------------------------------------------------------------ Gunther 12/10/99 - BTU land BTU #6 - ------------------------------------------------------------------------------------------------ Gunther 12/10/99 - BTU land BTU #7 - ------------------------------------------------------------------------------------------------ Steam Separator Will PPGM - ------------------------------------------------------------------------------------------------ Will 1/17/00 Renault - ------------------------------------------------------------------------------------------------ Will 1/17/00 VW - ------------------------------------------------------------------------------------------------ Will 1/24/00 SFAA - ------------------------------------------------------------------------------------------------ Will 1/24/00 - ------------------------------------------------------------------------------------------------ Will 2/4/00 - ------------------------------------------------------------------------------------------------ Will 2/4/00 - ------------------------------------------------------------------------------------------------ Water Separator Will PPGM - ------------------------------------------------------------------------------------------------ Will 1/17/00 Renault - ------------------------------------------------------------------------------------------------ Will 1/17/00 VW - ------------------------------------------------------------------------------------------------ Will 1/24/00 SFAA - ------------------------------------------------------------------------------------------------ Will 1/24/00 - ------------------------------------------------------------------------------------------------ Will 2/4/00 - ------------------------------------------------------------------------------------------------ Will 2/4/00 - ------------------------------------------------------------------------------------------------
EPYX CONFIDENTIAL
Heat Exchangers - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Model No.(aka Unit S/N Current Design PO Resp Date Date H/W Current Assigned Comments Drawing No.) Hardware Release Parts Ass'd Location To Status Received - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Superradiator DOE Phase III 1 DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ 2 DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ Modine Phase III 1 DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ 2 DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ Modine Phase IV 1 B. Nowicki 12/9/99 Trailer DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ 2 B. Nowicki 12/9/99 Trailer DOE PRDA - ------------------------------------------------------------------------------------------------------------------------------------ BTU PrOx Intercooler Matt's sketch 1 BTU #1 - ------------------------------------------------------------------------------------------------------------------------------------ Matt's sketch 2 BTU #2 - ------------------------------------------------------------------------------------------------------------------------------------ 68191-D1-651 3 On Order Gus due 1/14 Bldg 46 BTU #3 - ------------------------------------------------------------------------------------------------------------------------------------ 68191-D1-651 4 On Order Gus due 1/14 Mfg Lab BTU #4 - ------------------------------------------------------------------------------------------------------------------------------------ 5 On Order Gus due 1/28 BTU #5 - ------------------------------------------------------------------------------------------------------------------------------------ 6 On Order Gus due 2/11 BTU #6 - ------------------------------------------------------------------------------------------------------------------------------------ 7 On Order Gus due 2/25 BTU #7 - ------------------------------------------------------------------------------------------------------------------------------------ 8 On Order Gus due 3/10 BTU #8 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ Epyx Custom Components Summary (Reactors, Heat Exchangers & Miscellaneous) - ------------------------------------------------------------------------------------------------------------------------ Custom Component PrOx LTS Heat Tail Gas Steam Status Fuel Processors Reactors Reactors Exchangers Combustors Separators - ------------------------------------------------------------------------------------------------------------------------ DOE Phase I 5-Bed LTS 1 (3.5 L 50 kWe Fuel 10 kWe Anode 50 kWe Ethanol Test Radial Vaporizer Burner + Auto Existing Hardware Model A Reactor Flow) (8008-008) Catalyst Bo Special - ------------------------------------------------------------------------------------------------------------------------ PrOx 1 50 kWe Gasoline (3.5L 10 kWe Fuel Model A (8008- Radial Vaporizer Natural Gas Existing Hardware 101) Flow) (8037-002) TGC (EP) - ------------------------------------------------------------------------------------------------------------------------ 10 kWe Gasoline Doe Phase 11 Model A (8035- PrOx 2 1O kWe Existing Hardware 001) (Monolith) TGC/CC - ------------------------------------------------------------------------------------------------------------------------ Merchant H2 10 kWe Gasoline Thermal Model B (8037- Reactor Existing Hardware 001) (HGTGC-001) - ------------------------------------------------------------------------------------------------------------------------ Merchant H2 FPA Existing Hardware (5064-001) - ------------------------------------------------------------------------------------------------------------------------ MiniPox A (93747- Existing Hardware 00) MiniPrOx MiniTGC - ------------------------------------------------------------------------------------------------------------------------ Existing Hardware MiniPox B - ------------------------------------------------------------------------------------------------------------------------ 190 kWth PrOx 190 kWth DOE 1(34788-D 190 kWth 190 kWth DOE Phase 111 (8051- 300) & LTS (34788- Phase III TGC New Designs 001) PrOx 2 D-200) (34788-D-100) - ------------------------------------------------------------------------------------------------------------------------ PS-1 New Designs PS-1 FPA PrOx PS-1 LTS PS-1 TGC - ------------------------------------------------------------------------------------------------------------------------
Inventory of EPYX Equipment In Laboratory 15L/109 3/31/00 Quantity Part Company ADL # 2 Hoods for Ventilation Anemostat 1 GC/MS with spare parts Hewlett Packard 140-135 1 Furnace Type 6000 with separate Control Box Thermolyne 3 Gas Detectors (Combustibles, CO, H2) USI 1 Printer Minolta 3 Bubble Generators with appropriate Kit Gillian Sensodyne 2 Corner Slate Top Cabinets containing glassware and GC sampling components 1 Flexible Metal Hose Cambridge Valve and Fittings 2 Small computer stands on wheels 1 5890 Series 11 G.C. Hewlett Packard 3 Carrier Gas Drying Tubes Supelco 5 Cylinder Holders 1 Microreactor Rig with Control Stand EPYX 12 Mass Flowmeters, 1 Pressure Controller, 1 refrigerator, 1 oven Brooks, Cole Parmer, Lindberg 1 Mesoreactor Rig with Control Stand EPYX 7 Mass Flowmeters, 1 Pressure Controller, 1 refrigerator, 1 large oven Brooks, Cole Parmer, Lindberg 2 Toolboxes full of tools 1 861OB G.C. SRI 1 Chrompack Micro G.C. Varian 2 Fuel Cell Test Stands EPYX 1 Big Hydrocarbon Trap R&D separations 4 HPLC Pumps Series III Bodman 1 Mobile Work Bench Kennedy 2 Gray one-shelf Work Bench 33 Calibration Gas Cylinders Matheson and AGA 1 PC Based Data Acquisition and Process Controller (2000) Camile 1 Spare Oven Heating Element Lindberg 1 Vacuum Nilfisk 1 Electric Boiler Chromalox 1 G.C. Work Bench 1 Plastic Cart 1 PH meter Consort 1 Gas Sample Carrier Intrument EPYX 1 Mobile Cart with Part Storage Container full of Rig replacement equipment 2 Large Gray Metal Cabinets
Submitted By: Carlo Cloffi 1 3/31/00
Quantity Part Company ADL # Gas regulators, Electrical and Plastic and Metal Tube Fittings, and a TV 1 Cabinet for Flammable Liquids Model 1962 1 Respirator Storage Container with Several Respirator Global 1 Slide Door Cabinet with Safet Equipment 2 Hazardous Waster Compression Seal Containers 1 Model 14658 Stirre/Hot Plate Cole Parmer 1 Metal Shelf with GC equipment 1 Ultrasonic Cleaner 3/4 Gallon Lab Safety 3 1 Liter Dewar Flasks Naglene 1 Spill Tray, 21"x17"x4" Lab Safety 2 Infinite Divider Boxes with Lab Equipment Lab Safety 1 Lab Rack Scienceware 1 Dual Temperature Controller Omega-Custom 1 Metal two shelf cart 1 Heated Valve Box Valco 1 Metal Safety Can Justrite 1 Plastic Safety Can Justrite 1 Metal Canopy 1 Small cylinder carrier cart hand crafted
Submitted By: Carlo Cioffi 2 Catalyst Lab 3/31/00 Inventory of EPYX Equipment In Laboratory 15L/108
Quantity Part Company ADL # 1 Hood for Ventilation with Cabinets Hamilton 1 large Furnace Lindberg 2 Gas Detectors (CO, H2) USI 1 Printer Minolta 1 Corner Slate Top Cabinets containing GC sampling components and Balance Equipment 2 Six-Cylinder Holders 1 Microreactor Rig with Control Stand EPYX 8 Rotameters, 2 Pressure Regulators, 1 clam-shell oven Cole Parmer, Aircontrol INC. 1 Toolboxes full of tools Allen 1 Chrompack Micro G.C. Varian 2 Syringe Pumps Harvard Apparatus 1 G.C. Work Bench 1 Large Gray Metal Chemical Cabinet 1 Plastic Vent Hood 1 Cabinet for Flammable Liquids 1 Model 1103 Stirrer/Hot Plate Jenway 1 Wood Shell 1 Laboratory Mixer with Controller 2 Auto-transformers Varlac 1 Two-Gas cylinder Cabinet with Vent Matheson 1 EZ-label Printer Casio 1 Slate top Sink with Cabinet 1 Medium Slate top Cabinet with Microreactor rig spare parts 2 Large Slate Top Cabinets Containing Catalyst, Glassware, and Spare Equipment 1 Periodic Table of Elements Elsevier 1 Dry Glass rack Kartell 2 Fischer Burners Fischer Scientific 1 Laboratory Blender Waring 1 Water Ultrasonic Heater FS20 Fischer Scientific 1 Mass Four-Flow Controller and Meter Porter 1 Hydraulic Unit Model # 3912 Carver 1 metal grinder Straub 2 grinder Proctor-Silex 1 scale Metler 2 Dryers
Submitted By: Carlo Cioffi 1 3/31/00
Ouantity Part Company ADL # 1 Nanopure Ultra-Pure Water System Barnstead 1 60" Fan 1 Water/Heater Oven Omega 1 Metal stand 1 Masterflex C/L Cole Parmer 1 Consort P601 Cole Parmer 1 Compaq DeskPro 3865 computer Compaq 143-1954 1 Computer Monitor Compaq 1 Laser Jet Printer Hewlett Packard 143-1527 22 Boxes of Purex Glassware Corning 1 (110gX0.1mg) scale Explorer 1 Portable Scale Ghaus 1 Portable Clam Sheel Oven EPYX 1 Circulator Leeds and Northrup 1 Laser-Particle Analyzer MicroTrac Fra 1 Stirrer Cole Parmer 1 Rs-232/Rs-485 Converter/Repeater Omega 2 large Plastic Tanks Nalgene 1 30/60 Heavy Duty Charger/ 200/300 amp Starter, Charge load tester with 6/12 volts Schumacher 1 Oven/Vacuum Chamber/Pump Model 900 Thermo-Environment 1 Antek 900-s Total Sulfur Analyzer Antek 1 Antek model 734-2 gas sample box Antek 1 Antek model 735 syringe drive Antek 1 Dell computer for Antek system, to be replaced from a laptop Dell 1 HP6890 GC from pilot plant Hewlett Packard 1 HP Vectra Computer for 6890 GC Hewlett Packard
Submitted By: Carlo Cioffi 2 Analytic Equipment (Partial)
- ---------------------------------------------------------------------------------------------------------------------- Type Mfr Model SIN Location Special - ---------------------------------------------------------------------------------------------------------------------- Laser Particle Analyzer Microtrac FRA 15L/108 - ---------------------------------------------------------------------------------------------------------------------- Micro GC Varian CP2003P 941096 15L/108 Dual Channel - ---------------------------------------------------------------------------------------------------------------------- Micro GC Varian CP2003P 941031 15L/109 Dual Channel - ---------------------------------------------------------------------------------------------------------------------- GC Hewlett-Packard 5890 LR47359C 15L/109 w/Methanizer - ---------------------------------------------------------------------------------------------------------------------- GC/MS Hewlett-Packard 6890/5973 US00007467 15L/109 - ---------------------------------------------------------------------------------------------------------------------- Total Sulfur Analyzer Antek 9000S En Route - ---------------------------------------------------------------------------------------------------------------------- GC SRI 8610B N1010 15L/136 w/Methanizer - ---------------------------------------------------------------------------------------------------------------------- CO Analyzer Horiba VIA-510 572886022 15L/136 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- O2 Analyzer Horiba VIA-510 573018013 15L/136 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO2 Analyzer Horiba VIA-510 573018074 15L/136 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- Gas Sampler EPYX Barrett 15L/109 New - ---------------------------------------------------------------------------------------------------------------------- Analytic Balance OHAUS E01140 B364013972 15L/108 110g Max - ---------------------------------------------------------------------------------------------------------------------- GC Hewlett-Packard 6890 Bid 46 w/Methanizer - ---------------------------------------------------------------------------------------------------------------------- Micro GC Hewlett-Packard M200H Bid 46 Dual Channel - ---------------------------------------------------------------------------------------------------------------------- Micro GC Varian CP2003P Bid 46 Dual Channel - ---------------------------------------------------------------------------------------------------------------------- CO Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO2 Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO2 Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- CO Analyzer Horiba VIA-510 Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- THC Horiba VIA-510 Model B Bid T6 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- NOX Horiba CLA-51OSS Model B Bid 46 IR Flow Cell Type - ---------------------------------------------------------------------------------------------------------------------- O2 Analyzer Horiba MPA-520 Model B Bid 46 IR Flow Cell Type - ----------------------------------------------------------------------------------------------------------------------
BLDG. 46 James Cross 03/31/2000 10:12 AM To: William Mitchell/ADLittle@ADLittle cc: Subject: Equipment List- Bldg 46 for Epyx/De Nora bill -- here is list - ------------ Forwarded by James Cross/ADLittle on 03/31/2000 10:12 AM ---------- Pai-Yung Woo 03/13/2000 03:08 PM To: James Cross/ADLittle@ADLittle cc: Hi James, Per your request on Friday of document preparations for De Nora/Epyx business development effort, here is the List of major pieces of equipment and apparatus in Bldg. 46. Please let me know if you need additional informations. P.Y. Epyx Pilot Plant - Reformer/Fuel Cell Technology Development Center (Bldg. 46 at Acorn Park) List of Major Pieces of Equipment and Apparatus (1) Process Air Compressor Type: Rotary Screw Compressor Mfr.: Sullair Corporation, IN Model: ES11 Integral Compressor/Air Dryer Capacity: 40 hp, 163 ACFM, Max. pressure 125 PSI; (2) Utility Air Compressor: Type: Reciprocating Mfr.: SpeedAir Model: 3JR77 Capacity: 7 hp, 17 CFM @90 PSI (3) Natural Gas Compressor: Type: Reciprocating Mfr.: Universal Air Products Corporation, VA Model: UR2.60-15NGB Capacity: 15 hp, 60 SCFM, 200 PSIG (4) Process Chiller: Type: Compressor/refrigeration Mfr.: GC Industries, DE Model: Icewagon 100AC-OD Capacity: 5 hp, 10 tons @50F or 120k Btu/hr. (5) Fuel Delivery Enclosure: Type: Steel and Fire-Rated Mfr.: Safety Storage Inc., CA Model: #15 Capacity: 134 sq-ft (6) Fuel Pumps (gear): Type: Gear Mfr.: Suntec Industries, Inc., IN Model: J6BC-325 Capacity: 43GPH @ 100 PSIG (7) Fuel Pump (vane) Type: Rotary Vane Mfr.: Weldon Pump, OH Model: A2015-A Capacity: 100GPH @75 PSIG @14VDC on gasoline (8) Process Steam Generator: Type: Electric powered Mfr.: Emerson Electric Company, PA Model: CES-048A8F31-483 Capacity: 68kW, 238 lb/hr., saturated, 150 PSIG max. (9) Water Deionizer: Type: Ion-Exchange Mfr.: Barnstead/Thermolyne, IA Model: B-Pure Capacity: 30 GPH, 100 PSIG, 18 Mohm-cm (10) Gas Monitor for Lab Safety (Carbon Monoxide) Type: Solid-state Diffusion Mfr.: US. Industrial Products Co Inc., CA Model: 4200R Capacity: 250 PPM, remote (11) Gas Monitor for Lab Safety (Hydrogen) Type: Solid-state Diffusion Mfr.: U.S. Industrial Products Co Inc., CA Model: 7200R Capacity: 20k PPM, remote (12) On-line Gas Analyzer-(CO) Type: Non-Dispersive Infrared analysis Mfr.: Horiba, CA Model: VIA-510 Capacity: CO, 0 to 50% (13) On-line Gas Analyzer (CO2) Type: Non-Dispersive Infrared analysis Mfr.: Horiba, CA Model: VIA-510 Capacity: CO2, 0 to 20% (14) On-line Gas Analyzer (CO) Type: Non-Dispersive Infrared analysis Mfr.: Horiba, CA Model: VIA-510 Capacity: CO, 0 to 50, 100, 500, 1000 PPM (15) On-line Gas Analyzer (O2) Type: Paramagnetic Mfr.: Horiba, CA Model: MPA-510 Capacity: 0 to 5, 10, 25, 50% (16) On-line Gas Analyzer (NO/NOx) Type: Chemiluminescence method Mfr.: Horiba, CA Model:CLA-510SS Capacity: 0 to 20, 50, 100, 200, 500, 1000, 2000 PPM (17) On-line Gas Analyzer (HC) Type: Flame ionization Mfr.: Horiba, CA Model: FIA-510 Capacity: Total HC (C3H8), 0 to 10, 50, 100, 500, 1000, 5000, 10000 PPM (18) Process Ventilation Canopies (10) 6,000 SCFM, 3,000 SCFM, 3,000 SCFM (19) Electric Power: 300A @480V Total; (20) Space: 3000 sq.ft total; Reformer Lab (Bldg. 46) Equipment List (with price for budgetary Planning) 40 HP air compressor (1) $16,000 180 gallon air tank (1) $1,200 60 gallon air tank (1) $600 N.G. compressor (1) $43,000 S/S after burn chamber (1) $3,500 Fuel enclosure (1) $30,000 Drum fuel delivery system (3) $1,500/ea $4,500 Explosion proof motor (3) $500/ea $1,500 Fuel drum spill skid (8) $350/ea $2,800 Fuel pump motor (4) $150/ea $600 20kW/40kW electric heater and controller (1) $15,000 Process boiler (68kW) (1) $8,000 Process boiler (12kW) (1) $1,600 Process boiler (9kW) (2) $1,400/ea $2,800 Process boiler (20kW) (1) $1,800/ea Boiler feed pump (8) $ 330/ea $2,640 Double head vacuum pump (4) $950/ea $3,800 HEPA vacuum pump (2) $1,200/ea $2,400 CO detector 4200R (8) $930/ea, $7,440 H2 detector 7200R (8) $930/ea $7,440 19" rack for analyzers (5) $1,700/ea $8,500 CO analyzer 1000ppm (3) $9,650/ea $28,950 CO analyzer 50% (3) $7,850/ea $23,550 CO2 analyzer 20% (3) $8,000/ea $24,000 O2 analyzer 100% (1) $9,000/ea NOx analyzer (1) $9,500 HC analyzer (1) $22,000 Sampler (1) $3,500 Process ventilation canopy system (9) $1,350/ea $12,150 Ventilation blower (3) $650/ea $1,950 Dalton blower (1) $300 Blue M oven (1) $5,000 Battery charger (1) $500 Teel 20 gallon tank (1) $500 Patton Fan (1) $200 Lathe insulation cutter (1) $1,500 Chiller (1) $22,000 Refrigerator bath (5) $2,200/ea $11,000 Total $340,720 1 - HP 6890 GC ~ 45K 1 - HP Micro GC ~ 20K - Various Lab Furniture - Cabinets & Parts 1 - VARIAN MICRO GC ~ 20K FUEL CELL TECHNOLOGY ELECTRONICS LAB 15/153 A ------------------------ 1. 3 ELECTRONICS BENCHES - LIST A 2. Leader 730-3D Power Supply 3. BK Model 1686 Power Supply 4. WAHL SOLMAX 7485 Soldering Station 5. MISC. ELECTRONICS STOCK PARTS 6. FLUKE SCOPE METER 7. 3 EA - DIGITAL MULTI METERS 15L/110 Materials Processing Laboratory Inventory January 13, 2000 o Vibco large vibrator SN 10B00206 o Nilfisk GS80 Vacuum Cleaner o Buffalo Vibrator #200 o Thermodyne Type 6000 Furnace, 0 to 2000(degree)F o Blue-M StabilTherm Oven, 0 to 600(degree)FLT-1041R o 13 ft bench with cabinet o 1000 lb. Capacity scale sv13237 o Filter mate air purification system SN98.30.015 o Valley craft drum hoist model #8565B 0599 o Large mop and pail o Seven 55 gallon drums of catalyst o Twelve 30 gallon drums of catalyst o Fifteen 5 gallon drums of catalyst o 10 ft. 55 gallon drum storage platform o Trash Can o Lab Furniture and Fume Hood 15L/138 INVENTORY
4. Date 1/3/2000 5. Submitted by: Mark Hagan 6. Ext.: 6559 Vendor Number: ---------- ------------------------------- ----- ---------------------------- 7. Deliver to (NAME): Mary Lou Haud Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building / Room: 15L/120 9. Ext.: 6517 Extension: --------------------------------------------- ----- -------------------------------- 10. Date Needed: 1/10/2000 C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 93286-01 12. [ ] Gov. Case [ ] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 194 15. Employee No.: 5956 Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable? [ ] Yes [ ] No 17. Is Mat'l Certification required? Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [ ] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [ ] Suggested Source GRAINGER Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. 505546 Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acorn Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [ ] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 1 3 4W520 3W044 Edsal 3001 Gray Cabinet ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ 2 1 7W405 4TV75 48" INDUSTRIAL CABINET ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ 3 1 5U989 7D203 Welded Bin Storage Cabinet ___________________________________________________________________________________________________________________________________ 4 48 2W777 Bins ___________________________________________________________________________________________________________________________________ 5 1624 2W779 Bins ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBER ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
4. Date 1/10/2000 5. Submitted by: Gus Block 6. Ext.: 5412 Vendor Number: ---------- ------------------------------- ----- ---------------------------- 7. Deliver to (NAME): Gus Block Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building / Room: 15L-103 9. Ext.: 5412 Extension: --------------------------------------------- ----- ------------------------------- 10. Date Needed: 1/11/2000 C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 93284-15 12. [ ] Gov. Case [X] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 194 15. Employee No.: 932 Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [X] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [X] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature /s/ Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [X] Suggested Source Craftsman Industrial Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [X] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted 800-776-8666 Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acom Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [X] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 1 2 9-WOC3 Written Pipet Bench Vise, 7" opening ___________________________________________________________________________________________________________________________________ 2 2 9-27194 14.4V Portable Electric Drill ___________________________________________________________________________________________________________________________________ 3 1 9-31228 14 pc file set ___________________________________________________________________________________________________________________________________ 4 1 9-38463 8 oz. Ball Pein hammer ___________________________________________________________________________________________________________________________________ 5 1 9-38465 16 oz. Ball Pein hammer ___________________________________________________________________________________________________________________________________ 6 1 9-38466 24 oz. Ball Pein hammer ___________________________________________________________________________________________________________________________________ 7 1 9-MH40100 9" Pry Bar ___________________________________________________________________________________________________________________________________ 8 1 9-MH40102 18" Pry Bar ___________________________________________________________________________________________________________________________________ 9 1 9-39830 Universal Protractor / Level ___________________________________________________________________________________________________________________________________ 10 1 9-94876 Utility knife ___________________________________________________________________________________________________________________________________ 11 1 9-94881 Replacement blades, Pkg. 100 ___________________________________________________________________________________________________________________________________ 12 1 9-KL-15INS Diagonal Pliers ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBER ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
4. Date 1/10/2000 5. Submitted by: Gus Block 6. Ext.: Vendor Number: ---------- ------------------------------- ----- ---------------------------- 7. Deliver to (Name): Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building/Room: 9. Ext.: Extension: --------------------------------------------- ----- ------------------------------- 10. Date Needed: C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case/Account: 12. [ ] Gov. Case [ ] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 15. Employee No.: Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [ ] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [ ] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature /s/ Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [ ] Suggested Source Craftsman Industrial Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acorn Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [X] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 25 1 9-AT6LN Long nose pliers locking 6'1 ___________________________________________________________________________________________________________________________________ 26 1 9-BH10937 Balldriver L-wrench set, Inch ___________________________________________________________________________________________________________________________________ 27 1 9-BH10999 Balldriver L-wrench set, Metric ___________________________________________________________________________________________________________________________________ 28 1 9-4362 10 pc. crowfoot wrench set ___________________________________________________________________________________________________________________________________ 29 1 9-WR1080 1-1/8" crowfoot wrench ___________________________________________________________________________________________________________________________________ 30 1 9-WR1082 1-1/4" crowfoot wrench ___________________________________________________________________________________________________________________________________ 31 2 9-42230 12 pc. wrench set ___________________________________________________________________________________________________________________________________ 32 2 9-44933 1" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ 33 2 9-44935 1-1/16" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ 34 2 9-44936 1-1/8" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ 35 2 9-44937 1-1/4" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBER ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
4. Date 1/10/2000 5. Submitted by: Gus Block 6. Ext.: 5412 Vendor Number: ---------- ------------------------------- ------ ---------------------------- 7. Deliver to (Name): Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building / Room: 9. Ext.: Extension: --------------------------------------------- ----- ------------------------------- 10. Date Needed: C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 12. [ ] Gov. Case [ ] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 15. Employee No.: Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [ ] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [ ] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature /s/ Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [ ] Suggested Source Craftsman Industrial Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acom Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [X] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 36 2 9-44235 1/2" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ 37 2 9-44236 9/16" long pattern comb. wrench ___________________________________________________________________________________________________________________________________ 38 2 9-44263 Extension bar 20" x 3/8" ___________________________________________________________________________________________________________________________________ 39 1 9-34843 3/8" 51 pc Socket set ___________________________________________________________________________________________________________________________________ 40 1 9-4435 Universal joint ___________________________________________________________________________________________________________________________________ 41 1 9-40169 Electronic Display caliper ___________________________________________________________________________________________________________________________________ 42 1 9-3869 6" Comb. square ___________________________________________________________________________________________________________________________________ 43 2 9-LFW9210 10' pocket tape ___________________________________________________________________________________________________________________________________ 44 1 9-67115 115 pc drill set ___________________________________________________________________________________________________________________________________ 45 1 9-65918 6-Drawer Pool Chest ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBER ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
4. Date 1/10/2000 5. Submitted by: Gus Block 6. Ext.: 5412 Vendor Number: ---------- ------------------------------- ----- ---------------------------- 7. Deliver to (Name): Gus Block Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building / Room: 15L/103 9. Ext.: Extension: --------------------------------------------- ----- ------------------------------- 10. Date Needed: C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 12. [ ] Gov. Case [ ] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 15. Employee No.: Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [ ] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [ ] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature /s/ Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [ ] Suggested Source Craftsman Industrial Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted 800-776-8666 Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acorn Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [ ] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 46 1 T-65919 Rollaway ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBER ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
Date 1/10/2000 5. Submitted by: Gus Block 6. Ext.: 5412 Vendor Number: ---------- ------------------------------- ----- --------------------- Deliver to (Name): Gus Block Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building / Room: 15L/103 9. Ext.: 5412 Extension: --------------------------------------------- ----- ------------------------------- 10. Date Needed: 1/11/2000 C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 93286-15 12. [ ] Gov. Case [X] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 194 15. Employee No.: 0932 Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [X] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [X] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature /s/ Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [X] Suggested Source McMaster Carr Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted 800-776-8666 Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACT'S NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acorn Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [X] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 1 3 8290A31 Ratchet tube cutter ___________________________________________________________________________________________________________________________________ 2 3 8290A32 Ratchet tube cutter ___________________________________________________________________________________________________________________________________ 3 12 8290A33 Extra tube cutter wheels ___________________________________________________________________________________________________________________________________ 4 12 8290A34 Extra tube cutter wheels ___________________________________________________________________________________________________________________________________ 5 3 8910A12 Variable diameter drills ___________________________________________________________________________________________________________________________________ 6 1 60515A3 2 lb. dead blow hammer ___________________________________________________________________________________________________________________________________ 7 1 5682A47 Phillips Round blade screwdriver ___________________________________________________________________________________________________________________________________ 8 1 6970A11 Slotted round blade X-long screwdriver ___________________________________________________________________________________________________________________________________ 9 1 6714T82 Flashlight ___________________________________________________________________________________________________________________________________ 10 2 4075A21 Hacksaw ___________________________________________________________________________________________________________________________________ 11 2 2476A25 Hacksaw blades, 24 tpi ___________________________________________________________________________________________________________________________________ 12 3 7016K71 Standard Reel Retracting Electric Cord ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBERS ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY 3. WHERE FREIGHT CHARGES ARE APPLICABLE, PLEASE PREPAY AND ADD.
4. Date 12/23/1999 5. Submitted by: Gus Block 6. Ext.: 5412 Vendor Number: ---------- ------------------------------- ---- ---------------------------- 7. Deliver to (Name): Gus Block Buyer Name and Number: ------------------------------------------------------------ --------------------- 8. Building/Room: 15L/138 9. Ext.: 5412 Extension: --------------------------------------------- ---- ------------------------------- 10. Date Needed: 1/7/2000 C.E.R. Number: ----------------------------------------------------------------- ---------------------------- 11. Case / Account: 93286-15 12. [ ] Gov. Case [X] Civ. Case Standing Order: [ ] Minority Vendor: [ ] -------- 13. Expense Category No.: 14. Unit No.: 194 15. Employee No.: 0932 Small Business Vendor: [ ] ----- ----- ----- 16. Is substitute acceptable: [ ] Yes [X] No 17. Is Mat'l Certification required Lease/Rental Purchase: [ ] L [ ] R [ ] Yes [X] No Buyer's Confirmation: [ ] Yes [ ] No 18. Approval Signature Follow-up Date: ------------------------------------------------------------ --------------------------- Section Head / Case Leader / Business Manager 19. Vendor Name: Date Received: --------------------------------------------------------- ---------------------------- [X] Suggested Source Global Industrial Equipment Received By: (ADL Recv. Dept) --------------------------------------------------------- ---------------------------- [ ] Mandatory Source Shipped Via: --------------------------------------------------------- ----------------------------- [ ] Vendor Contacted 800-645-1232 Date Delivered to Recipient: --------------------------------------------------------- --------------- CONTACTS NAME PHONE NUMBER Accepted By: FAX NUMBER: ----------------------------- (Print/Legible Signature of Recipient ) ____________________________________________________________________________________________________________________________________ PURCHASE ORDER No. 505546 Fax: 800-336-3818 Part No. Arthur D. Little INVOICE TO: Arthur D. Little, Inc. 20 Acorn Park, Cambridge, MA USA 02140-2390 . Telephone 617-498-5000 . Telefax: 617-498-7030 SHIP TO DATE OF ORDER LOCATION [ ] SEE [X] 20 ACORN PARK [ ] NO COPY TO RECEIVING MARKED BELOW CAMBRIDGE, MA 02140-2390 NECESSARY ____________________________________________________________________________________________________________________________________ FOR USE ON GOVERNMENT CONTRACT NUMBER PRIME SUB TO ARRIVE ON OR BEFORE SHIP VIA F.O.B. PPD TERMS SHIP PT. [ ] DESTINATION [ ] ____________________________________________________________________________________________________________________________________ ___________________________________________________________________________ [ ] MASSACHUSETTS SALES/USE TAX STATUS ___________________________________________________________________________ VENDOR REGISTRATION NO. 041549700 ___________________________________________________________________________ [ ] TAXABLE, ADD IF REGISTERED MASS. VENDOR ___________________________________________________________________________ [ ] EXEMPT, FOR RESALE, CERTIFICATE FURNISHED ATTN: [ ] EXEMPT, FOR MFG. USE, CERTIFICATE FURNISHED ___________________________________________________________________________ [ ] EXEMPT, NOT TAXABLE BY MASS. LAW [ ] OTHER ____________________________________________________________________________________________________________________________________ ITEM QUANTITY CATALOG NO. DESCRIPTION PRICE NO. ____________________________________________________________________________________________________________________________________ 1 6 DH 651397 60x36" Basic Bench, Maple top 248.95 3 wks ___________________________________________________________________________________________________________________________________ 2 3 DH 651416 48X24" Bench Return, Maple top 154.95 in store ___________________________________________________________________________________________________________________________________ 3 6 DH 651431 60" Bench Upright 95.95 " ___________________________________________________________________________________________________________________________________ 4 6 DH 651428 60X12" Cantilever Shelf 72.95 " ___________________________________________________________________________________________________________________________________ 5 3 DH 651443 60" Bin Panel Kit, 3 Bin Panels 67.95 3 wks ___________________________________________________________________________________________________________________________________ 6 3 DH 651444 60" Bin Panel, 2 Bin Panels, 1 Steel 63.95 in store ___________________________________________________________________________________________________________________________________ 7 3 DH 651439 48" Electric Strip 47.95 3 wks ___________________________________________________________________________________________________________________________________ 8 3 DH 651436 24" Bench Drawer 51.95 " ___________________________________________________________________________________________________________________________________ 9 3 DH 651438 36" Bench Drawer 55.95 " ___________________________________________________________________________________________________________________________________ 10 6 DH 651455 60X16" Lower Shelf 64.95 in store ___________________________________________________________________________________________________________________________________ 11 2 DH 344853 Production Stool 251.95 7 days ___________________________________________________________________________________________________________________________________ 12 Cont'd p. 1of 2 ___________________________________________________________________________________________________________________________________ THIS ORDER SUBJECT TO CONDITIONS OF SALE ON FACE AND REVERSE SIDE. TOTAL 1. ACKNOWLEDGE THIS ORDER IMMEDIATELY, GIVING PRICE AND FULL DELIVERY INFORMATION. ____________________________________ 2. SHOW ORDER NUMBERS ON ALL INVOICES, PACKAGES, SHIPPING PAPERS AND CORRESPONDENCE. BUYER'S SIGNATURE ONLY
Please see Changes in Bold EPYX Inventory (194) as of 3/31/00
ASSET LAST FIRST MAKE MODEL 300-2702 Batal John IBM 17" color monitor 300-2704 Batal John IBM PC300PL/400 300-1418 Bentley Jeffrey IBM Thinkpad 560 300-1562 Bentley Jeffrey IBM Thinkpad 560E P/MMX 300-2452 Bentley Jeffrey IBM PC300 PL 300-2511 Bentley Jeffrey IBM 21" G72 FS color monitor 300-2548 Bentley Jeffrey IBM Thinkpad 600 300-2970 Bentley Jeffrey IBM Thinkpad 600X 800-1704 Bentley Jeffrey Compaq LTE 5100 pentium 800-3777 Bentley Jeffrey MAG Innovation 17" color monitor 300-2463 Block Gus Compaq Deskpro 4000 300-2464 Block Gus Compaq Deskpro 4000 300-2465 Block Gus Compaq Deskpro 4000 300-2504 Block Gus Compaq 15" color monitor 300-2787 Block Gus IBM Thinkpad 600 800-1988 Block Gus IBM Thinkpad 560 800-2940 Block Gus Compaq 15" color monitor 800-3110 Block Gus Compaq 15" color monitor 800-3882 Block Gus Compaq 15" color monitor 143-4397 Block Stephen AST AST SVGA-l-R 300-2451 Bowers Brian IBM PC300 PL 300-2469 Bowers Brian IBM 17" color monitor 300-1671 Boyd Stephen Compaq 17" color monitor 300-1672 Boyd Stephen Compaq Deskpro 4000 300-1318 Celona John Compaq 17" color monitor 300-1895 Celona John Compaq Deskpro 4000 800-3871 Chintawar Prashant Quantex QP6 PII/300 MHz 800-3872 Chintawar Prashant Quantex 17" color monitor 300-1973 Cioffi Carlo Compaq 17" color monitor 300-2958 Cioffi Carlo IBM PC300PL/550 300-2964 Cioffi Carlo IBM 17 color G76
300-2445 Cole Terence IBM PC300 PL 300-2473 Cole Terence IBM 17" color monitor 800-3785 Cole Terence Quantex 17" color monitor 300-2379 Cross James IBM Thinkpad 600 300-2796 Cross James IBM Thinkpad 600X 800-2107 Cross James IBM Thinkpad 560 800-3776 Dorson Matthew Quantex QP6 P11/300 MHz 300-2959 Goodwin Marc IBM PC300PL/550 300-2967 Goodwin Marc IBM 17 color G76 300-1666 Goodwin Mark IBM Thinkpad 380 ED 300-1459 Hagan Mark Compaq 15" color monitor 800-3513 Hagan Mark Compaq Deskpro 6000 800-3771 Hagan Mark Compaq Deskpro 6000 300-2962 Hailes Rebecca IBM PC300PL/550 300-2968 Hailes Rebecca IBM 17 color G76 300-1786 Hand Mary Tektronix Phaser 560C color laser 300-1900 Hand Mary Compaq 17" color monitor 300-2696 Hand Mary IBM PC300PL/400 800-3765 Hansen Wesley IBM Thinkpad 600 300-2467 Harvey Richard Compaq Deskpro 4000 300-1393 Haverty Alina Compaq Deskpro 4000 300-2397 Haverty Alina IBM 17" color monitor 300-2687 Haverty Alina IBM PC300PL/350 143-1954 He Bo-Xiong Compaq Deskpro 386s 300-2609 He Bo-Xiong IBM Thinkpad 600 800-2245 Hill Steven Compaq 17" color monitor 800-2505 Hill Steven Compaq Deskpro Pentium 4000 300-2804 Jamil Anwar IBM Intellistation MPro 800-2147 Khan Abdul Apple 17" color monitor 800-2954 Khan Abdul IBM Thinkpad 365XD 300-1976 Kottenstette Nicholas Compaq 17" color monitor 800-1348 Kottenstette Nicholas Compaq Deskpro 590 Pentium 300-2444 Landry Brian IBM PC300 PL 300-2541 Landry Brian IBM PC300 PL 800-3611 Landry Brian IBM PC300 PL 800-3612 Landry Brian IBM 17" color monitor 143-5547 Lavine KathySue Apple 17" color monitor
300-2594 Liu Helen IBM PC300PL 300-2697 Liu Helen IBM 17" color monitor 143-1527 Mitchell William Hewlett-Packard HP Laserjet II 143-3203 Mitchell William Radius B/W (Apple) 143-3877 Mitchell William RGB 143-4863 Mitchell William Compaq Deskpro 486 33i 143-5132 Mitchell William Apple RGB Color Display 143-5551 Mitchell William Apple Apple 15" Color 300-1894 Mitchell William Compaq Deskpro 4000 300-1975 Mitchell William Compaq 17" color monitor 300-2427 Mitchell William IBM PC300 PL 300-2443 Mitchell William IBM PC300 PL 300-2458 Mitchell William IBM 17" color monitor 300-2474 Mitchell William IBM 17" color monitor 300-2512 Mitchell William IBM 21" G72 FS color monitor 300-2678 Mitchell William IBM PC300PL/350 300-2679 Mitchell William IBM 17" color monitor 300-2684 Mitchell William IBM PC300PL/350 300-2686 Mitchell William IBM PC300PL/350 300-2700 Mitchell William IBM 17" color monitor 300-2705 Mitchell William IBM PC300PL/400 300-2708 Mitchell William IBM 17" color monitor 300-2744 Mitchell William IBM PC300 PL 300-2745 Mitchell William IBM 17" color monitor 300-2797 Mitchell William IBM Thinkpad 600X 300-3779 Mitchell William Hewlett-Packard Vectra VL7 800- Mitchell William MAG Innovation 17" color monitor 800- Mitchell William MAG Innovation 17" color monitor 800-1012 Mitchell William IBM ThinkPad 755C 800-1363 Mitchell William Compaq Compaq 15" Color 800-1387 Mitchell William Compaq Deskpro 5100 (Pentium) 800-2945 Mitchell William Compaq Compaq 2000 800-2946 Mitchell William Compaq 17" color monitor 800-3501 Mitchell William Apple LaserWriter 16/600 Postscript 800-3762 Mitchell William MAG Innovation 17" color monitor 800-3763 Mitchell William Hewlett-Packard Vectra VU 860-3764 Mitchell William Hewlett-Packard 17" color monitor
800-3766 Mitchell William Hewlett-Packard LaserJet 400OTN 800-3767 Mitchell William Hewlett-Packard Kayak XA 800-3768 Mitchell William Hewlett-Packard 17" color monitor 800-3769 Mitchell William Compaq Deskpro 6000 800-3770 Mitchell William Compaq 17" color monitor 800-3772 Mitchell William Compaq 17" color monitor 800-3773 Mitchell William Hewlett-Packard Vectra VL7 800-3774 Mitchell William Hewlett-Packard Vectra VL7 800-3775 Mitchell William IBM Thinkpad 600 800-3778 Mitchell William Hewlett-Packard 17" Ergo 1284 300-2448 Morriseau Brian IBM PC300 PL 300-2457 Morriseau Brian IBM 17" color monitor 300-2960 Mosher Paul IBM PC300PL/550 300-2965 Mosher Paul IBM 17 color G76 800-2139 Mosher Paul Compaq Deskpro 4000 Given to Jason Willey 300-2426 Northrop William IBM PC300 PL 300-2455 Northrop William IBM 17" color monitor 143-3632 Nowicki Brian AST SVGA 143-4865 Nowlckl Brian Compaq Deskpro 486 66i 300-1897 Nowicki Brian Compaq Deskpro 4000 300-1901 Nowlckl Brian Compaq 17" color monitor 300-2802 Nowicki Brian IBM 20" monitor 300-2803 Nowicki Brian IBM 20" monitor 300-2805 Nowicki Brian IBM Intellistation MPro 300-2806 Nowicki Brian IBM Intellistation MPro 300-3116 Nowicki Brian IBM 17" color monitor 800-1824 Nowicki Brian IBM 21" P260 800-2503 Nowicki Brian Compaq Deskpro Pentium 4000 800-2504 Nowicki Brian Compaq 15" color monitor 800-3311 Nowicki Brian Mag DX 1745 17" color monitor 800-3312 Nowicki Brian Mag DX 1745 17" color monitor 800-3313 Nowicki Brian Mag DX 1745 17" color monitor 300-2961 Polevaya Olga IBM PC300PL/550 300-2966 Polevaya Olga IBM 17 color G76 800-2574 Polevaya Olga IBM Thinkpad 560 Back to stock for future new hire 300-2446 Pollica Darryl IBM PC300 PL 300-2471 Pollica Darryl IBM 17" color monitor
300-2613 Pollica Darryl IBM PC300PL/350 300-2430 Prabhu Srinivasa IBM Thinkpad 600 800-3960 Prabhu Srinlvasa IBM Thinkpad 560 300-2450 Qi Frank IBM PC300 PL 300-2456 Qi Frank IBM 17" color monitor 300-2513 Rivera Alejandro IBM 21" G72 FS color monitor 300-2807 Rivera Alejandro IBM Intellistation MPro 300-2428 Rizzo Vincent IBM PC300 PL 300-2470 Rizzo Vincent IBM 17" color monitor 300-4007 Rizzo Vincent IBM 21" P260 Stealth Black Monitor 300-4008 Rizzo Vincent IBM Intellistation MPRO Pentium III/733 300-4009 Rizzo Vincent IBM 21" P260 stealth black color monitor 300-4010 Rizzo Vincent IBM Intellistation MPRO Pentium III/733 300-1898 Rounds Robert Compaq 17" color monitor 300-2325 Rounds Robert Compaq Deskpro 4000 300-2472 Rumsey Jennifer IBM 17" color monitor 300-2595 Rumsey Jennifer IBM PC300PL/400 300-1668 Sylvester Richard Compaq 17" color monitor 300-1669 Sylvester Richard Compaq Deskpro 4000 143-4575 Teagan William IBM Thinkpad 720C Transfer to Unit 966- Not In Unit 194 300-1477 Thompson Craig Compaq Deskpro 4000 300-2675 Thompson Craig IBM PC300PL/350 300-2703 Thompson Craig IBM 17" color monitor 300-1623 UNASSIGNED Compaq Deskpro 6000 300-1036 Unassigned AcornPark Compaq Deskpro 4000 LS 300-1191 Unassigned Unassigned Compaq Armada 4131T 300-2963 Unassigned Unassigned IBM PC300PL/550 300-2969 Unassigned Unassigned IBM 17 color G76 300-2971 Unassigned Unassigned IBM Thinkpad 60OX 800-1359 UNASSIGNED UNASSIGNED Compaq Deskpro 590 (Pentium) 800-3098 UNASSIGNED UNASSIGNED Compaq Armada 1130T 300-1427 Unassigned Compaq Armada 4131T 300-1458 UNASSIGNED Compaq Deskpro 4000 800-3144 Voduc Vinh IBM Thinkpad 560 300-2015 Zhao James Compaq Deskpro 4000 300-2123 Zhao James Compaq 17" color monitor 800-2045 Zhao Jessica IBM Thinkpad 560
NEC Multisync XMz9 Plus V Videoplayer Viewsonic Prof. Svcs. PT813 Monitor Flight Computer (Serial No. #25M1012) H-P LaserJet 4000 printer H-P LaserJet 4000 printer Furniture: Office cubicles Kodak DC 120 Camera Schedule 3.17 ------------- EPYX has limited accounts receivable from ADL for contracts previously identified in Schedule 3.5. Schedule 3.18 ------------- None Schedule 3.19(a) ---------------- See attached Schedule 3.19(a) EPYX Rost For Job Classification and Adjustments
Supervisor Name Name ID No. Hire Date Arthur D. Little Job Title Status Class FT/PT - ---------------- ---------------- ------ --------- ------------------------------ ------ ----- ----- Hand, Mary L Haverly, Alina H 5689 05-May-86 Administrative Assistant A E P Bentley, Jeffrey M Hand, Mary L 8053 28-Mar-77 Business Assistant III A E F Brodsky, Mark Bentley, Jeffrey M. 5675 21-Apr-86 Director A E F Bentley, Jeffrey M Cross III, James C 865 28-Dec-95 Consultant A E F Bentley, Jeffrey M Mitchell, William L 152 06-Mar-95 Senior Consultant A E F Mitchell, William L Landry, Brian P 6446 20-Apr-98 Senior Consultant A E F Chintawar, Prashant Ciotti, Carlo Mario 5307 11-Oct-99 Consultant A E F Chintawar, Prashant Cole, Terence 2996 15-Nov-99 Consultant A E F Chintawar, Prashant Pollica, Darry E 6834 26-May-98 Analyst/RA/Associate A E F Mitchell, William L Goodwin, Marc 4494 24-Jan-00 Consultant A E F Mitchell, William L Morriseau, Brian D 8314 15-Jun-98 Consultant A E F Mitchell, William L Rizzo, Vincent G 513 29-Jun-98 Consultant A E F Mitchell, William L Rounds III, Robert 4880 22-Sep-99 Engineer A E F Mitchell, William L Zhao, Jessica 7490 22-Feb-00 Consultant/Engineer, PSMC A E F Mitchell, William L Hailes, Rebecca 630 20-Mar-00 Consultant A E F Nowicki, Brian J Jamil, Anwar 4042 04-Oct-99 Consultant A E F Nowicki, Brian J Northrop, William F 362 22-Jun-98 Consultant A E F Nowicki, Brian J Rivera, Alejandro 4054 04-Oct-99 Consultant A E F Polveya, Olga Khan, Abdul Raley 1870 10-Aug-98 Consultant A E F Prabhu, Srinivasa Bowers, Brian J 1714 13-Jul-98 Consultant A E F Prabhu, Srinivasa Liu, Holon 4044 11-Oct-99 Consultant A E F Chintawar, Prashani Wiley, Jason 4265 13-Mar-00 new hire A E F Chintawar, Prashani Thompson, Craig 4370 05-Oct-99 Consultant A E F Hagan, Mark Oi, Frank C 7374 04-Jun-98 Consultant A E F Hagan, Mark Zhao, James 6826 31-Jan-00 Manager A E F Mitchell, William L Dorson, Matthew H 8863 09-Mar-98 Consultant A E F Mitchell, William L Noordzij, Bouke 6001 20-Nov-69 Consultant A E F Prabhu, Srinivasa Rumsey, Jennifer W 874 01-Jul-98 Consultant A E F Cross III, James C Chintawar, Prashani 6422 20-Apr-98 Consultant A E F Cross III, James C Haqan, Mark R 5956 28-Jul-97 Consultant A E F Cross III, James C Nowicki, Brian J 607 30-Oct-95 Consultant A E F Cross III, James C Polevaya, Olga 7465 22-Feb-00 Manager, Technology A E F Cross III, James C Woo, Pai-Yung 6916 25-Feb-88 Senior Consultant A E F Mitchell, William L Block, Stephen Gustav 932 22-Jan-96 Consultant A E F Mitchell, William L Prabhu, Srinivasa K 335 03-Nov-97 Consultant A E F Cross III, James C Clawson, Lawrence G 5163 03-Apr-99 Consultant A E F Noordzij, Bouke Boyd, Stephen 4802 24-Jun-99 Lab Tech Group Leader A E F Noordzij, Bouke Sylvester, Richard M 4035 21-Oct-99 Lab Technician A E F Supervisor Name Name New Title Level Date Base Rt US Annual Rt - ---------------- ---------------- ------------------------ ----- --------- ----------- --------- Hand, Mary L Haverly, Alina H Administrative Assistant 01-Jan-01 21.06 32,853.60 Bentley, Jeffrey M Hand, Mary L Business Associate III 01-Apr-00 55,000.00 55,000.00 Brodsky, Mark Bentley, Jeffrey M. Chief Operating Officer 01-Apr-00 150,000.00 150,000.00 Bentley, Jeffrey M Cross III, James C Director, Tech Dev. 01-Apr-00 100,000.00 100,000.00 Bentley, Jeffrey M Mitchell, William L V.P. Engineering 01-Apr-00 130,000.00 130,000.00 Michell, William L Landry, Brian P Engineer 1 01-Apr-00 45,000.00 45,000.00 Chintawar, Prashant Ciotti, Carlo Mario Engineer 2 01-Mar-99 48,000.00 48,000.00 Chintawar, Prashant Cole, Terence Engineer 2 01-Sep-99 56,000.00 56,000.00 Chintawar, Prashant Pollica, Darry E Engineer 2 01-Jun-00 52,000.00 52,000.00 Mitchell, William L Goodwin, Marc Engineer 2 01-Feb-01 52,000.00 52,000.00 Mitchell, William L Morriseau, Brian D Engineer 2 01-Jun-00 61,000.00 61,000.00 Mitchell, William L Rizzo, Vincent G Engineer 2 01-Jul-00 55,000.00 55,000.00 Mitchell, William L Rounds III, Robert Engineer 2 01-Oct-00 61,000.00 61,000.00 Mitchell, William L Zhao, Jessica Engineer 2 01-Mar-01 59,000.00 59,000.00 Mitchell, William L Hailes, Rebecca Engineer 2 01-Apr-01 48,000.00 48,000.00 Nowicki, Brian J Jamil, Anwar Engineer 2 01-Oct-00 50,000.00 50,000.00 Nowicki, Brian J Northrop, William F Engineer 2 01-Jun-00 56,100.00 56,100.00 Nowicki, Brian J Rivera, Alejandro Engineer 2 01-Oct-00 50,000.00 50,000.00 Polveya, Olga Khan, Abdul Raley Engineer 2 01-Aug-00 58,000.00 58,000.00 Prabhu, Srinivasa Bowers, Brian J Engineer 2 01-Jul-00 59,500.00 59,500.00 Prabhu, Srinivasa Liu, Holon Engineer 2 01-Oct-00 60,000.00 60,000.00 Chintawar, Prashani Wiley, Jason Engineer 2 01-Jul-00 53,000.00 53,000.00 Chintawar, Prashani Thompson, Craig Engineer 3 01-Nov-99 66,500.00 66,500.00 Hagan, Mark Oi, Frank C Engineer 3 01-Jun-00 73,500.00 73,500.00 Hagan, Mark Zhao, James Engineer 3 29-Jan-01 75,000.00 75,000.00 Mitchell, William L Dorson, Matthew H Engineer 3 01-Apr-00 66,000.00 66,000.00 Mitchell, William L Noordzij, Bouke Engineer 3 18-Nov-96 61,000.00 61,000.00 Prabhu, Srinivasa Rumsey, Jennifer W Engineer 3 01-Jul-00 61,000.00 61,000.00 Cross III, James C Thompson, Craig Engineering Manager 1 01-Apr-00 61,000.00 61,000.00 Cross III, James C Haqan, Mark R Engineering Manager 1 01-Aug-00 62,000.00 62,000.00 Cross III, James C Nowicki, Brian J Engineering Manager 1 01-Apr-00 72,000.00 72,000.00 Cross III, James C Polevaya, Olga Engineering Manager 1 01-Mar-01 75,000.00 75,000.00 Cross III, James C Woo, Pai-Yung Engineering Manager 1 01-Apr-00 73,150.00 73,150.00 Mitchell, William L Block, Stephen Gustav Engineering Manager 1 01-Apr-00 72,000.00 72,000.00 Mitchell, William L Prabhu, Srinivasa K Engineering Manager 1 01-Apr-00 85,000.00 85,000.00 Cross III, James C Clawson, Lawrence G Principal Engineer 01-Mar-00 113,000.00 113,000.00 Noordzij, Bouke Boyd, Stephen Lab Tech Group Leader 2 01-Feb-01 50,000.00 50,000.00 Noordzij, Bouke Sylvester, Richard M Technician 2 01-Oct-99 45,000.00 45,000.00 Supervisor Salary Position Event IC Name Name Adjustment in Range Target Comments - ---------------- ---------------- ---------- ---------- -------- ------------------------ Hand, Mary L Haverly, Alina H 5% Bentley, Jeffrey M Hand, Mary L 5% Brodsky, Mark Bentley, Jeffrey M. 0% 40% Bentley, Jeffrey M Cross III, James C 120,000.00 -33% 35% Bentley, Jeffrey M Mitchell, William L 140,000.00 -20% 35% Michell, William L Landry, Brian P 17% 10% Chintawar, Prashant Ciotti, Carlo Mario 52,000.00 0% 10% Chintawar, Prashant Cole, Terence 17% 10% Compression noted Chintawar, Prashant Pollica, Darry E 0% 10% Mitchell, William L Goodwin, Marc 0% 10% Mitchell, William L Morriseau, Brian D 39% 10% Mitchell, William L Rizzo, Vincent G 13% 10% Mitchell, William L Rounds III, Robert 39% 10% Mitchell, William L Zhao, Jessica 10% Mitchell, William L Hailes, Rebecca 52,000.00 0% 10% Nowicki, Brian J Jamil, Anwar 52,000.00 0% 10% Nowicki, Brian J Northrop, William F 18% 10% Nowicki, Brian J Rivera, Alejandro 52,000.00 0% 10% Polveya, Olga Khan, Abdul Raley 26% 10% Prabhu, Srinivasa Bowers, Brian J 33% 10% Prabhu, Srinivasa Liu, Holon 35% 10% Chintawar, Prashani Wiley, Jason 4% 10% Chintawar, Prashani Thompson, Craig 22% 15% Hagan, Mark Oi, Frank C 45% 15% Hagan, Mark Zhao, James 9% 15% Reclassified as Engineer Mitchell, William L Dorson, Matthew H 20% 15% Mitchell, William L Noordzij, Bouke 3% 15% Prabhu, Srinivasa Rumsey, Jennifer W 3% 15% Cross III, James C Thompson, Craig 27% 15% Cross III, James C Haqan, Mark R 72,000.00 0% 15% Cross III, James C Nowicki, Brian J 0% 15% Cross III, James C Polevaya, Olga 9% 15% Cross III, James C Woo, Pai-Yung 3% 15% Mitchell, William L Block, Stephen Gustav 0% 15% Mitchell, William L Prabhu, Srinivasa K 39% 15% Cross III, James C Clawson, Lawrence G 54% Noordzij, Bouke Boyd, Stephen 47% Noordzij, Bouke Sylvester, Richard M 18%
Contractors/Convserion Candidates Supervisor Name Name ID No. Hire Date Arthur D. Little Status Class FT/PT - ---------------- ---------------- ------ --------- ------------------------ ------ ----- ----- Nowicki, Brian J Wersinger, Yvonne Contractor Mitchell, William L Hottle, David Contractor Mitchell, William L Swavely, Donald Contractor Mitchell, William L DiPietro, Roger Contractor Mitchell, William L Kleeberg, Gunther Contractor Chintawar, Prashani Hansen, Wesley part time Nowicki, Brian J Smith, Alexis Contractor Mitchell, William L Hardy, Richard Contractor Prabhu, Srinivasa Batal, John Contractor Mitchell, William L Mosher, Paul Contractor Mitchell, William L Hill, Steven Contractor Mitchell, William L Wright, Fred Contractor Mitchell, William L Longo, Nathan Contractor who? Rindone, Michael Contractor Prabhu, Srinivasa Celona, John Contractor Supervisor Name Name New Title Level Review Date Base Rt US Annual Rt - ---------------- ---------------- ------------- ----- ----------- ----------- --------- Nowicki, Brian J Wersinger, Yvonne Designer 1 43 69,440.00 Mitchell, William L Hottle, David Designer 2 68.6 121,680.00 Mitchell, William L Swavely, Donald Designer 2 63 131,040.00 Mitchell, William L DiPietro, Roger Engineer 2 75 166,000.00 Mitchell, William L Kleeberg, Gunther Engineer 2 80 166,400.00 Chintawar, Prashani Hansen, Wesley Engineer 2 18 16,720.00 Nowicki, Brian J Smith, Alexis Engineer 3 49 101,920.00 Mitchell, William L Hardy, Richard Engineer 3 48 99,640.00 Prabhu, Srinivasa Batal, John Engineer 3 60 52,000.00 Mitchell, William L Mosher, Paul Recruiter 60 124,800.00 Mitchell, William L Hill, Steven Technician 1 29 30,160.00 Mitchell, William L Wright, Fred Technician 1 27.63 57,470.40 Mitchell, William L Longo, Nathan Technician 2 65 136,200.00 who? Rindone, Michael Technician 2 46 93,600.00 Prabhu, Srinivasa Celona, John Technician 2 17 17,680.00 Supervisor Salary Position Event IC Name Name Adjustment in Range Target Comments - ---------------- ---------------- ---------- ---------- -------- ------------------------- Nowicki, Brian J Wersinger, Yvonne Epyx conversion candidate Mitchell, William L Hottle, David Epyx conversion candidate Mitchell, William L Swavely, Donald Epyx conversion candidate Mitchell, William L DiPietro, Roger Epyx conversion candidate Mitchell, William L Kleeberg, Gunther Chintawar, Prashani Hansen, Wesley Nowicki, Brian J Smith, Alexis Epyx conversion candidate Mitchell, William L Hardy, Richard Epyx conversion candidate Prabhu, Srinivasa Batal, John Epyx conversion candidate Mitchell, William L Mosher, Paul Mitchell, William L Hill, Steven Epyx conversion candidate Mitchell, William L Wright, Fred Epyx conversion candidate Mitchell, William L Longo, Nathan who? Rindone, Michael Epyx conversion candidate Prabhu, Srinivasa Celona, John Epyx conversion candidate
Schedule 3.19(b) ---------------- ADL has a severance policy for its employees. Schedule 6.3 ------------ Contracts included in Schedule 3.5 in which the contract rights and obligations - ------------------------------------------------------------------------------- are not transferable, but EPYX shall receive the benefits and burdens of such - ----------------------------------------------------------------------------- contracts and agreements: - ------------------------- "DOE Contract No. DE-FC02-99EE50580 dated July 21, 1999 issued to Arthur D. Little, Inc., titled Development of Fuel Processor, Durability Demonstration and lOkW" "Subcontract Agreement dated November 21, 1997 between Plug Power, LLC and Arthur D. Little, Inc. under DOE Contract No. DE-FC02-97EE50472" Excluded Contracts: - ------------------- "Design of a 50 kW Stationary PEMEFC System" "Design of next generation of PEMFC stacks with clearly superior hydrogen utilization" Schedule 4.5 - Material Contracts ------------------ Schedule 4.5 4.5/1 DNFC LIST OF LEASE/TEST AGREEMENTS as of March 30th, 2000
- ---------------------------------------------------------------------------------------------------------------------------------- LEASE EXPIRY DATE CLIENT SCOPE OF SUPPLY SIGNATURE DATE (depends on delivery date) - ---------------------------------------------------------------------------------------------------------------------------------- DLR - Germany Test for 5 kW stack 03/04/96 24/10/99 - ---------------------------------------------------------------------------------------------------------------------------------- ESKOM (S. Africa) Test/Lease for 1.8kW stack 06/08/98 03/06/00 - ---------------------------------------------------------------------------------------------------------------------------------- VOLVO (S) Test/Lease for 1OkW stack 03/06/98 25/06/00 - ---------------------------------------------------------------------------------------------------------------------------------- RENAULT - Direction de la 3x 1OkW FEVER project 2 delivered on 28/10/98 19/6/92 Recherche - France and 1 del. on 28/10/96 - ---------------------------------------------------------------------------------------------------------------------------------- RENAULT - Direction de La Lease of no 1 additional stack tot 10 kW same delivered 2/6/98 02/06/00 Recherche - France condition as lease contract FEVER - ---------------------------------------------------------------------------------------------------------------------------------- RENAULT - Direction de la 1 kW stack delivered to Ecole de Mines delivered Febr. 95 Febr. 97 Recherche - France - ---------------------------------------------------------------------------------------------------------------------------------- TNO - Nederland Test/Lease for 1 kW stack 31/12/96 31/12/98 - ---------------------------------------------------------------------------------------------------------------------------------- ABB - Switzerland Test/Lease for 1.5 kW stack 22/10/98 19/01/01 EVC = 02/11/98 - ---------------------------------------------------------------------------------------------------------------------------------- POWER COMPUTING Test/Lease for 0.84 kW stack 07/08/98 26/09/01 SOLUTION - USA - ---------------------------------------------------------------------------------------------------------------------------------- ESORO AG Lease of 8,3kW stack 25/02/00 3 years from date of supply - ----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------- LEASE CLIENT EXTENSIONS - ------------------------------------------------- DLR - Germany 30/06/00 - ------------------------------------------------- ESKOM (S. Africa) - ------------------------------------------------- VOLVO (S) - ------------------------------------------------- RENAULT - Direction de la 31/07/00 Recherche - France - ------------------------------------------------- RENAULT - Direction de la 31/07/00 Recherche - France - ------------------------------------------------- RENAULT - Direction de la 31/07/00 Recherche - France - ------------------------------------------------- 31/12/99 then TNO - Nederland 31/12/00 - ------------------------------------------------- ABB - Switzerland - ------------------------------------------------- POWER COMPUTING SOLUTION - USA - ------------------------------------------------- ESORO AG - -------------------------------------------------
4.5/1 DNFC LIST OF LEASE/TEST AGREEMENTS, supply of stacks free of charge as of March 30th, 2000 - ----------------------------------------------------------------------------------------------------------------------------- LEASE CLIENT SCOPE OF SUPPLY SIGNATURE DATE EXPIRY DATE EXTENSIONS - ----------------------------------------------------------------------------------------------------------------------------- AIR LIQUIDE - France Ex stack COVAL-6.5kW for test free of charge Addendum of 5/l/99 31/10/99 30/04/00 to MOU of 7/5/98 - ----------------------------------------------------------------------------------------------------------------------------- CNR - Italy Test for prototypal fc stack for direct 23/11/99 01/12/00 methanol - -----------------------------------------------------------------------------------------------------------------------------
Schedule 4.5 4.5/2 DNFC LIST OF SALE AND NON DISCLOSURE AGREEMENTS - As of March 30th, 2000
- ---------------------------------------------------------------------------------------------------------------- CLIENT SCOPE OF SUPPLY SIGNATURE DATE - ---------------------------------------------------------------------------------------------------------------- I HR (D) NO 3 prototypes stack 55kW 01/09/98 - ---------------------------------------------------------------------------------------------------------------- CENTRO RICERCHE. FIAT n 1 stack 5kW 08/06/99 (I) - ---------------------------------------------------------------------------------------------------------------- AIR LIQUIDE n. 1 stack 5 kw (AL) 10/11/99 --------------------------------------------------- (F) 120 kW nominal power stacks (MAN) --------------------------------------------------- n.2 stacks 5kW (CSIRO) --------------------------------------------------- n.1 stack 1 kW ~CSIRO) --------------------------------------------------- n.1 stack 0.35 kW (FANTASSIN) - ---------------------------------------------------------------------------------------------------------------- DLR (D) 0,15kW stack covered by amendment n.2 to 25/11/99 the Agreement of 03/04/96 - ---------------------------------------------------------------------------------------------------------------- DLR (D) 2,2kW stack covered by amendment n.3 to the 04/02/00 Agreement of 03/04/96 - ---------------------------------------------------------------------------------------------------------------- CELLEX Power n. 3 stack, 2 kW total 01/01/00 Prod.(Canada) - ---------------------------------------------------------------------------------------------------------------- FUELCELL PROPULSION INSTITUTE nr.2 FC stacks - l4kW total 04/02/00 - ---------------------------------------------------------------------------------------------------------------- Agreement signed De Nora North America 4,6kW stack for NPS (Sandia National between DNNA and Laboratories) NPS - ----------------------------------------------------------------------------------------------------------------
Schedule 4.5 4.5/3 Ongoing purchase orders for PEM stacks as of March 30th, 2000
- ----------------------------------------------------------------------------------------------------------------------------------- CLIENT SCOPE OF SUPPLY ORDER DATE ORDER VALUE EUROS TYPE - ----------------------------------------------------------------------------------------------------------------------------------- ESORO AO 8,3kW slack 15/03/00 EURO 44.700 44.700 Lease, see Sch. 4.5/1 - ----------------------------------------------------------------------------------------------------------------------------------- Northwest Power Systems - USA 2xO.5kW and 8xlkW stacks 13/03/00 USD 149.000 148.362 Sale b) - ----------------------------------------------------------------------------------------------------------------------------------- Volkswagen AO - Germany n. 4 stacks for a total of 5OkW 31/01/00 EUROS 325.000 325.000 Sale b) - ----------------------------------------------------------------------------------------------------------------------------------- REGIENOV - France n.2 stacks. lkW each 28/01/00 FRF 590,000 89.946 Sale a) - ----------------------------------------------------------------------------------------------------------------------------------- De Nora S.p.A. - Italy Hardware and services for Y2K 23/12/99 ITL 37.700.000 19.470 Sale - ----------------------------------------------------------------------------------------------------------------------------------- Fuelcell Propulsion Institute - USA n. 2 stack for a total of l4kW 22/12/99 USD 96.400 95.987 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- REGIENOV - France 5kW stack 16/12/99 FRF 217.122 33.100 Lease c) - ----------------------------------------------------------------------------------------------------------------------------------- AIR LIQUIDE - France n. 2 stack for a total of 11 kW 01/12/99 EUROS 69.500 69.500 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- DLR - Germany 0, 15 kW stack 24/11/99 EUROS 4.650 4.650 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- DLR - Germany 2,2 kW stack 24/11/99 EUROS 30.960 30.960 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- REGIENOV - France n. 1 MEA 03/11/99 FRP 2.191 334 Sale - ----------------------------------------------------------------------------------------------------------------------------------- Cellex Power Prod. - Canada n. 3 stacks for a total of 2kW 03/11/99 USD 69.000 68.705 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- DE NORA NORTH AMERICA - USA 4,6kW stack for NPS (Sandia National Laboratories) 06/l0/99 USD 34.500 34.352 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- Northwest Power Systems - USA n. 20 stacks (1 free of charge) 30/11/98 (21 stacks), 4,6 kW modified on 27/9/99 (20 USD 365.000 363.437 Sale stacks) - ----------------------------------------------------------------------------------------------------------------------------------- CRF (Centro Ricerche Fiat) - Italy 5kW stack 23/03/99 EUROS 41.316 41.316 Sale see Sch. 4.5/2 - ----------------------------------------------------------------------------------------------------------------------------------- Volkswagen AG - Germany 5kW High temperature stack. Covered by R&D cooperation 04/05/98 ITL 570.000.000 294.380 R&D, see agreement of 14/04/99 Sch 4.5/5 - ----------------------------------------------------------------------------------------------------------------------------------- Exchange votes: - -------------------------------------------------------------------------------------------------------------------- USD - EUROS 1,0043 - -------------------------------------------------------------------------------------------------------------------- FRF - EUROS 6,5595 - -------------------------------------------------------------------------------------------------------------------- ITL - EUROS 1936,27 - --------------------------------------------------------------------------------------------------------------------
Notes: a) Part of the feasibility study contract, under discussion b) Sale Contract under discussion c) Lease contract under discussion Schedule 4.5 4.5/4 DNFC LIST OF SECRECY AGREEMENTS as of March 30th, 2000
- ------------------------------------------------------------------------------------------------------------------------------------ EXPIRY DATE OF SECRECY CLIENT TYPE OF AGREEMENT SIGNATURE DATE OBBLIGATIONS Contact Expiry date - ------------------------------------------------------------------------------------------------------------------------------------ JOHNSON MATTHEY - Great Britain Electrodes test 23/03/93 23/03/03 23/03/03 - ------------------------------------------------------------------------------------------------------------------------------------ ARMINES Ecole des Mines - France Development of mathematical 07/04/94 07/04/09 = fluidodynamic model - ------------------------------------------------------------------------------------------------------------------------------------ TNO - ROYAL NAVY - The Nederlands Fuel Cell technology 06/10/94 06/10/14 06/10/09 - ------------------------------------------------------------------------------------------------------------------------------------ RENAULT - France FEVER Project (3 x 10kW FC stack) 21/11/94 31/12/06 31/07/00 - ------------------------------------------------------------------------------------------------------------------------------------ GORE W.L. - Germany membrane development and testing 03/02/95 02/02/00 02/02/1998 extended up to 2/2/00 - ------------------------------------------------------------------------------------------------------------------------------------ JOHNSON MATTHEY - Great Britain GDE electrodes 23/02/96 23/02/06 23/02/06 - ------------------------------------------------------------------------------------------------------------------------------------ SORAPEC - France Membrane MEA 26/02/96 26/02/07 26/02/97 - ------------------------------------------------------------------------------------------------------------------------------------ Mr. Patrik Grace - France Info on FEVER project 03/06/96 03/06/06 03/06/06 - ------------------------------------------------------------------------------------------------------------------------------------ Du Pont - France MEA and membrane development 02/07/96 02/07/01 02/07/97 and testing - ------------------------------------------------------------------------------------------------------------------------------------ SCANIA CV AB - Sweden, Arthur Membrane fuel cells and 11/09/96 11/09/01 11/09/01 D. Little - Mr. Bentley their application - ------------------------------------------------------------------------------------------------------------------------------------ TNO - The Nederlands bipolar plates - TNO polymer development 15/10/96 15/10/01 15/10/01 - ------------------------------------------------------------------------------------------------------------------------------------ HH ENERGIE - France Non exclusive cooperation on 20/12/96 01/07/09 20/12/99 development of GEN-SET based on FC technology - ------------------------------------------------------------------------------------------------------------------------------------ Etievant Claude - CIEE - France Patent application on H2 generator 05/02/97 05/02/00 - ------------------------------------------------------------------------------------------------------------------------------------ HOECHST (Aventis) - Germany MEA and membrane development 23/04/97 23/04/03 23/04/98 and testing - ------------------------------------------------------------------------------------------------------------------------------------ FuMA-Tech - Germany membrane development/testing 28/01/98 31/12/06 31/12/98 - ------------------------------------------------------------------------------------------------------------------------------------ Air Liquide - France Non Disclosure Agreement before 30/01/98 30/01/10 30/01/00 signature of MOU[Bs - ------------------------------------------------------------------------------------------------------------------------------------ E-TEK - USA on CNR information on Gas 24/02/98 24/02/03 24/02/03 Diffusion Electrodes - ------------------------------------------------------------------------------------------------------------------------------------ VAILLANT - Germany Info on development strategy 15/05/98 15/05/05 15/05/00 - ------------------------------------------------------------------------------------------------------------------------------------ ENI - Italy Secrecy agreement for valuation 01/07/98 01/07/08 01/07/99 for further cooperation - ------------------------------------------------------------------------------------------------------------------------------------ H POWER Corp. - USA for visiting the Company 03/12/98 03/12/06 03/12/01 - ------------------------------------------------------------------------------------------------------------------------------------ International Fuel Cells - USA for visiting the Company 04/12/98 04/12/04 04/12/99 - ------------------------------------------------------------------------------------------------------------------------------------ MIRANE - Mr. Kimoto - Glappone Membrane 07/12/98 07/12/09 07/12/99 - ------------------------------------------------------------------------------------------------------------------------------------ PSA PEUGEOT CITROEN - RENAULT Fuel Cells system and fuel 15/12/98 15/12/04 15/12/99 extended (GIE) - France feedings Phase O to 15/12/2000 - ------------------------------------------------------------------------------------------------------------------------------------ MANNESMANN - Germany Evaluation for possible future cooperation 30/12/98 30/12/11 30/12/01 - ------------------------------------------------------------------------------------------------------------------------------------ NITECH - France Visit c/o NITECH 31/03/99 not defined - ------------------------------------------------------------------------------------------------------------------------------------ GMITROVIC - Australia Production of Hydrogen 14/04/99 14/04/05 14/04/00 - ------------------------------------------------------------------------------------------------------------------------------------ Air Liquide - France Confidentiality Agreement 22/07/99 22/07/04 22/07/00 - ------------------------------------------------------------------------------------------------------------------------------------ NISSAN MOTOR Co. Ltd. - Japan Non Disclosure Agreement for a 29/11/99 29/11/05 29/11/00 joint program incorporating DNFC and NISSAN technology - ------------------------------------------------------------------------------------------------------------------------------------ VEBA OEL, + BUDERUS - Germany FC applications for stationary 08/12/99 08/12/10 08/12/00 power and heat generation - ------------------------------------------------------------------------------------------------------------------------------------ NORTHWEST POWER SYSTEMS - USA Confidentiality Agreement between 17/12/99 17/12/05 17/12/00 NPS - NORFIN - DNFC. Corporate development and other strat. issues - ------------------------------------------------------------------------------------------------------------------------------------ EAGLE PICHER - USA Confidentiality Agreement between 20/12/99 20/12/05 20/12/00 EP - NORFIN - DNFC - ------------------------------------------------------------------------------------------------------------------------------------ ARTHUR D. LITTLE - USA Confidentiality Agreement between 22/12/99 22/12/05 22/12/00 ADL - NORFIN - DNFC - ------------------------------------------------------------------------------------------------------------------------------------ ASAHI GLASS Co. Ltd. - Japan cooperation for a joint evaluation 16/02/00 16/02/05 16/02/02 program of a system incorporating DNFC technology and AOC technology - ------------------------------------------------------------------------------------------------------------------------------------ ELEVISTA BRANDING + COMMUNICATIONS Confidentiality Agreement To 15/03/00 15/03/05 = collect confidential Information relating DNFC to be used to prepare a branding and communication campaign - ------------------------------------------------------------------------------------------------------------------------------------
Schedule 4.5
- ------------------------------------------------------------------------------------------------------------------------------------ EXPIRY DATE EXPIRY DATE OF CLIENT TYPE OF AGREEMENT SIGNATURE SECRECY DATE OBBLIGATIONS - ------------------------------------------------------------------------------------------------------------------------------------ VOLKSWAGEN - Germany Research and development project contract. Development of 31/1/99; 31/5/99; 5kW high temperature stack for automotive applications 14/04/98 31/8/99; 31/12/99 31/08/02 - ------------------------------------------------------------------------------------------------------------------------------------ GORE W.L. - Germany Optimization of membrane for DN stacks. Non exclusive 16/04/00 cooperation for membrane testing. 16/04/97 16/04/01 16/04/03 - ------------------------------------------------------------------------------------------------------------------------------------ AIR LIQUIDE - France Memorandum of understanding for a non-exclusive cooperation for the development of modules based on FC 26/06/98 26/06/01 26/06/11 - ------------------------------------------------------------------------------------------------------------------------------------ 04/03/00; DLR - Germania Supply and testing of DN ELATs 04/03/97 31/12/00 by 31/12/10 mutual agreement - ------------------------------------------------------------------------------------------------------------------------------------
Schedule 4.5
4.5/6 LIST OF SIGNED EUROPEAN PROGRAMS as of March 30th, 2000 - ---------------------------------------------------------------------------------------------------------------------------------- CONTRIBUTION CONTRIBUTION CONTRACTING PARTIES RECEIVED UP UP TO PROJECT TITLE DURATION TOTAL CONTRIBUTION TO 30/03/00 CONTRACT EXPIRY CONTRACT NUMBER (EUROS) (EUROS) (EUROS) - ---------------------------------------------------------------------------------------------------------------------------------- BIOETHANOL FHG.ISE Fraunhofer-Gesellschaft. JOR3-CT97-0174 Universitat Gesamthochschule Duisburg-DNFC 01/12/97-31/05/00 41.987 18.983 - ---------------------------------------------------------------------------------------------------------------------------------- FC-STAT Air Liquide-Schneider Electric-CEA EI 174/97 FR/IT Commissariat a l'Energie Atomique DNFC 01/09/97-31/08/00 560.020 186.046 - ---------------------------------------------------------------------------------------------------------------------------------- FC-BUS Air Liquide-Scania-SAR-Universita di 01/05/96-31/12/00 JOE3-CT96-0043 Genova-DNFC 01/01/99-31/12/00 473.940 225.524 - ---------------------------------------------------------------------------------------------------------------------------------- HIM CNRS LAMMI-Universita di Perugia- BRPR-CT97-0408 University of Strathclyde-ISRIM-SORAPEC- FuMA-Tech-DNFC 01/06/97-30/06/00 106.932 58.676 - ---------------------------------------------------------------------------------------------------------------------------------- HYDRO-GEN GIE PSA PEUGEOT CITROEN-Air Liquide-CEA JOB3-CT-95-0013 Commissariat a l'Energie Atomique-GIE RENAULT-DNFC 01/01/96-30/06/00 925.000 848.947 - ---------------------------------------------------------------------------------------------------------------------------------- NEMECEL SRTI-THOMSON-CSF-DNFC-SOLVAY-GIE PSA JOE3-CT97-0063 PEUGEOT CITROEN 01/12/97-31/12/01 604.500 223.944 - ---------------------------------------------------------------------------------------------------------------------------------- VELAPAC CNIM-AIR LIQUIDE-DNFC 01/01/99-1/07/01 164.000 54.393 TR193/98/FR/IT/FR - ---------------------------------------------------------------------------------------------------------------------------------- PEM-ED 917FSG ERK FUMA-TECH-CNRS.LAMMI-CNR.ITAE-Univ. of 01/04/00-01/04/04 120.00 - 6-CT-199-00025 of Strathclyde-Univ. degli studi di Perugia-EDF-SEFAR AG-IFEO.TE-DNFC - ---------------------------------------------------------------------------------------------------------------------------------- FIRST 916AMS-ERK Alcatel-Air Liquide-FHG.ISE-CIEMAT.CF- 01/03/00-01/04/03 85.500 - 6-CT 1999-000018 DNFC-WUEL.PD-CSIC - ---------------------------------------------------------------------------------------------------------------------------------- Totals (EUROS) 3.081.879 1.616.513 =========================================================================
Schedule 4.5 4.5/7 List of on-going issued purchase orders for raw materials and equipment
- ------------------------------------------------------------------------------------------------------------------------- Order Date number Supplier Description Sale amount - ------------------------------------------------------------------------------------------------------------------------- 19/01/98 990005 STELAR data acquisition system 15.200.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 23/04/99 990007 AVENTIS 80 MEA-HT 21.600 US $ - ------------------------------------------------------------------------------------------------------------------------- 14/05/99 990008 HONEYWELL Updating control system 34.280.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 07/05/99 990009 I.CO.M Gas Manifolds 52.000.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 19/07/99 990017 DNNA electrodes 56.440 US $ - ------------------------------------------------------------------------------------------------------------------------- 19/07/99 990026 DNNA electrodes 112.880 US $ - ------------------------------------------------------------------------------------------------------------------------- 17/09/99 990027 DNNA electrodes 112.880 US $ - ------------------------------------------------------------------------------------------------------------------------- 19/07/99 990036 DNNA electrodes 4.288,5 US $ - ------------------------------------------------------------------------------------------------------------------------- 10/11/99 990052 RENEWABLE ENERGY WORD advertisement 7.000 Lgs. - ------------------------------------------------------------------------------------------------------------------------- 10/05/99 990053 W.L. GORE & ASS. PRIMEA MEA 17.825,95 US $ - ------------------------------------------------------------------------------------------------------------------------- 09/02/00 00/0022 TECNOMECCANICA Die 24.250.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 22/02/00 00/0024 DELCHIMICA SCIENTIFICA GLASSWARE Sprayer nozzle 525.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 28/02/00 00/0026 Amboldi hollow punch 4.822.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 02/03/00 00/0029 SYCON MS Project 98 772.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 08/03/00 00/0032 TECNOMECCANICA Endplates 2.950.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 08/03/00 00/0033 DNNA Catalysts, Carbon cloth, ELAT 11.664,8 US $ - ------------------------------------------------------------------------------------------------------------------------- 08/03/00 00/0034 IKD Electric resistance and Temperature controllers 1.110.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 08/03/00 00/0035 DNNA ELAT Electrodes AUTOMATED PRODUCTION 12.943,3 US $ - ------------------------------------------------------------------------------------------------------------------------- 08/03/00 00/0037 DNNA ELAT Electrodes for PSA/PEUGEOT 240 US $ - ------------------------------------------------------------------------------------------------------------------------- 09/03/00 00/0038 GORE Membrane 11.542,5 US $ - ------------------------------------------------------------------------------------------------------------------------- 14/03/00 00/0039 ING. SALTINI A. & V.L. Snc Insulating mechanical components 480.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 17/03/00 00/0042 AMBOLDI hollow punch 350.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 17/03/00 00/0043 VAILATI Connectors 3.910.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 17/03/00 00/0044 TECNOMECCANICA Assembly equipments details 3.620.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 17/03/00 00/0045 FOPLAST Fuel Cells gaskets 9.800.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 20/03/00 00/0046 KAISER + KRAFT Tools for production site 4.111.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 23/03/00 00/0047 EMPRISE CORP. Heat Wheel 2.000 US $ - ------------------------------------------------------------------------------------------------------------------------- 23/03/00 00/0048 TECNOMECCANICA Mechanical components 800.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 29/03/00 00/0049 LA GALVANO Thermal treatment on current collectors 3.000.000 Lit. - ------------------------------------------------------------------------------------------------------------------------- 29/03/00 00/0050 RAYTECH sheath for tie-rods 757.520 Lit. - -------------------------------------------------------------------------------------------------------------------------
Schedule 4.6 - Intellectual Property --------------------- Agreements entered with the EUROPEAN COMMUNITY represented by the Commission of the European Communities
- ------------------------------------------------------------------------------------------------------------------ Contractors Object Commencement Termination Date - ------------------------------------------------------------------------------------------------------------------ FHG.ISE Fraunhofer- Gesellschaft - Universitat BIOETHANOL 909 FFG - Contract 01/12/1997 31/05/2000 Gesamthochschule Duisburg JOR3CT970174 - - - DN - ------------------------------------------------------------------------------------------------------------------ Air Liquide - Schneider FC STAT 910 AWF Electric - CEA Contract STAT - EI-1 74-97-FR-IT 01/09/1997 31/08/2000 Commissariat a l'Energie Hydrogen recovery for stationary Atomique - DN applications - ------------------------------------------------------------------------------------------------------------------ ANSALDO - DN - NEOPLAN - S.A.R. - Air FC-BUS 906 ASF -E59 NEOPL Liquide - Universita di Contract E90JOE3-CT96-0043 25/04/1996 31/12/2000* Genova - ------------------------------------------------------------------------------------------------------------------ FC-BUS Air Liquide - DN - Neoplan Amendment 1 to FC-BUS 906 ASF Extended to - - SAR - Universita di -E59 NEOPL - Contract 07/04/1998 31/12/2000* Genova E90JOE3-CT96-0043 ANSALDO withdrawal - ------------------------------------------------------------------------------------------------------------------ FC-BUS, Air Liquide - DN - Neoplan Amendment 2 to FC-BUS 906 ASF 31/05/1999 31/12/2000 - - SAR - Universita di -E59 NEOPL - Contract Genova E90JOE3-CT96-0043 Extension of Project to 31/12/2000* - ------------------------------------------------------------------------------------------------------------------ Air Liquide - DN - SAR - FC-BUS - Amendment 3 to 23/07/1999 31/12/2000 Universita di Genova - Contract JOE3CT960043 Scania - ------------------------------------------------------------------------------------------------------------------ CNRS LAMMI - Universita di Perugia - University of HIM 907 MMF - Strathclyde - ISRIM - Contract BRPR-CT97-0408 14/05/1997 30/06/2000 SORAPEC -DN - FuMA- Hybrid Ionomeric Membrane Tech - ------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- Contractors Object Commencement Termination Date - ----------------------------------------------------------------------------------------------------------------------- CNRS LAMMI - Universita di Perugia - University of HIM 907 MMF Strathclyde - ISRIM - Consortium Agreement for 19/01/1998 30/06/2000 SORAPEC - DN - FuMA- Contract BRPR-CT97-0408 -E65 Tech - Hybrid Ionomeric Membrane - - ----------------------------------------------------------------------------------------------------------------------- GIE PSA Peugeot Citroen - Ansaldo - CEA HYDRO-GEN 905 PVF Commissariat a I'Energie Contract JOD-CT95-0013 06/12/1995 29/12/2000* Atomique - DN - GEE Renault - Solvay - ----------------------------------------------------------------------------------------------------------------------- GEE PSA Peugeot Citroen - HYDRO-GEN 905 PVF CEA Commissariat a Amendment 1 to I'Energie Atomique - DN - Contract JOE3-CT95-0013 29/12/1997 30/06/2000 GIE Renault - Solvay Ansaldo withdrawal Air Liquide Air Liquide takes over task Extension to 30/6/2000* - ----------------------------------------------------------------------------------------------------------------------- SRTI SYSTEM - THOMSON- DN - NEMECELL 908 SPF - SOLVAY - GIE PSA Contract JOE3-CT97-0063 01/12/1997 30/11/2001 Peugeot Citroen (low cost direct methanol) - ----------------------------------------------------------------------------------------------------------------------- SRTI SYSTEM - NEMECEL 908 SPF THOMSON- DN - Amendment 1 to Contract 17/04/1998 01/12/2001 SOLVAY - GIE PSA JOR3CT970063: UPIS substituted Peugeot Citroen by CNRS - ----------------------------------------------------------------------------------------------------------------------- SRTI SYSTEM - NEMECEL 908 SPF THOMSON- DN - Amendment 2 to Contract 11/11/1999 01/12/2001 SOLVAY - GIE PSA JOE3CT970063: SRTL SODETEC Peugeot Citroen and SOGELERG merge in SODETEC - approval by DN - ----------------------------------------------------------------------------------------------------------------------- SRTI SYSTEM - NEMECEL 908 SPF THOMSON-DN- Consortium Agreement for 19/11/1997 01/12/2001 SOLVAY - GEE PSA Contract JOE3CT970063 Peugeot Citroen - ----------------------------------------------------------------------------------------------------------------------- CNIM - DN - AIR VELAPAC 912 CTF LIQUIDE - CONTRACT TR 193/98 01/01/1999 01/08/2001 - ----------------------------------------------------------------------------------------------------------------------- Alcatel -Air Liquide - FHG.ISE - CIEMAT.CF - FIRST 916-AMS - ERK 6-CT-1999- DNFC - WUEL.PD - CSIC 00018 01/03/2000 01/04/2003 - -----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------- Contractors Object Commencement Termination Date - ----------------------------------------------------------------------------------------------------------------- FUMA-TECH - CNRS.LAMMI- PEM-ED 917FSGERK6-CT-1999- CNR-ITAE- - Univ. of 00025 01/04/2000 01/04/2004 Strathclyde - Univ. degli studi di Perugia - EDF - SEFAR AG - IFEO.TE - DNFC - - -----------------------------------------------------------------------------------------------------------------
Association Agreements entered with ENEA (National Agency for Alternative Energy)
- ------------------------------------------------------------------------------------------- Description Date of Termination of Termination of signature contractual Secrecy obligations Obligations - ------------------------------------------------------------------------------------------- Development of fuel cell stack (10 kW) 23/12/1987 22/06/1993 22/10/2008 - ------------------------------------------------------------------------------------------- Development of fuel cell stack for 05/09/1995 31/12/1997 electric transport and hybrid systems - ------------------------------------------------------------------------------------------- Hydrogen Generator - Program : ENEA 3 31/10/1997 30/06/1999 21/03/2007 - -------------------------------------------------------------------------------------------
Schedule 4.11 - Financial Statements -------------------- De Nora Fuel Cells S.p.A. Balance Sheet as at 31.12.99 - ------------------------------------------------------------------------ Assets Lit./ML Euro*000 - ------------------------------------------------------------------------ Intangible fixed assets 102 53 Tangible fixed assets 1.370 708 Long term receivables 25 13 Total fixed assets 1.497 773 Inventory 1.211 625 Trade receivables 2.523 1.303 Trade receivables / Group 76 39 Other debtors 74 38 Cash and bank 36 19 Total current assets 3.920 2.025 Prepaid expenses & accrued income 1 1 Total Assets 5.418 2.798 - ------------------------------------------------------------------------ - ------------------------------------------------------------------------- Net Worth and liabilities Lit./ML Euro*000 - ------------------------------------------------------------------------- Share capital 400 207 Share premium 1.130 584 Legal reserve 48 25 Other reserve 259 134 Result for the period (384) (198) Net Worth 1.453 750 Provisions for liabil.&charges 0 0 Retirement allowance 398 206 Loans from affiliated companies 1.050 542 Long term liabilities 1.448 748 Payments on account 687 355 Trade creditors 861 445 Trade creditors / Group 646 334 Other creditors 174 90 Current liabilities 2.368 1.223 Deferred income & accrued liab. 149 77 Total Net Worth & Liabilities 5.418 2.798 - ------------------------------------------------------------------------- De Nora Fuel Cells S.p.A. Statement of income - ------------------------------------------------------------------------ 1.10.99 - 31.12.99 Lit./ML Euro*000 - ------------------------------------------------------------------------ Sales 205 106 Lease 53 27 Research contributions 202 104 Variation in stocks of finished goods & wip 34 18 Production value 494 255 Cost of raw materials & consumables (306) (158) Service charges (329) (170) Entitlement of minority goods (32) (17) Personnel costs (286) (148) Depreciations and devaluations (78) (40) Variation in stocks of raw materials 246 127 Production costs (785) (405) Operating result (291) (150) Net financial income (charges) (14) (7) Net extraordinary income (charges) (79) (41) Result before income taxes (384) (198) Income taxes 0 0 Result for the year (384) (198) - ------------------------------------------------------------------------ Notes: (*) 1 Euro = 1936,27 Lit. (**) Considered period Oct. 1, 1999 - Dec. 31, 1999. The previous period of the year 1999 was directly at De Nora SpA charge. De Nora Fuel Cells S.p.A. Stato patrimoniale al 31.12.99 - ---------------------------------------------------------------------------- Attivita Lit/ML Euro*000 - ---------------------------------------------------------------------------- Immobilizzioni immateriali 102 53 lmmobilizzazioni materiali 1.370 708 Crediti a lungo termine 25 13 Immobilizzazioni nette 1.497 773 Rimanenze di magazzino 1.211 625 Crediti vs clientela 2.523 1.303 Crediti commerciali vs Gruppo 76 39 Crediti diversi 74 38 Disponibiliti liquide 36 19 Totale attivitit correnti 3.920 2.025 Ratei e risconti 1 1 Totafe Attivitit 5.418 2.798 - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- Passivita Lit./ML Euro*000 - ----------------------------------------------------------------------------- Capitale sociale 400 207 Riserva sovrapprezzo 1.130 584 Riserva legale 48 25 Altre riserve 259 134 Risultato di periodo (384) (198) Patrimonio netto 1.453 750 Fondi rischi e oneri 0 0 Fondo TFR 398 206 Norfin spa c/finanziamento 1.050 542 Passivita a lungo termine 1.448 748 Anticipi da clienti 687 355 Debiti vs fomitori 861 445 Debiti commerciali vs Gruppo 646 334 Altri debiti 174 90 Passivita correnti 2.368 1.223 Ratei e riscondi 149 77 Totale Passivita 5.418 2.798 - ----------------------------------------------------------------------------- De Nora Fuel Cells S.p.A. Conto Economico - ----------------------------------------------------------------------------- 1.10.99 - 31.12.99 Lit./ML Euro*000 - ----------------------------------------------------------------------------- Vendite 205 106 Locazioni 53 27 Contributi della ricerca 202 104 Var. rim. prodotti in corso e finiti 34 18 Valore della produzione 494 255 Costo materie prime, sussidiarie e merci (306) (158) Costi per servizi (329) (170) Costi pergodimento beni di terzi (affitti) (32) (17) Costi per il personale (286) (148) Ammortamenti (78) (40) Var. rim. materie prime e sussidiarie 246 127 Costi della produzione (785) (405) Risultato operativo (291) (150) Proventi (oneri) finanziari (14) (7) Proventi (oneri) straordinari (79) (41) Risultato ante imposte (384) (198) Imposte sul reddito 0 0 Risultato netto (384) (198) - ----------------------------------------------------------------------------- Note. (*) 1 Euro = 1936,27 Lit. (**) Periodo: 1 Ott. 1999 - 31 Dic. 1999. Nel periodo precedente l'attivita e in carico a De Nora spa. Schedule 4.13 - Absence of Certain Changes -------------------------- None Schedule 4.15 - Employee Benefit Plans ---------------------- In addition to severance pay, our company add the following annual integration for middle management and management, then: - - to Mr. Antonio Maggiore Lit. 4.000.000 - - to Mr. Michele Tettamanti Lit. 8.000.000 Schedule 4.16(a) - Real Property ------------- - - Milan; Via Bistolfi 35: Offices sqm 103 Laboratory sqm 250 - - Milan: Via Dei Canzi 1: Workshop sqm 140 Schedule 4.16(b) - Personal Property ----------------- Details of equipments and other assets t 31/12/1999 after spin-off
- ------------------------------------------------------------------------------------------------------------------------------------ Accumulated Accumulated Net book Date of depreciation Depreciation value as order Orders Description Supplier Book value at 31/12/98 31/12/99 at 31.12.1999 - ------------------------------------------------------------------------------------------------------------------------------------ Other equipments 19/10/92 921546 Vasca lavaggio ad ultrasuoni Orma 1.150.000 (1.150.000) (1.150.000) 26/10/92 921632 Rack di controllo SEA 9.310.000 (9.310.000) (9.310.000) 04/11/92 921716 Stampo guarniz 225 cm2 pressofuse Italstamp 9.000.000 (9.000.000) (9.000.000) 05/11/92 921722 Stampo bipoferi pressofusi Albertini 44.500.000 (44.500.000) (44.500.000) 11/02/93 930446 Stampo telai umid stack 10 kW Italstamp 11.000.000 (11.000.000) (11.000.000) 29/10/93 933741 Modifica stampo guarniz FC stack 225 cm2 Italstamp 5.000.000 (5.000.000) (5.000.000) 31/03/94 941585 Pompa Viesse 2.134.000 (2.134.000) (2.134.000) 24/05/94 942654 Applicatore Loctite Utensileria Teodosio 1.350.000 (1.350.000) (1.350.000) - ------------------------------------------------------------------------------------------------------------------------------------ Total other equipments 83.444.000 (83.444.000) (83.444.000) - ------------------------------------------------------------------------------------------------------------------------------------ Laboratory equipments 17/03/93 930833 Sonde RH (2), set di calibrazione, trasduttori P (2) Jumo 6.355.000 (6.355.000) (6.355.000) 19/03/93 930861 Indicatore digitali (5) + trasmett P (4) FEM 15.924.195 (15.924.195) (15,924.195) 26/03/93 930971 Cappa di Laboratorio Tecnoservice 14.400.000 (14.400.000) (14.400.000) 31/03/93 931056 PLC MAC 50 S.T.A 33.000.000 (33.000.000) (33.000.000) 20/04/93 931310 Cercafughe Gambetti 3.155.230 (3.155.230) (3.155.230) 07/06/93 932032 Fustellatrice oleodinamica Bombelli 6.100.000 (6.100.000) (6.100.000) 04/11/93 933813 Portastampo per provini + taselli Italstamp 3.000.066 (3.000.066) (3.000.066) 16/11/93 933956 Trasmettitore di Pressione Camille Bauer (4) Camille Bauer 5.928.000 (5.928.000) (5.928.000) 02/02/94 940437 Tensionatori + pompa BLM 9.482.720 (9.482.720) (9.482.720) 23/03/94 941370 Stampo guernizione FC stack 225 cm2 Italstamp 16.896.000 (16.896.000) (16.896.000) 10/05/94 942353 Stampo guarniz umidif stack 225 cm2 Italstamp 23.616.000 (23.616.000) (23.616.000) 23/05/94 942641 Serbatoio con resistenze SEA 4.560.000 (4.560.000) (4.560.000) 25/05/94 942706 Carichi elettronic (5 da 120 W e 1 da 8 kW) Hochert & Hackl 23.932.138 (23.932.138) (23.932.138) 07/06/94 942961 Pannello di decompressione e distribuzione gas Sapio 20.500.000 (20.500.000) (20.500.000) 14/06/94 943066 Strumentaz electtronica impianto B1 MKS 3.477.558 (3.477.558) (3.477.558) 01/07/94 943391 Rack modulari (3) S.E.A. 25.965.000 (25.965.000) (25.965.000) 15/09/94 944155 Apparecchiatura per prove elettriche Italstamp 4.200.000 (4.200.000) (4.200.000) 21/09/94 944244 Trasmettitore di pressione Camille Bauer (2) Camille Bauer 3.120.000 (3.120.000) (3.120.000) 21/09/94 944242 Armadio/pannelli di controllo strumentazione S.E.A. 7.722.000 (7.722.000) (7.722.000) 07/04/95 951549 Stampi guarniz FC x FEVER Italstamp 73.000.000 (73.000.000) (73.000.000) 07/04/95 951551 Stampo per lastre di gomma Italstamp 8.700.000 (8.700.000) (8.700.000) 11/04/95 951596 Stampo guarniz umidif. per FEVER busnelli 35.000.000 (35.000.000) (35.000.000) 28/06/95 952773 Sistema acquisizione dati SEA di Mora Pierangelo 21.707.500 (21.707.500) (21.707.500) 04/07/95 952860 Bagno termostatico Lauda Italscientifica 4.000.000 (4.000.000) (4.400.000) 21/07/95 953173 Tensionatori idraulici BLM SOS 7.866.000 (7.866.000) (7.866.000) 10/07/96 962671 Stampo guarniz FC stack 956 cm2 Italstamp 40.000.000 (29.999.976) (40.000.000) 27/08/96 962701 Dima press. Sorapec Italstamp 3.200.000 (2.399.976) (3.200.000) 27/01/97 970189 Piastre fibra Carbonio Archemide 1.350.000 (506.244) (843.744) 506.258 13/03/97 970835 Bagno termostatico Seneco 2.850.000 (1.068.744) (1.781.244) 1.068.756 14/04/97 971221 Stampo guarnizioni stack 60 cm2 Italstamp 17.000.000 (6.374.988) (10.624.988) 6.375.012 22/04/97 971319 Plastre fibra Carbonio Archemide 1.350.000 (506.223) (843.723) 506.277 16/07/97 972362 Stampo guarnizioni stack 1500 cm2 Italstamp 38.000.000 (14.249.988) (23.749.988) 14.250.012 Scaffalature per deposito Lab, FUEL CELL Scaffaltecnica (041) 2.864.160 (447.525) 2.416.635 19/07/94 943696 1 mobile lavello Arredi tecnici Villa 1.935.150 (1.935.150) (1.935.150) 25/10/99 m. 2 stampi Tecnomeccanica pr 53 30.000.000 (937.500) 29.062.500 30/10/99 Modifica stampo Italstamp ft 103 pr 29 15.000.000 (468.750) 14.531.250 01/11/99 Racorderia Nordival 3.193.963 (99.811) 3.094.152 02/11/99 Masaulom pr 32 1.237.850 (38.683) 1.199.167 05/11/99 Cotelco sri pr 35 5.081.326 (158.791) 4.922.535 08/11/99 Vimec sri pr 39 2.854.400 (89.200) 2.765.200 30/11/99 Amboldi-Fustelfa pr 52 720.000 (22.500) 697.500 30/11/99 Nordival pr 48 135.470 (4.233) 131.237 10/12/99 Acq Stack 1.200.000 (37.500) 1.162.500 ---------------------------------------------------------------- Total laboratory equipments [illegible] (436.648.696) [illegible] 82,688,988 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL EQUIPMENTS 633.023.726 (522.092.696) (550.334.738) 82,688,988 - ------------------------------------------------------------------------------------------------------------------------------------
t 31/12/1999 after spin-off - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated Accumulated Net book Date of depreciation Depreciation value as order Orders Description Supplier Book value at 31/12/98 31/12/99 at 31.12.1999 - ---------------------------------------------------------------------------------------------------------------------------------- FURNITURE AND PITTINGS 94 1326 Armadi in metallo (2) Ditron Sisteml 1.327.200 (982.128) (1.141.392) 185.808 94 1487 Scrivanie ufficl + cassettiere Mercatre 8.147.250 (6.028.900) (7.006.565) 1.140.686 95 2226 Armadio Mercatre SpA 846.000 (846.000) (846.000) 92 879 n. 7 Sedle c/braccioli ODN Technologies (050) 1.186.000 1.186.000 (1.186.000) 92 903 n. 1 Scrivania + n. 1 Angolo ODN Technologies per scrivania (050) 178.976 178.976 (178.976) 92 905 n. 1 Scrivania ODN Technologies (050) 127.840 127.840 (127.840) 92 890 n. 4 Cassettiere ODN Technologies (050) 818.176 818.176 (818.176) 92 894 n. 1 Armadio a 4 ante 207 x 49.2 ODN Technologies (050) 5.752.800 5.752.800 (5.752.800) n. 4 Antine 44 x 49.2 92 898 n. 1 Mobiletto basso ODN Technologies (050) 204.544 204.544 (204.544) 92 1249 n. 1 Classificatore 4b4 ODN Technologies (050) 51.943 51.943 (51.943) 92 1250 n. 1 Classificatore 4b4 ODN Technologies (050) 58.303 58.303 (58.303) 99 063 S180 DM n. 1 Scrivania noce anegre' Centrufficio Loreto (050) 1.208.996 (72.540) 1.136.456 99 064 DA11060P - Dattilo noce anegre' Centrufficio Loreto (050) 519.646 (519.646) 99 065 1828OGP Contenitore noce anegre' Centrufficio Loreto (050) 839.246 (839.246) 99 064 18280PV Contenitore noce anegre' Centrufficio Loreto (050) 1.009.246 (60.553) 948.693 99 066 Top noce anegre' da cm. 159 Centrufficio Loreto (050) 139.696 (139.696) 99 065 n. 2 poltrene direzionali in Centrufficio Loreto pelle nera (050) 409.996 (409.996) 99 069 n. 8 Sedie FSBIGN 72 Blu' Centrufficio Loreto (050) 723.174 (723.174) - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL FURNITURE AND FITTINGS [illegible] 521.554 [illegible] 3.411.643 - ---------------------------------------------------------------------------------------------------------------------------------- COMPUTER HARDWARE 93 1458 Centralina di controllo portatile S.E.A. (60) 3.550.000 (3.550.000) (3.550.000) 99 076 Stampante SCANJET HP 5200 matric.SG8C11613T SYCON (060) 530.000 (530.000) 99 077 Stampante HP DESKJET metric. ES92H1308V SYCON (060) 650.000 (650.000) 99 027 FAX RICOH metricola U3381100579 SYCON (060) 1.950.000 (195.000) 1.755.000 99 146 DESKPRO EP Pll s/n 8920CCJ72006 (Franchi) SYCON (060) 1.950.000 (195.000) 1.755.000 96 065 BRAVO MS P/75 s/n 501772908 + Monitor + Licenza (Ornelas) SYCON (060) 6.090.000 3.654.000 (4.872.000) 1.218.000 99 144 DESKPRO EP Pll s/n 8920CCJ71832 (Brambilla) SYCON (060) 1.950.000 (195.000) 1.755.000 94 276 ZENITH 450X s/n N50021930 (Lab.FUEL CELLS) SYCON (060) 6.150.000 6.150.000 (6.150.000) 95 149 IBM 466 DX2/T s/n 6P550Z583 (Lab.FUEL CELLS Acq.dali) SYCON (060) 1.739.000 1.739.000 (1.739.000) 94 087 PC CIEMME - matric 951515 (Lab.FUEL CELLS Acq.dali) SYCON (060) 1.750.000 1.750.000 (1.750.000) 96 174 Transformazione 486 matric.951515 in PENTIUM SYCON (060) 1.100.000 659.976 (879.973) 220.027 95 198 BRAVO 270W s/n 125BHP030051 (Lab.FUEL CELLS Acq.dali) SYCON (060) 2.104.190 2.104.190 (2.104.190) 92 386 PC CIEMME P100 - matric 080454 (Magazz. via del Canzi) SYCON (060) 8.700.000 8.700.000 (8.700.000) 96 102 Transformazione 486 matric. 080454 in PENTIUM SYCON (060) 1.100.000 659.976 (879.973) 220.027 99 150 DESKPRO EP Pii s/n 8919CCJ72279 (Mazzuchelli) SYCON (060) 1.950.000 (195.000) 1.755.000 99 145 DESKPRO EP Pii s/n 8919CCJ72279 (Marzupio) SYCON (060) 1.950.000 (195.000) 1.755.000 98 207 DESKPRO P233MX s/n 8825BNT22415 (PLC) SYCON (060) 3.310.000 330.996 (992.970) 2.317.030 93 229 PC CIEMME 486DX (Zinl) s/n 223744 SYCON (060) 3.650.000 3.650.000 (3.650.000) 98 173 Transformazione in PENTIUM s/n 223744 SYCON (060) 1.100.000 659.976 (879.973) 220.027 99 090 DESKPRO EP Pii s/n 8908CCJ74715- (Dal Pezzo) SYCON (060) 2.130.000 (213.000) 1.917.000 97 140 BRAVO LC5133 s/n 11BUR034902 + Monitor + Office (Taverna) SYCON (060) 2.680.000 803.988 (1.339.982) 1.340.018 99 154 ARMADA 1700 - s/n 3J94CND1383C (Maggiore) SYCON (060) 3.700.000 (369.997) 3.330.003 DESKPRO EP Pii s/n 8919CCJ76324 (Torro) SYCON (060) 2.140.000 (213.999) 1.926.001 DESKPRO EP PII s/n 8919CCJ70168 (Fleba) SYCON (060) 2.140.000 (213.999) 1.926.001 30/11/99 ARMADA + SDRAM SYCON PR 51 3.450.000 (86.250) 3.363.750 23/12/99 BORSA PER PORTATILE SYCON PR 78 160.000 (4.000) 158.000 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL COMPUTER HARDWARE XXXX 27.312.102 XXXXXX 26.928.884 - ---------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL VEHICLES 21/10/92 92 1596 Carello transpallet (movimentaz bombole) Rotocar 12.500.000 (12.500.000) (12.500.000) --------------------------------------------------------------------------- 12.500.000 (12.500.000) (12.500.000) --------------------------------------------------------------------------- STATIONARY SYSTEMS AND TEST STATION --------------------------------------------------------------------------- [illegible] 3.611.303 1.009.716.495 --------------------------------------------------------------------------- SEE ATTACHED LIST - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL FITINGS, COMPUTERS, OTHER ASSETS 1.117.050.020 15.333.656 (76.992.998) 1.040.057.022 - ----------------------------------------------------------------------------------------------------------------------------------
Producer goods in lease
Fuel Cells with clients Amount as at 31/12/1999 after spin-off - ----------------------------------------------------------------------------------------------------------------------------------- Client name Year of booking Book value Accumulated Deprec Pro-quota Deprec Pro-quota deprec 31/12/1999 Net book value 31.12.1998 as at 30.09.1999 rate 22.5% as at 31/12/99 - ----------------------------------------------------------------------------------------------------------------------------------- RENAULT Fuel cell year 95 8.928.426 8.928.426 0 RENAULT Fuel cell year 96 133.848.750 90.347.904 22.586.976 7.528.992 13.384.878 RENAULT Fuel cell year 96 66.924.375 45.173.952 11.293.488 3.764.496 6.692.439 RENAULT Fuel cell year 98 70.707.752 7.954.620 11.931.930 3.997.311 46.843.891 ANSALDO Fuel cell year 95 327.164.388 327.164.388 0 ANSALDO Fuel cell year 97 281.282.103 94.932.696 47.466.351 15.822.118 123.060.938 TNO INST. ENV. Fuel cell year 97 9.369.400 3.162.168 1.581.084 527.029 4.099.119 ARMINES Fuel cell year 95 44.140.712 41.381.900 2.758.812 0 ENEA Fuel cell year 96 35.843.136 24.194.088 6.048.522 2.016.176 3.584.350 DLR Fuel cell year 96 38.269.860 25.832.136 6.458.031 2.152.680 3.827.013 VOLVO Fuel cell year 98 35.017.907 3.939.504 5.909.265 1.969.757 23.199.381 ------------------------------------------------------------------------------------------------------------------ 1.051.496.809 673.011.782 116.034.459 37.758.560 224.692.008 ------------------------------------------------------------------------------------------------------------------ ABB CORPORATE Fuel cell year 1999 4.314.925 0 364.068 121.357 3.950.857 ESKOM Fuel cell year 1999 7.433.117 0 627.165 209.056 6.805.952 POWER COMP. Fuel cell year 1999 13.263.415 0 1.119.100 373.034 12.144.315 ------------------------------------------------------------------------------------------------------------------ 25.011.457 0 2.110.333 703.447 22.901.124 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL 1.076.508.266 673.011.782 118.144.792 38.462.007 247.593.132 - ----------------------------------------------------------------------------------------------------------------------------------
Other tangible fixed assets Amount as at 31/12/1999 after spin-off at 31.12.1999 - ------------------------------------------------------------------------------ HIGH POWER TEST STATION FUEL CELL project 911-IDMI 85.267.598 - less pro quota depreciation at 30/9/99 (2.558.025) Invoice of 21/10/99 order 99/33 PR 5 20.060.200 ------------------ 102.769.773 ------------------ STATIONARY FUEL CELL SYSTEMS project 902 DMI 908.000.000 ------------------ 908.000.000 ------------------ TOTAL 1.010.769.773 - ------------------------------------------------------------------------------ Schedule 4.19(a) - A complete list of employees of DNFC ------------------------------------ DE NORA FUEL CELLS S.p.A.
- ------------------------------------------------------------------------------------------------------------------------------------ Gross Annual Date Salary of (Italian Incentive bonus Fringe Working Duration of Surname Name Sex birth Age Lire) (Italian Lire) Benefits Time contract - ------------------------------------------------------------------------------------------------------------------------------------ xxRTI IACOPO M 24/10/1978 21 34.409.200 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxBILLA MASSIMO M 12/02/1953 47 56.999.110 5000.00/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxMEZZO PIETRO M 02/09/1966 33 44.717.400 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxRATE ALESSANDRO M 10/02/1962 38 71.982.512 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxA GIAN PIERO M 06/05/1955 44 58.756.894 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxO ANTONIO M 14/05/1937 62 62.629.322 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxCHI KATIA F 25/05/1970 29 48.287.596 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xDOLFI SABRINA F 06/02/1968 32 42.155.400 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xIORE ANTONIO GIUSEPPE M 12/06/1964 35 70.000.000 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xUPIO GIANPAOLO M 10/02/1951 49 60.027.128 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxUCCHELLI GABRIELE M 03/09/1949 50 61.616.898 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxLAS JACOBO RUBEN M 05/03/1956 43 55.936.944 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxRNA MARINA F 25/08/1970 29 41.702.416 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxAMANTI MICHELE M 25/11/1959 40 100.000.012 up to 20% annual gross salary** Hand-phone Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxxx ANTONINO M 18/12/1972 27 38.102.624 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ XNI FABIO M 17/08/1967 32 43.247.400 500.000/1.500.000* Full-time Open-ended contract - ------------------------------------------------------------------------------------------------------------------------------------ xxxcordance with Corporate Agreement, calculated on productivity, profitability and quality index results xxo system xxxdata are reserved in compliance with Law 675/1996
DE NORA FUEL CELLS S.p.A.
- ------------------------------------------------------------------------------------------------------------------------------------ Medium working Daily Pay Incentive bonus Surname Name Sex Date of birth Age (Italian Lire) (Italian Lire) Fringe Benefits Working Time Duration of contract - ------------------------------------------------------------------------------------------------------------------------------------ A ROBERTO M 370.000 Temporary Until 21/4/2000 - ------------------------------------------------------------------------------------------------------------------------------------ XMANTONIO MICHELE M 370.000 Temporary Until 21/4/2000 - ------------------------------------------------------------------------------------------------------------------------------------ XHO MASSIMO M 370.000 Temporary Until 21/4/2000 - ------------------------------------------------------------------------------------------------------------------------------------ XEGRINO ROBERTO M 370.000 Temporary Until 28/4/2000 - ------------------------------------------------------------------------------------------------------------------------------------
XXe end of temporary contract he will be emploied by De Nora Fuel Cells directly XXt data reserved in compliance with Law 675/1996
- ------------------------------------------------------------------------------------------------------------------------------------ Gross annual Salary Incentive bonus Surname Name Sex Date of birth Age (Italian Lire) (Italian Lire) Fringe Benefits Working Time Duration of contract - ------------------------------------------------------------------------------------------------------------------------------------ XOSSO DOMENICO M 21/10/1961 39 42.699.678 500.000/1.500.000* Temporary** Expiring 30/4/2000 - ------------------------------------------------------------------------------------------------------------------------------------ Dell'Osso is a De Nora S.p.A employee. Actually he is at disposal of De Nora Fuel Cells. Xt data are reserved in compliance with Law 675/1996
DE NORA s.p.a. GRUPPO ORONZIO DE NORA - -------------------------------------------------------------------------------- Spettabile DE NORA FUEL CELLS S.p.A. Via Bistolfi, 35 20134 MILANO Milano, 26 gennaio 2000 A seguito Vostra richiesta odierna, ci dichiariamo disponibili, sentito anche il parere del nostro dipendente, a mettere a Vostra disposizione il Sig. Domenico Dell'Osso alle seguenti condizioni: Durata del prestito: dal 01/02/2000 al 30/04/2000 Tipologia di prestazione effettuata: attivita produttiva Sede di lavoro: Milano - Via Bistolfi, 35 Orario di lavoro: a tempo pieno Corrispettivo del prestito: costo del lavoro da noi sostenuto compreso di oneri contributivi Modalilti del riaddebito: posticipato mensile Risoluzione del contratto: a mezzo comunicazione scritta dal primo del mese successivo alla data della comunicazione Vogliate renderci firmata per accetazione copia della presente. DE NORA S.p.A PER ACCETTAZIONE: /s/ ................... [LOGO] Via Bistolfi, 35-20134 Milano - [LOGO] Tel. (02) 21291 - Telex 310.552 ODENOR I Schedule 4.19(b) - Severance Pay as of 31/12/99 ---------------------------- Lit. 398.473.100 ---------------- EXHIBIT A [LETTERHEAD OF HALE AND DORR LLP] April 4, 2000 DeNora New Energy Investments B.V. DeNora Fuel Cells S.p.a Via Bistolfi 35 20134 Milano, Italy Re: Investment and Exchange Agreement --------------------------------- Ladies and Gentlemen: This opinion is being furnished pursuant to Section 8.1(d) of the Investment and Exchange Agreement, dated as of April 4, 2000, between Arthur D. Little, Inc. ("ADL"), Epyx Corporation ("Epyx"), DeNora Fuel Cells S.p.a. ("DNFC") and DeNora New Energy Investment B.V. ("DN") (the "Investment Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Investment Agreement. We have acted as special counsel to ADL and Epyx (the "ADL Parties") in connection with the Investment Agreement. As such counsel, we have not been engaged to negotiate or prepare the Investment Agreement or any of the other documents referenced therein. However, we have examined and are familiar with and have relied upon the following documents: (a) the Investment Agreement and the Stockholders' Agreement dated of even date herewith between Epyx, ADL, DN and Amerada Hess Corporation (the "Stockholders' Agreement," and together, with the Investment Agreement, the "Transaction Documents"); (b) an Officer's Certificate from ADL, dated as of the date hereof (the "ADL Officer's Certificate"), attesting to ADL's charter and bylaws, certain resolutions adopted by the Board of Directors of ADL, the incumbency of certain officers of ADL, and as to certain other matters; (c) an officer's Certificate from Epyx, dated as of the date hereof (the "Epyx Officer's Certificate"), attesting to Epyx's charter and bylaws, certain resolutions adopted by the Board of Directors and Stockholders of Epyx, the incumbency of certain officers of Epyx, and as to certain other matters; (d) A stock certificate (the "Epyx Certificate") representing 500,000 shares of Epyx Common Stock, registered in the name of DN (the "Epyx Shares"); and (e) such other records of meetings, documents, instruments and certificates (including but not limited to certificates of public officials and officers of the ADL Parties) as we have considered necessary for purposes of this opinion. In our examination of the documents described above, we have assumed the genuineness of all signatures, the legal capacity of all individual signatories, the completeness of all corporate and stock records provided to us, me authenticity of all documents submitted to us as originals, DeNora New Energy Investments B.V. DeNora Fuel Cells S.p.a April 4, 2000 Page 2 the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such latter documents. In rendering this opinion, we have relied, as to all questions of fact material to this opinion, upon certificates of public officials and officers of the ADL Parties and upon the representations and warranties made by the parties to the Transaction Documents in the Transaction Documents. We have not attempted to verify independently such facts, although nothing has come to our attention which has caused us to question the accuracy of such certificates or representations and warranties. Any reference herein to "our knowledge," or to any matter "known to us", "coming to our attention" or "of which we are aware", or any variation of any of the foregoing shall mean the conscious awareness of the attorneys in this firm who have been involved in the preparation of this letter of the existence or absence of any facts which would contradict our opinions or statements set forth below. We have not undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of the ADL Parties. Without limiting the foregoing, we have not conducted a search of any electronic databases or the dockets of any court, administrative or regulatory body, agency or other filing office in any jurisdiction. For purposes of this opinion, we have assumed that the Transaction Documents have been duly authorized, executed and delivered by all parties thereto other than the ADL Parties, and that all such other parties have all requisite power and authority to effect the transactions contemplated by the Transaction Documents. We have also assumed that each Transaction Document is the valid, binding and enforceable obligation of each party thereto other than the ADL Parties. We do not render any opinion as to the application of any federal or state law or regulation to the power, authority or compliance of any party to any of the Transaction Documents other than the ADL Parties. Our opinions set forth below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, moratorium fraudulent conveyance or similar laws relating to or affecting the rights of creditors generally, (ii) statutory or decisional law concerning recourse by creditors to security in the absence of notice or hearing, and (iii) duties and standards imposed on creditors and parties to contracts, including, without limitation, requirements of good faith, reasonableness and fair dealing. Furthermore, we express no opinion as to the availability of any equitable or specific remedy upon any breach of any of the agreements as to which we are opining herein, or any of the agreements, documents or obligations referred to therein, or to the successful assertion of any equitable defenses, inasmuch as the availability of such remedies or the success of any equitable defense may be subject to the discretion of a court. We are expressing no opinion herein as to the enforceability of Sections 7.1, 7.2, 7.3, 9.1, 9.2, 9.3 or 9.4 of the Investment Agreement. We are expressing no opinion herein as the enforceability of the following Sections of the Stockholders' Agreement: (I) Section 2.1(b) (other than the first sentence thereof); or (II) Sections 2.3, 2.4, 3.3, 4.4 or the last two sentences of Section 5.8. We are expressing no opinion as the enforceability of any provision of any agreement or document as to which we are opining herein which purports to indemnify any person against his, her or its own negligence or intentional misconduct. We are expressing no opinion herein with respect to compliance by any ADL Party with (I) state securities or "blue sky" laws, or with any state or federal securities antifraud laws or (II) with any laws or regulations relating to export of technology, goods, services or intellectual property. We are not DeNora New Energy Investment B.V. DeNora Fuel Cells S.p.a. April 4, 2000 Page 3 expressing any opinion herein as to the title or ownership of any assets by any of the ADL Parties. For purposes of our opinion expressed in paragraph 6 below, insofar as it relates to the full payment for the Epyx Shares, we have assumed that (i) the DNFC shares have been duly and properly transferred by DN to Epyx, free and clear of all liens and encumbrances and (ii) the fair market value of the DNFC shares transferred to Epyx by DN is equal to or greater than the aggregate par value of the Epyx Shares. For purposes of our opinion in paragraph 8 below, we have relied upon representations made by DN in Section 5.4 of the Investment Agreement, and have assumed (without any independent investigation) the accuracy of such representations. We are opining herein solely as to the state laws of the Commonwealth of Massachusetts, the Delaware General Corporation Law statute and the federal laws of the United States of America. To the extent that any other laws govern any of the matters as to which we are opining below, we have assumed, with your permission and without independent investigation, that such laws are identical to the state laws of the Commonwealth of Massachusetts, and we express no opinion as to whether such assumption is reasonable or correct. For purposes of our opinions rendered below, we have assumed that the facts and law governing the future performance by the ADL Parties of their respective obligations under the Transaction Documents will be identical to the facts and law governing their performance on the date of this opinion. Based upon and subject to the foregoing, we are of the opinion that: 1. Each of the ADL Parties has all requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. 2. The execution, delivery and performance of the Investment Agreement by the ADL Parties have been duly authorized by each of the ADL Parties, and the execution, delivery and performance of the Stockholders' Agreement by the ADL Parties has been duly authorized by the ADL Parties. 3. The Investment Agreement has been duly executed and delivered by each of the ADL Parties, and constitutes the valid and binding obligation of the ADL Parties, enforceable against them in accordance with its terms. The Stockholders' Agreement has been duly executed and delivered by the ADL Parties, and constitutes the valid and binding obligation of the ADL Parties, enforceable against them in accordance with its terms. 4. The execution, delivery and performance of the Transaction Documents by the ADL Parties who are parties thereto does not violate any decree or order of any court or governmental or regulatory agency specifically naming any ADL Party of which we have knowledge. 5. No stamp, registration or other similar taxes or charges are payable under the federal laws of the United States or the state laws of the Commonwealth of DeNora New Energy Investment B.V. DeNora Fuel Cells S.p.a. April 4, 2000 Page 4 Massachusetts in respect of the execution or delivery by the ADL Parties of the Transaction Documents. 6. The Epyx Shares have been duly authorized and validly issued and are fully paid and nonassessable, and the Epyx Certificate represents 500,000 shares of Common Stock of Epyx. 7. The execution and delivery by the ADL Parties of the Transaction Documents, and the consummation by the ADL Parties of the transactions contemplated thereby, do not, to our knowledge, violate the provisions of any Federal or Massachusetts state law, rule or regulation applicable to the ADL Parties. 8. Based in part on the representations of DN in the Investment Agreement, the issuance and sale of the Epyx Shares to DN pursuant to the Investment Agreement are exempt from registration under the Securities Act of 1933, as amended. This opinion is provided to you as a legal opinion only and not as a guaranty or warranty of the matters discussed herein. This opinion is based upon currently existing statutes, rules, regulations and judicial decisions and is rendered as of the date hereof, and we disclaim any obligation to advise you of any change in any of the foregoing sources of law or subsequent developments in law or changes in facts or circumstances which might affect any matters or opinions set forth herein. This opinion is rendered only to you and is solely for your benefit in connection with the transactions contemplated by the Transaction Documents. This opinion may not be relied upon by you for any other purpose, nor may this opinion be provided to, quoted to or relied upon by any other person or entity for any purpose, without our prior written consent. Very truly yours, /s/ Hale and Dorr LLP HALE AND DORR LLP EXHIBIT B [LETTERHEAD OF STUDIO LEGALE] Boston, April 4/th/ 2000 Arthur D. Little Inc. Acorn Park Cambridge, Massachussets 02140-2390 USA Re: Investment and Exchange Agreement --------------------------------- Dear Sirs: This opinion is being furnished pursuant to Section 8.2(d) of the Investment and Exchange Agreement, dated as of April 4, 2000, between Arthur D. Little, Inc. ("ADL"), Epyx Corporation ("Epyx"), DeNora Fuel Cells S.p.a. ("DNFC") and DeNora New Energy Investment B.V. ("DN") (the "Investment Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Investment Agreement. We have acted as legal counsel to DNFC and DN (the "DN Parties") in connection with the Investment Agreement and we have been engaged to negotiate and prepare the Investment Agreement and any of the other documents referenced therein. We have examined and are familiar with and have relied upon the following documents: . the Investment Agreement, the Stockholders' Agreement dated of even date herewith between ADL, DN and Epyx (the "Stockholders' Agreement, and together, with the Investment Agreement, the "Transaction Documents"); . the shareholders' ledger of DNFC (the "DNFC Ledger"), attesting to DNFC's incorporation and capitalization, certain resolutions adopted by the Board of Directors of DNFC; . deed of incorporation dated as of March 14/th/ 2000 and certificate from the Chamber of Commerce and Industries of Amsterdam, dated as of March 30, 2000 (the "DN Corporate Certificates"), attesting to DN's incorporation, Arthur D. Little Inc. April 4, 2000 Page 2 charter and bylaws, certain resolutions adopted by the Board of Managing Directors of DN; . a stock certificate to be completed by DNFC and issued to Epyx and then recorded in the DNFC Ledger (the "DNFC Stock Certificate"); and . such other records of meetings, documents, instruments and certificates (including but not limited to certificates of public officials and officers of the DN Parties) as we have considered necessary for purposes of this opinion. In our examination of the documents described above, we have assumed the genuineness of all signatures, the legal capacity of all individual signatories, the completeness of all corporate and stock records provided to us, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such latter documents. In rendering this opinion, we have relied, as to all questions of fact material to this opinion, upon certificates of public officials and officers of the DN Parties and upon the representations and warranties made by the parties to the Transaction Documents in the Transaction Documents. We have not attempted to verify independently such facts, although nothing has come to our attention which has caused us to question the accuracy of such certificates or representations and warranties. Any reference herein to "our knowledge," or to any matter "known to us", "coming to our attention" or "of which we are aware", or any variation of any of the foregoing shall mean the conscious awareness of the attorneys in this firm who have been involved in the preparation of this letter of the existence or absence of any facts which would contradict our opinions or statements set forth below. We have not undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of the DN Parties. Without limiting the foregoing, we have not conducted a search of any electronic databases or the dockets of any court, administrative or regulatory body, agency or other filing office in any jurisdiction. For purposes of this opinion, we have assumed that the Transaction Documents have been duly authorized, executed and delivered by all parties thereto other than the DN Parties, and that all such other parties have all requisite power and authority to effect the transactions contemplated by the Transaction Documents. We have also assumed that each Transaction Document is the valid, binding and enforceable obligation of each party thereto other than the DN Parties. We do not render any opinion as to the application of any law or regulation to the power, authority or compliance of any party to any of the Transaction Documents other than the DN Parties. Our opinions set forth below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws relating to or affecting the rights of creditors generally, (ii) statutory or decisional law concerning recourse by creditors to security in the absence of notice or hearing, and (iii) Arthur D. Little Inc. April 4, 2000 Page 3 duties and standards imposed on creditors and parties to contracts, including, without limitation, requirements of good faith, reasonableness and fair dealing. Furthermore, we express no opinion as to the availability of any equitable or specific remedy upon any breach of any of the agreements as to which we are opining herein, or any of the agreements, documents or obligations referred to therein, or to the successful assertion of any equitable defenses, inasmuch as the availability of such remedies or the success of any equitable defense may be subject to the discretion of a court. We are expressing no opinion herein as to the enforceability of any section of the Transaction Documents under the General Corporation Law of the State of Delaware. We are expressing no opinion as the enforceability of any provision of any agreement or document as to which we are opining herein which purports to indemnify any person against his, her or its own gross negligence or intentional misconduct. We are expressing no opinion herein with respect to compliance by any DN Party with (I) securities or "blue sky" laws, or with any securities antifraud laws or (II) with any laws or regulations relating to export of technology, goods, services or intellectual property. We are not expressing any opinion herein as to the title or ownership of any assets by any of the DN Parties. For purposes of our opinion expressed in paragraph 6 below, insofar as it relates to the full payment for the DNFC Shares, we have assumed that (i) 500,000 newly issued shares of Epyx (the "Epyx Shares") have been duly and properly issued by Epyx and registered in the name of DN, free and clear of all liens and encumbrances and (ii) the fair market value of the Epyx Shares is equal to or greater than the par value of 50% of the common stock of Epyx. We are opining herein solely as to the laws of Italy. To the extent that any other laws govern any of the matters as to which we are opining below, we have assumed, with your permission and without independent investigation, that such laws are identical to the laws of Italy, and we express no opinion as to whether such assumption is reasonable or correct. For purposes of our opinions rendered below, we have assumed that the facts and law governing the future performance by the DN Parties of their respective obligations under the Transaction Documents will be identical to the facts and law governing their performance on the date of this opinion. Based upon and subject to the foregoing, we are of the opinion that: 1. Each of the DN Parties has all requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. 2. DNFC has all requisite corporate power and authority to issue and delivery the DNFC Stock Certificate to Epyx and to make any entry thereof in the DNFC Ledger. 3. The execution, delivery and performance of the Investment Agreement by the DN Parties have been duly authorized by each of the DN Parties, and the execution, delivery and performance of the Stockholders' Agreement by DN has been duly authorized by DN. 4. The Investment Agreement has been duly executed and delivered by each of the DN Parties, and constitutes the valid and binding obligation of Arthur D. Little Inc. April 4, 2000 Page 4 the DN Parties, enforceable against them in accordance with its terms. The Stockholders' Agreement has been duly executed and delivered by DN, and constitutes the valid and binding obligation of DN, enforceable against it in accordance with its terms. 5. The execution, delivery and performance of the Transaction Documents by the DN Parties who are parties thereto does not violate any decree or order of any court or governmental or regulatory agency specifically naming any DN Party of which we have knowledge. 6. No stamp, registration or other similar taxes or charges are payable under the laws of Italy in respect of the execution or delivery by the DN Parties of the Transaction Documents. 7. The DNFC Shares have been duly authorized and validly issued and are fully paid and nonassessable. The DNFC Stock Certificate, when completed and issued to Epyx, represents 400,000 ordinary shares of Common Stock of DNFC. 8. The execution and delivery by the DN Parties of the Transaction Documents, and the consummation by the DN Parties of the transactions contemplated thereby, do not, to our knowledge, violate the provisions of any law, rule or regulation applicable to the DN Parties. 9. Neither the DN Parties nor any of their assets enjoy any right of immunity from set-off, suit, or execution with respect to their obligations under the Transaction Documents. This opinion is provided to you as a legal opinion only and not as a guaranty or warranty of the matters discussed herein. This opinion is based upon currently existing statutes, rules, regulations and judicial decisions and is rendered as of the date hereof, and we disclaim any obligation to advise you of any change in any of the foregoing sources of law or subsequent developments in law or changes in facts or circumstances which might affect any matters or opinions set forth herein. This opinion is rendered only to you and is solely for your benefit in connection with the transactions contemplated by the Transaction Documents. This opinion may not be relied upon by you for any other purpose, nor may this opinion be provided to, quoted to or relied upon by any other person or entity for any purpose, without our prior written consent. Very truly yours Avv. Giuseppe Cambareri /s/ Giuseppe Cambareri Exhibit C EXHIBIT 10.04 LICENSE AGREEMENT This Agreement is made as of March 31, 2000, by and between EPYX Corporation, a Delaware corporation located at 15 Acorn Park, Cambridge, MA 02140 (hereinafter "EPYX") and Arthur D. Little, Inc., a Massachusetts corporation located at 25 Acorn Park, Cambridge, MA 02140 (hereinafter "ADL"). WITNESSETH WHEREAS, ADL desires to acquire a license from EPYX under certain intellectual property rights owned by EPYX for use solely in certain Fields of Use; and WHEREAS, EPYX desires to grant such license rights to ADL; and NOW, THEREFORE, for and in consideration of the covenants set forth herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 1. DEFINITIONS. The following capitalized terms, as used in this Agreement, shall have the meanings set forth below. 1.1 "EPYX Intellectual Property Rights" means all intellectual property set forth on the attached Schedule __, exclusive of trademark rights, for which EPYX has the right to grant sublicenses thereunder. 1.2 "Gas-to-Liquids Fuel Processing" means the conversion of substantially gaseous hydrocarbons into products that are substantially liquids at or near ambient conditions such as but not limited to diesel and methanol. 1.3 "Fuel Conversion for I.C. Engines" means the transformation of internal combustion engine fuels into reducing agents such as hydrogen, carbon monoxide, and small hydrocarbons to assist in lean burn operation, cold starting, and emissions control of internal combustion engines. 1.4 "Field of Use" means Gas to Liquids Fuel Processing and Fuel Conversion Devices for I.C. Engines. 2. LICENSE GRANT. EPYX hereby grants to ADL a royalty-free, world-wide, non-exclusive right and license, with the right to sublicense, to make, have made, import, use, offer for sale and/or sell, all products, devices, apparatus and processes covered under EPYX Intellectual Property Rights solely in the Fields of Use. The license rights granted herein shall not be assigned by ADL without the prior written consent of EPYX, which consent shall not be unreasonably withheld. Prior to ADL granting a sublicense hereunder, ADL agrees to obtain the consent of EPYX, such consent not to be unreasonably withheld. 3. CONFIDENTIALITY ADL agrees to keep confidential and exercise reasonable care in preventing disclosure to third parties of all EPYX Intellectual Property Rights that are not otherwise publicly available, (EPYX Confidential Information). All documents containing such information shall be marked "EPYX CONFIDENTIAL". Upon termination of this Agreement all EPYX Confidential Information shall be returned promptly to EPYX. Nevertheless, the obligations contained herein shall survive the termination of the Agreement. The obligations contained in this section shall not apply in the event that the aforesaid Confidential Information is now or shall become available to the public generally other than as a result of a breach of this provision, or becomes available to the receiving party from a third party who owed no obligation of confidentiality to EPYX. In the event that a receiving party concludes that information covered by this provision is no longer confidential, it shall so notify the disclosing party and provide it with evidence of the public nature of the information, but shall continue to maintain the confidentiality of the information for a period of thirty (30) days after the giving of such notice. In the event the disclosing party continues to assert the confidentiality of the information, it shall so notify the receiving party and the parties shall in good faith attempt to reach agreement as to the need for continued confidentiality of the information. 4. TERM AND TERMINATION Unless otherwise agreed by the parties in writing, the term of the licenses granted herein shall be ten (10) years from the effective date of this Agreement. The parties may terminate this Agreement at any time if mutually agreed in writing. The Agreement will terminate upon the happening of any of the following: (a) ADL shall make an assignment for the benefit of creditors, or petition or apply for or arrange for the appointment of a trustee, liquidator or receiver, or commence any proceeding relating to itself under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or otherwise, or shall be adjudicated a bankrupt or insolvent, or (b) any petition or application for the appointment of a trustee, liquidator or receiver is filed against ADL or any proceeding relating to ADL under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction now or hereafter in effect is commenced against ADL and ADL shall indicate its approval thereof, consent thereto, or acquiescence therein, or an order is entered appointing any such trustee, liquidator or receiver, which order is not stayed or removed within ninety (90) days after the date entered. 5. NO REPRESENTATIONS OR WARRANTIES Neither party makes any representation or gives any warranties that the use of EPYX Intellectual Property Rights by ADL will not infringe the rights of any third parties. 6. NOTICES 6.1 EPYX agrees to give ADL notice of any inventions developed by or for EPYX in the Field of Use, subsequent to the effective date of this Agreement, which are the subject of a patent application promptly upon filing of the same. Should ADL desire a license under such patent rights, the parties shall use their best efforts to negotiate mutually acceptable terms. 2 6.2 ADL and EPYX agree, respectively, to give each other prompt notice of any claims by a third party of infringement as a result of any licensed rights under EPYX Intellectual Property Rights and/or ADL Intellectual Property Rights. 6.3 All Notices required hereunder shall be in writing and shall be deemed to have been duly given when (a) delivered by hand; (b) given by facsimile or e-mail (and confirmed by registered mail); or (c) on the third business day after deposit with (i) the United States Postal Service for delivery by Express Mail or equivalent; or (ii) Federal Express or the equivalent, and in all cases addressed as follows: If to EPYX, at: Jeffrey Bentley EPYX Corporation Acorn Park Cambridge, MA 02140 If to ADL, at: Samuel J. Gallo General Counsel Arthur D. Little, Inc. 25 Acorn Park Cambridge, MA 02140 7 MISCELLANEOUS EPYX agrees to take all reasonable steps to prevent the lapse of any patent, patent application, trademark and/or copyright which is the subject EPYX Intellectual Property Rights. 8 ENTIRE AGREEMENT. This Agreement represents the entire understanding between the parties, and supercedes all other agreements, express or implied, between the parties concerning the license granted herein. 9 CHOICE OF LAWS. This license shall be interpreted according to the laws of the Commonwealth of Massachusetts. 3 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. EPYX CORPORATION ARTHUR D. LITTLE, INC. By: /s/ Mark Brodsky By: /s/ John F. Burns ---------------------------- ------------------------------- Name: Mark Brodsky Name: John F. Burns Title: President Title: Chief Financial Officer 4 SCHEDULE 1 ARTHUR D. LITTLE, INC. TO EPYX CORPORATION (HYDROGEN GENERATION TECHNOLOGY)
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 002 CLOSED PCT UTILITY APPL. Lawrence G. Clawson . Second Written Opinion mailed S/N: PCT/US 97/014, 906 William L. Mitchell 7/7/98 is favorable, indicating (National filings FILED: 8/25/97 Johannes H.J. Thijssen patentability. completed, see 1973 PUBLISHED: 3/5/98, WO98/08771 Jeff Bentley . National filings completed in P 003, 005, 006, TITLE: Method and Apparatus for February of 1999; see 1973 008, 009, and 011) Converting Hydrocarbon Fuel into series below. Hydrogen Gas and Carbon Dioxide . PCT application filed naming NOTE: (This is the international only one Inventor, per equivalent of 1955 P007; i.e., the instructions from legal originally-filed ADL application assistant to ADL. directed to Model A, FIG. 1 and This consequently corrected in two other embodiments FIGS. 2-3) National filings (1973 series). - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 003 CLOSED PROPOSED: U.S. Continuation-In- Lawrence G. Clawson, . New generation reactor (a.k.a (Case No. Part application from USSN 08/703, William Mitchell Model B) drawings provided to 93275-75 & (Subject matter 398 8/26/96. W&W, claims prepared and sent to 6/20/97) incorporated into WORKING Title: Method and W. Mitchell and L. Clawson for Provisional App. Apparatus for Converting Hydrogen review. Discussed at 9/9/98 1955 P 008, then Gas and Carbon Dioxide. meeting regarding proper claim updated into NOTE: (Early MODEL B with distinct scope. . Updated disclosures received and all subject matter incorporated into Provisional - -----------------------------------------------------------------------------------------------------------------------------------
1
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ omnibus steam reform and POX in same Application (See 1955 P 008) specification for central chamber, now changed to POX filed 05/03/1999. proposed Utility surrounded by S/R chamber) . An omnibus specification of application) system as a whole, sent to B. Nowicki on 12/23/99 for review. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 004 PENDING U.S. UTILITY Lawrence G. Clawson, . Corresponding PCT filed January S/N: 09/006, 727 William Mitchell 13, 1999 (P049); FILED: 1/14/98 Jeff Bentley . Filed as a non-DOE application; TITLE: Hydrogen-producing Reactor James C. Cross, III . Office Action mailed 6/21/1999 with React and Flow in Diverging rejecting all claims; Directions . Subsequent U.S. searching done; NOTE: (Radial Flow Muni-pox) . Response mailed 12/21/99; . Examiner interviewed, Supplemental Reply and Amendment mailed 2/22/00; . Office Action mailed 3/24/00 --- Claims 71 and 72 allowed, Claims 17, 18, 38-41, 60-62 and 73 allowable if rewritten, all other claims rejected; [_]Prepare Reply to rewrite allowable claims, cancel rejected claims; [_]File Continuation Application to pursue rejected claims - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 005 CLOSED WORKING TITLE: Method And Robert Davis . Proposed claims forwarded to R. (Case Nos. Apparatus For Controlling Lawrence G. Clawson, Davis and reviewed with R. 48226 and (Subject matter Multifuel, Hydrogen-producing William Mitchell, Davis at ADL on 9/10/98 53790 & incorporated into Reactor Jennifer Rumsey . Some disclosure to DOE in at 2/15/95) omnibus NOTE: (System Level Application) least February 1995. specification, [_]Have received updated forwarded to B. information from J. Rumsey, in Nowiki on progress of incorporating control into omnibus specification for Model B system, forwarded to B. Nowicki on - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1/23/99) 12/23/1999 for review. [_] NOT PROTECTED: Do Not Make Public Disclosure. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 007 PENDING U.S. UTILITY APPLICATION Lawrence G. Clawson, . Application filed 8/26/96; S/N: 08/703,398 William L. Mitchell, . Office Action received FILED: 8/26/96 Jeffrey M. Bentley, 7/30/97, per Examiner CPA FILED: 8/9/99 Johannes H J. Thijssen Supplemental required in view TITLE: Method and Apparatus for of supplement IDS, received by Converting Hydrocarbon Fuel into W&W (all claims rejected); Hydrogen Gas and Carbon Dioxide . Response to Supplemental NOTE: (Three embodiments, Model A Office 8/31/98; reformer, FIG. 1 and two other . Office Action received FIGS. 2-3) 11/09/98 (all claims rejected; . CPA (continuing patent application) filed with preliminary amendment 8/9/99; . Office Action received September 27, 1999; . One face-to-face interview of Examiner and several telephonic interviews with Examiner, indicating potentially allowable subject matter contingent upon declaration of inventor and claim amendments; . Reply filed with Declaration of W. Mitchell on 3/2/00; [_] Awaiting next Office Action - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 008 PENDING U.S. PROVISIONAL William L. Mitchell, . Claims prepared and compared (Memo S/N: 60/132,184 Lawrence G. Clawson, with ADL prior public undated, FILED: 5/3/99 Robert Davis disclosures. Claim scope received TITLE: Apparatus For Reforming Brian Nowicki discussed with J. Bentley at 10/8/97) Hydrocarbon Fuels to Hydrogen Jennifer Rumsey 12/3/97 meeting. and For Cleaning Exhaust From Matthew Dorson . Application includes subject Associated Fuel Cell matter from: 1955 P 003; 1955 P 033, 1955 P 034; 1955 P 035; and, 1955 P 043. [_] Consider if combined or combinable with invention to Hydrodesulfurization Method - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ and Apparatus (See 1955 P 039 Sederquist). . Provisional Application filed May 3, 1999. [_]Received updated disclosure of Model B and TGC with multi functions including preheat fuel to reformer and desulfurization. Omnibus application sent to B. Nowicki on 12/23/99 for review. Does or will include updated disclosure for filing as a utility application. [_]Decision to be made on whether (and to what extent) subject matter is under any DOE contracts. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 009 ACTIVE WORKING TITLE: Adiabatic Prox With Robert Weber, . C. Papile has sent us some Au Catalyst Promoted by Another Christopher Papile, information on the catalyst and Transition Metal Oxide Robert Barrett has incorporated it somewhat into other apparatus disclosures. [_]Need to check with W. Mitchell (or B. Weber) if "single stage" PROX via proprietary catalyst is still contemplated as an invention/direction for commercialization. [_]Also need to get disclosure of method of preparing catalyst. [_]Awaiting further instructions and information. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 012 ACTIVE WORKING TITLE: Combination Nickel William Mitchell . Briefly discussed with W. Catalysts in Steam Reformer Mitchell, L. Clawson and J. Bentley on 9/10/97, a new Ni catalyst combination operating in protype reactor in steam reform stage. [_]If protection is to be sought, W. Mitchell to provide W&W with a timely disclosure of compositions, operation parameters, theories of operation and keys to operational success. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ . Per 1/5/98 meeting, W&W advised that key catalyst is no longer available and prototype merchant devise intended for Air Products will not contain the catalyst combination. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 017 ACTIVE WORKING TITLE: Housing for Radial Gunther Kleeberg . W&W has preliminary drawings Flow Reactor for radial- flow small POX housing, need updated disclosure and instructions to proceed to proposed claims and search. [_] W&W should receive updates as appropriate. [_] Awaiting further instructions and information. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 018 ACTIVE WORKING TITLE: Methods And Compositions Christopher Papile . Disclosure received by W&W, For Protecting Low-temperature Shift proposed claims prepared and Catalyst From Condensed Water After discussed with C. Papile on Shut-down of Reactor 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 019 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P 007, S/N: 09/184,618 William L. Mitchell, filed November 2, 1998. FILED: 11/2/98 Jeffrey M. Bentley [_] No action by PTO yet TITLE: Apparatus For Converting Johannes H.J. Hydrocarbon Fuel into Hydrogen Gas and Thijssen Carbon Dioxide NOTE: Divisional of 1955 P007 (Group II, apparatus of FIG. 2) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 020 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P 007, S/N: 09/184,387 William L. Mitchell, filed November 2, 1998; FILED: 11/2/98 Jeffrey M. Bentley . Response to Office Action TITLE: Method For Converting Johannes H.J. Thijssen rejecting all claims was filed, Hydrocarbon Fuel into Hydrogen Gas and a subsequent replacement and Carbon Dioxide NOTE: Divisional information disclosure and of 1955 P 007 (Group telephone interview with examiner was conducted; . Notice of allowance, 12/11/1999; - ------------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ III, methods associated with FIG. 1, . Issue fee paid 1/7/2000; Model A) . Formal drawings submitted. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 021 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P S/N: 09/184,615 William L. Mitchell, 007, filed November 2, FILED: 11/2/98 Jeffrey M. Bentley 1998; TITLE: Method For Converting Hydrocarbon Johannes H.J. Thijssen . Response to Office Fuel into Hydrogen Gas and Carbon Dioxide Action (rejecting all NOTE: Divisional of 1955 P 007 (Group IV, claims) mailed methods associated with FIG. 2) 10/21/1999; . Final Office Action dated 1/5/2000, received, rejecting all claims; [_]Appeal, CPA, or Reply with amendments to put in better condition for allowance, due without extension fee by 4/5/2000. Six Month deadline is 6/5/2000. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 022 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional filed S/N: 09/185,393 William L. Mitchell, November 3, 1998. FILED: 11/3/98 Jeffrey M. Bentley [_]Awaiting action by PTO. TITLE: Apparatus For Converting Johannes H.J. Thijssen Hydrocarbon Fuel into Hydrogen Gas and Carbon Dioxide NOTE: Divisional of 1955 P 007 Apparatus according to FIG. 3) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 023 ACTIVE WORKING TITLE: Method For Preferentially William L. Mitchell, . Proposed claims oxidizing Carbon Monoxide in a Christopher Papile prepared and discussed Hydrogen-rich Reformate Stream with C. Papile on (Continuous Replenishment of Oxygen to 9/9/98. Reformate Stream as it Goes Through Prox [_]Awaiting further Bed) instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 024 ACTIVE WORKING TITLE: Apparatus For William L. Mitchell, . Proposed claims Preferentially-oxidizing Carbon Monoxide Christopher Papile prepared and discussed in a Hydrogen-rich Reformate Stream with C. Papile on (Continuous Replenishment of 9/9/98. [_]Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Oxygen to Reformate Stream as it Goes Through Prox Bed) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 025 ACTIVE WORKING TITLE: Method and Apparatus For Christopher Papile, . Proposed claims Back-flushing Prox Reactors On-line Pai-Yug Woo prepared and discussed (Subject with C. Papile on matter 9/9/98. included in [_] Need to determine if provisional subject matter is to be application carried forward in 1955 P 026) omnibus specification forwarded to B. Nowicki on 12/23/1999, or in a separate application. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 026 PENDING U.S. PROVISIONAL Christopher Papile, . Proposed claims (Provisional) S/N: 60/132,259 Lawrence G. Clawson, prepared and discussed FILED: 5/3/99 William L. Mitchell, with C. Papile on TITLE: Preferential Oxidative Reactor Frank Qi, 9/9/98. Mark Hagan A provisional application filed May 3, 1999 incorporates this invention. . This has been implemented in the general system concept and incorporated into the omnibus specification to be filed as a Utility App. [_] Draft of omnibus specification sent to B. Nowicki on 12/23/1999 for review. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 027 CLOSED WORKING TITLE: Prox Reactor with Active Christopher Papile, . Proposed claims (Subject Cooling (Tube Boiler) Lawrence G. Clawson prepared and discussed matter with C. Papile on incorporated 9/9/98. into . A provisional 1955 P 026) application (1955 P 026) filed May 3, 1999 incorporates this invention. Status pending. . An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 028 CLOSED WORKING TITLE: Prox and Low-temperature Lawrence G. Clawson, . Proposed claims (Subject Shift Catalyst Beds With Mark Hagan prepared and discussed matter with C. Papile on 9/9/98. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADERS(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ incorporated Shared Tube Boilers . A provisional into 1955 application (1955 P P 026) 026) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 029 ACTIVE WORKING TITLE: Fluidized Bed Prox Reactor Christopher Papile . Proposed claims (Project With Combined Condenser And Separator prepared and discussed No. 93286- with C. Papile on 01 & 8/3/98 9/9/98. [_] Awaiting further instructions - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 030 ACTIVE WORKING TITLE: Reformer Reactor With Heat Christopher Papile . Proposed claims Transfer Between Prox Liquid Fuel And/or prepared and discussed Water with C. Papile on 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 031 CLOSED METHOD AND APPARATUS FOR DYNAMIC CONTROL Jennifer Rumsey . Proposed claims (Subject OF OXYGEN TO PROX REACTOR Vincent Rizzo prepared and discussed matter Darryl Pollica with C. Papile on incorporated 9/9/98. into 1955 . Rob Davis input was to P 026) be sought. . Updated disclosure has been received with respect to dynamic control for transients (See also, disclosures by J. Rumsey and C. Papile). . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/ 1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 032 ACTIVE WORKING TITLE: Air-cooled Prox With Christopher Papile . Proposed claims Catalyst Supported on Metal prepared and discussed Substrate/monoliths with C. Papile on 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 033 CLOSED WORKING TITLE: Reformer With Fuel William L. Mitchell, . Proposed claims (Subject Preheater Tube in Shift Zone Lawrence G. Clawson, prepared and discussed matter with W. Mitchell on incorporated 9/9/98. into . A provisional 1955 P 008) application (1955 P 008) filed May 3, 1999 incorporates this invention. Status, pending. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 034 CLOSED WORKING TITLE: Reformer Having William L. Mitchell, . Proposed claims prepared and (Subject matter Central Pox Zone Surrounded by Lawrence G. Clawson, discussed with W. Mitchell on incorporated into Annular Shift Zone and Tube Boiler 9/9/98. 1955 P 008) in The Shift Zone . A provisional application (1955 P 008) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 035 CLOSED WORKING TITLE: Reformer With Pox William L. Mitchell, . Proposed claims prepared and (Subject matter Surrounded by Annular Steam Reforming Lawrence G. Clawson, discussed with W. Mitchell on incorporated into Zone and Serpentine Flow Relationship 9/9/98. 1955 P 008) From Pox to The Steam Reforming Zone . A provisional application (1955 P 008) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 036 ACTIVE WORKING TITLE: Methods And William L. Mitchell, . Proposed claims prepared and (Memo by C. (Some Subject Compositions For Mixing Air/fuel Lawrence G. Clawson, discussed with W. Mitchell on Read, Ref: Matter, /steam For Pox Reaction in Reformer, Johannes Thijssen, 9/9/98 and a preliminary search "93747 and "Tangential Including Disk And Cup-shaped Pox Carole Read of in-house patent collection 34788-14 & Delivery," Has Reaction Chambers And Reactors conducted to shape claim scope. 7/6/98) been Incorporated Embodying Same [_] Need to consider modification Into 1955 P 007 of claims in view of further by Amendment, disclosure by J. Thijssen and And Some Into C. Greene on 9/9/98. Omnibus [_] Awaiting further instructions on disc shape POX chamber (mini POX) and cup shaped POX. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Specification To Be Filed) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 037 CLOSED METHOD AND APPARATUS FOR Christopher Papile . Proposed claims prepared and (Subject Matter DYNAMIC CONTROL OF discussed with C. Papile on Incorporated Into REFORMATE TO A PROX REACTOR 9/9/98. 1955 P 026) . Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 038 ACTIVE WORKING TITLE: Methods And Christopher Papile . Preliminary disclosure made to (Project No. Apparatus For Providing Variable W&W by C. Papile, discussed at 93286-01 & Pox Duty (Flow) 9/9/98 meeting. 8/16/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 039 ACTIVE WORKING TITLE: Methods of Fuel Richard A. Sederquist . Disclosure received, read and (none & Desulfurization For Process Fuel understood by W&W 7/29/98) For Hydrogen Generation And . Need to check whether or not Apparatus For Integration With a this subject matter was Fuel Reformer incorporated by ADL into TGC. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 040 ACTIVE WORKING TITLE: Transient, Cold Start, Christopher Papile . Disclosure received by W&W (Project No. Volume Conserving, Very . A provisional application (1955 93286-01 & (Some of this Low-temperature Shift Reactor P 026) filed May 3, 1999 8/24/98) subject matter partially incorporates this incorporated into subject matter. 1955 P 026) [_] Some of this subject matter (water cooling jacket) has been incorporated in an omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. [_] Need to determine if the remaining subject matter should be added to omnibus specification or separate application. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 042 PENDING U.S. PROVISIONAL APP Prassant Chintawar . Disclosure received, read and S/N: 60/132,183 and Craig Thompson understood by W&W. FILED: 5/3/99 . Provisional application filed May 3, 1999. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ TITLE: Low Temperature Water Gs Shift . An updated disclosure Reactor and updated claims were NOTE: (This is the Pt/Zr catalyst idea filed 10/6/99 as a for water-gas-shift reactions) provisional file no. 1955 P 051. [_] Updated specification and updated claims (beyond 1955 P 051) have been prepared and finally reviewed by inventors. Recent prior art reference has caused need for re-evaluations by W&W of claim scope and spec. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 043 ACTIVE WORKING TITLE: MODEL ABC-Reformer With Richard A. Sederquist . Disclosure received, read (none & Reduced POX Gasification Zone and understood by W&W. 8/3/98) NOTE: (Some Of This . A provisional application Subject Matter (1955 P 008)filed May 3, Appears To Have 1999 incorporates a Been Incorporated portion of this subject Into An Omnibus matter. Specification For [_] An omnibus specification Further Filing As A for a proposed utility Utility Application) application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. [_] Need to determine the extent of which Mr. Sederquist's idea has been incorporated into Model B, i.e., is it Model ABC?) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 044 PENDING U.S. UTILITY APP Lawrence G. Clawson, . Divisional filed November S/N: 09/185,325 William L. Mitchell, 3, 1998; FILED: 11/3/98 Jeffrey M. Bentley . Office Action received TITLE: Method for Converting Hydrocarbon Johannes H.J. Thijssen, 12/17/1999, rejecting all Fuel into Hydrogen Gas and Carbon Dioxide claims (only sections 103 NOTE: Divisional from 1955 P 007 (Method and 112); associated with reformer of FIG. 3) . Examiner interview conducted on 2/3/00; . Reply to Office Action filed 2/3/00. [_] Awaiting next Office Action from PTO. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 045 ACTIVE WORKING TITLE: Hydrogenation of Carbon Christopher Papile . Disclosure received, read (11000-TM-002a Monoxide from Anode Exhaust and understood by W&W. & 9/22/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1946 P 046 ACTIVE REFORMER WITH ROTARY POSITIVE Lawrence G. Clawson . Disclosure received, read (11000-TM-003a DISPOALCEMENT COMBUSTION CHAMBER and understood by W&W. & 9/22/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 047 ACTIVE LOW HEAT LOSS MINI-POX REFORMER WITH (Project No. GURAD HEATING BY ANODE EXHASUT Richard A. Sederquist . Disclosure received, read 93286-01 & and understood by W&W. 8/18/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 048 ACTIVE CYCLIC PROX WITH STEAM GENERATION AND Richard A. Sederquist . Disclosure received, read (Project No. REGENERATABLE METAL OXIDE FOR PRODUCTION and understood by W&W. 93286-01& OXIDANT [_] Awaiting further 9/4/98) instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 049 PENDING PCT UTLITY APP. Lawrence G. Clawson, . Filing requirements S/N: PCT/US 99/00833 William L. Mitchell, completed (from P 004). FILED: 1/13/99 Jeffrey M. Bentley, . Published in 8/99. TITLE: Reactor For Producing Hydrogen James C. Cross III . Requested Examination on From Hydrocarbon Fuels 7/21/1999.
12
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ gas-shift Converting Carbon Monoxide and Water . This subject matter has reactions, from in a Reformate Stream and Apparatus been carried forward to 1955 P 042) Therefore. 1955 P 052 for filing as a utility application. FILING RECEIPT TITLE: Low Temperature Water Gas Catalyst and Reactor. WORKING TITLE: Method For Producing Hydrogen From Hydrocarbons Using Water Gas Shift Reaction And Apparatus Therefore - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 052 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: Prashant S. Chintawar . To be filed as utility Process for Converting Carbon Dioxide And Craig Thompson application relying on Water in a Reformate Stream And Mark Hagan the priority of pending NOTE: (This is the Apparatus Therefore provisional applications Pt/Zr catalyst idea (1955 P 042 and 1955 P for water-gas-shift 051) May 3, 1999, and reactions) October 6, 1999, respectively (accordingly filing due by May 3, 2000). . Prepared and reviewed by inventors. [_ ] Updated specification and updated claims (beyond 1955 P 051) have been prepared and finally reviewed by inventors. Recent prior art reference has caused need for re-evaluation by W&W of claim scope and specification Due by May 3, 2000, to rely on earliest priority. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 053 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: Lawrence G. Clawson . To be filed as utility Model B Reformer William L. Mitchell application relying on Jeff Bentley priority of provisional (1955 P 008) due May 3, 2000). [_ ] An omnibus specification for a proposed utility application including this invention has - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 054 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: To be determined. . To be filed as utility Preferential Oxidation Reactor application relying on priority of provisional (1955 P 026) due May 3, 2000). [_] An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 055 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: William L. Mitchell, . To be filed as utility Tall Gas Combuster Lawrence G. Clawson, application relying on Brian Nowicki, priority of provisional Matthew Dorson (1955 P 008) due May 3, 2000). [_] An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 056 ACTIVE PROPOSED U.S. UTILITY WORKING TITLE: Lawrence G. Clawson . To be filed as utility Hydrocarbon Reforming System William L. Mitchell application relying on Matthew Dorson priority of provisional Johannes Thijssen applications (1955 p 008 and Robert Davis 1955 P 026) due 05/03/2000. Christopher Papile [_] An omnibus specification for Jennifer Rumsey a proposed utility Nathan Longo application including this James C. Cross, III invention has been sent to Vicent Rizzo B. Nowicki for review on Gunther Kleeburg 12/23/1999. William Rindone Brian Nowicki Stephen G. Block Maria Sun - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Brian Morriseau - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 003 PENDING EPO UTILITY APP. A/N: 97939541.5-2111 Lawrence G. Clawson . Filed with EPO associate LODGED: 2/23/99 William L. Mitchell by 2/26/99. TITLE: M&A For Converting Hydrocarbon Jeffrey M. Bentley . Instructions to proceed Fule Into Hydrogen Gas And Carbon Dioxide Johannes H. J. Thijssen with prosecution of NOTE: (Counterpart to U.S. App., 1955 P. Claims 1-41 sent to 002) associate on 12/13/99. [_] Annuity due 8/25/00. - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 005 PENDING JAPAN UTILITY APP. S/N: 10-511780 Lawrence G. Clawson . Forwarded to Japan LODGED: 2/26/99 William L Mitchell associate for filing by TITLE: M&A For Converting Hydrocarbon Jeffrey M. Bentley 2/26/99. Fuel Into Hydrogen Gas And Carbon Dioxide Johannes H.J. Thijssen [_] Deferred examination due NOTE: (Counterpart to U.S. App., 1955 P 2/26/2006. 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 006 PENDING CANADA UTILITY APP. Lawrence G. Clawson . Forwarded to Canada S/N: 2,265,468 William L. Mitchell associate for filing LODGED: 2/24/99 Jeffrey M. Bentley 2/26/99; TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen . Request for Examination Fuel Into Hydrogen Gas And Carbon Dioxide authorized on 3/30/00; NOTE: (Counterpart to U.S. App., 1955 P [_] Annuity due 8/25/2000. 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 008 PENDING CHINA UTILITY APP. Lawrence G. Clawson . Forwarded to China S/N: 97197471.3 William L. Mitchell associate for filing by LODGED: 2/26/99 Jeffrey M. Bentley 2/26/99. TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen . Examination requested on Fuel Into Hydrogen Gas and Carbon Dioxide 8/26/99. [_] Registration in Hong Kong due 3/15/2000. . Application published 2/26/99. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ NOTE: (Counterpart to U.S. App., 1955 P 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 009 PENDING KOREA UTILITY APP. Lawrence g. Clawson . Forwarded to Korea S/N: 99-7001595 William L. Mitchell associate for filing LODGED: 2/26/99 Jeffrey M. Bentley 2/26/99. TITLE: M&A For converting Hydrocarbon Johannes H. J. Thijssen [_] Request for Examination due Fuel Into Hydrogen Gas And Carbon Dioxide 8/25/2000. NOTE: (Counterpart to U.S. App., 1955 P 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 011 PENDING AUSTRALIA UTILITY APP. Lawrence G. Clawson . Forwarded to Australia S/N: 41610/97 William L. Mitchell associate for filing LODGED: 8/25/97 Jeffrey M. Bentley 2/26/99 TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen [_] Response to Official Fuel Into Hydrogen Gas and Carbon Dioxide Report due 8/04/2000. NOTE: (Counterpart to U.S. App., 1955 P [_] Maintenance fee due 002) 8/25/2002. - ------------------------------------------------------------------------------------------------------------------------------------
16 NuVera Confidential Exhibit D [LOGO OF NUVERA FUEL CELLS] Operating Plan April 1, 2000 - October 1, 2001 April 5, 2000 Private and Confidential Page 1 Table of Contents 1 Executive Summary.................................................................................. 3 1.1 Technology Development and Refinement.............................................................. 3 1.1.1 MicroPower(TM) Market........................................................................... 3 1.1.2 Transportation Market........................................................................... 3 1.1.3 Directed Use of Internal........................................................................ 4 1.1.4 Detailed Development Plans...................................................................... 4 1.2 Production and Testing Plan........................................................................ 4 1.3 Market Strategy.................................................................................... 5 1.3.1 Strategic alliances with Tier 2 and Tier 3 suppliers............................................ 5 1.3.2 MicroPower Market............................................................................... 5 1.3.3 Transportation Market........................................................................... 6 1.4 Marketing Plan...................................................................................... 6 1.5 5 Year Business Plan............................................................................... 6 2 Market Development Plan............................................................................ 7 2.1 Overall NuVera Strategy............................................................................ 7 2.2 Resource Requirements Summary...................................................................... 8 2.3 Overall Market Strategy............................................................................ 9 2.4 Product and Technology Plan: Q1 2000 to Q3 2001.................................................... 11 2.4.1 MicroPower Products............................................................................. 11 2.4.1.1 Market Opportunity Focus...................................................................... 11 2.4.1.2 Overall Objectives - MicroPower Residential Systems........................................... 12 2.4.1.3 Overall Objectives - MicroPower Premium/Portable Systems...................................... 13 2.4.1.4 Overall Objectives Hydrogen Recovery Systems.................................................. 14 2.4.2 Transportation.................................................................................. 15 2.4.2.1 Market Opportunity Focus...................................................................... 16 2.4.2.2 Overall Objectives - Fuel processor........................................................... 16 2.4.2.3 Overall Objectives - Fuel Cell Stack Development.............................................. 17 2.4.3 Technology Development.......................................................................... 18 2.4.3.1 Overall objectives - Fuel processor........................................................... 19 2.4.3.2 Overall Objectives - Fuel Cell Stack Development.............................................. 19 2.4.4 Marketing Plan.................................................................................. 21 2.4.5 Pricing Policy.................................................................................. 22 2.4.6 Sourcing of Strategic Components and Technologies............................................... 23 2.5 Administration and Business Support................................................................ 24 2.5.1 Key Activities-Yr. 2000 Business Support........................................................ 24 2.5.2 Business Support Function Discussion............................................................ 25 2.5.2.1 Finance....................................................................................... 25 2.5.2.2 Human Resources............................................................................... 26 2.5.2.3 Contracting................................................................................... 26 2.5.2.4 Information Technology........................................................................ 26 2.5.2.5 Purchasing and Material Control............................................................... 26 2.5.2.6 Administration and Miscellaneous Support...................................................... 27 2.6 Risks and Risk Management.......................................................................... 28 3 Organizational Integration and Growth Plan......................................................... 29 3.1 Personnel Plan..................................................................................... 29 3.1.1 North America Operations........................................................................ 29 3.1.2 European Operations............................................................................. 29
Page i 3.2 Technology Exchange Program........................................................................ 30 3.3 Facilities and Location............................................................................ 31 3.3.1 North America Operations........................................................................ 31 3.3.2 European Operations............................................................................. 31 4 Financial Overview................................................................................. 32
Page ii NuVera Confidential 1 Executive Summary This strategic overview summary outlines the objectives to be pursued in the 18 months following the Definitive Agreement of constitution of NuVera in order to implement the technological and business mission of the Company with the objective to prepare it for an IPO. Upon approval of this document the selected teams will proceed with the preparation of a 5 year Business Plan. The primary mission of DNE will be the development of multifuel power modules. Power modules are the core technology package that can be further integrated into fuel cell systems for various applications by systems integrators. Power modules cannot be properly conceived without developing system integration expertise: in order to pursue such knowledge, NuVera will also develop and manufacture, within the timeframe, fully integrated fuel cell systems for internal and field demonstration 1.1 Technology Development and Refinement This will be the top priority of the Company in the 18 month period and will focus on the following mission statements: . DEVELOPMENT AND MANUFACTURE WORLD CLASS COMMERCIAL MULTIFUEL FUEL PROCESSORS AND STACKS (HYDROGEN AND REFORMATE OPERATION) FOR MICROPOWER AND MOBILE APPLICATIONS . DEVELOP EXPERTISE FOR INTEGRATION OF FUEL PROCESSORS AND STACKS IN POWER MODULES AND/OR FULLY INTEGRATED UNITS (DIRECTLY OR WITH EXTERNAL TECHNOLOGICAL PARTNERS) In particular, these are the key objectives to be achieved: 1.1.1 MicroPower(TM) Market 1) RESIDENTIAL SECTOR: Design manufacture and test of 100, 5kW - class MicroPower prototype units for residential markets of interest in the near term. 2) PREMIUM/PORTABLE POWER SECTOR: Design manufacture and test approximately ten one kW - class prototype units for portable power applications of interest in the near term. 3) COMMERCIAL/INDUSTRIAL SECTOR: implement system studies, develop stacks and system integration expertise (with selected industrial partners) for applications of hydrogen recovery (industrial cogeneration). System studies will include the commercial building market up to 100 kW. 1.1.2 Transportation Market Develop and demonstrate fuel processors and stacks for mobile applications in the frame of funded projects. Page 3 NuVera Confidential 1.1.3 Directed Use of Internal Funds The technology development in the MicroPower sector (up to 5kW) is considered of main strategic importance for the Company and will be funded by the Company directly or indirectly. Some funding will available from the ongoing projects and commercial sales of stacks, fuel processors, prototype power modules and/or fully integrated prototype systems. All the improvements and demonstrations in the transportation sector will be implemented if funding of 50% or more is available from OEM or government projects (DOE, EU, Governments) and if such developments bring technical advantages to the strategic focus in the MicroPower sector. The objectives will essentially be the "integrated results" of the ongoing projects that DNFC and EPYX have with OEM, car manufacturers or as foreseen by the already ongoing DOE/EU contracts. Particular care will have to be taken in order to fully protect the intellectual property when participating/implementing non-internally funded projects. 1.1.4 Detailed Development Plans Three documents will be available that incorporate the operating guidelines to achieve the strategic objectives outlined above: 1) Technical Development Plan: will detail the development milestones, costs and resources to develop fuel processing units and stacks (hydrogen and reformate operation); 2) MicroPower Plan: will detail the development milestones, costs and resources for system integration and demonstration of alpha units for premium/portable (approximately 1&5kW), residential (approximately 5kW) applications, industrial applications (pure hydrogen operation) and system studies for Commercial Building sector; 3) Transportation Plan: will detail the development milestones for fuel processors and stacks for transportation applications as supported by ongoing and planned privately and publicly funded demonstration projects. It is intended that the development work will be carried our in Boston and in Milan as separate locations with integrated business and technology organizations. In order to facilitate the integrated work of the teams a detailed Organization and Technology Exchange Plan will be jointly developed. 1.2 Production and Testing Plan A detailed production and testing plan will be implemented for the procurement of parts, assembly and testing of the prototype fuel processors, stacks and systems to be produced within the timeframe. An overview of this plan will be included in the 5 year business plan, and will include discussion on the MicroPower systems manufacturing facility. Page 4 NuVera Confidential 1.3 Market Strategy 1.3.1 Strategic alliances with Tier 2 and Tier 3 suppliers In order to implement the technological development plan strategic suppliers/partners in Europe, the U.S, and Far East will be identified and implemented at the Tier 2&3 level. These partnerships will be such that they may be continued at the fuel cell system manufacturing stage: Tier 2 Suppliers: Power electronics developers/supplier Tier 3 Suppliers: Fuel processor suppliers of key components and Stack key component suppliers 1.3.2 MicroPower Market Market sectors: Premium/Portable, Residential - -------------- Supply of fuel cell systems with Partners as follows: . Fully integrated systems to Marketing Partners . Power Modules (fuel processors and stack integrated) and integration expertise (if required) to system integrators/packagers (OEM's in the MicroPower power sector) In principle, no separate supply of fuel processors and /or stacks will be pursued in the MicroPower power sector except where supply will create business advantage (i.e. NPS) or increase technology or manufacturing expertise without reducing the NuVera technology and market development efforts. In all MicroPower markets NuVera will first pursue the use of integrated NuVera fuel cell power systems. Territories: US, Europe, Far East - ----------- Market sector: Commercial/Industrial - ------------- . Supply of hydrogen stacks to selected industrial partners . Market and system integration studies Territories: US, Europe, Far East - ----------- Based on the above, the following actions will be implemented: . Identification and prioritization of portable/residential/industrial power market sectors in the Territories . Identification of potential marketing /packaging/manufacturing Partners in US and Europe . Definition/ implementation of key Partnerships before the IPO . Support to the Technology Development Group: . Definition of system technical specifications/ system performances for major markets . System cost analysis for major markets Page 5 NuVera Confidential . Analysis of Codes and Standards and participation in their development 1.3.3 Transportation Market Market sectors: Light-Duty Vehicles, Heavy-Duty Vehicles, APU's, Non-Road - -------------- Transport Supply to OEM's as follows: . Feasibility studies . Fuel processors and stacks . Fuel processor/stack integration expertise . Following the specifications defined by the OEM's and car manufacturers in the frame of privately/publicly funded projects. Territories: US, Europe, Far East - ----------- 1.4 Marketing Plan The objective will be to create market awareness, establish the position as Fuel Cell Power System Company, and to prepare NuVera for an IPO. This objective will be achieved as follows: . A professional in the communication sector will be identified to guide the Communication Strategy before, during and after the IPO . Preparation of Company promotional material/web site . Attendance at high visibility conferences and Trade Shows . Implementation of the Technology Plans through on site demonstration of fully integrated prototype units . Announcement of upstream/downstream strategic partnerships implemented in the period 1.5 5 Year Business Plan Upon approval of this document, selected teams will proceed with the preparation of a 5 year Business Plan to be used for the IPO. Page 6 NuVera Confidential 2 Market Development Plan 2.1 Overall NuVera Strategy DeNora Fuel Cells and Epyx have separately developed fuel cells and fuel processors for nearly a decade. Both have a worldwide reputation. Epyx has a high profile reputation as an innovator in fuel processing, but customers need to be convinced that Epyx fuel processors can be simply integrated into fuel cell systems in a cost effective manner. DeNora Fuel Cells's fuel cell product has been integrated into hydrogen-based power systems worldwide and DeNora Fuel Cells's reputation for producing quality industrial electrochemical equipment has been successfully transferred to DeNora Fuel Cells Fuel Cells. Both companies have concluded that further market development now clearly demands that we be positioned to develop and produce completely integrated power modules. These integrated power modules would represent the core competence of the company and access to markets will rely in the establishment of partnerships with system integrators and /or marketing partners. In order to seek attention from the various already established market channels, it will be necessary to demonstrate fully integrated systems. The selected strategic sectors where the Company will demonstrate such fully integrated systems are represented in the MicroPower area by the residential and Premium/portable sectors. In the industrial sector, wherever hydrogen is available to be economically recovered as energy, the Company will act as supplier of high-power hydrogen stacks to selected industrial partners. In the commercial sector the Company will implement market and system integration studies. The development of fuel processors in the range of 50kW and above, necessary to follow the above described strategy in the Commercial sector is not currently seen as key strategic focus in the timeframe of the 18 month plan. In the automotive sector, the Company will maintain its leadership position as developer/ supplier of fuel processors and fuel cell stacks. Access to capital via an IPO is clearly achievable given the market response to public fuel cell competing companies. In preparation for the IPO a comprehensive 5 year business plan will be developed during the timeframe. As we establish NuVera, additional resources will be required to accomplish our aggressive business plan and an integrated technology development effort. The major milestones for the next 18 months are focused on the development and demonstration of products for the Stationary MicroPower system market and preparing the company for an IPO. The Technology Development Group will play a critical role in developing state-of-the-art fuel processing reactors and reformate tolerant stacks for the MicroPower market, while the Transportation Group will continue to work in a stepwise fashion with automotive OEM's to further the NuVera working relationships. This process is shown schematically in Figure 2.1. Page 7 NuVera Confidential Figure 2.1. Year 2000/2001 Overall Strategy and Business Milestones Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01
MicroPower Generation Ship 100 Prototypes 1st Gen. 2nd Gen. 3000 3rd Gen. 7000 4th Gen. 1000000 System System Hours System Hours System kW-hr Residential Systems (5 kW) Hydrogen Propane 4000 Propane System System Hours System Premium Systems (1kW) 240 kW Stack 4000 60 kW Delivery Hours Industrial Hydrogen Recovery Transportation Customer Laboratory Testing/Vehicle Demonstrations Advanced 1st Gen. Advanced 4000 Advanced Prototype System Prototype Hours Prototype Fuel Processing Deliver Advanced High Performance Prototypes Design 30 kW Prototype Vehicle Fuel Cells Business Milestones Marketing H\\2\\ U.S. & Europe Japan Residential Finalize new Open Launch of Partner Residential Partner & Key Manufacturing/ Manufacturing "NewCo" Partner(s) Suppliers Corporate Site Facility
2.2 Resource Requirements Summary Table 1.1: NuVera' Resource Requirements Summary for the 18 months
- ------------------------------------------------------------------------------------------------------------------------ N. America Currently Required Additional Total 18 Months Available - ------------------------------------------------------------------------------------------------------------------------ Total Staff 58 91 149 - ------------------------------------------------------------------------------------------------------------------------ Office Space m/2/ 1,486 930 2,415 - ------------------------------------------------------------------------------------------------------------------------ Lab space m/2/ 650 1,765 2,415 - ------------------------------------------------------------------------------------------------------------------------ Funding $11.8M $39.4M $51.2M - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Europe Currently Required Additional Total 18 Months Available - ------------------------------------------------------------------------------------------------------------------------ Total Staff 18 36 54 - ------------------------------------------------------------------------------------------------------------------------ Office Space m/2/ 130 170 300 - ------------------------------------------------------------------------------------------------------------------------ Lab/prod. space m/2/ 380 770 1,150 - ------------------------------------------------------------------------------------------------------------------------ Funding $3.8M $10.9M $14.7M - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ TOTAL Currently Required Additional Total 18 Months Available - ------------------------------------------------------------------------------------------------------------------------ Total Staff 76 127 203 - ------------------------------------------------------------------------------------------------------------------------ Office Space m/2/ 1,616 1,100 2,715 - ------------------------------------------------------------------------------------------------------------------------ Lab/prod. m/2/ 1,030 2,535 3,565 - ------------------------------------------------------------------------------------------------------------------------ Funding $15.6M $50.3M $65.9M - ------------------------------------------------------------------------------------------------------------------------
Page 8 NuVera Confidential 2.3 Overall Market Strategy As shown in Figure 2.2, the fuel cell industry is developing into three tiers of supply to the ultimate OEM customer. NuVera will seek different positions in the value chain in each of the target markets as described below. In all markets, we expect to rely on a common base of Tier 3 component suppliers. For fuel cell stacks, the key electrode supplier is DeNora Fuel Cells North America. Cooperative agreements will be pursued with membrane suppliers worldwide. Additional interactions will be developed with mass manufactures of bipolar plates and gasketing materials. In fuel processing, we have identified many Tier 3 partners such as Coming, Degussa, Eaton, and Siemens, and are finding that with NuVera' guidance, their existing technology can be migrated to new components that meet the unique requirements of compact fuel cell power systems. Wherever possible, the Company will negotiate favored terms of commercial supply and/or alliances from leading Tier 3 suppliers to provide NuVera with access to these components on a preferred basis for early markets. Our joint development agreement with Corning Corporation for advanced fuel processor catalyst supports is an example of this type of agreement. Figure 2.2. Fuel Cell System Value Chain Tier 3 Tier 2 Tier1 Component Sub-System Fuel Cell System Supplier Supplier Supplier --------------- Materials --------------- --------------- Fuel Processing --------------- Systems --------------- --------- Controls --------------- --------------- --------------- System OEM --------------- Fuel Cells Integration Heat Exchangers --------------- --------- --------------- --------------- --------------- --------------- Power Compressors Electronics --------------- --------------- --------------- Membranes Electrodes --------------- For the MicroPower market (residential, premium/portable), NuVera will be directly focused on becoming a Tier 1 integrator. Late in 2000, the Company will include OEM's as the channel to market in the U.S., Europe, and the Far East. In the industrial hydrogen recovery sector, the Company will act as Tier 2 sub supplier of fuel cell stacks to industrial partners for integration into fuel cell power systems for deployment in niche industrial applications where hydrogen is available. For transportation markets, NuVera will continue to work as a fuel cell stacks or fuel processing technology supplier with Tier 1 integrators and automotive OEM's as partners Page 9 NuVera Confidential Figure 2.3 and 2.4 shows all of the NuVera markets, and indicates that in 2000 NuVera will focus on the following sectors: 1. Residential MicroPower fuel cell power systems for world wide markets (with a focus on N. America and Europe) 2. Premium MicroPower fuel cell systems (with a focus on the industrial equipment market) 3. Hydrogen Recovery for industrial applications 4 . Passenger car fuel processors or fuel cells Figure 2.3 NuVera Market Strategy - -------------------------------------------------------------------------------- Market Strategy - -------------------------------------------------------------------------------- Residential Complete Fuel Cell --------------------- Power Systems Premium/portable (with partners) MicroPower ------------------------------------------------------------ System Studies Potentially Leading Commercial to complete power systems ------------------------------------------------------------ Hydrogen Fuel Cell Supplier Recovery - -------------------------------------------------------------------------------- Light Duty Fuel Cell or Fuel Processor Transporation --------------------- Technology Supplier Heavy Duty - -------------------------------------------------------------------------------- Page 10 NuVera Confidential Figure 2.4. Year 2000/2001NuVera Market Focus - -------------------------------------------------------------------------------- Market/Region North America Europe Far East - -------------------------------------------------------------------------------- Residential [_] [_] ---------------- Premium/portable [_] [_] -------------------------------------------------------------- MicroPower Commercial -------------------------------------------------------------- Hydrogen Recovery [X] - -------------------------------------------------------------------------------- Light Duty [X] [X] [X] ---------------- Transportation Heavy Duty - -------------------------------------------------------------------------------- 2.4 Product and Technology Plan: Q1 2000 to Q3 2001 This section describes the actions the Company will take to develop the prototype products, technology and customer relationships needed to support the overall NuVera 18-month operating plan. 2.4.1 MicroPower Products The objective of the NuVera MicroPower business is to create fuel cell system prototype and stacks with near-term market interest. 2.4.1.1 Market Opportunity Focus This market is comprised of applications in the following size ranges: . Premium/Portable MicroPower (500 W to 10 kW): Recreation, RVs, yachts, power hand tools, telecom backup, remote power generation, home backup, portable military field units, remote sensors. This market has attributes of either high allowable cost equipment, high quality power, or both. Page 11 Nuvera Confidential . Residential MicroPower (3 kW to 15 kW): Home power generation, cogeneration (combined heat and power), and backup power. . Commercial MicroPower (up to 50 kW): Commercial distributed generation, cogeneration, microturbine replacement. . Hydrogen Recovery (up to I MW): Pure hydrogen fuel cell systems for use with waste hydrogen streams such as chlor-alkali plants, hydrogen off-gassing from industrial plants, etc. Near-term (2001) applications include uninterruptible power supply (UPS), on- site telecommunications power supply, and other remote power generation systems that compete with engine generators, batteries, micro turbines, and solar technology. Long-term (2005) applications include industrial and consumer electronics and recreational power systems, and grid-based applications such as residential and commercial power supply and cogeneration. 2.4.1.2 Overall Objectives - MicroPower Residential Systems The following key milestones have all been identified as necessary to support NuVera mission to commercialize fuel cell power systems. . Design and build filly integrated fuel cell power systems that operate on widely available fuels. In order to develop practical power generators that achieve the necessary performance characteristics, fuel cell systems must be highly integrated. As a result, it is essential that NuVera design, build and demonstrate optimized fuel cell power systems--not just advanced fuel processing technology or hydrogen fueled fuel cell stacks. As a first step, Epyx fuel processing systems will be connected to currently available DeNora Fuel Cells for prototype testing. Based on the results of these tests, fully integrated, skid packaged prototypes will be built to demonstrate performance using embedded controls. Attention will be paid at this stage to industrial design considerations and creating the look and feel of a thoughtfully designed commercial appliance. . Accumulate thousands of hours of operation on NuVera state-of-the-art fuel processors, fuel cells, and fuel cell power systems. A key performance characteristic of any fuel cell system is durability. DeNora Fuel Cells have already shown superior technical performance in a variety of applications, while Epyx has demonstrated fuel processing systems with outstanding efficiency and low criteria emissions, operating on "strategic" fuels (gasoline for automotive applications, and natural gas and propane for MicroPower applications). DeNora Fuel Cells and Epyx have recently begun durability testing on their respective fuel cell and fuel processor subsystems. As a unified company, NuVera will put a statistically significant number of the integrated MicroPower fuel cell power systems it develops on long-term test as well. Strategic partners who lease NuVera systems will be required to operate the units for a specified and substantial amount of time during the term of their contract. Furthermore, a primary objective of the field test demonstrations planned for 2001 will be to gather durability data under realistic operating conditions. Page 12 Nuvera Confidential By mid-2001, NuVera systems will have achieved 1,OOO,OOO kilowatt-hours on delivered systems. . Pro-actively develop system specifications based on market analysis and code requirements. There are myriad opportunities to develop commercially viable power generating appliances and other products incorporating fuel cells. To date, both DeNora Fuel Cells and Epyx' relationships with potential product developers has essentially been in the role of supplier. As a developer of fully integrated, stand-alone fuel cell power systems, however, NuVera will be in a position to identify promising commercial opportunities based on market analyses and assessments of the capabilities of the systems it develops. The three target market areas are premium, residential, and commercial MicroPower generation in capacities ranging from 500 W to 50 kW. NuVera MicroPower fuel cell power system product specifications will be driven in part by requirements detailed in the codes and standards relevant to the application. A key milestone for 2001 will be appropriate agency certification (i.e., UL approval). Since building construction and other codes lag considerably behind fuel cell technology development, NuVera will actively engage in the formulation of codes and standards. By so doing, the company will have the opportunity to eliminate unnecessary regulatory constraints, emphasize specific technologies or create a niche for certain applications, and educate others participating in the codes development process. . Develop strategic alliances, especially residential system marketing partners in the U.S., Europe and Japan. As a technology development company, NuVera is not in a position to rapidly introduce fuel cell power systems to a mass market. Therefore, NuVera will team with major appliance manufacturers to develop products for MicroPower power generation markets-first in the U.S., followed by Europe and later by Japan. . Establish the test and manufacturing facilities and infrastructure required for building standardized prototypes. By the first quarter of 2001, NuVera will have built, tested and field deployed up to one hundred fully integrated fuel cell power systems. Accomplishing this objective will require significant expansion of the facilities currently available for build and test activities. It will also require the development of internal resources adequate to cope with increasingly complex issues of planning, purchasing, materials handling, inventory and quality control. Building multiple systems also affords the opportunity to significantly reduce fabrication costs by adopting processes suitable only at higher manufacturing volumes. 2.4.1.3 Overall Objectives - MicroPower Premium/Portable Systems . Design and build filly integrated fuel cell power systems that operate on widely available fuels. Both hydrogen and fuel processor power modules in the 1 kW power range will be developed that serve as a "front end" to standardized power electronics units that supply AC output. Page 13 Nuvera Confidential Subsequently, fully integrated systems using the same basic reactor components and reformate-tolerant fuel cells will be developed. These tightly packaged fuel cell power systems will share thermal, air and water management strategies and components, a common control system, and integrated power electronics. Their final design will be determined by their envisioned application; it is likely that different applications will dictate significantly different packaging solutions. The selected partners will help to define system packaging for the various potential applications. . Accumulate thousands of hours of operation on DeNora Fuel Cells Epyx state-of-the-art fuel processors, fuel cells, and fuel cell power systems. By late-2000, NuVera hydrogen and propane premium power units will have achieved 4,000 hours of operation. 2.4.1.4 Overall Objectives Hydrogen Recovery Systems The objective of the DNE hydrogen recovery business is to demonstrate hydrogen stacks at the 60 kW power level and to partner with industrial gas/energy providers to create fuel cell stack sales opportunities with near-term market interest. The following key milestones have been identified as necessary to support NuVera mission: . To develop and fine tune the hydrogen stacks at the 6OkW level In the frame of project funded by the European Commission, NuVera has developed hydrogen stacks prototypes capable to deliver up to 60kW of power. In the course of year 2000 NuVera will deliver 24OkW of high power hydrogen stacks. Such stacks will be demonstrated in an industrial plant where spare hydrogen is available. At laboratory level, NuVera will continue to fine-tune the stack configuration to make it fully functional for industrial assembly and operation in an industrial environment. Such stacks may also be used in the heavy vehicle hydrogen based applications (city buses). . Find an industrial partner for integration of hydrogen stacks and fuel ceil systems commercialization During the year 2000, NuVera will identify an industrial partner that will have system integration expertise and will be strategically positioned in the industrial /energy market . NuVera will offer technical support at stack level in the system integration process and will jointly seek an opportunity to have an industrial site where the stack can begun durability tests in an industrial environment. Page 14 NuVera Confidential Figure 1.4. Year 2000/200l Micro-Power Product Development Milestones [TABLE] BTU = Beta Test Unit 5 k W fuel processor natural gas and propane CTU = 5 k W high-efficiency natural gas fuel system DTU = 1.5-5 k W heavy fuels system ETU = Pre-Commercial Prototype FCPS = Fuel Cell Power System (fuel processor integrated with fuel from partner) LFO = Kerosene 2.4.2 Transportation The overall objective of the Transportation Group is to secure a technology ---------- leadership position in the transportation fuel processing/fuel cell market. ---------- This will enhance the value of the company and help our MicroPower business with appropriate technology transfer. We will achieve this leadership position by using our ongoing government programs for technology development and our commercial programs with major OEM's to create visibility and credibility. We will deliver multiple subsystems or complete systems to the government sponsors and commercial partners this year. A strong interaction with car manufacturers and other Tier I suppliers will be pursued since their capability to mass-produce and reduce component cost (key requirements of a car components) is invaluable to NuVera. Furthermore these relationships will provide us with insight into the technical specifications for the subsystems that can completely fit the requirements of compactness, efficiency, reliability, Page 15 NuVera Confidential recycability of the future car industry. On the other side, the government programs for the development of low polluting devices provide visibility and substantial funding; therefore, the good relations obtained with DOE by Epyx and with EU and ENEA (respectively European Union and Italian agency for energy) by DNFC will be strengthened. 2.4.2.1 Market Opportunity Focus The transportation market opportunities for fuel cell systems are: . Low Dower mobile systems (* 5 kWe): These systems will be used to ---------------------------------- drive small mobile units like scooters, golf carts, utility vehicles etc,. . Auxiliary Power Units (* 15 kWe): These power supplies will be used to -------------------------------- provide auxiliary power to support air conditioning, power steering and other on-board applications for passenger cars, heavy duty busses and trucks. . Automotive Fuel Cell Power System (30-90 kWe): These systems will --------------------------------------------- replace the internal combustion engine in passenger vehicles as lean power systems or as a part of a hybrid strategy. . Heavy Duty Fuel Cell Power Systems (90-250 kWe): These systems will be ----------------------------------------------- used in heavy-duty trucks and buses as the main power source. 2.4.2.2 Overall Objectives - Fuel processor . Design, build and deliver prototype fuel processing systems to OEM's. NuVera will build and deliver 4-520 kWe gasoline fuel processing systems to OEM customers. The objective of t&se programs is to increase our visibility in the automotive industry and demonstrate our expertise in fuel processing to the OEM's. This is a first step towards developing a long-term relationship with these companies. . Plug Power/GM, Toyota, Renault/PSA, Volkswagen, Epyx . Integrate fuel cell power systems and develop system expertise. NuVera will design and build two fuel cell power systems. These programs will enhance our system knowledge and potentially lead to critical intellectual property rights. The ability to operate full systems will help us design better reformers, CO clean up devices and tail gas combustors. In addition, these systems will be used as demonstration units with potential partners or investors. . DOE Program (SFAA) - 10 kWe . DOE Program (PRDA and SFAA)- 50 kWe . Epyx Internal 30-50 kWe . Advance fuel processing technology to the next level. NuVera will design and build the next generation Epyx 50 kWe fuel processing systems. This system will incorporate advances in catalysts, heat exchangers and other system integration improvements that have been achieved over the last two years. It is expected that we will supply one or two of these units to OEM's in addition to our PRDA program deliverable to the Department of Energy. This 50 kWe system will play a very crucial role in enforcing our excellence in fuel processing technology for automotive applications. In addition we will complete the design of another 50 kWe fuel processing system that will incorporate the technology developed in our government programs. . DOE Program and Automotive 50 kWe 6)32278 051 . Phase II Volkswagen and Renault, GM * less than Page 16 Nuvera Confidential . Explore the heavy-duty bus market as a potential market for our systems. Currently we are exploring the possibility of starting a fuel cell bus program with multiple interested companies. In these programs, we will design and build systems or subsystems to be integrated in a fuel cell bus. This program, will provide us the ability to explore the bus market, which eventually may be a near term market for our systems. . Toyota and Robert Wright 2.4.2.3 Overall Objectives - Fuel Cell Stack Development . Design, build and deliver small power prototype fuel cell stack to OEM's. We will deliver 4 - 5 FC stacks in the power range of 5 - 7 kW to be integrated in small electric vehicles and to be tested on laboratory benches. This unit will act as range extender or battery charger of the battery vehicles. These vehicles can be considered "service vehicles" to be used in restricted area such as airports, exhibitions, or "city cars" to be used downtown in European cities. . FIAT 600 electra project for 2 range extender demonstration vehicles . EU project "Velapac" for 2 range extender demonstration vehicles . ENEA project "MURST 5%" for 10 kW stack coupling with FP (contract still to be signed) . Design, build and deliver prototype fuel cell stack for car integration to OEM's. We will deliver two FC stack packages in the range of 30 to 50 kW each to be installed in prototype vehicles where all or at least most of the traction power is coming from hydrogen fuelled stacks. . VW project for 50 kW stack . EU project "Hydro-gen" for 30 kW stack supply to PSA (Peugeot- Citroen) . Design, build and deliver prototype fuel cell stack for bus integration to OEM's. We will deliver two FC stack packages to be installed in prototype buses (pure FC and hybrid configuration will be addressed). Pure hydrogen feeding is foreseen in the two projects. . EU project "FC-BUS" for 60 kW stack supply to Scania . EU project "Berlin Bus" for 120 kW stack supply to Air Liquide and MAN (contract still to be signed) . Design and build a new generation of fuel cell stack hardware. We will design a new stack. This design will take into consideration the requirements of car manufacturers in terms of allowable dimensions, geometrical constraints and electrical parameters to ease power electronics coupling. This new stack configuration will de designed to meet the power density targets. . Today it is a internal activity to be launched in 2nd quarter of Y2000, although funding may be secured from a DOE contract that is currently underway at NuVera. . Improve system knowledge through detailed studies. We are supporting a wide analysis effort for a major automotive OEM. This study will approach the various aspects related to the introduction of fuel cell technology in cars such as development, industrialization, cost analysis, and recycling. This program will give us the opportunity to build strong relations with automotive OEM's. Furthermore in Y2000 a 4-year Italian program should start, in this scenario the development and testing activities of NuVera will be greatly interrelated with Fiat. . PSA/Renault phase 0 project Page 17 NuVera Confidential . Corivarnia Italian program (contract still to be signed) Figure 2.5. Year 2OO0/2001 Transportation Development Milestones [TABLE] SFAA = DOE Advanced Components Program(1999-2000) PRDA = DOE Gasoline Fuel Processor Program (1998-2000) ANL = DOE Argonne National Laboratory 2.4.3 Technology Development The objective of the Technology Development Group (TDG) is to support NuVera business initiatives in the MicroPower and Transportation markets. "Support" means relentless pursuit of innovations which strengthen NuVera's ability to introduce and commercialize products. The necessary innovations will answer to market-driven specifications, which may be grouped into three classes as follows: . Acceptance: if these are not met, products will not meet the fundamental ---------- requirements of the application and cannot be sold . Performance: if these are not met, we retain functionality but lose ----------- competitive edge . Reliability: if these are not met, we lose functionality and credibility ----------- Page 18 NuVera Confidential These groups also provide a convenient means for segmenting the TDG program portfolio. The following table summarizes key system attributes which fall into each specification class: ----------------------------------------------------------------------- Acceptance Performance Reliability ----------------------------------------------------------------------- . Fuel . Efficiency . Feed water quality . Cost . Emissions . Reformate quality . Capacity . Responsiveness . Structural integrity . Size/weight . Startup time . Catalyst stability . Environment . Turndown range . No nitrogen purge ----------------------------------------------------------------------- NuVera will extend the reach of our fuel processing capability by designing and demonstrating next generation systems for MicroPower and transportation markets. These activities are already underway, funded almost entirely by cost-shared government grants. All of our R&D efforts are proven by integration into one or more fuel processing system prototypes. Technology development programs also provide the basis for NuVera to identify and integrate necessary components from Tier 3 suppliers. An overarching goal of these thrusts focused on "value creation" is the embellishment of NuVera's intellectual property portfolio. Accordingly, we have set as a specific goal the filing of fifty patent applications in year 2000 in fuel processing and systems alone. 2.4.3.1 Overall objectives - Fuel processor . Demonstration of an integrated ATR reactor train/heat recovery module, leading to a reduction in thermal losses and higher efficiency, enhanced load responsiveness, faster startup time, and likely lower cost. . Demonstration of >l kW /th/liter H2 production-based power density in ATR system, including integrated heat exchangers, reformer, shift, steam separator, and tail gas burner/heat recovery module, leading to reduced size/weight and lower cost. . Incorporation of novel catalyst substrates into two reaction zones in one device, leading to reduce size/weight, increased efficiency by virtue of reduced pressure drop, faster startup time due to reduced thermal mass, and enhanced structural integrity. . Demonstration of a steam reformer running g on natural gas, to enhanced reformate quality, reduce required stack size/weight, and realize a modest gain in efficiency. . Demonstration of a kerosene fuel processor, to extend fuel capability. 2.4.3.2 Overall Objectives - Fuel cell Stack Development . Demonstration of a CO-tolerant fuel cell stack, specifically exhibiting voltage degradation of less than 10% with respect to pure H2 operation when operating on reformate containing 50 ppm CO, thereby leading to enhanced reliability. . Improvements of hydrogen stack power density and specific power up to 1 kW/kg and 1 kWL . Reduction of stack operating pressure in order to minimize auxiliary power consumption. . Qualification of a selection of stack hardware components (particularly PEM membranes) in term of reliability, performance and compatibility with stack technology. . Achieve target of reliability, lifetime, out of design and unattended operation. Page 19 NuVera Confidential Figure 26. Year 2OOWOOl Technology Development Milestones [TABLE] ATR = Autothermal Reformer. An advanced fuel processor for heavier fuels FP = Fuel Processor SR = Steam Reformer: A high-efficiency fuel processor that operates best on natural gas 2.4.4 Marketing Plan The objective of the Marketing Plan is, to establish DNE as a fuel cell power system company, and increase market awareness to prepare the company for an IPO in 7 to 12 months. Page 20 NuVera Confidential Over the past year, De Nora and Epyx have continued to make dramatic strides in technology; however, this has not turned into marketing opportunities. Also, while several high profile fuel cell companies have marketed their business successes, Neither De Nora nor Epyx was in a position to keep pace. The new business direction of NuVera as a single company will dictate a different marketing message to help shape the brand image of NuVera into that of a fuel cell power system company in the MicroPower market, while maintaining leadership positions as a component supplier to automotive companies. To address the above issues, a three-tiered approach will be employed. First, NuVera will strive to gain awareness in its new direction through conferences, press releases, and partnership announcements. Second, we will continue to push the technology demonstrations and developments in all market segments. Third, towards the time of the IFO, we will begin to announce strategic partnerships at the OEM, manufacturing and Tier III supplier levels. The process is shown schematically in Figure 2.7. Tactical execution of the plan is given below: . Reinvigorate media relations . Attend conferences / trade shows / special events - 43 assumed with exhibits at 5 . Expand internal communications . Update the web site . Update collateral material . Provide on-site support materials Figure 2.7. Year 2000/2001 Marketing Milestones
IPO Q2 2000 Q3 2000 Q3-4 2000 Q1-3 2001 - ------------------------------------------------------------------------------------- TECHNOLOGY ANNOUNCE AWARENESS DEVELOPMENT & STRATEGIC SHOWCASE GENERATION DEMONSTRATION PARTNERSHIIPS PRODUCTS - ------------------------------------------------------------------------------------- . "NewCo" Launch . Marketing Partner(s) . Mfg. Partner . Maintain Awareness . Investor . Build Brand Image . Other partner(s) Announcement . Press release . Residential FCPS . Press release and media . Conferences and media coverage . Deliver First System coverage . Press Releases . Deliver 100th . 50 kWe Auto System . Premium Power System . Events System prototype . Pre-Production Prototypes
2.4.5 Pricing Policy Even though the acquisition of Contracts may help the Company to cover its development expenses, these acquisitions will not be necessarily pursued if not in line with the strategic Page 21 NuVera Confidential technological developments. This general approach is particularly true in the Transportation Sector, where the Company will implement technology development only in the frame of publicly and privately funded projects, and if the outcome such projects will increase the know how of the Company with direct effect to the strategic technological development focus in the MicroPower sectors. On the opposite, in the MicroPower sector, particularly in the fuel cell system prototype demonstration phase, the Company may decide to supply prototypes on a free of charge basis, should this approach reveal itself strategic for the development of technological and market partnerships. As a general rule the competitive fuel cell prototype price scenario will be analyzed and constantly monitored, so that the Company will always be competitive as the market develops. 2.4.6 Sourcing of Strategic Components and Technologies Fuel cell stacks, fuel processors and integrated systems can derive competitive advantage from the use of strategic components. Both DeNora Fuel Cells and Epyx have developed relationships that we expect will create unique fuel cell power systems that are differentiated from NuVera's competitors by the incorporation of technology provided by strategic suppliers. However, dependence on suppliers for critical technology creates business risks such as supply, security, and pricing that must be managed. NuVera will pursue a three pronged strategy for the sourcing of strategic components and technology: 1. Engage suppliers in joint development agreements that leverage the supplier's special expertise to develop specialized components which NuVera will have preferential access. 2. In all cases pursue second sources of supply to manage supply and cost risks. 3. Develop systems for mass manufacturing cost analysis of key components with Tier 3 suppliers. The table below lists critical components that are currently used or are anticipated to be needed for competitive systems: Page 22 NuVera Confidential
- -------------------------------------------------------------------------------------------------------- Component Supplier(s) Status Anticipated actions - -------------------------------------------------------------------------------------------------------- PEM Membrane DuPont DuPont and Gore are both 1. Develop programs with Gore qualified to provide DuPont and Gore for Asahi Glass membranes catalyzed/uncatalyzed Elf Atochem membranes Asahi Chem. 2. Develop Asian membrane Aventis source for Japan market - -------------------------------------------------------------------------------------------------------- Gas Diffusion DeNora NA Sole source Supply agreement with Electrode DN-NA required - -------------------------------------------------------------------------------------------------------- Stack hardware Several Italian sources only Seek to enlarge the components (bipolar Dana Corp. suppliers database on a plates, end plates, Apple Rubber territorial base (i.e. US) gaskets etc) - -------------------------------------------------------------------------------------------------------- Fuel Processing Englehard Many formulations under 1. Sign multiple Joint Catalysts (4 separate DeGussa test. Development Agreements systems) United Cat Joint Development 2. Evaluate use of ETEK as Corning Agreement with Engelhard custom supplier for Epyx Proprietary Formulations designed catalysts - -------------------------------------------------------------------------------------------------------- Air Supply Subsystem Eaton Development program Develop Strategic Valeo under discussion Relationship Allied Signal Vairex Opcon - -------------------------------------------------------------------------------------------------------- Power Conditioning Sat Con Investigation started Develop Strategic Trace Relationship Eaton (Others) - --------------------------------------------------------------------------------------------------------
2.5 Administration and Business Support The objective of the Administration and Business Support group is to develop and manage the infrastructure necessary for the integration of the separate DeNora Fuel Cells and Epyx operations and to provide the support required by the groups in Milan and Cambridge for autonomy from the mother companies. This group will also develop and manage marketing and external relationships 2.5.1 Key Activities-Yr. 2000 Business Support The key milestones for Administration and Business support functions for 2000 are: . Manage the launch and growth of NuVera in accordance with this plan with a particular focus on integration of Milan and Cambridge groups and on increasing autonomy from the mother companies. The following business functions will be required: . Financial reporting and management . Marketing . Human resources and recruiting . Facilities Page 23 NuVera Confidential . Contracting and legal affairs . Guide the creation of systems capability through internal NuVera growth, outsourcing and alliances . Establish a market channel alliance for the US and European MicroPower (residential, portable) and industrial hydrogen recovery fuel cell markets . Establish alliances and/or favored supply arrangements with Tier 3 component suppliers 2.5.2 Business Support Functional Discussion 2.5.2.1 Finance North American Operations Currently ADL Finance Department Staff performs accounting functions for NuVera. Considerations in changing to an NuVera stand-alone financial system include: . Cost to NuVera . Timeliness and relevance of financial reporting to NuVera management and NuVera Board . Establishment of an independently auditable finance function to support future equity transactions . Integration of finance with other ADL support functions used by NuVera (i.e. Accounts Payable support of Purchasing) . Obtaining government approval of rates and methods used in any new accounting system. Finance function costs in the 2000 financial plan assume that ADL Finance will continue to provide all forecasting, accounts payable, accounts receivable, labor accounting and payroll functions for NuVera The Plan includes hiring of a Chief Financial Officer and financial assistant during the second quarter of 2000. European Operations NuVera European Operations will establish an independent Accounting Department to replace the services currently provided by Norfin SpA. Such accounting function will provide: . Timeliness and relevance of financial reporting to NuVera management and NuVera Board . all forecasting, cost control accounts payable, accounts receivables and manage labor accounting and payroll functions . administrative management of EU and government Contracts . Purchasing activity Such Accounting function will provide to US Operation all reporting necessary to achieve a fully integrated accounting policy. Norfin SpA will continue to provide Financial Management and Financial Support for all other concerns such as funding management, preparation and follow up of the IPO. Page 24 NuVera Confidential 2.5.2.2 Human Resources North American Operations Currently, NuVera management of North American Operations handles most HR functions other than recruiting and compensation. ADL currently provides modest (0.1 FTE) (FTE = Full Time Equivalent) Human Resources Management support to assist in HR issues with strategic or legal implications. Due to increased recruiting requirements, we will add a full-time recruiter to our staff this year. Also, ADL HR support will need to increase to 0.5 FTE. The costs of the HR administration services are reflected in the financial plan under ADL Allocations. European Operations The recruitment of new personnel will be effected through the involvement of an external recruiting firm under the supervision of the HR management of DeNora Fuel Cells group. A training campaign will be pursued with the involvement of an external consultant. 2.5.2.3 Contracting North American Operations Commercial contracting is currently provided by ADL. These contracts encompass significant legal liability and Intellectual Property implications. A full time contracts/intellectual property administrator is planned for Q1 2000. Government contracts will continue to be administered by ADL with costs allocated to NuVera as part of the ADL Allocation. European Operations A contract management function will be established within the Business Administration Group of the European Operations, particularly for the implementation and administrative management of Public Contracts. Legal advice will be provided by an external Legal Firm on a consultancy basis. 2.5.2.4 Information Technology Computers, networking and general IT support will continue to be provided by ADL during 2000 or until NuVera relocation with a full time person dedicated to NuVera North America Operations. Costs are included in the 2000 financial plan for establishing a secure network server for NuVera within ADL's network. A separate internal network is already functioning within the European Operations, connected to the main DN Group servers. The IT services are currently provided by DeNora Fuel Cells Group and will continue during year 2000. As part of the Technology Exchange Plan, a common network system will be implemented in order to enhance communication transfer. 2.5.2.5 Purchasing and Material Control Because of the criticality of purchased material to NuVera prototype deliveries, NuVera North American Operations will establish an NuVera Materials Control function (2 FTE's) in Q1 2000. Purchasing will continue to be outsourced to ADL. Page 25 NuVera Confidential The European Operations will have autonomy in the purchasing and material controls. A QA/QC function will be established in the Production Department. The purchasing activity will be independently managed within the Business Administration group. 2.5.2.6 Administration and Miscellaneous Support North American Operations While NuVera remains in its current location, it will be most cost effective to utilize the following ADL support services: . Corporate Travel, . Graphics, . Machine shops, . Facilities maintenance . Technician pool (as required and available). . Safety Office and Medical Surveillance Staff . Purchasing (until a separate purchasing function is established) Costs for these support services are included in the financial plan under ADL Allocation. European Operations As far as the European operations are concerned, the following services will continue to be provided by DeNora Fuel Cells Group: . R&D services (Scientific advice, analytical services, engineering support) . Patent and Licenses (A dedicated resource will be added to the Technology development Group) . Catering . Corporate Travel, . Import Export . General Services (facilities maintenance, etc.) Page 26 NuVera Confidential 2.6 Risks and Risk Management The following table describes the business and technology risks that have been identified by the business planning team. - -------------------------------------------------------------------------------- Risk Mitigating Action (ie solutions) - -------------------------------------------------------------------------------- Technology Risks - -------------------------------------------------------------------------------- Reformate tolerant stacks unavailable Aggressive ETEK/DNNA plan funded by DeNora Benchmark other MEA suppliers - -------------------------------------------------------------------------------- Undesirable catalyst pollutants in Aggressive plan to identify better the fuel processor exit gas catalyst/and reformate gas purifying methods - -------------------------------------------------------------------------------- Standard metallic hardware not fully Implement use of suitable alternative compatible with certain reformate hardware or use of protective compositions coatings - -------------------------------------------------------------------------------- Practical Air System required Eaton Strategic supplier program - -------------------------------------------------------------------------------- Efficient 1 kW fuel processor Hydrogen Systems Solution in parallel (premium power threat) - -------------------------------------------------------------------------------- Low cost CO detector required Working with Engelhard sensors, DCHT, and Epyx/Local Vendor (J. Rumsey) for NDIR - -------------------------------------------------------------------------------- Business Risks - -------------------------------------------------------------------------------- Failure to integrate technology teams Technology Exchange Program to be implemented "Intranet" communication Management action - -------------------------------------------------------------------------------- NuVera systems do not meet market Cost/technology analysis programs cost requirements - -------------------------------------------------------------------------------- Page 27 NuVera Confidential 3 Organizational Integration and Growth Plan 3.1 Personnel Plan 3.1.1 North America Operations In order to support the product and technology developments planned in the year 2000, NuVera staff must be expanded aggressively in all areas, requiring an overall increase in staff levels of greater than 200% by the third quarter of the year. The personnel plan by month is shown in Table 2.1 and is broken out between MicroPower, transportation, and technology development functions. Technology development shows the largest growth at 220%, followed by MicroPower at 121% and transportation at 78%. Table 3.1. Year 2000/2001 Personnel Plan*
- -------------------------------------------------------------------------------------------------------------------- Staffing 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 30-Sep - -------------------------------------------------------------------------------------------------------------------- FTE's 80.00 100.00 114.00 133.00 149.10 149.10 149.10 149.10 149.10 149.10 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- MicroPower 19.00 23.00 33.00 40.00 56.10 56.10 56.10 56.10 56.10 56.10 - -------------------------------------------------------------------------------------------------------------------- Transportation 15.00 18.00 22.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 - -------------------------------------------------------------------------------------------------------------------- Technology Dev. 40.00 50.00 50.00 55.00 55.00 55.00 55.00 55.00 55.00 55.00 - -------------------------------------------------------------------------------------------------------------------- Administrative 6.00 9.00 9.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 - --------------------------------------------------------------------------------------------------------------------
* Plan shows no growth after IPO - this will be revisited after IPO completion FTE = Fuel Time Equivalent 3.1.2 European Operations In order to support the product and technology developments planned in the year 2000, NuVera staff will be expanded aggressively in all areas, requiring an overall increase in staff levels of greater than 200% by the third quarter of the year. The personnel plan by month is shown in Table 3.2. Table 3.2. Year 2000/2001 Personnel Plan*
- ---------------------------------------------------------------------------------------------------------------------------- Staffing 31-Jan 28-Feb 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 27-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 30-Sep - ---------------------------------------------------------------------------------------------------------------------------- FTE's 18 18 20 25 30 35 35 44 54 54 54 54 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Production 3 3 3 3 4 5 5 5 13 13 13 13 - ---------------------------------------------------------------------------------------------------------------------------- Prog. Mgmt. 2 9 2 3 3 4 4 4 4 4 4 4 - ---------------------------------------------------------------------------------------------------------------------------- Technology 9 9 10 13 17 20 20 27 27 27 27 27 Development - ---------------------------------------------------------------------------------------------------------------------------- Administrative 4 4 5 6 6 6 6 8 10 10 10 10 - ----------------------------------------------------------------------------------------------------------------------------
* Plan shows no growth after IPO - this will be revisited after IPO completion FTE = Fuel Time Equivalent Page 28 NuVera Confidential 3.2 Technology Exchange Program In order to ensure that DeNora Fuel Cells and Epyx are integrated seamlessly into a single company, a detailed technology exchange program is anticipated and is outlined below. Implementation of such a program is required to make NuVera successful in the marketplace. Much of this information currently exists inside of DeNora Fuel Cells and Epyx and is being compiled into a cohesive set of documents. 1. Fuel Processing Manual (Training Manual for NuVera staff and new hires) A. Technology Review B. Technology Details C. Myths of Operation D. Reformate Characterization - contaminants, metals, etc. 2. PEM Manual (Training Manual for NuVera staff and new hires) A. Technology Review B. Technology Details C. Myths of Operation 1) Can we use Aluminum HX components 2) What is the required water quality, etc. D. Reformate Requirements - contaminants, metals, etc. 3. Personnel Exchange Plan 4. Technology Seminar Series (Ongoing Updates) 5. Technical Capabilities A. Personnel Biographies B. Company Qualifications C. Group Missions D. Facilities / Testing Capabilities E. Analytical Equipment F. Prototyping/Manufacturing G. Industrial Design H. ISO 9001 Certification 6. Data/Information Exchange A. Computer Networking B. Meetings/Videoconferences - frequency C. Intranet D. Computer Packages (Drawing, Process, etc.) E. Units (S.I.), Language (English), Paper (A4), SAE/Metric Fittings (SAE) 7. Planned Capital Expenditures for FY 2000/2001 8. Dealing with external vendors/partners - how to approach A. Etek for ELAT's 9. Safety Committee and Standards / Safety training 10. Technical Documentation Process 11. Inventory and Parts tracking methodology Page 29 NuVera Confidential 3.3 Facilities and Location 3.3.1 North America Operations NuVera presently occupies approximately 20,000 square feet of office and laboratory space at Arthur D. Little's Cambridge, Massachusetts's headquarters. During the transition period of 2000, NuVera will continue to occupy the present office and laboratory space at Arthur D. Little. NuVera facilities for 2000 will include office space, specialized laboratories and prototype production areas. Facilities square footage estimates were developed to support the Year 2000 technology and product plans, with no contingency for 2001 requirements. This plan assumes no move from Acorn Park facilities during 2000 and no difference in -- rates between office and lab space. Also, this plan assumes that no leasehold improvements at Acorn Park will be necessary during the year 2000 as NuVera continues to expand. ADL facilities charges used for this plan are: Base Pate: $27.29/sq. ft Fully Loaded Rate: $44.35/sq. ft A contingency reserve of $3.0 million has been added to the financial plan to reflect the costs associated with a complete move from Acorn Park in the year 2001. This contingency includes costs that would be incurred for laboratory replication, leasehold improvement and other moving costs associated with a complete departure from Acorn Park. The NuVera facilities requirements are listed in Tables 2.2 and 2.3 by month. Based on the current business plan, the facilities requirements in 2005 and 2010 will be 11,150 m/2/ and 13,000 m/2/ respectively, without taking manufacturing space into consideration. Table 3.2. Year 2000/2001 Facilities Plan*
- -------------------------------------------------------------------------------------------------------------------------------- 3-Jan 31-Jan 28-Feb 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 30-Jan 27-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 30-Sep - -------------------------------------------------------------------------------------------------------------------------------- Total Footage 2,077 2,917 3,501 4,043 4,235 4,480 4,480 4,773 4,773 4,773 4,773 4,773 4,773 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Office m/2/ Space 965 1,585 1,983 2,166 2,265 2,417 2,397 2,432 2,432 2,432 2,432 2,432 2,432 - -------------------------------------------------------------------------------------------------------------------------------- Lab Space m/2/ 721 943 1,128 1,487 1,579 1,672 1,672 1,951 1,951 1,951 1,951 1,951 1,951 - -------------------------------------------------------------------------------------------------------------------------------- Prototype m/2/ Space 390 390 390 390 390 390 390 390 390 390 390 390 390 - --------------------------------------------------------------------------------------------------------------------------------
* Plan shows no growth after IPO - this will be revisited after IPO completion 3.3.2 European Operations Table 3.3. Year 2000/2001 Facilities Plan*
- -------------------------------------------------------------------------------------------------------------------------------- 3-Jan 31-Jan 28-Feb 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 30-Jan 27-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 30-Sep - -------------------------------------------------------------------------------------------------------------------------------- Total Footage 474 474 474 474 474 474 474 474 474 1,397 1,397 1,397 1,397 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Office m/2/ Space 121 121 121 121 150 180 210 240 260 279 279 279 279 - -------------------------------------------------------------------------------------------------------------------------------- Lab Space m/2/ 232 232 232 232 232 232 232 232 232 418 418 418 418 - -------------------------------------------------------------------------------------------------------------------------------- Prototype m/2/ Space 121 121 121 121 121 121 121 121 121 700 700 700 700 - --------------------------------------------------------------------------------------------------------------------------------
* Plan shows no growth after IPO - this will be revisited after IPO completion Page 30 NuVera Confidential 4 Financial Overview The complete year 2000 financial plan is attached in Appendix A. Table 4.1. Year 2000 Abbreviated Operating Statement ($ except as noted)
- ---------------------------------------------------------------------------------------------------- Q2 2000 Q3 2000 Q4 2000 Y 2kTotal (S) - ---------------------------------------------------------------------------------------------------- Total Revenue 2,609,198 3,880,156 2,041,257 8,530,610 - ---------------------------------------------------------------------------------------------------- Total Employment Costs (3,023,197) (4,207,391) (4,555,323) (11,785,910) - ---------------------------------------------------------------------------------------------------- Cost Of Sales (3,437,434) (2,656,556) (2,426,430) (8,520,419) - ---------------------------------------------------------------------------------------------------- Total Overhead Expenses (811,349) (932,578) (758,152) (2,502,078) - ---------------------------------------------------------------------------------------------------- Intercompany Expenses (1,035,656) (1,264,086) (1,299,348) (3,599,090) - ---------------------------------------------------------------------------------------------------- Income/(Loss) (5,911,589) (5,393,606) (7,211,146) (18,516,341) - ---------------------------------------------------------------------------------------------------- Capital Expenditures (2,113,700) (803,000) (290,000) (3,206,700) - ---------------------------------------------------------------------------------------------------- Net Cash Flow (8,612,137) (6,118,121) (7,242,440) (21,972,698) - ----------------------------------------------------------------------------------------------------
Total includes Management, Administration and allocated costs Table 4.2. Year 2001 Abbreviated Operation Statement
- ---------------------------------------------------------------------------------------------------- Q1 2001 Q2 2001 Q3 2001 18 Month Total (S) - ---------------------------------------------------------------------------------------------------- Total Revenue 2,285,736 2,548,736 2,235,736 15,600,818 - ---------------------------------------------------------------------------------------------------- Total Employment Costs (4,657,449) (4,785,007) (4,785,007) (26,013,372) - ---------------------------------------------------------------------------------------------------- Cost Of Sales (2,201,107) (1,943,329) (1,861,107) (14,525,962) - ---------------------------------------------------------------------------------------------------- Total Overhead Expenses (720,287) (720,287) (720,287) (4,662,938) - ---------------------------------------------------------------------------------------------------- Intercompany Expenses (1,405,991) (1,420,719) (1,420,752) (7,846,551) - ---------------------------------------------------------------------------------------------------- Income/(Loss) (6,914,215) (6,535,723) (6,825,760) (38,792,039) - ---------------------------------------------------------------------------------------------------- Capital Expenditures (2,934,610) (3,080,000) (2,432,610) (11,653,920) - ---------------------------------------------------------------------------------------------------- Net Cash Flow (10,333,707) (8,907,279) (9,081,707) (50,295,392) - ----------------------------------------------------------------------------------------------------
Table 4.3. Resource Requirements- Year 2000/2001
------------------------------------------------------------------------------------------ TOTAL Currently Required Additional Total 18 Months Available ------------------------------------------------------------------------------------------ Total Staff 76 135 211 ------------------------------------------------------------------------------------------ Office Space m/2/ 1,616 1,100 2,715 ------------------------------------------------------------------------------------------ Lab/prod. m/2/ 1,030 2,535 3,565 ------------------------------------------------------------------------------------------ Funding $ 15.6 M $ 50.3 M $ 65.9 M ------------------------------------------------------------------------------------------
Page 31 NuVera Confidential Appendix A Financial Statement February 1, 2000 January 31, 200l Page 32 Exhibit E EXHIBIT 10.2 STOCKHOLDERS' AGREEMENT This Stockholders' Agreement is made as of April 4, 2000, by and among DeNora New Energy Investments B.V., a company established under the laws of The Netherlands and the parent company of DeNora Fuel Cells, S.p.A. ("DN"), Arthur D. Little, Inc., a Massachusetts corporation ("ADL"), Amerada Hess Corporation, a Delaware corporation ("Hess" and, together with ADL and DN, the "Stockholders"), and Epyx Corporation, a Delaware corporation ("Epyx"). W I T N E S S E T H: WHEREAS, the Stockholders desire to provide for certain matters with respect to their ownership of common stock of New DeNora Epyx Corporation (formerly, Epyx Corporation, "New DeNora Epyx"), as well as for the management and operations of New DeNora Epyx. NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: ARTICLE I. DEFINITIONS The following capitalized terms, as used in this Agreement, shall have the meanings set forth below. Capitalized terms used herein without definition shall have the meaning ascribed to such terms in that certain Investment and Exchange Agreement dated as of the date hereof by and among DN, DeNora Fuel Cells, S.p.A., ADL and Epyx (the "Investment Agreement"). An "Affiliate" of any Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person possesses directly or indirectly the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of New DeNora Epyx. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Common Stock, par value $.01 per share, of New DeNora Epyx, issued in accordance with and subject to the terms of the Certificate of Incorporation of New DeNora Epyx, and any other common equity securities now or hereafter issued by New DeNora Epyx, together with any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend, stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, recapitalization, merger, consolidation or other corporate reorganization). 1 "Controlling Person" has the meaning set forth in Section 4.4. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder. "Holder" has the meaning set forth in Section 4.1. "Person" means an individual, a corporation, an association, a partnership, a limited liability company, an estate, a trust, and any other entity or organization, governmental or otherwise. "Registrable Securities" has the meaning set forth in Section 4.2. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder. "Selling Holder" has the meaning set forth in Section 4.4. "Stock" means Common Stock and any other equity securities of New DeNora Epyx. "Transfer" means any direct or indirect offer, transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in, conveyance of a beneficial ownership or other right in, or other disposal or attempted disposal of all or any portion of a security or of any rights. "Transferred" means the accomplishment of a Transfer, and "Transferee" means the recipient of a Transfer. ARTICLE II. ELECTION OF DIRECTORS OF NEW DENORA EPYX 2.1 Voting of Shares for Election of Directors of New DeNora Epyx. (a) With respect to each election or removal of members of the Board (including, without limitation, any replacement members), whether at an annual or special meeting of stockholders or by written consent of stockholders, each of the Stockholders agrees to vote its Stock (and any shares of Stock over which it exercises voting control) and to take such other action as may be necessary to fix the number of Directors of New DeNora Epyx at eight (8), as indicated below, and to cause and maintain the nomination and election to the Board and to keep in office as such: (i) four (4) persons designated from time to time by DN (the "DN Directors"); (ii) three (3) persons designated from time to time by ADL (the "ADL Directors"); and (iii) one (1) person designated from time to time by Hess (the "Hess Director"). (b) New DeNora Epyx shall nominate the DN Directors, the Hess Director and the ADL Directors for election to the Board. Each of DN, ADL and Hess further agrees to place at least one of the DN Directors, the Hess Director and one of the ADL Directors on each committee of the Board. The Chairman of the Board shall be nominated by ADL, subject to the approval of DN. The Chief Executive Officer of New DeNora Epyx shall be nominated by ADL, subject to the approval of DN, provided that upon the selection of a Chief Executive Officer, such officer shall become a member of the Board and will be one of the three ADL Directors. 2.2 Vacancies; Removal. Each of the Stockholders agrees to vote its Stock (and any shares of Stock over which it exercises voting control), to the extent required by Section 2.1, in such manner as shall be necessary or appropriate so as to ensure that any vacancy occurring for any reason in the Board shall be filled so as to constitute the Board in accordance with Section 2.1 above. The DN Directors only may be removed by DN, the Hess Director only may be removed by Hess and the ADL Directors only may be removed by ADL, provided that each of DN, Hess and ADL agrees to vote for the removal of any director upon the request of the party which designated such director and for the election to the Board of a substitute director designated by such party. 2.3 Meetings; Expenses. The Board shall hold such number of meetings as shall be determined by the Board. A quorum shall consist of four (4) Directors, at least two of which shall be DN Directors and two of which shall be ADL Directors. Meetings of the Board shall be convened in accordance with the by-laws of New DeNora Epyx (attached hereto as Exhibit A), provided that in any case a Board meeting shall be convened upon written request of at least two (2) Directors, one of which is a DN Director and one of which is an ADL Director. In such case, written notice of such meeting shall be delivered to each of the other Directors at least seven (7) business days prior to the date of the proposed meeting. In the event that the Hess Director is unavailable for any meeting of the Board, Hess shall have the right to designate an alternate Director for any such meeting, and such alternate Director shall have the same rights, duties and obligations as the Hess Director. All Directors shall, subject to reasonable substantiation and documentation be entitled to reimbursement of out-of-pocket expenses incurred in attending each meeting of the Board or any committee thereof or otherwise incurred in performing his or her duties as a director of New DeNora Epyx (including, without limitation, reasonable travel, lodging, meals and communication expenses). 2.4 Deadlock. (a) If the Board, after a reasonable period of discussion at a duly constituted meeting or meetings thereof, is unable to resolve any issue before them, the resolution of which is necessary for the continued operation of the Business in a commercially reasonable manner and/or the Board is unable to agree upon any matter requiring special Board approval pursuant to Section 3.3 below, a Special Meeting of the Board to further consider the issue shall be scheduled and consideration of the matter shall be suspended until such Special Meeting which shall meet within seven (7) days to discuss the matter. (b) If the Board, after a reasonable period of discussion at a Special Meeting called pursuant to Section 2.4(a), are unable to resolve the issue that necessitated such meeting, (i) a subsequent Special Meeting to further consider the issue shall be scheduled, (ii) consideration of the matter shall be suspended until such Special Meeting and (iii) the chief executive officers of DN, Hess and ADL (the "Senior Deadlock Committee") shall meet within twenty (20) days to discuss the matter. At the subsequent Special Meeting to discuss the issue, the Senior Deadlock Committee shall make a report to the Board, and the Board shall adopt any proposal agreed to unanimously by all members of the Senior Deadlock Committee. (c) During any period in which a deadlock continues, the Board shall continue to conduct the Business in good faith and to the best of their abilities consistent with past practices and the then current Operating Plan. ARTICLE III. COVENANTS OF NEW DENORA EPYX 3.1 Financial and Other Information. (a) Accounts and Reports. New DeNora Epyx will maintain a standard system of accounts in accordance with generally accepted accounting principles consistently applied. (b) Annual, Quarterly and Monthly Financial Statements. New DeNora Epyx will deliver to each Stockholder: (i) within ninety (90) days after the end of each fiscal year, financial statements of New DeNora Epyx and its subsidiaries, if any, prepared in reasonable detail and in accordance with generally accepted accounting principles consistently applied, and certified by the principal financial officer of New DeNora Epyx that they are true and accurate in all material respects as of their respective dates, and (ii) copies of all financial statements and reports which New DeNora Epyx shall send to its stockholders or file with the Securities and Exchange Commission or any stock exchange on which any securities of New DeNora Epyx may be listed. New DeNora Epyx also will deliver to each such holder (x) within forty-five (45) days after the end of the first three quarters of each fiscal year, a copy of the consolidated balance sheet of New DeNora Epyx as of the end of such quarter and consolidated statements of income and of cash flows of New DeNora Epyx for the fiscal quarter and for the portion of the fiscal year ending on the last day of such quarter, each of the foregoing balance sheets and statements to set forth in comparative form the corresponding figures for the same period of the prior fiscal year, and (y) within twenty (20) days after the end of each calendar month, a copy of the consolidated balance sheet of New DeNora Epyx as of the end of such month and consolidated statements of income and of cash flows of New DeNora Epyx for such month and for the portion of the fiscal year ending on the last day of such month, each of the foregoing balance sheets and statements to set forth in comparative form the corresponding figures for the same period of the prior fiscal year; provided, however, that such financials may be subject to year-end adjustments and need not contain all footnotes required under generally accepted accounting principles, and to be certified, subject to normal year-end audit adjustments, by the principal financial officer of New DeNora Epyx that they are true and accurate in all material respects as of their respective dates. (c) Operating Plan. The Operating Plan shall be revised at least annually or otherwise as directed by the Board. The adoption of the revised operating plan to supersede the Operating Plan shall be effective as and when approved by the Required Percentage (as defined below) of the Board. (d) Visits and Discussions. New DeNora Epyx will permit each Stockholder and its authorized representatives, at all reasonable times during normal business hours and as often as reasonably requested, to visit and inspect, at the expense of such Stockholder, any of the properties of New DeNora Epyx, including its books and records and lists of security holders, and to make extracts therefrom and to discuss the affairs, finances and accounts of New DeNora Epyx with its officers. (e) Confidentiality. Each Stockholder agrees to treat all non-public information provided to it by New DeNora Epyx, including without limitation all financial and other information provided to any such Stockholder pursuant to this Section 3.1, as confidential and will not convey any such information to any Person (other than such Stockholder's Affiliates, accountants, legal counsel and other similar representatives) without the prior written consent of New DeNora Epyx. The foregoing obligation of confidentiality shall not apply to information (i) which later becomes part of the public domain (other than as a result of a violation of this Section 3.1(e) by any such Stockholder); (ii) which is required to be disclosed to the extent necessary to enforce this Agreement; or (iii) which is required to be disclosed by law or governmental order or regulation, or subpoena or other legal process, provided that such Stockholder notifies New DeNora Epyx as soon as practicable prior to such disclosure, cooperates with New DeNora Epyx to preserve the confidentiality of such information, and uses commercially reasonable efforts to limit any such disclosure to the minimum disclosure necessary to comply with such law or governmental order or regulation, or subpoena or other legal process. 3.2 Dealings with Affiliates and Others. New DeNora Epyx covenants that it shall not, without the prior approval of an absolute majority of the Board, enter into any transaction (including without limitation the purchase, sale, rental or exchange of any property or services, or any loans, advances or guarantees) with any stockholder, director, officer, agent, partner, employee or affiliate of New DeNora Epyx or any of its stockholders, other than upon fair and reasonable terms no less favorable to New DeNora Epyx than would be obtained in a comparable arms-length transaction with any other Person not so affiliated with New DeNora Epyx. 3.3 Actions Requiring Special Board Approval. (a) Without the prior approval of the Required Percentage (as defined below) of the Board, acting by resolution at a duly called regular or special meeting of the Board or acting by written consent, New DeNora Epyx shall not: (i) merge or consolidate New DeNora Epyx with any other Person, or sell, assign, lease or otherwise dispose of or voluntarily part with the control of (whether in one transaction or in a series of transactions) all, or substantially all, of its assets or capital stock (whether now owned or hereinafter acquired) or sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) any asset or group of assets which is material to the business or operations of New DeNora Epyx, or agree to do any of the foregoing, except for sales or other dispositions of assets in the ordinary course of business; (ii) amend the Certificate of Incorporation or By-laws of New DeNora Epyx; (iii) sell or issue to any Person any capital stock of New DeNora Epyx except pursuant to this Agreement or any approved stock option or other equity participation plan, or agree to do either of the foregoing; (iv) redeem, purchase or otherwise acquire for value any Common Stock or any other capital stock New DeNora Epyx except for repurchases of Common Stock pursuant to the terms of any approved stock option or other equity participation plan within the normal operation of such plan, or agree to do any of the foregoing; (v) declare or pay any dividend on any capital stock of New DeNora Epyx; (vi) liquidate, dissolve or commence proceedings in bankruptcy; (vii) approve the Operating Plan; or (viii) designate the individual to represent New DeNora Epyx in the shareholders meeting of DNFC and the instructions to be granted to such representative to vote at such meeting. (b) For purposes of this Section 3.3, "Required Percentage" shall mean: (i) seventy-five percent (rounded up to the nearest whole number) of the Board as long as the number of directors on the Board is eight (8) or less and (ii) sixty-six and two-thirds percent (rounded up to the nearest whole number) of the Board as long as the number of directors on the Board is nine (9) or more. (c) To the extent that any of the matters listed in Section 3.3(a) also require approval by the stockholders of New DeNora Epyx pursuant to the General Corporation Law of the State of Delaware or any other applicable law, such approval shall require the prior approval of sixty-six and two-thirds percent of the shares of Common Stock then outstanding, acting by resolution at a duly called regular or special meeting of the stockholders of New DeNora Epyx or acting by written consent. 3.4 Access to Public Capital Market. New DeNora Epyx shall use commercially reasonable efforts to access the public capital market no later than December 31, 2000. 3.5 Funding of Operations. The operations of New DeNora Epyx shall be funded in accordance with the provisions of Section 7.4 of the Investment Agreement. ARTICLE IV. REGISTRATION RIGHTS 4.1 "Piggy-Back" Registration Rights. If at any time or times after the Closing Date, New DeNora Epyx shall determine or be required to register any shares of its Common Stock for sale under the Securities Act (whether in connection with a public offering of securities by New DeNora Epyx (a "primary offering"), a public offering of securities by stockholders of New DeNora Epyx (a "secondary offering"), or both, but not in connection with a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 or any other similar rule of the Commission under the Securities Act is applicable), New DeNora Epyx will promptly give written notice (but in no event less than 30 days before the anticipated filing date) thereof to DN, Hess and ADL and any other Person to whom New DeNora Epyx has granted "piggy-back" registration rights with respect to the Common Stock (referred to for purposes of this Article IV collectively as the "Holders" and individually as a "Holder" and such notice shall offer, subject to the terms and conditions hereof, each such Holder the opportunity to register such Registrable Securities (as hereinafter defined) as such Holder may request on the same terms and conditions as the securities proposed to be sold by New DeNora Epyx or any other Holder in such offering. If within 30 days after the delivery of such notice by New DeNora Epyx one or more Holders of Registrable Securities request in a writing delivered to New DeNora Epyx the inclusion of some or all of the Registrable Securities (but not any other securities) held by them in such registration, New DeNora Epyx will use its best efforts to effect the registration under the Securities Act of all such Registrable Securities. In the case of the registration of shares of Common Stock by New DeNora Epyx in connection with an underwritten public offering, (i) New DeNora Epyx shall not be required to include any Registrable Securities in such underwriting unless the Holders thereof accept the terms of the underwriting as agreed upon between New DeNora Epyx and the underwriter or underwriters selected by it, and (ii) if the underwriter(s) determines that marketing factors require a limitation on the number of Registrable Securities to be offered, New DeNora Epyx shall not be required to register Registrable Securities of the Holders in excess of the amount, if any, of shares of the capital stock which the principal underwriter of such underwritten offering shall reasonably and in good faith agree to include in such offering in excess of any amount to be registered for New DeNora Epyx. In the event of any such limitation, the first shares to be included in such registration shall be any shares to be registered for the benefit of New DeNora Epyx and thereafter any shares which any other Holders have requested to be registered shall be included on a pro rata basis, based upon their respective holdings of Registrable Securities. All expenses relating to the registration and offering of Registrable Securities pursuant to this Section 4.1 (including the reasonable fees and expenses of not more than one independent counsel for the Holders) shall be borne by New DeNora Epyx, except that the Holders shall bear underwriting and selling commissions attributable to their Registrable Securities being registered and any transfer taxes on shares being sold by such Holders. 4.2 Registrable Securities. For the purposes of this Article IV, the term "Registrable Securities" and any and all references to Registrable Securities held by any Person shall mean any shares of Common Stock purchased by, or issued to, a Stockholder prior to, at or after the Closing, and shall also mean shares of Common Stock issuable pursuant to the exercise of warrants, options or other convertible or exchangeable security, to the extent then exercisable, notwithstanding that any such warrant, option or other convertible security has not been exercised; provided, however, that any Common Stock that is sold in a registered sale pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 thereunder, or that may be sold without restriction (including volume limitations) pursuant to Rule 144(k) under the Securities Act (as confirmed by an unqualified opinion of counsel to New DeNora Epyx), shall not be deemed to be Registrable Securities. 4.3 Further Obligations of New DeNora Epyx. Whenever under Section 4.1 New DeNora Epyx is required hereunder to register any Registrable Securities, it agrees that it shall also do the following: (a) Use its best efforts (with due regard to the management of the ongoing business of New DeNora Epyx) diligently to prepare and file with the Commission a registration statement and such amendments and supplements to said registration statement and the prospectus used in connection therewith as may be necessary to keep said registration statement effective and to comply with the provisions of the Securities Act with respect to the sale of securities covered by said registration statement for the lesser of (i) 180 days (or 120 days in the case of registration on Form S-3) or (ii) the period necessary to complete the proposed public offering; (b) Furnish to each selling Holder such copies of each preliminary and final prospectus and such other documents as such Holder may reasonably request to facilitate the public offering of its or his Registrable Securities; (c) Enter into any reasonable underwriting agreement required by the proposed underwriter for the selling Holders, if any, in such form and containing such terms as are customary; provided, however, that no Holder shall be required to make any representations or warranties other than with respect to its title to the Registrable Securities and any written information provided by the Holders to New DeNora Epyx, and if the underwriter requires that representations or warranties be made, New DeNora Epyx shall make all such representations and warranties relating to New DeNora Epyx reasonably required by such underwriter; (d) Use its reasonable best efforts to register or qualify the securities covered by said registration statement under the securities or "blue-sky" laws of such jurisdictions as any selling Holders may reasonably request, provided that New DeNora Epyx shall not be required to register or qualify the securities in any jurisdictions which require it to qualify to do business or subject itself to general service of process therein; (e) Immediately notify each selling Holder, at any time when a prospectus relating to such Holder's Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which such prospectus contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading, and, at the request of any such selling Holder, prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (f) Cause all such Registrable Securities to be listed on each securities exchange or quoted in each quotation system on which similar securities issued by New DeNora Epyx are then listed or quoted (or, in the case of New DeNora Epyx's initial public offering, such exchange or quotation system as New DeNora Epyx may determine); (g) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its security holders, in each case as soon as practicable, but not later than 45 days after the close of the period covered thereby (90 days in case the period covered corresponds to a fiscal year of New DeNora Epyx), an earnings statement of New DeNora Epyx which will satisfy the provisions of Section 9(a) of the Securities Act; (h) Obtain and furnish to each selling Holder, immediately prior to the effectiveness of the registration statement (and, in the case of an underwritten offering, at the time of delivery of any Registrable Securities sold pursuant thereto), a cold comfort letter from New DeNora Epyx's independent public accountants in the same form and covering the same matters as is typically delivered to underwriters and, in the event that an underwriter or underwriters have been retained in connection with such registration, such cold comfort letter to be provided to the selling Holders shall be the same cold comfort letter delivered to such underwriter or underwriters; and (i) Otherwise cooperate with the underwriter or underwriters, the Commission and other regulatory agencies and take all actions and execute and deliver or cause to be executed and delivered all documents necessary to effect the registration of any Registrable Securities under this Article IV. 4.4 Indemnification; Contribution. (a) Incident to any registration statement referred to in this Article IV, and subject to applicable law, New DeNora Epyx will indemnify and hold harmless each underwriter, each Holder who offers or sells any such Registrable Securities in connection with such registration statement (including its partners (including partners of partners and stockholders of such partners), and directors, officers, employees and agents of any of them (a "Selling Holder"), and each person (a "Controlling Person") who controls any of them within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the "Indemnified Persons"), from and against any and all losses, claims, damages, expenses and liabilities, joint or several (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages, expenses or liabilities arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement (including any related preliminary or definitive prospectus, or any amendment or supplement to such registration statement or prospectus), (ii) any omission or alleged omission to state in such document a material fact required to be stated in it or necessary to make the statements in it not misleading, or (iii) any violation by New DeNora Epyx of the Securities Act, any state securities or "blue sky" laws or any rule or regulation thereunder in connection with such registration; provided, however, that New DeNora Epyx will not be liable to the extent that such loss, claim, damage, expense or liability arises from and is based on an untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information furnished in writing to New DeNora Epyx by such Indemnified Person expressly for use in such registration statement (in such Person's capacity as a shareholder of New DeNora Epyx and not in its capacity as an officer or director of New DeNora Epyx and which such information relates to such Person's capacity as a shareholder). With respect to such untrue statement or omission or alleged untrue statement or omission in the information furnished in writing to New DeNora Epyx by any Selling Holder expressly for use in such registration statement (in such Person's capacity as a shareholder of New DeNora Epyx and not in its capacity as an officer or director of New DeNora Epyx and which such information relates to such Person's capacity as a shareholder), such Selling Holder will indemnify and hold harmless each underwriter, New DeNora Epyx (including its directors, officers, employees and agents), each other Selling Holder (including its partners (including partners of partners and stockholders of such partners) and directors, officers, employees and agents of any of them), and each person who controls any of them within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, expenses and liabilities, joint or several, to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise to the same extent provided in the immediately preceding sentence. In no event, however, shall the liability of a Selling Holder for indemnification under this Section 4.4(a) in its capacity as such (and not in its capacity as an officer or director of New DeNora Epyx) exceed the lesser of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total securities sold under such registration statement which is being sold by such Selling Holder or (ii) the proceeds received by such Selling Holder from its sale of Registrable Securities under such registration statement. (b) If the indemnification provided for in Section 4.4(a) above for any reason is held by a court of competent jurisdiction to be unavailable to an indemnified party in respect of any losses, claims, damages, expenses or liabilities referred to therein, then each indemnifying party under this Section 4.4, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by New DeNora Epyx, the other Selling Holders and the underwriters from the offering of the Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of New DeNora Epyx, the other Selling Holders and the underwriters in connection with the statements or omissions which resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable considerations. The relative benefits received by New DeNora Epyx, the Selling Holders and the underwriters shall be deemed to be in the same respective proportions that the net proceeds from the offering (before deducting expenses) received by New DeNora Epyx and the Selling Holders and the underwriting discount received by the underwriters, in each case as set forth in the table on the cover page of the applicable prospectus, bear to the aggregate public offering price of the Registrable Securities. The relative fault of New DeNora Epyx, the Selling Holders and the underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by New DeNora Epyx, the Selling Holders or the underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. New DeNora Epyx, the Selling Holders, and the underwriters agree that it would not be just and equitable if contribution pursuant to this Section 4.4(b) were determined by pro rata or per capita allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. In no event, however, shall a Selling Holder be required to contribute any amount under this Section 4.4(b) in excess of the lesser of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total Registrable Securities sold under such registration statement which are being sold by such Selling Holder or (ii) the proceeds received by such Selling Holder from its sale of Registrable Securities under such registration statement. No person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. (c) The amount paid by an indemnifying party or payable to an indemnified party as a result of the losses, claims, damages and liabilities referred to in this Section 4.4 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim, payable as the same are incurred. The indemnification and contribution provided for in this Section 4.4 will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified parties or any officer, director, employee, agent or controlling person of the indemnified parties. 4.5 Rule 144 and 144A Requirements. If New DeNora Epyx becomes subject to the reporting requirements of either Section 13 or 15(d) of the Exchange Act, New DeNora Epyx will use its best efforts thereafter to file with the Commission such information as is specified under either of said Sections for so long as DN, Hess or ADL are Holders of Registrable Securities; and in such event, New DeNora Epyx shall use its best efforts to take all action as may be required as a condition to the availability of Rule 144 or Rule 144A under the Securities Act (or any successor or similar exemptive rules hereafter in effect). New DeNora Epyx shall furnish to each of DN, Hess and ADL upon request a written statement executed by New DeNora Epyx as to the steps it has taken to comply with the current public information requirement of Rule 144 or Rule 144A or such successor rules. 4.6 Market Stand-Off. Each of DN, Hess and ADL agrees, if requested by New DeNora Epyx and an underwriter of Common Stock of New DeNora Epyx (provided that all Holders have been so requested), not to sell or otherwise transfer or dispose of any Common Stock held by it for such period, not to exceed 180 days following the effective date of any registration statement (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 or any other similar rule of the Commission under the Securities Act is applicable) of New DeNora Epyx filed under the Securities Act as New DeNora Epyx or such underwriter shall specify reasonably and in good faith. ARTICLE V. MISCELLANEOUS PROVISIONS 5.1 Restrictions on Transfer. No Stockholder shall Transfer any Stock without the prior written consent, which consent shall not be unreasonably withheld, of the other Stockholders except (i) pursuant to Article IV hereof; (ii) in connection with any pledge to any of such Stockholder's lenders; (iii) ADL may Transfer shares of Common Stock to Hess pursuant to the Investment Agreement between ADL and Hess dated as of March 30, 2000; and (iv) any Stockholder may Transfer, in one or more transactions, up to an aggregate of ten percent (10%) of the outstanding shares of Common Stock, provided that each Transferee is a financial or investment institution which is in good standing with the applicable regulatory authorities and is in compliance with the applicable laws and regulations. Notwithstanding any provision of this Section 5.1 to the contrary, no Stockholder may Transfer any shares of Stock unless the Transferee agrees in writing to be bound by the provisions of this Section 5.1. The provisions of this Section 5.1 shall terminate automatically and will be of no further force and effect upon the closing of an IPO (as defined in Section 5.10 below). In the event that at October 15, 2000, the Stockholders determine that an IPO will not be completed by December 31, 2000 for any reason, the Stockholders agree to renegotiate in good faith the provisions of this Section 5.1. 5.2 Legend on Securities. The Stockholders acknowledge and agree that the following legend shall be typed on each certificate evidencing any of the securities issued hereunder held at any time by the Stockholders: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR (2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF APRIL 4, 2000, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE. 5.3 Amendment and Waiver. Any party may waive any provision hereof intended solely for its benefit in writing. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. Except as otherwise expressly provided herein, the remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to any party hereto at law or in equity or otherwise. This Agreement may not be amended without the prior written consent of each of the parties hereto. 5.4 Notices. All notices and other communications shall be in writing and shall be deemed given if delivered by hand, sent via facsimile, sent via a reputable nationwide courier service or mailed by registered mail (return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice) and shall be deemed given on the date on which so hand-delivered, the date on which receipt of the facsimile is acknowledged, the next business day following the date on which so sent or on the third business day following the date on which so mailed, as the case may be: If to DN: Herengracht 548 Postbus 990 1000AZ Amsterdam, The Netherlands Attention: Managing Board of Directors Facsimile: +31.20.625.8274 with a copy to: Avv. Giuseppe Cambareri Via dei Giardini 10 20121 Milano, Italy Facsimile: +39.02.6555.152 If to ADL: Acorn Park Cambridge, MA 02140 Attention: General Counsel Facsimile: (617) 498-7116 If to Hess: 1185 Avenue of the Americas New York, NY 10036 Attention: General Counsel Facsimile: (212) 536-8241 If to New DeNora Epyx: Acorn Park Cambridge, MA 02140 Attention: Chief Operating Officer Facsimile: (617) 498-6655 5.5 Headings. The Article and Section headings used or contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. 5.6 Counterparts. This Agreement may be executed in one or more counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which together shall be deemed to constitute one and the same agreement. 5.7 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 5.8 Entire Agreement. This Agreement and the other agreements contemplated hereby are intended by the parties as a final expression of their agreement and intended to be complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. This Agreement and the other agreements contemplated hereby (including the exhibits hereto) supersede all prior agreements and understandings between the parties with respect to such subject matter. The Stockholders agree that in the event of any inconsistencies between the by-laws of New DeNora Epyx and the provisions of this Agreement, the latter shall prevail. No amendment to the by-laws of New DeNora Epyx shall be deemed an amendment of this Agreement, in whole or in part, so that no right or obligation of the parties with respect to any matters covered by this Agreement shall be affected thereby. 5.9 Law Governing. This Agreement shall be construed and enforced in accordance with and governed by the laws of The Commonwealth of Massachusetts (without giving effect to principles of conflicts of law). Any controversy, claim or dispute arising out of or relating to this Agreement, the Investment Agreement or any other agreement or instrument delivered in connection therewith shall be submitted to and resolved exclusively by arbitration in accordance with the rules of the American Arbitration Association in effect on the date thereof. Judgment upon the award rendered by the arbitrator(s) in accordance with said rules may be entered and enforced in any court of competent jurisdiction and, for such purpose, each party hereby waives trial by jury in any action relating thereto and consents to the jurisdiction of any Massachusetts court (federal or state). Any such arbitration proceedings shall be held in Boston, Massachusetts. 5.10 Termination upon Initial Public Offering. This Agreement automatically shall, except as provided in the following sentence, automatically terminate and be of no further force or effect upon the closing of an underwritten initial public offering of New DeNora Epyx pursuant to an effective registration statement covering the offer and sale to the public of a number of shares equal to at least ten percent (10%) of the shares of Common Stock outstanding prior to such offering (an "IPO"). Notwithstanding the preceding sentence, Article IV and Sections 3.1(e) and 5.9 hereof shall survive such termination. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. DENORA NEW ENERGY INVESTMENTS B.V. (presently ANDROMA B.V.) By: /s/ Mauro Saponelli --------------------------------- Mauro Saponelli Managing Director EPYX CORPORATION By: /s/ Mark A. Brodsky --------------------------------- Mark A. Brodsky President ARTHUR D. LITTLE, INC. By: /s/ Mark A. Brodsky --------------------------------- Mark A. Brodsky Executive Vice President AMERADA HESS CORPORATION By: /s/ John A. Gartman --------------------------------- Name: John A. Gartman Title: Sr. Vice President Exhibit F EXHIBIT 10.12 LICENSE AND SERVICES AGREEMENT BY AND BETWEEN ARTHUR D. LITTLE, INC. AND EPYX CORPORATION THIS LICENSE AND SERVICES AGREEMENT is made as of April 4, 2000, by and between Arthur D. Little, Inc., a Massachusetts corporation ("ADL"), and Epyx Corporation, a Delaware corporation ("Epyx"). 1. GRANT OF LICENSE. ADL hereby grants to Epyx a license to occupy and use, upon the terms and conditions set forth herein, the premises set forth on Exhibit A to this Agreement (the "Licensed Premises"), located in Buildings 15, 32 and 46 (the "Buildings") located in ADL's premises at Acorn Park, Cambridge, MA ("Acorn Park"). The Licensed Premises presently consists of approximately 14,554 rentable square feet but may be increased at the mutual consent of both parties during the Term. Epyx acknowledges that the Licensed Premises occupy only a portion of the Building and that ADL occupies and uses the remaining portions of the Building for its own office, laboratory, research and other purposes. Accordingly, Epyx agrees that it will use the Licensed Premises and the other areas of the Building and Acorn Park to which Epyx has access pursuant to this Agreement, in such a manner as to minimize any interference with the activities of ADL and to recognize and respect the business security and confidentiality needs of ADL. 2. TERM AND EXTENSIONS. 2.1 Term. The term of this Agreement shall commence on April 4, 2000, and shall, if not previously terminated in accordance with the terms hereof, terminate on December 31, 2000 (the "Initial Term"). Upon mutual agreement between Epyx and ADL, this Agreement may be extended for one or more six (6) month periods following the expiration of the Initial Term (each, an "Extension Period") at rates to be negotiated between the parties. If Epyx desires to extend this Agreement, Epyx shall provide written notice to ADL requesting such extension at least three (3) months prior to the expiration of the Initial Term or any Extension Period, as the case may be. If the term of this Agreement shall be extended on any such occasion, all of the terms and conditions of this Agreement not otherwise modified by a written agreement between the parties shall remain in full force and effect during each Extension Period. The Initial Term, together with any Extension Periods, is referred to herein as the "Term." 2.2 Early Termination. Either party may terminate this Agreement at any time with or without cause by giving the other party six (6) months prior written notice, provided that ADL may not terminate this Agreement without cause prior to the expiration of the Initial Term. In addition, this Agreement and Epyx's rights hereunder may be earlier terminated at ADL's option upon the occurrence of any of the events specified in Sections 18 or 19 below, and Epyx shall vacate the Licensed Premises immediately following any such termination. 2.3 Holdover. If, at the end of the Term (or upon any termination of this Agreement in accordance with the provisions hereof), Epyx fails to vacate all or any portion of the Licensed Premises, Epyx's occupancy shall be deemed to be a tenancy from month to month subject to all the terms and conditions thereof and hereof which may be applicable except that the Fees (as defined below) shall be and Epyx shall pay an amount equal to 300% of the amount specified as the last Fee during the Term for each month of occupancy, and ADL's charging of such amount shall in no event constitute a waiver of any other right ADL may have hereunder or at law or in equity. The parties recognize that the intent of this Agreement is to be a short-term obligation and that any holdover by Epyx will cause damages to ADL that will be difficult to calculate and accordingly the parties have agreed on the escalations of holdover fees herein set forth as the best mechanism for insuring Epyx's compliance. 3. LICENSE AND SERVICES FEE. Epyx agrees to pay to ADL, without offset or reduction, a fee (the "Fee") covering the combined license and services provided for herein during the Term. The rate of such Fee shall equal Two Thousand Four Hundred Sixty Dollars ($2,460) per average number of EPYX staff members per month. The average number of EPYX staff members shall be determined at the end of each month by adding the actual number of EPYX staff members on the first day of the month to the actual number of EPYX staff members on the last day of the month, and then dividing the sum by two. Payment for each month shall be made in advance on the first day of each month during the Term and shall be based on the average number of EPYX staff members from the previous month. Epyx shall pay the Fee on a pro-rata basis for any partial calendar month during the Term or any extension thereof. All payments of Fees are to be made at ADL's address set forth herein or at such other place as ADL shall from time to time designate in writing. The Fee shall be increased or decreased each month to reflect the actual average number of staff members per month from time to time. 4. PERMITTED USE. The Licensed Premises are to be used solely in connection with Epyx's operations relating to the development of reformer and 2 fuel cell technology and other uses that are incidental or customarily accessory thereto, such as office, administrative, and storage uses, in each case to the extent permitted by applicable law and consistent with current use, and such other uses as may be consented to by ADL in advance (which consent may be withheld by ADL in its sole and absolute discretion). Epyx agrees to conduct its business in a professional and businesslike manner and in accordance with best safety and operating practices. 5. PREMISES. 5.1 Condition of the Licensed Premises. Epyx accepts the Licensed Premises in their existing condition on the date of commencement of the Term, and acknowledges that the Licensed Premises are in good order and condition and sufficient for the uses intended by Epyx. Epyx agrees that it has had full and adequate opportunity to inspect the Licensed Premises and has done so to its satisfaction. ADL has not made nor has Epyx relied on any representations or warranties, express or implied, as to the condition of the Licensed Premises or their suitability for Epyx's use. 5.2 Common Areas. (a) The Licensed Premises are licensed together with the use for their intended purposes, in common with ADL and all others, including any other tenants and occupants of Acorn Park lawfully entitled thereto, of (i) the common facilities included in the Building between the Licensed Premises and the exterior of the Building; (ii) the parking facilities located in Acorn Park; (iii) the pipes, ducts, conduits, wires and appurtenant equipment serving the Licensed Premises; (iv) the common women's room and men's room in closest proximity to the Licensed Premises and (v) the central reception area in Building 25 of Acorn Park (collectively, the aforementioned areas shall hereinafter be referred to as the "Common Areas"). Such rights in the Common Areas shall always be subject to the right of ADL to designate and change from time to time areas and facilities so to be used and any rules and regulations established by ADL with respect to Acorn Park. Epyx's staff members whose principal office is located on the Licensed Premises also shall be entitled to use ADL's cafeteria facilities. (b) ADL's shipping and receiving facilities shall not constitute part of the Licensed Premises or the Common Areas. As and when shipments for Epyx are presented to ADL, ADL shall promptly notify Epyx, and Epyx shall promptly make available an authorized agent or employee to accept and receive such shipments, and thereafter ADL and Epyx shall cooperate 3 to make arrangements for delivery of such accepted shipments to the Licensed Premises. 5.3 Access and Parking. ADL shall provide reasonable access to the Licensed Premises 24 hours a day seven days a week and shall permit Epyx's staff members and guests to use the roads, sidewalks and parking areas located on ADL's property adjacent to the Licensed Premises. Access into the Building must be in accordance with ADL's security system and policies and procedures. ADL's government security form must be signed by Epyx and all employees who will be occupying the Licensed Premises. All visitors must sign in at the central reception area in Building 25 and be escorted by an Epyx employee at all times. 6. REPAIRS AND MAINTENANCE; DESTRUCTION BY CASUALTY 6.1 ADL Responsibilities. Subject to Sections 6.3 and 18 hereof, during the Term, ADL shall, at its own expense, maintain all structural elements and building systems of the Building (including, without limitation, the foundations and appurtenances thereto, the room, building exterior, framing, and floor slabs, all fixtures and equipment, all pipes, ducts, wiring, and lighting, and all plumbing and utility lines serving the Building, whether located within or outside the Building) in accordance with ADL's current practices. In no event shall ADL be obligated, pursuant to this Agreement, to make any capital or structural repairs or alterations to the Licensed Premises, the Building, or Acorn Park. 6.2 Epyx Responsibilities. During the Term, Epyx shall, at its own expense, maintain the Licensed Premises in good and safe order, condition, and repair, reasonable wear and tear excepted. Without limitation, Epyx shall maintain and use the Licensed Premises in accordance with all applicable laws, including those adopted after the commencement of this Agreement and those related to fire safety and environmental requirements, and all directions, rules and regulations of the proper officers of governmental agencies having jurisdiction over the Licensed Premises, the Building or Acorn Park. 6.3 Destruction by Casualty. If the Licensed Premises are damaged by fire or other casualty, and such damage renders the Licensed Premises substantially untenantable in whole or in part, then: (i) a fair and just part of the Fees shall abate until the damage is repaired to the extent necessary to render the Licensed Premises suitable for the conduct of Epyx's business; and (ii) ADL or Epyx may elect to terminate this Agreement upon thirty (30) days' prior written notice to the other, provided that Epyx may not terminate this Agreement under this Section if ADL has notified 4 Epyx of its intention to repair or restore the Licensed Premises in which event ADL shall have thirty (30) days measured from the date of notice to Epyx to commence repair or restoration to render the Licensed Premises tenantable. In the event of any such untenantability, ADL shall have no obligation or legal liability for its failure to provide alternate space, facilities or services to Epyx. 7. ALTERATIONS AND IMPROVEMENTS. Epyx shall not make any structural or nonstructural alterations, additions or improvements to the Licensed Premises without the prior written consent of ADL, which consent may be withheld by ADL in its sole and absolute discretion. 8. SERVICES, FACILITIES AND EQUIPMENT. Subject to Epyx's compliance with the obligations contained in this Agreement, ADL has also agreed to make available to Epyx certain services, and to authorize Epyx to use certain areas and equipment in or about the Licensed Premises jointly with ADL and others who may be authorized by ADL from time to time, during the term of this Agreement, as set forth in this Section. Epyx should contact Tim White, Director of Facilities, with respect to issues or questions regarding such services and he will direct and coordinate any other assistance which may be required. 8.1 Telephone System. ADL and Epyx acknowledge and agree that a common telephone system serves both the Licensed Premises and ADL's other facilities at Acorn Park. Epyx acknowledges that it must pay the cost of all telephone charges associated with Epyx's use of such telephone system (including the cost of local-calling and long-distance calling services) and that such fees are not included in this Agreement. ADL and Epyx hereby agree that Epyx shall be responsible for maintenance, repair and replacement of the telephone and facsimile sets owned by Epyx and connected to such system, and that ADL shall be responsible for all routine maintenance for such common telephone system serving the Licensed Premises. Epyx hereby agrees that it shall obtain ADL's prior written approval with respect to the installation or attachment to ADL's telephone switch, system or cables. Epyx agrees to pay for any additional system lines or equipment installed on or for its behalf after the date of this Agreement. 8.2 Security, Janitorial and Custodial Services. ADL shall provide routine security, janitorial, custodial and maintenance services to the Licensed Premises to the same general extent that ADL provides such services to the rest of Acorn Park. Such services shall not include receiving or shipping services. Epyx shall keep the Licensed Premises in a clean, orderly and safe condition. Epyx shall be responsible for removing 5 at its own expense and on a regular basis all disposed items other than normal office rubbish. Epyx shall not cause, permit or suffer any overloading of the floors in the Licensed Premises. 8.3 Mail. ADL shall deliver to the Licensed Premises, not less than once per business day, mail for Epyx received in ADL's central mail facility at Acorn Park. 8.4 Utilities. ADL shall provide utilities for the Licensed Premises, including heat, air conditioning, water/sewer and electricity during the same hours they are provided to the other office facilities at Acorn Park, subject to the reasonable availability of such utilities to ADL. ADL's obligations hereunder shall not exceed the capacities of existing connection and distribution equipment and infrastructure to safely carry or conduct said utilities. Epyx shall reimburse ADL for the cost (based upon ADL's actual third-party costs of such utilities) of (i) providing any utilities for the Licensed Premises beyond standard operating hours for Acorn Park (including any utility costs incurred as a result of such request which do not relate directly to the Licensed Premises but which result from providing the requested utilities to the Licensed Premises) and (ii) any such approved excess utility usage. 8.5 Fire and Safety. Epyx shall notify ADL immediately of any fire on the Licensed Premises. At no additional charge during the Term, ADL shall provide the services of its emergency response personnel in connection with any fire emergency reported by Epyx to the same general extent and in the same manner that response under similar circumstances would be provided to Acorn Park. Epyx shall be responsible for maintenance of all fire extinguishers and equipment within the Licensed Premises. ADL shall not under any circumstances provide emergency services in connection with spills of chemical or other hazardous wastes which emergency services shall be provided promptly by Epyx in accordance with all applicable Federal, state and local laws and regulations, and Epyx shall provide notice of any such events to ADL's emergency coordinator immediately. 8.6 Additional Services. In addition to the services described above, ADL shall provide the following services to the extent requested by Epyx: (a) ADL shall provide purchasing services to Epyx to the same general extent that services are provided to the rest of the operations at Acorn Park. Epyx agrees to pay ADL for all purchases made by ADL on 6 Epyx's behalf within ten (10) days following presentation of an invoice by ADL to Epyx for such goods. (b) Epyx shall continue to have access to ADL's computer network and ADL's ISD department shall provide support administration for the network. (c) Epyx shall continue to have access to the resources of ADL's Knowledge Resource Information Center. (d) Epyx and its employees whose principal offices are located on the Licensed Premises shall be entitled to use the services of the ADL Travel Department to the same general extent and in the same manner that such services are provided to ADL's other business operations at Acorn Park. (e) ADL shall provide accounting, tax and related financial and treasury services to Epyx as required by Epyx's business. Such services, shall include assisting Epyx in (i) keeping its books and records; (ii) preparing its financial statements; and (iii) preparing and filing its federal and state tax returns. (f) ADL shall provide contracting and related legal services to Epyx as required by Epyx's business. Epyx shall be billed for any out-of-pocket expenses incurred by ADL in the performance of such services. Invoices for such out-of-pocket expenses shall be payable within thirty days after issuance. 9. HAZARDOUS SUBSTANCES. Epyx shall not bring or create or maintain on the Licensed Premises any hazardous materials or wastes, chemicals or other substances which are subject to regulation by any governmental authority. Epyx shall indemnify ADL for any costs or liabilities incurred by ADL as a result of any breach by Epyx of the foregoing obligation. 10. RULES AND REGULATIONS. 10.1 General. Epyx shall, at its own cost and expense, comply with all applicable laws, ordinances, rules and regulations including those adopted after the commencement of this Agreement of any duly constituted governmental authority relating to the use or occupancy of the Licensed Premises and the activities conducted thereon, Epyx shall obey all of ADL's rules and regulations currently existing or hereafter promulgated 7 from time to time by ADL governing or pertaining to the Building, Acorn Park or their respective tenants and occupants. Epyx shall be responsible for paying in a prompt and appropriate manner all fines, penalties, damages, costs, and fees that may arise out of or be imposed on Epyx or ADL because of Epyx's failure to comply with the provisions of this Section or for contesting any such matters. 10.2 Other Conditions. (a) Epyx agrees not to harm the Licensed Premises or any other part of Acorn Park, or commit or permit waste, or create any nuisance or disturbance, or do any act tending to injure the activities or reputation of Acorn Park or ADL. Epyx shall not use or suffer or permit the use by any person of the Licensed Premises for any purpose other than the Permitted Use or in any manner which violates any of Epyx's governmental authorizations, which is contrary to any applicable law, ordinance, rule or regulation, which could cause injury or damage to any person or property, or which could adversely affect any insurance coverage applicable to the Licensed Premises or the activities conducted on the Licensed Premises. (b) Epyx shall load, unload and transport its supplies, materials and equipment at such times as are reasonably designated by ADL, and shall not obstruct or store any materials or items in the corridors, sidewalks, stairways, elevators, or any other area about or within the Building (except that Epyx may store materials and items in the Licensed Premises other than the Common Areas) or Acorn Park. 11. INDEMNIFICATION. Epyx shall indemnify, hold harmless and defend ADL and its employees, shareholders, directors, officers and affiliates from and against any and all costs, penalties, damages, claims, suits and liabilities (including reasonable attorney's fees) based on or arising out of (i) any breach or default by Epyx of its agreements under this Agreement; (ii) any act or omission of Epyx, its contractors, subcontractors, members, agents, affiliates, consultants, employees or invitees, or the failure of Epyx or such persons to comply with any applicable governmental or ADL laws, rules or regulations including those adopted after the commencement date of this Agreement; (iii) any accident, injury or damage to any person or property occurring in the Licensed Premises or outside of the Licensed Premises but within Acorn Park, where such accident, injury or damage results, or is caused by any act, omission, willful misconduct or 8 negligence of Epyx, its contractors, members, agents, affiliates, consultants, employees or invitees, or anyone claiming by, through or under Epyx (but excluding any loss, liability, expense or damage to the extent caused by the gross negligence or willful misconduct of ADL, its agents, contractors, subcontractors, members, agents, affiliates, consulting, employees or invitees); or (iv) Epyx's use or occupancy of the Licensed Premises (including those arising out of any damage or destruction of the Licensed Premises or ADL's property, any contamination of the Licensed Premises or ADL's property by hazardous substances, or Epyx's failure to remove or dispose of all of its property upon expiration or termination of the Term), except to the extent caused by the gross negligence or willful misconduct of ADL or its agents, servants or employees. 12. INSURANCE. 12.1 Insurance Coverage. Epyx shall carry the following insurance throughout the term of this agreement. a. Commercial general liability insurance in an amount not less than $2,000,000. Such insurance shall be written on an occurrence basis and shall cover bodily or personal injury or death of persons or damage to property on or about the Licensed Premises, including: Contractual Liability; and Fire Damage Legal Liability covering any liabilities assumed under this contract. b. Workers Compensation insurance as required by the laws of the Commonwealth of Massachusetts, and Employers Liability Insurance including occupational disease in an amount not less than $2,000,000. c. All-risk Property Insurance covering the full replacement value of all Epyx's furniture, trade fixtures and other personal property located on the Licensed Premises, against loss or damage or other insurable hazard. 12.2 Compliance. Epyx shall not violate or permit violation of any of the conditions or provisions contained in any of the insurance policies related to the Licensed Premises or ADL's property adjacent to the Licensed Premises. Epyx shall perform and satisfy the requirements of the respective insurance companies so that at all times insurance companies of good standing will be willing to write or continue such policies. Nothing herein shall prevent ADL from carrying additional insurance. 9 12.3 Evidence of Insurance. Prior to commencement of the term of this Agreement, Epyx shall give ADL certificates of insurance policies required hereunder. Each such policy shall require the insurer to give ADL 30 days written notice of any change in such policies, and shall name ADL and Master Lessor as additional insureds. The property insurance policy shall provide that proceeds are first payable to ADL. 12.4 Subrogation. ADL and Epyx hereby agree to waive all rights of subrogation against the other party to the extent that any laws or damage to the Licensed Premises is covered by any property insurance policy, including any deductibles thereunder. 13. EPYX'S FAILURE TO PERFORM. 13.1 Substituted Performance. If Epyx shall at any time fail to make any payment or otherwise to perform any of its obligations as required under this Agreement, ADL, after 10 days notice to Epyx, may (but shall be under no obligation to) make any payment or perform or cause to be performed any act to be performed by Epyx under the terms of this Agreement. ADL may enter the Licensed Premises for any such purpose and may take all such action thereon as may be necessary therefor. 13.2 Reimbursement of Expenditures. All sums paid by ADL pursuant to Section 13.1 hereof, and all costs and expenses incurred by ADL in connection with the performance of any such act, together with interest thereon at the rate of 18% per annum (or such lesser rate as may at the time be the maximum rate permitted by law) from the respective dates of ADL's making of such payment or incurring of each such cost and expense, shall be paid by Epyx to ADL on demand as if the same were additional Fees hereunder (and non-payment of which shall have the consequences of non-payment of Fees). 13.3 Interest on Overdue Fees. All overdue Fees shall bear interest at the rate of 18% per annum (or such lesser rate as may at the time be the maximum rate permitted by law) from the respective payment due dates. Such interest shall be paid by Epyx to ADL on demand as if the same were additional Fees hereunder (and non-payment of which shall have the consequences of non-payment of Fees). 14. MECHANICS' LIENS. Notice is hereby given that ADL shall not be liable for any labor or materials furnished or to be furnished to Epyx, and that no mechanics' or materialmen's liens or other liens for any such labor or materials shall attach to or affect the reversionary or other estate or interest of ADL in and 10 to the Licensed Premises, the Building or Acorn Park. Epyx agrees to indemnify and hold harmless ADL against any and all costs it may suffer on account of the same. 15. ADL'S ACCESS. ADL may at any time enter the Licensed Premises for the purposes of responding to an emergency, repairing the Licensed Premises, inspecting the Licensed Premises or the activities conducted thereon, or for purposes of showing the Licensed Premises to prospective purchasers, lessees, mortgagors or other parties involved or potentially involved in any real estate related transaction relating to the Licensed Premises or Acorn Park in general. ADL may take any action it deems reasonably necessary in order to safeguard the Licensed Premises or ADL's or any other property or the health and safety of any persons. 16. EXPIRATION OF TERM. Epyx, at the expiration of the Term or at any prior termination as herein provided, shall peaceably yield up the Licensed Premises in the same condition and repair as the same were in at the commencement of the Term, reasonable wear and use excepted. Prior to expiration of the Term or within 10 days after any earlier termination of this Agreement (whichever first occurs) Epyx shall remove from the Licensed Premises any personal property and equipment and any items for disposal. Any property, equipment or materials of Epyx not removed from the Licensed Premises as required herein shall, at ADL's sole option (a) become the property of ADL or (b) be deemed abandoned and removed and disposed of by ADL as ADL shall determine, and ADL may charge the cost of such removal and disposal and any repairs or replacements to the Licensed Premises necessitated thereby and any liabilities resulting therefrom to Epyx; provided that Epyx shall retain title to any hazardous substances left on the Licensed Premises. 17. ASSIGNMENT AND SUBLETTING. Epyx shall not under any circumstances be entitled or permitted to transfer, sublet, assign, hypothecate, mortgage, pledge, encumber or otherwise alienate this Agreement or Epyx's interest in and to all or any part of the Licensed Premises, or grant any person any license or permission to use the Licensed Premises. Any attempted transfer, subletting, assignment, hypothecation, encumbrance, license, or other alienation of this Agreement by Epyx shall be void and shall confer no rights on third parties, and shall entitle ADL at its option to terminate this Agreement. 18. EMINENT DOMAIN. 18.1 Total Taking. If the entire Premises shall be taken for public purposes, then this Agreement shall terminate as of the date Epyx is required by law to vacate the premises. 11 18.2 Partial Taking. If a substantial portion of the Licensed Premises shall be taken for public purposes, ADL shall be entitled at its option to terminate this Agreement. If such portion of the Licensed Premises shall be taken as to render the Licensed Premises unsuitable after repair and restoration for the continuance of Epyx's business in substantially the same manner as it was being conducted immediately prior to such taking, then Epyx or ADL upon 30 days' prior written notice shall have the right to terminate this Agreement as of the date Epyx is required by law to vacate such portion of the Licensed Premises. 18.3 Restoration. Subsequent to any taking of a portion of the Licensed Premises, if this Agreement is not terminated by ADL or Epyx in accordance with Section 18.2 hereof, ADL may in its sole and absolute discretion promptly commence restoration of the Licensed Premises to a complete architectural unit as similar as possible to the condition the Licensed Premises were in immediately prior to said taking. During the period of such restoration, the Fees hereunder shall be abated in its entirety, except that to the extent Epyx is able to use the Licensed Premises, the Fees shall be adjusted to reflect such use. 18.4 Proceeds. In the event of any such taking, the condemnation award and all other proceeds thereof shall be payable to ADL, and Epyx shall have absolutely no right or interest in any award. Epyx hereby irrevocably appoints ADL as its attorney in fact for purposes of collecting any such condemnation award or proceeds and of dealing with all governmental authorities with respect hereto. This power of attorney is coupled with an interest and hence is irrevocable. 19. DEFAULT AND TERMINATION OF AGREEMENT. If (a) Epyx fails to pay the Fee within five (5) days after it becomes due; or (b) Epyx fails to perform or comply with any of the other covenants, conditions or obligations of Epyx under this Agreement within ten (10) days after written notice of such default; (c) Epyx is adjudicated a bankrupt, or there is appointed a permanent receiver in insolvency or permanent trustee in bankruptcy of Epyx and the appointment is not vacated within thirty (30) days, or Epyx makes a general assignment for the benefit of creditors or files a voluntary petition for reorganization under applicable bankruptcy laws; or (d) Epyx shall have abandoned the Licensed Premises, then and in each case ADL may, at ADL's option, declare this Agreement terminated and enter the Licensed Premises or any part thereof, either with or without process of law, and expel Epyx or any person or persons occupying the Licensed Premises. 12 20. ADDITIONAL REMEDIES ON DEFAULT. Notwithstanding any termination pursuant to Section 19 above or any entry or reentry by ADL, Epyx agrees to pay, on the days originally fixed herein for the payment thereof, amounts equal to the several installments of Fees and any other amounts due hereunder as they would become due under the terms of this Agreement if it had not been terminated or if ADL had not reentered as aforesaid, and whether the Licensed Premises be re-licensed or remain vacant in whole or in part. In the event the Licensed Premises are re-licensed in whole or in part by ADL, Epyx shall be entitled to a credit in the net amount of Fees received by ADL in re-licensing, after deduction of reasonable expenses incurred in re-licensing the Licensed Premises and in collecting the Fees. Epyx shall also be liable to ADL for all expenses (including reasonable attorneys' fees) incurred by ADL in enforcing its rights under this Agreement in the event of a default by Epyx, and such expenses may be deducted from any credit otherwise due Epyx from ADL. 21. ESTOPPEL CERTIFICATE. Upon not less than fifteen (15) days prior written request, ADL and Epyx agree, each in favor of the other, to execute, acknowledge-and deliver a statement in writing certifying that this Agreement is unmodified and in full force and effect (or, if modified, setting forth the modifications and stating that this Agreement as modified is in full force and effect), and the dates to which the Fees hereunder and other charges have been paid, and any other information reasonably requested. Any such statement delivered pursuant to this Section 21 may be relied upon by any prospective purchaser or mortgagee. 22. SUBORDINATION. This Agreement shall be subject and subordinate to all mortgages and ground or underlying leases existing or hereafter placed upon the Licensed Premises. Epyx hereby acknowledges and agrees that the holder of any such mortgage or the lessor under any such lease shall not thereby become or be liable for the performance of any of ADL's obligations under this Agreement. Epyx agrees that at the request of ADL it will execute, acknowledge and deliver any and all instruments which ADL may require in order to effect such subordination and hereby irrevocably appoints ADL as its attorney-in-fact to execute, acknowledge and deliver all such instruments upon the failure or refusal of Epyx to do so. Epyx shall agree to any amendment (except relating to the Fees, the Term, or the description of the Licensed Premises) reasonably requested by such mortgagee or lessor. 23. CONSENTS. No express or implied consent to or waiver of or failure to insist on performance or observance of any covenant or condition of this Agreement shall be deemed to be a consent to or waiver to any succeeding breach of the same or any other covenant or condition. Except as provided herein, any party may assert its rights and remedies hereunder without any prior or additional 13 notice to the other party. The payment by Epyx and acceptance by ADL of Fees or other payment hereunder or silence by either party as to any breach shall not be construed as waiving any of such party's rights hereunder unless such waiver is in writing. No payment by Epyx or acceptance by ADL of a lesser amount than shall be due hereunder shall be deemed to be anything but payment on account, and the acceptance by ADL of a check for a lesser amount shall not prejudice ADL's right to recover the balance due or to pursue any other remedy which may be available to it. 24. CUMULATIVE RIGHTS. Any and all rights and remedies which either party may have hereunder shall be cumulative, and the exercise of any such rights or remedies shall not bar the exercise of any other right or remedy. 25. NOTICES. Any notice required or permitted to be given hereunder shall be given when in writing and delivered in person or forwarded by overnight or certified or registered mail, return receipt requested, to: ADL: Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 Attn: Tim White Epyx: Epyx Corporation Acorn Park Cambridge, Massachusetts 02140-2390 Attn: Chief Operating Officer or such other address as either party may have designated in a written notice to the other. Such notices shall be deemed received on the date of personal delivery or two days following the documented date of appropriate mailing. 26. ENTIRE AGREEMENT. This instrument contains the entire and exclusive agreement between the parties with respect to the Licensed Premises and supersedes and terminates all prior or contemporaneous arrangements, understandings and agreements whether oral or written. This Agreement may not be amended or modified except by a writing executed by both parties. 27. GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts. In the event any provision of this Agreement shall be determined to be invalid or unenforceable under applicable law, such provision shall insofar as possible be construed or applied in such manner as will permit enforcement; otherwise this Agreement shall be construed as if such provision were not a part hereof. 14 28. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of all successors and permitted assigns. 29. RECORDING. Epyx and ADL agree that Epyx will not record this Agreement. 30. ADL LIMITS OF LIABILITY. ADL shall not be liable to Epyx, or those claiming under Epyx, for any loss or damage to Epyx or its property in or upon the Licensed Premises or Acorn Park that may be caused by the acts or omissions of tenants or other persons occupying space in Acorn Park, or for any loss or damage resulting to Epyx or its property except for any loss or damage resulting from the gross negligence or willful misconduct of ADL, its agents, contractors and employees, provided, however, that ADL shall have no responsibility or liability for any indirect, incidental or consequential damages relating directly or indirectly to loss of business or other indirect, incidental or consequential damages, damage to computer software and related accessory equipment (including, without limitation, computer tapes, disks, other data in storage media and similar property), equipment, or unusually valuable, rare or exotic materials, works of art, and the like. In no event shall ADL ever be liable to Epyx for indirect, incidental or consequential damages. Except in the case of gross negligence or willful misconduct of ADL, ADL shall be under no responsibility or liability for failure or interruption of any of the services, repairs or replacements or for any action in connection with ADL's provision of any services or utilities to Epyx under this Agreement; and failure or omission on the part of ADL to furnish any of same shall not be construed as an eviction of Epyx, actual or constructive, nor entitle Epyx to an abatement of the Fees described herein, nor render ADL liable in damages, nor release Epyx from prompt fulfillment of any of its covenants under this Agreement. 15 IN WITNESS WHEREOF, the parties have executed this License and Services Agreement as of the date first set forth above. ARTHUR D. LITTLE, INC. By: /s/ Lorenzo C. Lamadrid ------------------------------- Name: Lorenzo C. Lamadrid Title: President & Chief Executive Officer EPYX CORPORATION By: /s/ Mark A. Brodsky ------------------------------- Name: Mark A. Brodsky Title: President 16 Exhibit A --------- Memorandum Date: March 31, 2000 To: Elliot Mark cc: Tim White From: Pat Walsh Loc: 20A/245 Ext: 5902 Subject: Space - EPYX EPYX currently occupies space in Building 15, 32, and the Pilot Plant complex. Below is a summary and cost breakdown: Monthly Yearly Building Sq. Ft. Cost Cost -------- ------- ------- ------ 15 8,261 $30,531.27 $366,375.34 32 4,015 14,838.77 178,065.25 Pilot Plant 2,278 8,419.10 101,029.29 ------ ---------- ----------- Total 14,554 $53,789.14 $645,469.89 Attached are drawings indicating the space assigned to EPYX and the Facilities Space Report. This information is as of March 31, 2000. Please let me know if you need any additional information.
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 1 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15 138 1356 1356 15 139 937 937 15 151A 140 140 01 15 151B 140 70 7930 DEPIETRO R CONS 15 153 100 100 15 153B 70 70 5409 MOSHER PD CONS 15 153C 70 70 15 153D 70 70 630 HAILES RL CONS 15 153E 70 70 15 154 440 440 15 154A 65 65 15 154B 65 65 4370 THOMPSON C CONS 15 154C 65 65 6834 POLLICA DE 15 154D 65 65 6422 CHINTAWAR PS CONS 15 154E 65 65 4265 WILLEY JM 15 154F 65 65 5307 CIOFFI CM CONS 15 154G 62 62 2996 COLE T CONS 15L 101 117 117 8314 MORRISEAU BD CONS 15L 102 121 121 4802 BOYD S CONS
NOTE 01 ##### BLDG 15 ROOM 151B ALSO SHARED WITH UNIT 0946 ########
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 2 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 102A 94 94 4035 SYLVESTER RM SUP 15L 103 54 54 932 BLOCK SG CONS 15L 103A 80 80 4880 ROUNDS III R CONS 15L 104 80 SWAVELY 80 15L 105 80 80 8863 DORSON MH CONS 15L 106 80 80 7490 ZHAO J CONS 15L 107 85 85 15L 107A 27 CLOSET 27 15L 108 510 510 15L 109 968 968 15L 110 238 238 15L 111 238 238 15L 112 168 MECH. ROOM 168 15L 113 193 193 15L 114 262 MECH. FOR DRY ROOM 262 15L 115 533 533 15L 117 124 124 865 CROSS III JC CONS 15L 118 117 117 152 MITCHELL WL SENC 15L 119 117 117 5675 BENTLEY JM DIR
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 3 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 120 130 65 8053 HAND ML SUP 65 254 MADAN S CONS 32 101 113 113 32 102 113 113 32 103 113 113 186 BARTON L CONS 32 104 174 174 32 105 114 114 32 106 113 113 32 107 114 57 513 RIZZO VG CONS 57 874 RUMSEY JW CONS 32 108 114 114 7465 POLEVAYA O CONS 32 109 114 114 32 110 114 38 8259 BOSCO T CONS 38 4494 GOODWIN M CONS 38 7519 VODUC V SUP 32 111 123 123 335 PRABHU SK CONS 32 119 115 115 6916 WOO P SENC 32 120 174 58 4461 CELONA J SUP 58 6660 HILL SA CONS 58 6446 LANDRY BP SUP 32 121 114 57 1870 KHAN AR CONS 57 4044 LIU H CONS 32 122 114 57 5956 HAGAN MR CONS 57 7374 QI FC CONS
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 4 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- 32 123 114 57 4260 BATAL JD CONS 57 6826 ZHAO J 32 124 113 57 1714 BOWERS BJ CONS 57 362 NORTHROP WF CONS 32 125 114 57 4042 JAMIL A CONS 57 4054 RIVERA A CONS 32 126 114 114 687 NOWICKI BJ CONS 32 127 173 173 32 128 114 114 32 129 114 114 32 130 113 113 32 134 164 164 5689 HAVERTY AH SUP 32 135 605 EPYX DESIGN CENTER 605 32 136A 65 65 32 136B 65 65 32 137 311 EPYX CONFERENCE 311 46 100A 1709 PILOT PLANT 1709 46 200A 297 PILOT PLANT ME22 WILSON G 297 48 100 272 SHED 5 272
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 5 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ********** TOTALS FOR GROUP 194 ********** SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 6 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########## TOTALS FOR SECTION B924 ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 7 SECTION: SECTION LEADER: UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########### GRAND TOTALS FOR COMPANY ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
EPYX Space - Building 15 Total Rentable sq. ft. 8,261 Notes: # 1: 15L/101 thru 15L/107A reflects space for cubicles only (818 sq. ft.) Aisle space has been deducted. Note #2: 15/153 reflects space for offices and cubicles only (380 sq. ft.) Entrance and aisle space has been deducted. [FLOOR PLAN APPEARS HERE] as of 3/31/00 Pat Walsh EPYX Space - Building 32 Total Rentable sq. ft. = 4,015 sq. ft. [FLOOR PLAN APPEARS HERE] Notes: Red background is Credit Union and other shared space. as of 3/31/00 Pat Walsh [PILOT PLANT COMPLEX DRAWING APPEARS HERE] EX-10.4(A) 3 0003.txt SCHEDULES TO EXHIBIT 10.4 Exhibit 10.4(a) SCHEDULE 1 ARTHUR D. LITTLE, INC. TO EPYX CORPORATION (HYDROGEN GENERATION TECHNOLOGY)
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 002 CLOSED PCT UTILITY APPL. Lawrence G. Clawson . Second Written Opinion mailed S/N: PCT/US 97/014, 906 William L. Mitchell 7/7/98 is favorable, indicating (National filings FILED: 8/25/97 Johannes H.J. Thijssen patentability. completed, see 1973 PUBLISHED: 3/5/98, WO98/08771 Jeff Bentley . National filings completed in P 003, 005, 006, TITLE: Method and Apparatus for February of 1999; see 1973 008, 009, and 011) Converting Hydrocarbon Fuel into series below. Hydrogen Gas and Carbon Dioxide . PCT application filed naming NOTE: (This is the international only one Inventor, per equivalent of 1955 P007; i.e., the instructions from legal originally-filed ADL application assistant to ADL. directed to Model A, FIG. 1 and This consequently corrected in two other embodiments FIGS. 2-3) National filings (1973 series). - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 003 CLOSED PROPOSED: U.S. Continuation-In- Lawrence G. Clawson, . New generation reactor (a.k.a (Case No. Part application from USSN 08/703, William Mitchell Model B) drawings provided to 93275-75 & (Subject matter 398 8/26/96. W&W, claims prepared and sent to 6/20/97) incorporated into WORKING Title: Method and W. Mitchell and L. Clawson for Provisional App. Apparatus for Converting Hydrogen review. Discussed at 9/9/98 1955 P 008, then Gas and Carbon Dioxide. meeting regarding proper claim updated into NOTE: (Early MODEL B with distinct scope. . Updated disclosures received and all subject matter incorporated into Provisional - -----------------------------------------------------------------------------------------------------------------------------------
1
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ omnibus steam reform and POX in same Application (See 1955 P 008) specification for central chamber, now changed to POX filed 05/03/1999. proposed Utility surrounded by S/R chamber) . An omnibus specification of application) system as a whole, sent to B. Nowicki on 12/23/99 for review. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 004 PENDING U.S. UTILITY Lawrence G. Clawson, . Corresponding PCT filed January S/N: 09/006, 727 William Mitchell 13, 1999 (P049); FILED: 1/14/98 Jeff Bentley . Filed as a non-DOE application; TITLE: Hydrogen-producing Reactor James C. Cross, III . Office Action mailed 6/21/1999 with React and Flow in Diverging rejecting all claims; Directions . Subsequent U.S. searching done; NOTE: (Radial Flow Muni-pox) . Response mailed 12/21/99; . Examiner interviewed, Supplemental Reply and Amendment mailed 2/22/00; . Office Action mailed 3/24/00 --- Claims 71 and 72 allowed, Claims 17, 18, 38-41, 60-62 and 73 allowable if rewritten, all other claims rejected; [_]Prepare Reply to rewrite allowable claims, cancel rejected claims; [_]File Continuation Application to pursue rejected claims - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 005 CLOSED WORKING TITLE: Method And Robert Davis . Proposed claims forwarded to R. (Case Nos. Apparatus For Controlling Lawrence G. Clawson, Davis and reviewed with R. 48226 and (Subject matter Multifuel, Hydrogen-producing William Mitchell, Davis at ADL on 9/10/98 53790 & incorporated into Reactor Jennifer Rumsey . Some disclosure to DOE in at 2/15/95) omnibus NOTE: (System Level Application) least February 1995. specification, [_]Have received updated forwarded to B. information from J. Rumsey, in Nowiki on progress of incorporating control into omnibus specification for Model B system, forwarded to B. Nowicki on - ------------------------------------------------------------------------------------------------------------------------------------
2
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1/23/99) 12/23/1999 for review. [_] NOT PROTECTED: Do Not Make Public Disclosure. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 007 PENDING U.S. UTILITY APPLICATION Lawrence G. Clawson, . Application filed 8/26/96; S/N: 08/703,398 William L. Mitchell, . Office Action received FILED: 8/26/96 Jeffrey M. Bentley, 7/30/97, per Examiner CPA FILED: 8/9/99 Johannes H J. Thijssen Supplemental required in view TITLE: Method and Apparatus for of supplement IDS, received by Converting Hydrocarbon Fuel into W&W (all claims rejected); Hydrogen Gas and Carbon Dioxide . Response to Supplemental NOTE: (Three embodiments, Model A Office 8/31/98; reformer, FIG. 1 and two other . Office Action received FIGS. 2-3) 11/09/98 (all claims rejected; . CPA (continuing patent application) filed with preliminary amendment 8/9/99; . Office Action received September 27, 1999; . One face-to-face interview of Examiner and several telephonic interviews with Examiner, indicating potentially allowable subject matter contingent upon declaration of inventor and claim amendments; . Reply filed with Declaration of W. Mitchell on 3/2/00; [_] Awaiting next Office Action - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 008 PENDING U.S. PROVISIONAL William L. Mitchell, . Claims prepared and compared (Memo S/N: 60/132,184 Lawrence G. Clawson, with ADL prior public undated, FILED: 5/3/99 Robert Davis disclosures. Claim scope received TITLE: Apparatus For Reforming Brian Nowicki discussed with J. Bentley at 10/8/97) Hydrocarbon Fuels to Hydrogen Jennifer Rumsey 12/3/97 meeting. and For Cleaning Exhaust From Matthew Dorson . Application includes subject Associated Fuel Cell matter from: 1955 P 003; 1955 P 033, 1955 P 034; 1955 P 035; and, 1955 P 043. [_] Consider if combined or combinable with invention to Hydrodesulfurization Method - ------------------------------------------------------------------------------------------------------------------------------------
3
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ and Apparatus (See 1955 P 039 Sederquist). . Provisional Application filed May 3, 1999. [_]Received updated disclosure of Model B and TGC with multi functions including preheat fuel to reformer and desulfurization. Omnibus application sent to B. Nowicki on 12/23/99 for review. Does or will include updated disclosure for filing as a utility application. [_]Decision to be made on whether (and to what extent) subject matter is under any DOE contracts. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 009 ACTIVE WORKING TITLE: Adiabatic Prox With Robert Weber, . C. Papile has sent us some Au Catalyst Promoted by Another Christopher Papile, information on the catalyst and Transition Metal Oxide Robert Barrett has incorporated it somewhat into other apparatus disclosures. [_]Need to check with W. Mitchell (or B. Weber) if "single stage" PROX via proprietary catalyst is still contemplated as an invention/direction for commercialization. [_]Also need to get disclosure of method of preparing catalyst. [_]Awaiting further instructions and information. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 012 ACTIVE WORKING TITLE: Combination Nickel William Mitchell . Briefly discussed with W. Catalysts in Steam Reformer Mitchell, L. Clawson and J. Bentley on 9/10/97, a new Ni catalyst combination operating in protype reactor in steam reform stage. [_]If protection is to be sought, W. Mitchell to provide W&W with a timely disclosure of compositions, operation parameters, theories of operation and keys to operational success. - ------------------------------------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ . Per 1/5/98 meeting, W&W advised that key catalyst is no longer available and prototype merchant devise intended for Air Products will not contain the catalyst combination. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 017 ACTIVE WORKING TITLE: Housing for Radial Gunther Kleeberg . W&W has preliminary drawings Flow Reactor for radial- flow small POX housing, need updated disclosure and instructions to proceed to proposed claims and search. [_] W&W should receive updates as appropriate. [_] Awaiting further instructions and information. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 018 ACTIVE WORKING TITLE: Methods And Compositions Christopher Papile . Disclosure received by W&W, For Protecting Low-temperature Shift proposed claims prepared and Catalyst From Condensed Water After discussed with C. Papile on Shut-down of Reactor 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 019 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P 007, S/N: 09/184,618 William L. Mitchell, filed November 2, 1998. FILED: 11/2/98 Jeffrey M. Bentley [_] No action by PTO yet TITLE: Apparatus For Converting Johannes H.J. Hydrocarbon Fuel into Hydrogen Gas and Thijssen Carbon Dioxide NOTE: Divisional of 1955 P007 (Group II, apparatus of FIG. 2) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 020 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P 007, S/N: 09/184,387 William L. Mitchell, filed November 2, 1998; FILED: 11/2/98 Jeffrey M. Bentley . Response to Office Action TITLE: Method For Converting Johannes H.J. Thijssen rejecting all claims was filed, Hydrocarbon Fuel into Hydrogen Gas and a subsequent replacement and Carbon Dioxide NOTE: Divisional information disclosure and of 1955 P 007 (Group telephone interview with examiner was conducted; . Notice of allowance, 12/11/1999; - ------------------------------------------------------------------------------------------------------------------------------------
5
- ---------------------------------------------------------------------------------------------------------------------------------- W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ III, methods associated with FIG. 1, . Issue fee paid 1/7/2000; Model A) . Formal drawings submitted. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 021 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional from 1955 P S/N: 09/184,615 William L. Mitchell, 007, filed November 2, FILED: 11/2/98 Jeffrey M. Bentley 1998; TITLE: Method For Converting Hydrocarbon Johannes H.J. Thijssen . Response to Office Fuel into Hydrogen Gas and Carbon Dioxide Action (rejecting all NOTE: Divisional of 1955 P 007 (Group IV, claims) mailed methods associated with FIG. 2) 10/21/1999; . Final Office Action dated 1/5/2000, received, rejecting all claims; [_]Appeal, CPA, or Reply with amendments to put in better condition for allowance, due without extension fee by 4/5/2000. Six Month deadline is 6/5/2000. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 022 PENDING U.S. UTILITY APP. Lawrence G. Clawson, . Divisional filed S/N: 09/185,393 William L. Mitchell, November 3, 1998. FILED: 11/3/98 Jeffrey M. Bentley [_]Awaiting action by PTO. TITLE: Apparatus For Converting Johannes H.J. Thijssen Hydrocarbon Fuel into Hydrogen Gas and Carbon Dioxide NOTE: Divisional of 1955 P 007 Apparatus according to FIG. 3) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 023 ACTIVE WORKING TITLE: Method For Preferentially William L. Mitchell, . Proposed claims oxidizing Carbon Monoxide in a Christopher Papile prepared and discussed Hydrogen-rich Reformate Stream with C. Papile on (Continuous Replenishment of Oxygen to 9/9/98. Reformate Stream as it Goes Through Prox [_]Awaiting further Bed) instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 024 ACTIVE WORKING TITLE: Apparatus For William L. Mitchell, . Proposed claims Preferentially-oxidizing Carbon Monoxide Christopher Papile prepared and discussed in a Hydrogen-rich Reformate Stream with C. Papile on (Continuous Replenishment of 9/9/98. [_]Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------
6
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Oxygen to Reformate Stream as it Goes Through Prox Bed) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 025 ACTIVE WORKING TITLE: Method and Apparatus For Christopher Papile, . Proposed claims Back-flushing Prox Reactors On-line Pai-Yug Woo prepared and discussed (Subject with C. Papile on matter 9/9/98. included in [_] Need to determine if provisional subject matter is to be application carried forward in 1955 P 026) omnibus specification forwarded to B. Nowicki on 12/23/1999, or in a separate application. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 026 PENDING U.S. PROVISIONAL Christopher Papile, . Proposed claims (Provisional) S/N: 60/132,259 Lawrence G. Clawson, prepared and discussed FILED: 5/3/99 William L. Mitchell, with C. Papile on TITLE: Preferential Oxidative Reactor Frank Qi, 9/9/98. Mark Hagan A provisional application filed May 3, 1999 incorporates this invention. . This has been implemented in the general system concept and incorporated into the omnibus specification to be filed as a Utility App. [_] Draft of omnibus specification sent to B. Nowicki on 12/23/1999 for review. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 027 CLOSED WORKING TITLE: Prox Reactor with Active Christopher Papile, . Proposed claims (Subject Cooling (Tube Boiler) Lawrence G. Clawson prepared and discussed matter with C. Papile on incorporated 9/9/98. into . A provisional 1955 P 026) application (1955 P 026) filed May 3, 1999 incorporates this invention. Status pending. . An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 028 CLOSED WORKING TITLE: Prox and Low-temperature Lawrence G. Clawson, . Proposed claims (Subject Shift Catalyst Beds With Mark Hagan prepared and discussed matter with C. Papile on 9/9/98. - ------------------------------------------------------------------------------------------------------------------------------------
7
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADERS(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ incorporated Shared Tube Boilers . A provisional into 1955 application (1955 P P 026) 026) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 029 ACTIVE WORKING TITLE: Fluidized Bed Prox Reactor Christopher Papile . Proposed claims (Project With Combined Condenser And Separator prepared and discussed No. 93286- with C. Papile on 01 & 8/3/98 9/9/98. [_] Awaiting further instructions - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 030 ACTIVE WORKING TITLE: Reformer Reactor With Heat Christopher Papile . Proposed claims Transfer Between Prox Liquid Fuel And/or prepared and discussed Water with C. Papile on 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 031 CLOSED METHOD AND APPARATUS FOR DYNAMIC CONTROL Jennifer Rumsey . Proposed claims (Subject OF OXYGEN TO PROX REACTOR Vincent Rizzo prepared and discussed matter Darryl Pollica with C. Papile on incorporated 9/9/98. into 1955 . Rob Davis input was to P 026) be sought. . Updated disclosure has been received with respect to dynamic control for transients (See also, disclosures by J. Rumsey and C. Papile). . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/ 1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 032 ACTIVE WORKING TITLE: Air-cooled Prox With Christopher Papile . Proposed claims Catalyst Supported on Metal prepared and discussed Substrate/monoliths with C. Papile on 9/9/98. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 033 CLOSED WORKING TITLE: Reformer With Fuel William L. Mitchell, . Proposed claims (Subject Preheater Tube in Shift Zone Lawrence G. Clawson, prepared and discussed matter with W. Mitchell on incorporated 9/9/98. into . A provisional 1955 P 008) application (1955 P 008) filed May 3, 1999 incorporates this invention. Status, pending. - ------------------------------------------------------------------------------------------------------------------------------------
8
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 034 CLOSED WORKING TITLE: Reformer Having William L. Mitchell, . Proposed claims prepared and (Subject matter Central Pox Zone Surrounded by Lawrence G. Clawson, discussed with W. Mitchell on incorporated into Annular Shift Zone and Tube Boiler 9/9/98. 1955 P 008) in The Shift Zone . A provisional application (1955 P 008) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 035 CLOSED WORKING TITLE: Reformer With Pox William L. Mitchell, . Proposed claims prepared and (Subject matter Surrounded by Annular Steam Reforming Lawrence G. Clawson, discussed with W. Mitchell on incorporated into Zone and Serpentine Flow Relationship 9/9/98. 1955 P 008) From Pox to The Steam Reforming Zone . A provisional application (1955 P 008) filed May 3, 1999 incorporates this invention. . An omnibus specification for a proposed utility application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 036 ACTIVE WORKING TITLE: Methods And William L. Mitchell, . Proposed claims prepared and (Memo by C. (Some Subject Compositions For Mixing Air/fuel Lawrence G. Clawson, discussed with W. Mitchell on Read, Ref: Matter, /steam For Pox Reaction in Reformer, Johannes Thijssen, 9/9/98 and a preliminary search "93747 and "Tangential Including Disk And Cup-shaped Pox Carole Read of in-house patent collection 34788-14 & Delivery," Has Reaction Chambers And Reactors conducted to shape claim scope. 7/6/98) been Incorporated Embodying Same [_] Need to consider modification Into 1955 P 007 of claims in view of further by Amendment, disclosure by J. Thijssen and And Some Into C. Greene on 9/9/98. Omnibus [_] Awaiting further instructions on disc shape POX chamber (mini POX) and cup shaped POX. - ------------------------------------------------------------------------------------------------------------------------------------
9
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Specification To Be Filed) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 037 CLOSED METHOD AND APPARATUS FOR Christopher Papile . Proposed claims prepared and (Subject Matter DYNAMIC CONTROL OF discussed with C. Papile on Incorporated Into REFORMATE TO A PROX REACTOR 9/9/98. 1955 P 026) . Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 038 ACTIVE WORKING TITLE: Methods And Christopher Papile . Preliminary disclosure made to (Project No. Apparatus For Providing Variable W&W by C. Papile, discussed at 93286-01 & Pox Duty (Flow) 9/9/98 meeting. 8/16/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 039 ACTIVE WORKING TITLE: Methods of Fuel Richard A. Sederquist . Disclosure received, read and (none & Desulfurization For Process Fuel understood by W&W 7/29/98) For Hydrogen Generation And . Need to check whether or not Apparatus For Integration With a this subject matter was Fuel Reformer incorporated by ADL into TGC. [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 040 ACTIVE WORKING TITLE: Transient, Cold Start, Christopher Papile . Disclosure received by W&W (Project No. Volume Conserving, Very . A provisional application (1955 93286-01 & (Some of this Low-temperature Shift Reactor P 026) filed May 3, 1999 8/24/98) subject matter partially incorporates this incorporated into subject matter. 1955 P 026) [_] Some of this subject matter (water cooling jacket) has been incorporated in an omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. [_] Need to determine if the remaining subject matter should be added to omnibus specification or separate application. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 042 PENDING U.S. PROVISIONAL APP Prassant Chintawar . Disclosure received, read and S/N: 60/132,183 and Craig Thompson understood by W&W. FILED: 5/3/99 . Provisional application filed May 3, 1999. - ------------------------------------------------------------------------------------------------------------------------------------
10
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ TITLE: Low Temperature Water Gs Shift . An updated disclosure Reactor and updated claims were NOTE: (This is the Pt/Zr catalyst idea filed 10/6/99 as a for water-gas-shift reactions) provisional file no. 1955 P 051. [_] Updated specification and updated claims (beyond 1955 P 051) have been prepared and finally reviewed by inventors. Recent prior art reference has caused need for re-evaluations by W&W of claim scope and spec. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 043 ACTIVE WORKING TITLE: MODEL ABC-Reformer With Richard A. Sederquist . Disclosure received, read (none & Reduced POX Gasification Zone and understood by W&W. 8/3/98) NOTE: (Some Of This . A provisional application Subject Matter (1955 P 008)filed May 3, Appears To Have 1999 incorporates a Been Incorporated portion of this subject Into An Omnibus matter. Specification For [_] An omnibus specification Further Filing As A for a proposed utility Utility Application) application including this subject matter has been sent to B. Nowicki for review on 12/23/1999. [_] Need to determine the extent of which Mr. Sederquist's idea has been incorporated into Model B, i.e., is it Model ABC?) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 044 PENDING U.S. UTILITY APP Lawrence G. Clawson, . Divisional filed November S/N: 09/185,325 William L. Mitchell, 3, 1998; FILED: 11/3/98 Jeffrey M. Bentley . Office Action received TITLE: Method for Converting Hydrocarbon Johannes H.J. Thijssen, 12/17/1999, rejecting all Fuel into Hydrogen Gas and Carbon Dioxide claims (only sections 103 NOTE: Divisional from 1955 P 007 (Method and 112); associated with reformer of FIG. 3) . Examiner interview conducted on 2/3/00; . Reply to Office Action filed 2/3/00. [_] Awaiting next Office Action from PTO. - ------------------------------------------------------------------------------------------------------------------------------------
11
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 045 ACTIVE WORKING TITLE: Hydrogenation of Carbon Christopher Papile . Disclosure received, read (11000-TM-002a Monoxide from Anode Exhaust and understood by W&W. & 9/22/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1946 P 046 ACTIVE REFORMER WITH ROTARY POSITIVE Lawrence G. Clawson . Disclosure received, read (11000-TM-003a DISPOALCEMENT COMBUSTION CHAMBER and understood by W&W. & 9/22/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 047 ACTIVE LOW HEAT LOSS MINI-POX REFORMER WITH (Project No. GURAD HEATING BY ANODE EXHASUT Richard A. Sederquist . Disclosure received, read 93286-01 & and understood by W&W. 8/18/98) [_] Awaiting further instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 048 ACTIVE CYCLIC PROX WITH STEAM GENERATION AND Richard A. Sederquist . Disclosure received, read (Project No. REGENERATABLE METAL OXIDE FOR PRODUCTION and understood by W&W. 93286-01& OXIDANT [_] Awaiting further 9/4/98) instructions. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 049 PENDING PCT UTLITY APP. Lawrence G. Clawson, . Filing requirements S/N: PCT/US 99/00833 William L. Mitchell, completed (from P 004). FILED: 1/13/99 Jeffrey M. Bentley, . Published in 8/99. TITLE: Reactor For Producing Hydrogen James C. Cross III . Requested Examination on From Hydrocarbon Fuels 7/21/1999.
12
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_] NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ gas-shift Converting Carbon Monoxide and Water . This subject matter has reactions, from in a Reformate Stream and Apparatus been carried forward to 1955 P 042) Therefore. 1955 P 052 for filing as a utility application. FILING RECEIPT TITLE: Low Temperature Water Gas Catalyst and Reactor. WORKING TITLE: Method For Producing Hydrogen From Hydrocarbons Using Water Gas Shift Reaction And Apparatus Therefore - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 052 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: Prashant S. Chintawar . To be filed as utility Process for Converting Carbon Dioxide And Craig Thompson application relying on Water in a Reformate Stream And Mark Hagan the priority of pending NOTE: (This is the Apparatus Therefore provisional applications Pt/Zr catalyst idea (1955 P 042 and 1955 P for water-gas-shift 051) May 3, 1999, and reactions) October 6, 1999, respectively (accordingly filing due by May 3, 2000). . Prepared and reviewed by inventors. [_ ] Updated specification and updated claims (beyond 1955 P 051) have been prepared and finally reviewed by inventors. Recent prior art reference has caused need for re-evaluation by W&W of claim scope and specification Due by May 3, 2000, to rely on earliest priority. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 053 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: Lawrence G. Clawson . To be filed as utility Model B Reformer William L. Mitchell application relying on Jeff Bentley priority of provisional (1955 P 008) due May 3, 2000). [_ ] An omnibus specification for a proposed utility application including this invention has - ------------------------------------------------------------------------------------------------------------------------------------
13
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 054 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: To be determined. . To be filed as utility Preferential Oxidation Reactor application relying on priority of provisional (1955 P 026) due May 3, 2000). [_] An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 055 ACTIVE PROPOSED U.S. UILITY APP. WORKING TITLE: William L. Mitchell, . To be filed as utility Tall Gas Combuster Lawrence G. Clawson, application relying on Brian Nowicki, priority of provisional Matthew Dorson (1955 P 008) due May 3, 2000). [_] An omnibus specification for a proposed utility application including this invention has been sent to B. Nowicki for review on 12/23/1999. - ------------------------------------------------------------------------------------------------------------------------------------ 1955 P 056 ACTIVE PROPOSED U.S. UTILITY WORKING TITLE: Lawrence G. Clawson . To be filed as utility Hydrocarbon Reforming System William L. Mitchell application relying on Matthew Dorson priority of provisional Johannes Thijssen applications (1955 p 008 and Robert Davis 1955 P 026) due 05/03/2000. Christopher Papile [_] An omnibus specification for Jennifer Rumsey a proposed utility Nathan Longo application including this James C. Cross, III invention has been sent to Vicent Rizzo B. Nowicki for review on Gunther Kleeburg 12/23/1999. William Rindone Brian Nowicki Stephen G. Block Maria Sun - ------------------------------------------------------------------------------------------------------------------------------------
14
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ Brian Morriseau - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 003 PENDING EPO UTILITY APP. A/N: 97939541.5-2111 Lawrence G. Clawson . Filed with EPO associate LODGED: 2/23/99 William L. Mitchell by 2/26/99. TITLE: M&A For Converting Hydrocarbon Jeffrey M. Bentley . Instructions to proceed Fule Into Hydrogen Gas And Carbon Dioxide Johannes H. J. Thijssen with prosecution of NOTE: (Counterpart to U.S. App., 1955 P. Claims 1-41 sent to 002) associate on 12/13/99. [_] Annuity due 8/25/00. - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 005 PENDING JAPAN UTILITY APP. S/N: 10-511780 Lawrence G. Clawson . Forwarded to Japan LODGED: 2/26/99 William L Mitchell associate for filing by TITLE: M&A For Converting Hydrocarbon Jeffrey M. Bentley 2/26/99. Fuel Into Hydrogen Gas And Carbon Dioxide Johannes H.J. Thijssen [_] Deferred examination due NOTE: (Counterpart to U.S. App., 1955 P 2/26/2006. 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 006 PENDING CANADA UTILITY APP. Lawrence G. Clawson . Forwarded to Canada S/N: 2,265,468 William L. Mitchell associate for filing LODGED: 2/24/99 Jeffrey M. Bentley 2/26/99; TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen . Request for Examination Fuel Into Hydrogen Gas And Carbon Dioxide authorized on 3/30/00; NOTE: (Counterpart to U.S. App., 1955 P [_] Annuity due 8/25/2000. 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 008 PENDING CHINA UTILITY APP. Lawrence G. Clawson . Forwarded to China S/N: 97197471.3 William L. Mitchell associate for filing by LODGED: 2/26/99 Jeffrey M. Bentley 2/26/99. TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen . Examination requested on Fuel Into Hydrogen Gas and Carbon Dioxide 8/26/99. [_] Registration in Hong Kong due 3/15/2000. . Application published 2/26/99. - ------------------------------------------------------------------------------------------------------------------------------------
15
- ------------------------------------------------------------------------------------------------------------------------------------ W&W FILE STATUS PROJECT DESCRIPTION OR INVENTOR(S) OR .FILE HISTORY FILE NO. APPLICATION INFORMATION PROJECT LEADER(S) [_]NEXT ACTION (ADL ROI No., Case No., or Project No. & Date of trst provable act) - ------------------------------------------------------------------------------------------------------------------------------------ NOTE: (Counterpart to U.S. App., 1955 P 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 009 PENDING KOREA UTILITY APP. Lawrence g. Clawson . Forwarded to Korea S/N: 99-7001595 William L. Mitchell associate for filing LODGED: 2/26/99 Jeffrey M. Bentley 2/26/99. TITLE: M&A For converting Hydrocarbon Johannes H. J. Thijssen [_] Request for Examination due Fuel Into Hydrogen Gas And Carbon Dioxide 8/25/2000. NOTE: (Counterpart to U.S. App., 1955 P 002) - ------------------------------------------------------------------------------------------------------------------------------------ 1973 P 011 PENDING AUSTRALIA UTILITY APP. Lawrence G. Clawson . Forwarded to Australia S/N: 41610/97 William L. Mitchell associate for filing LODGED: 8/25/97 Jeffrey M. Bentley 2/26/99 TITLE: M&A For Converting Hydrocarbon Johannes H.J. Thijssen [_] Response to Official Fuel Into Hydrogen Gas and Carbon Dioxide Report due 8/04/2000. NOTE: (Counterpart to U.S. App., 1955 P [_] Maintenance fee due 002) 8/25/2002. - ------------------------------------------------------------------------------------------------------------------------------------
16 EX-10.5(A) 4 0004.txt SCHEDULES TO EXHIBIT 10.5 Exhibit 10.5(a) Schedule 4.3 ------------ None Schedule 4.5 ------------ Joint Development Agreement dated September 24, 1999 between Plug Power, LLC and Epyx Joint Development Agreement dated January 12, 2000 between Cellex Power Products, Inc. and Epyx Purchase Order from Plug Power to Epyx dated November 10, 1999 for 10kW Multi- fuel Processor with Supporting Data and Service Joint Venture Agreement dated December 18, 1998 between H Power Corp. and Arthur D. Little, Inc. DOE Contract No. DE-FC02-99EE50580 dated July 21, 1999 issued to Arthur D. Little, Inc., titled Development of Fuel Processor, Durability Demonstration and 10kW Subcontract Agreement dated November 21, 1997 between Plug Power, LLC and Arthur D. Little, Inc. under DOE Contract No. DE-FC02-97EE50472 Subcontract Agreement dated January 17, 2000 between Giner, Inc. and Epyx Purchase Order for Transient Reactor dated February 2000 from Epyx to ZTON- Altamira Corporation Excluded Contracts: "Design of a 50 kW Stationary PEMFC System" "Design of next generation of PEMFC stacks with clearly superior hydrogen utilization" Schedule 4.6 ------------ None Schedule 4.11 ------------- Epyx Balance Sheet As of December 31, 1999
Adjusted Assign Gov't Adjusted Balances Receivables Balances -------------- ------------------ -------------- Assets: Current Assets: Cash and Cash Equivalents Accounts Receivable................................... $ 247,239.4 $454,234.0 $ 701,473.4 Unbilled Services..................................... 156,972.9 156,972.9 Other Current Assets.................................. (3,298.7) (3,298.7) -------------- -------------- Total Current Assets.................................... 400,913.6 454,234.0 855,147.6 Property and Equipment: Land Bldgs. & Leasehold Improvements....................... 339.1 339.1 Equip., Furniture, & Fixtures......................... 516,296.6 516,296.6 -------------- -------------- Property and Equipment................................ 516,635.7 516,635.7 Accumulated Depreciation.............................. (140,068.2) (140,068.2) -------------- -------------- Net Property and Equipment............................ 376,567.5 376,567.5 -------------- -------------- Total Assets............................................ $ 777,481.0 $454,234.0 $1,231,715.0 ============== ================== ============== Liabilities and Stockholders' Equity: Current Liabilities: Accounts Payable...................................... $ 1,878.6 $ 1,878.6 Accrued Compensation.................................. 31,370.1 31,370.1 Other Accrued Expenses................................ (2,354.5) (2,354.5) -------------- -------------- Total Current Liabilities............................... 30,894.2 30,894.2 Intercompany Receivable/Payable......................... 400,913.6 299,234.0 700,147.6 Total Liabilities Stockholders' Equity: Retained Earnings....................................... 345,673.3 155,000.0 500,673.3 -------------- -------------- Total Liabilities and Stockholders' Equity.............. $ 777,481.0 $454,234.0 $1,231,715.0 ============== ================== ==============
Schedule 4.15 ------------- MDT Retirement Plan ESOP - Hired prior to 1-1-99 Investment Plan ADL Medical Plan - Self funded Harvard Pilgrim HMO - Insured Tufts HMO - Insured ADL Dental Plan - Self funded ADL Long Term Disability Plan - Self funded Basic Life Insurance - Insured Portable Optional Term Life Insurance - Insured Dependent Life Insurance - Insured Health Care Spending Account - Self funded Dependent Care Spending Account - Self funded Pre-tax Deduction Plan - Self funded Business Travel Accident Insurance - Insured Excess Contribution Plan Stock Incentive Plan Stock-Based Deferred Incentive Compensation Plan New ADL Stock Option Plan Senior Staff Stock Purchase Plan All of the above plans are maintained and administered by ADL and not by Epyx Schedule 5.3 ------------ Excluded Contracts: "Design of a 50 kW Stationary PEMFC System" "Design of next generation of PEMFC stacks with clearly superior hydrogen utilization" Exhibit A State of Delaware PAGE 1 Office of the Secretary of State -------------------------------- I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ADVANCED FUEL PROCESSORS, INC.", CHANGING ITS NAME FROM "ADVANCED FUEL PROCESSORS, INC." TO "EPYX CORPORATION", FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF FEBRUARY, A.D. 1998, AT 10 OCLOCK A.M. [SEAL OF DELAWARE SECRETARY'S OFFICE] /s/ Edward J. Freel ----------------------------------- Edward J. Freel, Secretary of State 2834471 8100 AUTHENTICATION: 8923349 981059546 DATE: 2-17-98 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ADVANCED FUEL PROCESSORS, INC. Pursuant to Section 242 of the General Corporation Law of the State of Delaware ---------------------------------------- Advanced Fuel Processors, Inc. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify as follows: That by written consent of the Board of Directors of the Corporation, a resolution was duly adopted, pursuant to Sections 141(f) and 242 of the General Corporation Law of the State of Delaware, setting forth an amendment to the Certificate of Incorporation of the Corporation declaring said amendment to be advisable. The sole stockholder of the Corporation entitled to vote thereon approved said proposed amendment by written consent in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The resolution setting forth the amendment is as follows: RESOLVED: That the Certificate of Incorporation of the Corporation - -------- (the "Certificate of Incorporation") be and hereby is amended by deleting Article FIRST in its entirety and substituting therefor the following: "FIRST: The name of the Corporation is EPYX Corporation." IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its President and Chief Executive Officer this 12th day of February, 1998. ADVANCED FUEL PROCESSORS, INC. By: /s/ Ashok S. Kalelkar -------------------------- Ashok S. Kalelkar President State of Delaware PAGE 1 Office of the Secretary of State -------------------------------- I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF "ADVANCED FUEL PROCESSORS, INC.", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF DECEMBER, A.D. 1997, AT 12:30 O'CLOCK P.M. [SEAL OF DELAWARE SECRETARY'S OFFICE] /s/ Edward J. Freel ----------------------------------- Edward J. Freel, Secretary of State 2834471 8100 AUTHENTICATION: 8822484 971436517 DATE: 12-18-97 CERTIFICATE OF INCORPORATION OF ADVANCED FUEL PROCESSORS, INC. FIRST. The name of the Corporation is: Advanced Fuel Processors, Inc. SECOND. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is as follows: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is 1,000 shares of Common Stock, $.O1 par value per share. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. FIFTH. The name and mailing address of the sole incorporator are as follows: NAME MAILING ADDRESS ---- --------------- Donna A. Face Hale and Dorr Corporate Paralegal 60 State Street Boston, MA 02109 SIXTH. In furtherance of and not in limitation of powers conferred by statute, it is further provided: 1. Election of directors need not be by written ballot. 2. The Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. SEVENTH. Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. EIGHTH. The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of an Indemnitee in connection with such action, suit or proceeding and any appeal therefrom. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. In the event that the Corporation does not assume the defense of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, the Corporation shall pay in advance of the final disposition of such matter any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom; provided, however, that the payment of -------- ------- such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article, which undertaking shall be accepted without reference to the financial ability of the Indemnitee to make such repayment; and further provided that no such advancement of expenses shall ------- -------- be made if it is determined that (i) the Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or riot opposed to, the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, the Indemnitee had reasonable cause to believe his conduct was unlawful. The Corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. In addition, the Corporation, shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement. All determinations hereunder as to the entitlement of an Indemnitee to indemnification or advancement of expenses shall be made in each instance by (a) a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation), or (d) a court of competent jurisdiction. The indemnification rights provided in this Article (i) shall not be deemed exclusive of any other rights to which an Indemnitee may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of the Indemnitees. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. NINTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. EXECUTED at Boston, Massachusetts, on December 18, 1997. /s/ Donna A. Pace -------------------- Incorporator Donna A. Pace State of Delaware PAGE 1 Office of the Secretary of State -------------------------------- I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "EPYX CORPORATION", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY OF MARCH, A.D. 2000, AT 4:30 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE WAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. [SEAL OF DELAWARE SECRETARY'S OFFICE] /s/ Edward J. Freel ----------------------------------- Edward J. Freel, Secretary of State 2834471 8100 AUTHENTICATION: 0355725 001166923 DATE: 04-03-00 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF EPYX CORPORATION Pursuant to Section 242 of the General Corporation Law of the State of Delaware ---------------------------------------- Epyx Corporation (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify as follows: That by written consent of the Board of Directors of the Corporation, a resolution was duly adopted, pursuant to Sections 141(f) and 242 of the General Corporation Law of the State of Delaware, setting forth an amendment to the the Certificate of Incorporation of the Corporation declaring said amendment to be advisable. The sole stockholder of the Corporation entitled to vote thereon approved said proposed amendment by written consent in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The resolution setting forth the amendment is as follows: RESOLVED: That the Certificate of Incorporation of the Corporation be and hereby is amended by deleting the first sentence of Article FOURTH in its entirety and substituting therefor the following: "The total number of shares of stock which the Corporation shall have authority to issue is 2,000,000 shares of Common Stock, $.01 par value per share." IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its President this 31st day of March, 2000. EPYX CORPORATION By: /s/ Mark A. Brodsky ------------------------- Mark A. Brodsky President AMENDED AND RESTATED BY-LAWS OF EPYX CORPORATION ARTICLE I - Stockholders ------------------------ 1.1 Place of Meetings. All meetings of stockholders shall be held at such ----------------- place within or without the State of Delaware as may be designated from time to time by the Board of Directors or the President or, if not so designated, at the registered office of the corporation. 1.2 Annual Meeting. The annual meeting of stockholders for the election of -------------- directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date to be fixed by the Board of Directors or the President (which date shall not be a legal holiday in the place where the meeting is to be held) at the time and place to be fixed by the Board of Directors or the President and stated in the notice of the meeting. If no annual meeting is held in accordance with the foregoing provisions, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-Laws to the annual meeting of the stockholders shall be deemed to refer to such special meeting. 1.3 Special Meetings. Special meetings of stockholders may be called at any ---------------- time by the President or by the Board of Directors. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. 1.4 Notice of Meetings. Except as otherwise provided by law, written notice ------------------ of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, date and hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. 1.5 Voting List. The officer who has charge of the stock ledger of the ----------- corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, at a place within the city where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. 1.6 Quorum. Except as otherwise provided by law, the Certificate of ------ Incorporation or these By-Laws, the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. 1.7 Adjournments. Any meeting of stockholders may be adjourned to any other ------------ time and to any other place at which a meeting of stockholders may be held under these By-Laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as Secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. 1.8 Voting and Proxies. Each stockholder shall have one vote for each share ------------------ of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting, may vote or express such consent or dissent in person or may authorize another person or persons to vote or act for him by written proxy executed by the stockholder or his authorized agent and delivered to the Secretary of the corporation. No such proxy shall be voted or acted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period. 1.9 Action at Meeting. When a quorum is present at any meeting, the holders ----------------- of shares of stock representing a majority of the votes cast on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of shares of stock of that class representing a majority of the votes cast on a matter) shall decide any matter to be voted upon by the stockholders at such meeting, except when a different vote is required by express provision of law, the Certificate of Incorporation, these By-Laws or that certain Stockholders' Agreement dated as of April 4, 2000 (as amended, the "Stockholders' Agreement") among DeNora New Energy Investments B.V. ("DN"), Arthur D. Little, Inc. ("ADL"), Amerada Hess Corporation ("Hess") and the corporation. When a quorum is present at any meeting, any election by stockholders shall be determined by a plurality of the votes cast on the election. 2 1.10 Inspectors One or more inspectors may be appointed by the Board of Directors before or at any meeting of stockholders, or, if no such appointment shall have been made, the presiding officer may make such appointment at the meeting. At the meeting for which the inspector or inspectors are appointed, he or they shall open and close the polls, receive and take charge of the proxies and ballots, and decide all questions touching on the qualifications of voters, the validity of proxies and the acceptance and rejection of votes. If any inspector previously appointed shall fail to attend or refuse or be unable to serve, the presiding officer shall appoint an inspector in his place. At any time at which the corporation has a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on an inter-dealer quotation system of a registered national securities association, or (iii) held of record by more than 2,000 stockholders, the provisions of Section 231 of the Delaware General Corporation Law with respect to inspectors of election and voting procedures shall apply, in lieu of the provisions of the preceding paragraph. 1.11 Action without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE 2 - Directors 2.1 General Powers. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2.2 Number; Election and Qualification. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the stockholders or the Board of Directors, but in no event shall be less than one. The number of directors may be decreased at any time and from time to time either by the stockholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election, provided that as long as the Stockholders' Agreement is in effect, the corporation 3 shall nominate the directors designated by DN, ADL and Hess for election as directors of the corporation. Directors need not be stockholders of the corporation. 2.3 Enlargement of the Board. The number of directors may be increased at any time and from time to time by the stockholders or by a majority of the directors then in office. 2.4 Tenure. Each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.5 Vacancies. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, except as otherwise provided in the Stockholders' Agreement. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.6 Resignation. Any director may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. 2.7 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. 2.8 Special Meetings. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Delaware, designated in a call by the Chairman of the Board, President, two or more directors (provided that at least two directors are directors who have been designated by different stockholders), or by one director in the event that there is only a single director in office. 2.9 Notice of Special Meetings. Notice of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least seven (7) business days in advance of the meeting, (ii) by sending a telegram or telex, or delivering written notice by hand, to his last known business or home address at least seven (7) business days in advance of the meeting, or (iii) by mailing written notice to his last known business or home address at least seven (7) business days in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting. 4 2.10 Meetings by Telephone Conference Calls. Directors or any members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. 2.11 Quorum. A majority of the total number of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors, provided that for so long as the Stockholders' Agreement is in effect, four (4) directors shall constitute a quorum, at least two of which shall be directors designated by DN, and two of which shall be directors designated by ADL. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/3) of the number so fixed constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. 2.12 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws. 2.13 Actions Requiring Special Board Approval. (a) Without the prior approval of the Required Percentage (as defined below) of the Board of Directors, acting by resolution at a duly called regular or special meeting of the Board or acting by written consent, the corporation shall not: (i) merge or consolidate the corporation with any other Person (as defined below), or sell, assign, lease or otherwise dispose of or voluntarily part with the control of (whether in one transaction or in a series of transactions) all, or substantially all, of its assets or capital stock (whether now owned or hereinafter acquired) or sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) any asset or group of assets which is material to the business or operations of the corporation, or agree to do any of the foregoing, except for sales or other dispositions of assets in the ordinary course of business; (ii) amend the Certificate of Incorporation or By-laws of the corporation; (iii) sell or issue to any Person any capital stock of the corporation except pursuant to the Stockholders' Agreement or any approved stock option or other equity participation plan, or agree to do either of the foregoing; 5 (iv) redeem, purchase or otherwise acquire for value any common stock or any other capital stock the corporation except for repurchases of common stock pursuant to the terms of any approved stock option or other equity participation plan within the normal operation of such plan, or agree to do any of the foregoing; (v) declare or pay any dividend on any capital stock of the corporation; (vi) liquidate, dissolve or commence proceedings in bankruptcy; (vii) approve the operating plan of the corporation; or (viii) designate the individual to represent the corporation in the shareholders meeting of DeNora Fuel Cells, S.p.A. and the instructions to be granted to such representative to vote at such meeting. (b) For purposes of this Section 2.13, "Required Percentage" shall mean: (i) seventy-five percent (rounded up to the nearest whole number) of the Board as long as the number of directors on the Board is eight (8) or less and (ii) sixty-six and two-thirds percent (rounded up to the nearest whole number) of the Board as long as the number of directors on the Board is nine (9) or more. For purposes of this Section 2.13, "Person" means an individual, a corporation, an association, a partnership, a limited liability company, an estate, a trust, and any other entity or organization, governmental or otherwise. 2.14 Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing, and the written consents are filed with the minutes of proceedings of the Board or committee. 2.15 Removal. Except as otherwise provided by the General Corporation Law of Delaware or by the Stockholders, Agreement, any one or more or all of the directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except that the directors elected by the holders of a particular class or series of stock may be removed without cause only by vote of the holders of a majority of the outstanding shares of such class or series. 2.16 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the General Corporation 6 Law of the State of Delaware, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors. 2.17 Compensation of Directors. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service. ARTICLE 3 - Officers 3.1 Enumeration. The officers of the corporation shall consist of a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including a Chairman of the Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate. 3.2 Election. The President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting. 3.3 Qualification. No officer need be a stockholder. Any two or more offices may be held by the same person. 3.4 Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal. 3.5 Resignation and Removal. Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office. 7 Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation. 3.6 Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified, or until his earlier death, resignation or removal. 3.7 Chairman of the Board and Vice-Chairman of the Board. The Board of Directors may appoint a Chairman of the Board and may designate the Chairman of the Board as Chief Executive Officer. If the Board of Directors appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to him by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors. 3.8 President. The President shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the corporation. Unless otherwise provided by the Board of Directors, he shall preside at all meetings of the stockholders and, if he is a director, at all meetings of the Board of Directors. Unless the Board of Directors has designated the Chairman of the Board or another officer as Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The President shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe. 3.9 Vice Presidents. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors. 3.10 Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to 8 maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents. Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary, (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary. In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting. 3.11 Treasurer and Assistant Treasurers. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned to him by the Board of Directors or the President. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation. The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer, (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer. 3.12 Salaries. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. ARTICLE 4 - Capital Stock 4.1 Issuance of Stock. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any unissued balance of the authorized capital stock of the corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine. 9 4.2 Certificates of Stock. Every holder of stock of the corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by him in the corporation. Each such certificate shall be signed by, or in the name of the corporation by, the Chairman or Vice-Chairman, if any, of the Board of Directors, or the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on the certificate may be a facsimile. Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of shareholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 4.3 Transfers. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-Laws. 4.4 Lost, Stolen or Destroyed Certificates. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the corporation or any transfer agent or registrar. 10 4.5 Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders or to express consent (or dissent) to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 10 days after the date of adoption of a record date for a written consent without a meeting, nor more than 60 days prior to any other action to which such record date relates. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is properly delivered to the corporation. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE 5 - General Provisions 5.1 Fiscal Year. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January in each year and end on the last day of December in each year. 5.2 Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors. 5.3 Waiver of Notice. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a waiver of such notice either in writing signed by the person entitled to such notice or such person's duly authorized attorney, or by telegraph, cable or any other available method, whether before, at or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice. 5.4 Voting of Securities. Except as the directors may otherwise designate, the President or Treasurer may waive notice of, and act as, or appoint any person or persons to act as, 11 proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by this corporation. 5.5 Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action. 5.6 Certificate of Incorporation. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time. 5.7 Transactions with Interested Parties. No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 5.8 Severability. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws. 12 5.9 Pronouns. All pronouns used in these By-Laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. ARTICLE 6 - Indemnification 6.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of being or having been a director or officer of the corporation or serving or having served at the request of the corporation as a director, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an "Indemnitee"), shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than permitted prior thereto) (as used in this Article 6, the "Delaware Law"), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent and shall inure to the benefit of the Indemnitee's heirs, executors and administrators; provided, however, that, except as provided in Section 6.2 hereof with respect to Proceedings to enforce rights to indemnification, the corporation shall indemnify any such Indemnitee in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Article 6 shall be a contract right and shall include the right to be paid by the corporation the, expenses (including attorneys' fees) incurred in defending any such Proceeding in advance of its final disposition (an "Advancement of Expenses"); provided, however, that an Advancement of Expenses incurred by an Indemnitee shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it should ultimately be determined by final judicial decision from which there is no further right to appeal (a "Final Adjudication") that such Indemnitee is not entitled to be indemnified for such expenses under this Article 6 or otherwise. 6.2 Right of Indemnitee to Bring Suit. If a claim under Section 6.1 hereof is not paid in full by the corporation within sixty days after a written claim has been received by the corporation, except in the case of a claim for an Advancement of Expenses, in which case the applicable period will be twenty days, the Indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the corporation to recover an Advancement of Expenses, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by an Indemnitee to enforce a right to 13 indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that, and (ii) in any suit by the corporation to recover an Advancement of Expenses, the corporation shall be entitled to recover such expenses upon a Final Adjudication that, the Indemnitee has not met the applicable standard of conduct set forth in the Delaware Law. In any suit brought by the Indemnitee to enforce a right to indemnification or to an Advancement of Expenses hereunder, or by the corporation to recover an Advancement of Expenses, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such Advancement of Expenses, under this Article 6 or otherwise shall be on the corporation. 6.3 Non-Exclusivity of Rights. The rights to indemnification and to the Advancement of Expenses conferred in this Article 6 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provisions of the corporation's Certificate of Incorporation or these by-laws, agreement, vote of stockholders or disinterested directors or otherwise. 6.4 Insurance. The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under this Article 6 or under the Delaware Law. 6.5 Indemnification of Employees and Agents of the Corporation. The corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the Advancement of Expenses, to any employee or agent of the corporation to the fullest extent of the provisions of this Article 6 with respect to the indemnification and Advancement of Expenses of directors and officers of the corporation. ARTICLE 7 - Amendments 7.1 By the Board of Directors. These By-Laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the Required Percentage of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present. 7.2 By the Stockholders. These By-Laws may be altered, amended or repealed or new by-laws may be adopted by the affirmative vote of the holders of sixty-six and two-thirds percent of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, amendment, repeal or adoption of new by-laws shall have been stated in the notice of such special meeting. 14 EX-10.6(A) 5 0005.txt SCHEDULES TO EXHIBIT 10.6 Exhibit 10.6(a) Schedule 3.5 ------------ Joint Development Agreement dated September 24, 1999 between Plug Power, LLC and Epyx Joint Development Agreement dated January 12, 2000 between Cellex Power Products, Inc. and Epyx Purchase Order from Plug Power to Epyx dated November 10, 1999 for 10kW Multi- fuel Processor with Supporting Data and Service Joint Venture Agreement dated December 18, 1998 between H Power Corp. and Arthur D. Little, Inc. DOE Contract No. DE-FC02-99EE50580 dated July 21, 1999 issued to Arthur D. Little, Inc., titled Development of Fuel Processor, Durability Demonstration and 10kW Subcontract Agreement dated November 21, 1997 between Plug Power, LLC and Arthur D. Little, inc. under DOE Contract No. DE-FC02-97EE50472 Subcontract Agreement dated January 17, 2000 between Giner, Inc. and Epyx Purchase Order for Transient Reactor dated February 2000 from Epyx to ZTON- Altamira Corporation Other Non-Material Open Purchase Orders Excluded Contracts: "Design of a 50 kW Stationary PEMFC System" "Design of next generation of PEMFC stacks with clearly superior hydrogen utilization" Schedule 3.6 ------------ None 2 Consolidated Balance Sheets June 30, 2000 and March 31, 2000 $000's
Increase (Decrease) ---------------------- June 30, 2000 March 31, 2000 Amount % --------------- ---------------- -------- ---------- Assets Current Assets Cash $ 9,109.6 $ 106.4 $ 9,003.2 8462% Accounts receivable and unbilled services 2,813.2 1,747.6 1,065.6 61% Inventories 908.5 815.5 93.0 11% Accounts receivable - related parties 595.2 37.7 557.5 1479% Other current assets 22.3 117.2 (94.9) 81% --------------- ---------------- --------- ---------- Total current assets 13,448.8 2,824.4 10,624.4 376% Property and equipment, net 1,444.9 1,205.9 239.0 20% Other Assets 40.7 52.7 (12.0) 23% --------------- ---------------- --------- ---------- Total Assets $14,934.4 $4,083.0 $10,851.4 266% =============== ================ ========= ========== Liabilities and Stockholders Equity Current Liabilities Accounts payable - related parties $ 1,498.0 $ 944.9 $ 553.1 59% Prepaid Capitalization from ADL 7,000.0 - 7,000.0 N/A Trade payable and other accrued expenses 984.1 625.3 358.8 57% Bank loans - 794.8 (794.8) 100% Advance payments from clients 1,069.0 333.6 735.4 220% Accrued Compensation 233.6 153.0 80.6 53% --------------- ---------------- --------- ---------- Total current liabilities 10,784.7 2,851.6 7,933.1 278% Other Liabilities 235.7 231.4 4.3 2% Stockholders' Equity: Common Stock, par value $0.01, 2,000,000 shares authorized, shares issued and outstanding at April 4, 2000: 1,000,000 10.0 10.0 - 0% Additional Paid in Capital 6,990.0 990.0 6,000.0 606% Translation Adjustments (35.5) (35.5) N/A Retained earnings (losses) (3,050.5) - (3,050.5) N/A --------------- ---------------- --------- ---------- Total Stockholders' equity 3,914.0 1,000.0 2,914.0 291% --------------- ---------------- --------- ---------- Total liabilities and stockholders' equity $14,934.4 $4,083.0 $10,851.4 266% =============== ================ ========= ==========
3 Consolidated Statement of Operations June, 2000 and YTD June 30, 2000 $000's
June, 2000 YTD June, 2000 ------------------------------------- ---------------------------------- Actual Budget Fav(Unfav) Actual Budget Fav(Unfav) ---------- ------ ---------- ------ ------ ---------- REVENUE Sales/Leases $ 256.8 $ 581.6 $(324.8) $ 664.2 $ 1,744.7 $(1,080.4) Reimbursable client income 341.2 288.2 53.0 907.7 864.5 43.2 --------- --------- ------- --------- --------- --------- Total Revenue 598.0 869.7 (271.7) 1,571.9 2,609.2 (1,037.2) COSTS AND EXPENSES: Compensation and other employment costs 736.2 1,007.7 271.5 1,626.3 3,023.2 1,396.9 Other operating expenses 468.8 270.4 (198.4) 1,137.8 811.3 (326.4) Facilities and admin service fees 390.8 326.9 (63.9) 847.0 980.7 133.7 Reimbursable client costs 341.2 1,145.8 804.6 907.7 3,437.4 2,529.7 --------- --------- ------- --------- --------- --------- Total Costs and Expenses 1,937.0 2,750.9 813.9 4,518.8 8,252.7 3,733.9 (excl depr) --------- --------- ------- --------- --------- --------- EBITDA (1,339.0) (1,881.2) 542.2 (2,946.9) (5,643.5) 2,696.6 DEPRECIATION 42.8 71.1 28.3 63.7 213.2 149.5 --------- --------- ------- --------- --------- --------- INCOME (LOSS) FROM OPERATIONS (1,381.8) (1,952.2) 570.4 (3,010.6) (5,856.6) 2,846.1 (EBIT) OTHER INCOME (CHARGES) - - - (39.8) - (39.8) INCOME BEFORE TAX (1,381.8) (1,952.2) 570.4 (3,050.4) (5,856.6) 2,806.3 TAX PROVISION - - - - - - --------- --------- ------- --------- --------- --------- NET LOSS $(1,381.8) $(1,952.2) $ 570.4 $(3,050.4) $(5,856.6) $ 2,806.3 ========= ========= ======= ========= ========= =========
4 De Nora New Energy Investments B.V. Balance sheet as at August 2, 2000
Amounts in Euro - ------------------------------------------------------------------------------------------------- Investments Shareholders Equity Nuvera Fuel Cells Inc. 4.124.923 Authorized Capital 100.000 Shares in Portfolio (50.800) -------------------------------------------------------- Share capital 49.200 Result March 14, August 2 (86.059) --------- 36.859 Current Assets Liabilities Bank 27.610 Loans from Norfin International S.A. 4.102.324 Interests on loans 81.059 Accrued expenses 6.009 --------- --------- TOTAL ASSETS 4.152.533 TOTAL LIABILITIES AND SHARESHOLDERS EQUITY 4.152.533 ========= =========
De Nora New Energy Investments B.V. Profit and loss accounts as at August 2, 2000 Amounts in Euro Financial income and expenses Interest income 67 Interest expenses 81.059 ------- 80.992 Other income and expenses General & administrative expenses (6.327) Exchange result 1.439 ------- (4.888) ------- Profit before taxation (85.879) Tax on capital (180) - ------------------------------------------------- Result for the period (86.059) ================================================= 5 DE NORA NEW ENERGY INVESTMENTS B.V. ORONZIO DE NORA GROUP Herengracht 548 1017 CG Amsterdam the Netherlands August 2/nd/, 2000 FINEUROP INTERNATIONAL Ltd. 18-12 Dumaresq Street St. Helier Jersey - JE 2 3RL Dear Sirs: In connection with your consideration of a possible acquisition of shares Nuvera Fuel Cells, Inc. (the "Company"), it is expected that we will furnish you with certain nonpublic information about the business and operations of the Company. Such information, written or oral, together with analyses, compilations, studies or other documents prepared by you or your affiliates, officers, directors, employees, agents or representatives (collectively, "Representatives") which contain or otherwise reflect such information, is hereinafter referred to as "Confidential Information". In consideration of your being provided with the Confidential Information and being offered the opportunity to evaluate the business of the Company, you agree as follows. The Confidential Information will be kept confidential and shall not be disclosed, in whole or in part, to any person other than your Representatives who need to know such Confidential Information for the purpose of evaluating the proposed acquisition. You agree to inform each of your Representatives of the nonpublic nature of the Confidential Information and to direct such persons to treat such Confidential Information in accordance with the terms of this agreement. You will not use or allow the use of the Confidential Information for any purpose except to evaluate the proposed investment. Fineurop International, Ltd. August 2/nd/, 2000 You hereby acknowledge that, in your examination of the Confidential Information, you will receive material nonpublic information concerning the Company, and that you are aware (and that your Representatives who are apprised of this matter have been or will be advised by you) that the United States securities laws restrict the purchase and sale of securities by persons who possess certain nonpublic information relating to the issuer of such securities. The Confidential Information, except for that portion which consists of analyses, compilations, studies or other documents prepared by you or your Representatives, will be returned to us immediately upon your request. That portion of the Confidential Information which consists of analyses, compilations, studies or other documents prepared by you or your Representatives will be destroyed immediately upon our request. In the event you or anyone to whom you transmit the Confidential Information is requested or required (by oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demand or similar process) to disclose any of the Confidential Information, you will provide the Company with prompt notice so that the Company may seek a protective order or other appropriate remedy and/or waive your compliance with the provisions of this agreement. In the event that such protective order or other remedy is not obtained, or the Company waives your compliance with the provisions of this agreement, you will furnish only that portion of the Confidential Information which is legally required, in the opinion of your counsel, and will exercise your best efforts to obtain a protective order or other reliable assurance the confidential treatment will be accorded the Confidential Information. The term "Confidential Information" does not include any information (i) that was publicly available prior to the date of this agreement or thereafter becomes publicly available without any violation of this agreement on the part of you or any of your Representatives or (ii) that was available to you on a non-confidential basis prior to its disclosure to you by us or our Representatives or becomes available to you from a person other than us and our Representatives who is not, to the best of your knowledge, subject to any legally binding obligation to keep such information confidential. Neither we, nor the Company nor any of our or its Representatives make any representations or warranties, express or implied, with respect to the Confidential Information, except for any particular representations and warranties which may be made to a purchaser in a definitive purchase agreement when, as, and if finally executed, and subject to such limitations and restrictions as may be specified in such agreement. You agree that neither we, nor the Company nor any of our or its Representatives shall have any liability to you or your Representatives resulting from the selection or use of the Confidential Information by you or your Representatives. 7 Fineurop International, Ltd. August 2/nd/, 2000 This agreement will be binding upon you and your Representatives for a period of three years from the date hereof. This agreement shall be governed by, and construed in accordance with, the federal laws of the United States of America. Very truly yours, DE NORA NEW ENERGY INVESTMENTS B.V. By: /s/ Francesco Mazzucchi ----------------------- Name: Francesco Mazzucchi Title: Managing Director Accepted and agreed: FINEUROP INTERNATIONAL Ltd. By: /s/ Ronald Adir -------------------- Name: Ronald Adir Title: Director 25 EX-10.7(A) 6 0006.txt SCHEDULES TO EXHIBIT 10.7 Exhibit 10.7(a) Attachment "A" COMPENSATION ------------ TOP MANAGEMENT PERSONNEL 3,000,000 lire/day - ------------------------------------------- (Saponelli) MANAGEMENT PERSONNEL 1,500,000 lire/day - ------------------------------------------- (Ferrari) SPECIALIZED PERSONNEL 1,000,000 lire/day - ------------------------------------------- (Fazzoletti) QUALIFIED PERSONNEL Lire 600,000 lire/day - ------------------------------------------- (other NORFIN personnel) Milan, January 10, 2000 NORFIN S.P.A. DE NORA FUEL CELLS S.P.A. /s/ Mauro Saponelli /s/ Michele Tettamanti - -------------------- ----------------------- Mauro Saponelli Michele Tettamanti 1 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it DE NORA FUEL CELLS S.p.A. Via Bistolfi 35 20134 MILAN Milan, May 2, 2000 Re: Cooperation and Services Supply Agreement dated 01/10/00 With reference to the provision of point 5 of the agreement in question, please find enclosed the updated table of considerations, which takes effect on May 1, 2000. If you agree with same, please return a countersigned copy of this letter to indicate your acceptance. Sincerely, For acceptance [stamp] DE NORA FUEL CELLS spa [stamp] NORFIN s.p.a. /s/ Michele Tettamanti /s/ Mauro Saponelli - ---------------------- ------------------------- Michele Tettamanti Mauro Saponelli President President 2 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 3 Attachment "A" COMPENSATION ------------ TOP MANAGEMENT PERSONNEL 3,000,000 lire/day - ------------------------------------------- (Saponelli, Ladavas, Mora) MANAGEMENT PERSONNEL 1,500,000 lire/day - ------------------------------------------- (Ferrari) SPECIALIZED PERSONNEL 1,000,000 lire/day - ------------------------------------------- (Mazzoletti) QUALIFIED PERSONNEL Lire 600,000 lire/day - ------------------------------------------- (other NORFIN personnel) For acceptance [stamp] NORFIN s.p.a. [stamp] DE NORA FUEL CELLS s.p.a. /s/ Michele Tettamanti /s/ Mauro Saponelli - ----------------------- -------------------- Michele Tettamanti Mauro Saponelli President President 4 EX-10.8(A) 7 0007.txt SCHEDULES TO EXHIBIT 10.8 Exhibit 10.8(a) DE NORA GROUP INTERCOMPANY LAB ANALYSIS PRICE LIST Jan. 18, 2000 TYPE OF ANALYSIS
A) Microscopy, metallography Total price - ------------------------------------------------------------------------------------------------------------- 1 Powder analysis - inorganic residues (deposits, etc.) with EDAX 154,000 microanalysis - ------------------------------------------------------------------------------------------------------------- 2 Surface structures and EDA microanalysis 154,000 (metal-base electrode samples: anodes - cathodes activated by chlorine soda, etc.) - ------------------------------------------------------------------------------------------------------------- 3 Cross section structures and EDA microanalysis 615,000 (base metal electrode samples: anodes - cathodes activated by chlorine soda, etc.) - ------------------------------------------------------------------------------------------------------------- 4 Metallographic analyses of welds 616,000 - ------------------------------------------------------------------------------------------------------------- 5 Grain size on titanium samples 462,000 - ------------------------------------------------------------------------------------------------------------- 6 Surface and cross-section structural analyses and EDAX microanalysis on 924,000 carbon membranes and fabrics (e.g. Zoltek) from 4 to 8 assuming an average 6 hours - ------------------------------------------------------------------------------------------------------------- 7 Surface and cross-section structural analyses and EDAX microanalysis of 616,000 various components of the electrolyzers in general and Fuel Cells (FC bipolar plates, Ni sponges, silver-plated Ni meshes, etc.) - ------------------------------------------------------------------------------------------------------------- 8 Macro photographic test 154,000 (using stereo microscope) - ------------------------------------------------------------------------------------------------------------- 9 EDAX analysis of light elements, in addition to the usual EDAX tests 154,000 compared to the referenced times - ------------------------------------------------------------------------------------------------------------- 10 Linescan Mapping. Automatic analysis depends on the complexity of the test 924,000 (average 4 to 8 hours), the mean assumed to be 6 hours. - ------------------------------------------------------------------------------------------------------------- B) XRF - ------------------------------------------------------------------------------------------------------------- 11 Qualitative/quantitative test of the composition of various solid and 154,000 liquid samples, with UNIQUANT program - ------------------------------------------------------------------------------------------------------------- 12 Coating composition 77,000 (various types of anodes, activated cathodes, etc.) and load of noble metals - ------------------------------------------------------------------------------------------------------------- 13 Titer of concentrated solutions of indium and ruthenium 77,000 - ------------------------------------------------------------------------------------------------------------- 14 Tests of varying complexity (depending on type) from 4 to 8, average 6 924,000 hours - -------------------------------------------------------------------------------------------------------------
1 C) WET ANALYSIS BRINES AND SALTS - ---------------- - ------------------------------------------------------------------------------------------------------------- 15 a) group of 8 elements (ICP analysis): 231,000 - ------------------------------------------------------------------------------------------------------------- 16 Add 5-10' more for each additional sample 23,100 - ------------------------------------------------------------------------------------------------------------- 17 b) group of 4 heavy elements (ICP analysis): Ni, V, Mo, Pb 385,000 - ------------------------------------------------------------------------------------------------------------- Note: Ultimately, analysis of one sample which requires the complex determination of the 12 above elements, takes 4 hours. - ------------------------------------------------------------------------------------------------------------- 18 c) Cr determination (by atomic absorption) 616,000 4 hours for calibration with 4 standards, and reading of one sample - ------------------------------------------------------------------------------------------------------------- 19 Add 5-10' more for each additional sample 23,100 - ------------------------------------------------------------------------------------------------------------- 20 d) ClO3- + SO4= PO4= + NO3 + F- (high concentrations (ionic chromatography 616,000 analysis) for calibration - ------------------------------------------------------------------------------------------------------------- 21 Plus 0.5 hours for analysis of one sample 77,000 - ------------------------------------------------------------------------------------------------------------- 22 e) group of 4 titrations: NaCl, Na2CO3, NaOH, active Cl2 154,000 - ------------------------------------------------------------------------------------------------------------- 23 f) Br (titrimetry) 154,000 - ------------------------------------------------------------------------------------------------------------- 24 I (HACH spectrophotometry) 103,180 - ------------------------------------------------------------------------------------------------------------- 25 F (low concentrations) (ion sensitive electrode) 77,000 - ------------------------------------------------------------------------------------------------------------- 26 g) NH4OH (HACH spectrophotometry) - ------------------------------------------------------------------------------------------------------------- h) TOC (Donegani) - ------------------------------------------------------------------------------------------------------------- 27 1 sample 508,000 - ------------------------------------------------------------------------------------------------------------- 28 2 samples: 750,000 lire 750,000 - ------------------------------------------------------------------------------------------------------------- 29 3 samples: 991,000 lire 991,000 - ------------------------------------------------------------------------------------------------------------- 30 For each additional sample 238,000 - ------------------------------------------------------------------------------------------------------------- 31 AQUEOUS, opt. ACIDIC SOLUTIONS for the preparation of standards 77,000 - ------------------------------------------------------------------------------------------------------------- 32 10' additional for each element requested 23,100 - ------------------------------------------------------------------------------------------------------------- 33 ALCALINE SOLUTIONS (e.g., Fe in NaOH) per sample, for 154,000 - ------------------------------------------------------------------------------------------------------------- 34 PREPARATION OF SOLUTIONS FOR FUKUDA RECOATING, AND CONTROL OF TITRE 3,696,000 - ------------------------------------------------------------------------------------------------------------- 35 CONCENTRATED SOLUTIONS OF NOBLE METALS, from 16 to 32 616,000 (impurity analysis) - -------------------------------------------------------------------------------------------------------------
Electrochemical - ------------------------------------------------------------------------------------------------------------- 36 SEP 154,000 - ------------------------------------------------------------------------------------------------------------- 37 SEP/O2 1,232,000 - ------------------------------------------------------------------------------------------------------------- 38 WEAR RATE, from 8 to 24, average 16 2,464,000 - ------------------------------------------------------------------------------------------------------------- 39 Complete salts and brine analysis (includes analyses nos. 15, 17, 18, 20, 2,972,000 22, 23, 24, 25, 26, 27, plus 508,00 for outside analyses - -------------------------------------------------------------------------------------------------------------
2 - -------------------------------------------------------------------------------- Various non-quantifiable characterizations depending upon the complexity of the case. Non-quantifiable live tests depend on the complexity of the case. Non-quantifiable cell tests depend on the complexity of the case. - -------------------------------------------------------------------------------- /initialed/ 3 EX-10.10(A) 8 0008.txt SCHEDULES TO EXHIBIT 10.10 Exhibit 10.10(a)
- ----------------------------------------------------------------------------------------------------------------------- MASTRINI Company: DE NORA FUEL CELLA S.P.A. Date: 09/14/00 Page 1 - -----------------------------------------------------------------------------------------------------------------------
From 01/01/99
- ----------------------------------------------------------------------------------------------------------------------- Exchange Date Date and Record no. Description of DEBIT CREDIT Balance rate, Reg. number of CURRENCY transaction (consecutive) value date Symbol doc. CREDIT CURRENCY DEBIT - ----------------------------------------------------------------------------------------------------------------------- Norfin s.p.a. loan 01/01/101 account PREVIOUS BALANCE 0 11/01/99 11/01/99 General accounting 100,000,000 100,000,000 C account management 1936, 27,000 lire 100,000,000 11/22/99 11/22/99 11/22/99 General accounting 100,000,000 200,000,000 C EXTENSION CURRENT LOAN 1936, 27,000 lire 100,000,000 General accounting 50,000,000 250,000,000 C 11/25/99 11/25/99 extension Norfin loan 1936, 27,000 lire 50,000,000 12/15/99 12/15/99 12/15/99 General accounting 800,000,000 1,050,000,000 C Extension loan 1936, 27,000 lire 800,000,000 01/12/00 01/12/00 General accounting 400,000,000 1,450,000,000 C EXTENSION LOAN 1936, 27,000 lire 400,000,000 01/31/00 01/31/00 General accounting 200,000,000 1,650,000,000 C EXTENSION LOAN
1 1936, 27,000 lire 200,000,000 03/07/00 03/07/00 General accounting REPAYMENT 150,000,000 1,500,000,000 C LOAN 1936, 27,000 lire 150,000,000 03/24/00 03/24/00 General accounting REDEMPTION 1,500,000,000 0 D NF LOAN 1936, 27,000 lire 1,500,000,000 Debit balance 0 Final total 1,650,000,000 1,650,000,000 Final balance 0
2 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Attn: MR. CAMPOCCIA - ------------------- Milan, October 4, 1999 CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 19975/26 ABI 05696 CAB 01600, with effect October 1, 1999, the amount of 100,000,000 lire to DE NORA FUEL CELLS SPA account no. 9731/64 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "GRANTING OF LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT [Stamp] BANCA POPOLARE DI SONDRIO MILAN OFFICE OCT. 5, 1999 SERVICE OFFICE 3 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 4 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI BERGAMO CREDITO VARESINO Milan Office Via Manzoni, 7 MILAN Att: TRANSFERS OFFICE - --------------------- Milan, November 22, 1999 CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 040/18861 ABI 05428 CAB 01602, with effect November 22, 1999, the amount of 100,000,000 lire to DE NORA FUEL CELLS SPA account no. 86256 ABI 05428 CAB 01602 which this company has with you. Please indicate as the reason for transfers: "EXTENSION OF CURRENT LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT [Stamp] RECEIVED NOV. 22, 1999 BANCA POPOLARE DI BERGAMO CREDITO VARESINO Milan Office Via Manzoni, 7 5 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 6 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Att: MR. PASELLO - ---------------- Milan, October 4, 1999 CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 19975/26 ABI 05696 CAB 01600, with effect October 1, 1999, the amount of 50,000,000 lire to DE NORA FUEL CELLS SPA account no. 9731/64 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "EXTENSION OF CURRENT LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT [Stamp] BANCA POPOLARE DI SONDRIO MILAN OFFICE NOV. 25, 1999 SERVICE OFFICE 7 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 8 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Att: MR. PASELLO - ---------------- Milan, December 10, 1999 CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 19975/26 ABI 05696 CAB 01600, with effect December 15, 1999, the amount of 800,000,000 lire to DE NORA FUEL CELLS SPA account no. 9731/64 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "EXTENSION OF CURRENT LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT [Stamp] BANCA POPOLARE DI SONDRIO MILAN OFFICE DEC. 13, 1999 SERVICE OFFICE 9 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 10 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Att: MR. PASELLO - ---------------- Milan, January 11, 2000 [Stamp] BANCA POPOLARE DI SONDRIO MILAN OFFICE JAN. 12, 2000 BY MAIL CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 19975/26 ABI 05696 CAB 01600, with effect January 16, 2000, the amount of 400,000,000 lire to DE NORA FUEL CELLS SPA account no. 9731/64 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "EXTENSION OF CURRENT LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT 11 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 12 NORFIN VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: norfin@norfin.it ---------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Att: MR. PASELLO - ---------------- Milan, January 28, 2000 [Stamp] BANCA POPOLARE DI SONDRIO MILAN OFFICE JAN. 31, 1999 SERVICE OFFICE CC: DE NORA FUEL CELLS SPA Via Bistolfi, 35 MILAN Please transfer by debiting our account no. 19975/26 ABI 05696 CAB 01600, with effect February 2, 2000, the amount of 200,000,000 lire to DE NORA FUEL CELLS SPA account no. 9731/64 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "EXTENSION OF CURRENT LOAN" Sincerely, [stamp] NORFIN s.p.a. /s/ Mauro Saponelli --------------------- Mauro Saponelli PRESIDENT 13 STOCK CORPORATION - CAPITAL STOCK: 37,500,000,000 LIRE (wholly paid-in) - REGISTERED IN THE CORPORATE REGISTER, REGULAR SECTION AS NO. 203816 - R.E.A. NO. 1063960 AT C.C.I.A.A., MILAN - TAX ID NO. 06036090152 14 DE NORA FUEL CELLS VIA BISTOLFI, 35 - 20143 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 32223 1 ODENOR I e-mail: FuelCells@denora.it ------------------- BANCA POPOLARE DI SONDRIO MILAN OFFICE Via S. Maria Fulcorina, 5 MILAN Att: MR. PASELLO - ---------------- Milan, March 7, 2000 CC: [Stamp] BANCA POPOLARE DI NORFIN SPA SONDRIO Via Bistolfi, 35 MILAN OFFICE MILAN MARCH 7, 2000 SERVICE OFFICE Please transfer by debiting our account no. 9731/64 ABI 05696 CAB 01600, with effect March 8, 2000, the amount of 150,000,000 lire to NORFIN SPA account no. 19975/26 ABI 05696 CAB 01600 which this company has with you. Please indicate as the reason for transfers: "PARTIAL REDEMPTION OF CURRENT LOAN" Sincerely, [stamp] DE NORA FUEL CELLS s.p.a. /s/ Federico De Nora ----------------------- Federico De Nora Board Member 15 DE NORA FUEL CELLS VIA BISTOLFI, 35 - 21043 MILAN ORONZIO DE NORA GROUP TEL. (02) 21291 - FAX (02) 26412530 Telex 310552 - 322231 ODENOR I e-mail: FuelCells@denora.it ------------------- BANCA POPOLARE DE BERGAMO CREDITO VARESINO Milan Office Via Manzoni, 7 MILAN Att: MR TRAMEZZANI - ------------------- Milan, March 24, 2000 CC: NORFIN SPA Via Bistolfi, 35 MILAN [Stamp] RECEIVED [stamp] COPY MAR. 27, 2000 BANCA POPOLARE DI BERGAMO CREDITO VARESINO Milan Office Via Manzoni, 7 With reference to the credit line you have granted us, please transfer by debiting our account no. 86256 ABI 05428 CAB 01602, with effect March 24, 2000, the amount of 1,500,000,000 lire to NORFIN SPA account no. 040/18861 ABI 05428 CAB 01602 which this company has with you. Please indicate as the reason for the transfers: "Total redemption of current loan" Sincerely, [stamp] DE NORA FUEL CELLS s.p.a; /s/ Federico De Nora -------------------- Federico De Nora Board Member 16 [illeg. Letterhead] BANCA POPOLARE DI BERGAMO - CREDITO VARESINO - ----------------------------------------------------------------------------------------------- MILAN, 03/27/00 DIP 40 PR 084 WE WISH TO INFORM YOU THAT WE WILL PERFORM THE DE NORA FUEL CELLS SPA FOLLOWING RANSACTIONS WHICH WILL APPEAR IN YOUR NEXT ACCOUNT STATEMENT DIP. 40 - P.T.R. 084 WITH ACCOUNTING DATE 03/27/00 TRANS. 2621 40 79339 40/86256 CURRENCY: ITL ITALINA LIRE - -----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------- REASON AMOUNT VALUE DATE - --------------------------------------------------------- CREDITED TO NORFIN SPA REDEMPTION CURRENT LOAN DIDO - 1,500,000,000.00 03/24/2000 - -----------------------------------------------------------------------------------------------
/s/ Peroni Moreno ----------------- Peroni Moreno 17 EX-10.12(A) 9 0009.txt SCHEDULES TO EXHIBIT 10.12 Exhibit 10.12(a) Exhibit A --------- Memorandum Date: March 31, 2000 To: Elliot Mark cc: Tim White From: Pat Walsh Loc: 20A/245 Ext: 5902 Subject: Space - EPYX EPYX currently occupies space in Building 15, 32, and the Pilot Plant complex. Below is a summary and cost breakdown: Monthly Yearly Building Sq. Ft. Cost Cost -------- ------- ------- ------ 15 8,261 $30,531.27 $366,375.34 32 4,015 14,838.77 178,065.25 Pilot Plant 2,278 8,419.10 101,029.29 ------ ---------- ----------- Total 14,554 $53,789.14 $645,469.89 Attached are drawings indicating the space assigned to EPYX and the Facilities Space Report. This information is as of March 31, 2000. Please let me know if you need any additional information.
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 1 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15 138 1356 1356 15 139 937 937 15 151A 140 140 01 15 151B 140 70 7930 DEPIETRO R CONS 15 153 100 100 15 153B 70 70 5409 MOSHER PD CONS 15 153C 70 70 15 153D 70 70 630 HAILES RL CONS 15 153E 70 70 15 154 440 440 15 154A 65 65 15 154B 65 65 4370 THOMPSON C CONS 15 154C 65 65 6834 POLLICA DE 15 154D 65 65 6422 CHINTAWAR PS CONS 15 154E 65 65 4265 WILLEY JM 15 154F 65 65 5307 CIOFFI CM CONS 15 154G 62 62 2996 COLE T CONS 15L 101 117 117 8314 MORRISEAU BD CONS 15L 102 121 121 4802 BOYD S CONS
NOTE 01 ##### BLDG 15 ROOM 151B ALSO SHARED WITH UNIT 0946 ########
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 2 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 102A 94 94 4035 SYLVESTER RM SUP 15L 103 54 54 932 BLOCK SG CONS 15L 103A 80 80 4880 ROUNDS III R CONS 15L 104 80 SWAVELY 80 15L 105 80 80 8863 DORSON MH CONS 15L 106 80 80 7490 ZHAO J CONS 15L 107 85 85 15L 107A 27 CLOSET 27 15L 108 510 510 15L 109 968 968 15L 110 238 238 15L 111 238 238 15L 112 168 MECH. ROOM 168 15L 113 193 193 15L 114 262 MECH. FOR DRY ROOM 262 15L 115 533 533 15L 117 124 124 865 CROSS III JC CONS 15L 118 117 117 152 MITCHELL WL SENC 15L 119 117 117 5675 BENTLEY JM DIR
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 3 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- --- ---- ----- ---- ------------- ---- 15L 120 130 65 8053 HAND ML SUP 65 254 MADAN S CONS 32 101 113 113 32 102 113 113 32 103 113 113 186 BARTON L CONS 32 104 174 174 32 105 114 114 32 106 113 113 32 107 114 57 513 RIZZO VG CONS 57 874 RUMSEY JW CONS 32 108 114 114 7465 POLEVAYA O CONS 32 109 114 114 32 110 114 38 8259 BOSCO T CONS 38 4494 GOODWIN M CONS 38 7519 VODUC V SUP 32 111 123 123 335 PRABHU SK CONS 32 119 115 115 6916 WOO P SENC 32 120 174 58 4461 CELONA J SUP 58 6660 HILL SA CONS 58 6446 LANDRY BP SUP 32 121 114 57 1870 KHAN AR CONS 57 4044 LIU H CONS 32 122 114 57 5956 HAGAN MR CONS 57 7374 QI FC CONS
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 4 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- 32 123 114 57 4260 BATAL JD CONS 57 6826 ZHAO J 32 124 113 57 1714 BOWERS BJ CONS 57 362 NORTHROP WF CONS 32 125 114 57 4042 JAMIL A CONS 57 4054 RIVERA A CONS 32 126 114 114 687 NOWICKI BJ CONS 32 127 173 173 32 128 114 114 32 129 114 114 32 130 113 113 32 134 164 164 5689 HAVERTY AH SUP 32 135 605 EPYX DESIGN CENTER 605 32 136A 65 65 32 136B 65 65 32 137 311 EPYX CONFERENCE 311 46 100A 1709 PILOT PLANT 1709 46 200A 297 PILOT PLANT ME22 WILSON G 297 48 100 272 SHED 5 272
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 5 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: 194 UNIT LEADER: BENTLEY SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ********** TOTALS FOR GROUP 194 ********** SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 6 SECTION: EPYX SECTION LEADER: J BENTLEY UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########## TOTALS FOR SECTION B924 ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
RUN DATE: 04/03/00 ARTHUR D. LITTLE, INC. REPORT: SPACE200R1 RUN TIME: 09:31:12 SPACE MANAGEMENT PROGRAM: SPACE201 FACILITIES GROUP REPORT PAGE: 7 SECTION: SECTION LEADER: UNIT NUMBER: UNIT LEADER: SPACE HOLDING DETAIL FULL TIME STAFF DATA ------------------------------------------------- ------------------------- EMPL PRS NOTE BLD/ROOM SQ FT WIDTH DEPTH CHARACTERISTICS OFFCE AN HD CONE LIBRY MISC LAB SHOP STRGE NO EMPLOYEE NAME CLS - ---- -------- ----- ----- ----- ------------------ ----- ----- ---- ----- ---- ---- ---- ----- ---- ------------- ---- ########### GRAND TOTALS FOR COMPANY ########## SPACE HOLDING TOTALS OFFCE AN HD CONF LIBRY MISC LAB SHOP STRGE TOTAL STAFF TOTALS SQUARE FEET 14554 6776 0 0 0 668 7013 27 0 14484 PROF: 0 RA : 0 SEC : 0 CONS : 33 NUMBER ROOMS 70 56 0 0 0 3 10 1 0 SUP : 6 SENC : 2 DIR : 1 MNDR : 0 AVG SQFT/SEC : 0 AVG SQFT/RA : 0 AVG SQFT/CONS: 73 SENM: 0 TECH : 0 AVG SQFT/SENC: 116 AVG SQFT/DIR : 117 AVG SQFT/MNDR: 0 COOP: 0 LTD : 0 AVG SQFT/SENM: 0 AVG SQFT/PROF : 0 AVG SQFT/TECH: 0 DMD : 0 OTHER: 3 AVG SQFT/COOP: 0 AVG SQFT/SUP : 80 AVG SQFT/LTD : 0 ------ AVG SQFT/DMD : 0 AVG SQFT/OTHER: 62 AVG SQFT/EMPL: 322 TOTAL: 45
EPYX Space - Building 15 Total Rentable sq. ft. 8,261 Notes: # 1: 15L/101 thru 15L/107A reflects space for cubicles only (818 sq. ft.) Aisle space has been deducted. Note #2: 15/153 reflects space for offices and cubicles only (380 sq. ft.) Entrance and aisle space has been deducted. [FLOOR PLAN APPEARS HERE] as of 3/31/00 Pat Walsh EPYX Space - Building 32 Total Rentable sq. ft. = 4,015 sq. ft. [FLOOR PLAN APPEARS HERE] Notes: Red background is Credit Union and other shared space. as of 3/31/00 Pat Walsh [PILOT PLANT COMPLEX DRAWING APPEARS HERE] EX-10.17(A) 10 0010.txt SCHEDULES TO EXHIBIT 10.17 Exhibit 10.17(a) [FLOOR PLAN] [center of plan] Tettoia = penthouse [key, center left] = area, open fixtures 3,522.30 square meters = area, closed fixtures 699.40 square meters = area, closed fixtures 1200 square meters = area, offices (usable) 92.00 square meters = area, laboratories (usable) 360 square meters [title, bottom right] FINISOLA S.p.A. Milan, Italy GROUND LINE PLAN INSTALLATION AT VIA BISTOLFI, 35 [FLOOR PLAN] = area, closed fixtures 625.86 square meters RAISED LINE PLAN = area, offices (usable) 218.00 square meters [bottom left] [DESCRIPTION] area update [DATE] 08/05/00 [title, bottom right] FINISOLA S.p.A. Milan, Italy RAISED LINE PLAN Office Building Via Bistolfi, 35 2 [GENERAL PLAN] [key, center left] = area, open fixtures 12,046.30 square meters = area, closed fixtures penthouses 1,212.89 square meters = area, closed fixtures 414.37 square meters = area, offices (usable) 1,243.15 square meters = area, closed fixtures (Finisola), 299.89 square meters = area, production units (usable) 710 square meters [title, bottom right] FINISOLA S.p.A. Milan, Italy GENERAL PLAN Via dei Canzi, 1 Milan 3 EX-10.24 11 0011.txt JOINT VENTURE AGREEMENT Exhibit 10.24 H Power/ADL Joint Venture Agreement Joint Venture Agreement THIS AGREEMENT (this "Agreement") is made as of December 18, 1998, between H Power Corp., a Delaware corporation having its principal place of business at 60 Montgomery Street, Belleville NJ 07109, (hereinafter referred to as "H Power") and Arthur D. Little, Inc. having executive offices at Acorn Park, Cambridge, Massachusetts 02140 (hereinafter referred to as "ADL"). Throughout this Agreement, H Power and ADL may be referred to collectively as the "Parties" and each individually as a "Party". WHEREAS, H Power has acquired, developed, possesses and owns specialized, novel, and unique techniques, inventions, practices, methodologies, knowledge, skill, experience, data, formulae, computer programs and other information relating to the design and manufacture of proton exchange membrane ("PEM") fuel cells and to the design and manufacture of complete fuel cell operating systems, including but not limited to hydrogen supply and delivery sub-systems, temperature and water management sub-systems, control sub-system, and power conditioning sub- systems, some of which have been reduced to patents, pending patent applications or disclosure documents and others of which are deemed to be proprietary know-how (all of which are hereinafter referred to as H Power's Intellectual Property); and WHEREAS, H Power has utilized and is continuing to utilize its Intellectual Property to design, develop, integrate, assemble and produce fuel cell operating systems to replace or supplement conventional power sources such as batteries, diesel generators, internal combustion engines and central power stations, in a broad base of products and for various applications; and WHEREAS, ADL is a company specializing in areas ranging from product development and technology assessment to process engineering and manufacturing consulting; and WHEREAS, ADL has developed expertise in fuel processors operating on a variety of fuels, and WHEREAS, the Parties desire to collaborate under the terms of this Agreement to jointly study, design, develop, fabricate and demonstrate a commercially viable System that incorporates a PEM fuel cell sub-system and a propane fuel processor sub-system which supplies the hydrogen fuel to the PEM sub-system; and Page 1 of 11 Pages WHEREAS, the Parties believe that such Systems will meet the needs of telecommunications systems for premium power and will establish a technology base from which various other products will be created; and WHEREAS, the Parties have been selected for participation in the Advanced Technology program administered by tho National Institute of Standards and Technology as a joint venture to conduct certain specified research and development, and WHEREAS, the Parties wish to enter into a joint venture agreement to define their respective roles and responsibilities; and WHEREAS, the Parties have selected H Power to serve as the Administrator for the joint venture and wish to authorize, that organization to perform certain functions, specifically including executing the NIST Cooperative Agreement and thereby binding all the Parties to the terms and conditions of that agreement; NOW THEREFORE, in consideration of the foregoing recitals and the terms, conditions and covenants contained herein, it is hereby agreed as follows: 1. Definitions 1.1 Administrator. Administrator shall mean H Power Corp. and/or its appointed representative. 1.2 Agreement. Agreement shall mean this Joint Venture Agreement, as the same may be amended from time to time hereafter. 1.3 Background Technology. Background Technology shall mean technical information not generated in the course of the NIST Program. 1.4 Government Use License. Government Use License shall mean a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced by or on behalf of the United States throughout the world any Subject Invention. 1.5 NIST. NIST shall mean the National Institute of Standards and Technology. Page 2 of 11 Pages 1.6 NIST Cooperative Agreement. NIST Cooperative Agreement shall mean the funding agreement entered into between the Advanced Technology Program of NIST and the Parties hereto (as executed by the Administrator) for the conduct of the Research Program. 1.7 Patents. Patents shall mean all patents and applications relating thereto resulting from Subject Inventions. 1.8 Program or Research Program. Program or Research Program shall mean the research and development program set forth in the Proposal and included herein as Exhibit A. 1.9 Proposal. Proposal shall mean the proposal submitted by the Parties to the Advanced Technology Program, and which has been accepted by NIST for funding. 1.10 Statement of Work. Statement of Work shall mean the performance of activities as specifically set forth in Section 1.3 (entitled "Technical Approach") of the Proposal. 1.11 Subject Invention. Subject Invention shall mean any invention conceived or first reduced to practice in the course of the Program. 1.12 System. System shall mean a PEM fuel cell sub-system integrated with a propane fuel processor sub-system that will be utilized in telecommunication applications. 1.13 Technology. Technology shall mean all technical information generated in the course of the Program. 2. Purpose of this Joint Venture The limited purpose and the sole business of this Joint Venture shall be to accomplish the objectives of the Program by performing research directly and through the use of contracts, and to that end shall carry out their responsibilities as set forth in the Program, the NIST Cooperative Agreement, and the Statement of Work. The Joint Venture may engage in such other activities related either directly or indirectly to the foregoing as may be necessary Page 3 of 11 Pages advisable or convenient to the promotion or conduct of the Parties' businesses, but no other business shall be conducted by the Joint Venture without the prior written consent of both of the Parties hereto. 3. Term of this Joint Venture The term of the Joint Venture shall commence on and as at the date of this Agreement and shall continue until the Parties' obligations as set forth in this Agreement and the NIST Cooperative Agreement have been completed, or until the NIST Cooperative Agreement has been terminated. An individual Party may cease participation in the Program only in a manner consistent with the NIST Cooperative Agreement. 4. Obligation of the Parties 4.1 Activities The Parties shall use their best efforts to carry out the purposes of this Agreement, as set forth in Paragraph 2, hereinabove. 4.2 Contributions Each of the Parties agrees to contribute funds or in kind services as follows: Year One Year Two Total ---------- -------- ----- H Power $ 548,555 $933,628 $1,482,183 ADL $1,092,544 $642,722 $1,735,266 4.3 Responsibilities Of Each Of The Parties The primary responsibilities of the Parties to this Agreement shall be as follows: H Power: H Power shall be responsible for the design, development, fabrication and testing of the fuel cell sub-system, the integration of the System and the testing of the completed System. ADL: ADL shall be responsible for the design, development, fabrication and testing of the propane fuel processor sub-system. 4.4 Cooperation Between Parties The Parties shall cooperate fully with each other with respect to their primary responsibilities. Page 4 of 11 Pages 4.5 Execution of Work 4.5.1 H Power shall design, develop, fabricate and test its PEM fuel cell sub-system in its facilities at Belleville, NJ 4.5.2 ADL shall design, develop, fabricate and test its propane fuel processor subsystem in its facilities. 4.5.3 H Power shall integrate, assemble and test completed System at its place of business in Belleville, NJ. 5. Program Management To promote consultation and cooperation among the Parties hereto a committee shall be formed as follows: 5.1 A Joint Management Committee which shall consist of four representatives of H Power and three representatives of ADL and which will ordinarily meet once each month. Such meetings will be held at the premises of H Power in Belleville, NJ, unless otherwise agreed by the Parties hereto. The Chairman at the meetings of the Joint Committee shall be the Chief Executive Officer of H Power. 5.2 At such meetings the Joint Management Committee shall consider and advise upon and make recommendations to the Parties hereto on matters of policy pertaining to prospective and actual cooperation among the Parties hereto in the performance of this Agreement. 5.3 The representatives of the Parties shall be nominated by each of the Parties hereto by notice in writing to the other Party hereto. A Party, at anytime, may replace any and all of its said representatives by such notice. 5.4 The Joint Management Committee shall direct the conduct of the Program in all respects, through the Administrator. 5.5 The Administrator, who shall perform the day-to-day management and administration of the Program in accordance with all legal and regulatory requirements, including the NIST Cooperative Agreement, shall be an H Power member of the Joint Management Committee. 6. Intellectual Property Rights 6.1 In accordance with the Advanced Technology Program (ATP) statute and regulation, specifically 15 USC 278n(d)(11)(A) and 15 CFR 295.8(a)(1), title to inventions arising from assistance by the Program will vest in H Power and ADL. Title to any such intellectual property shall not be transferred or passed, except to a company incorporated in the United States, until the expiration of the first patent obtained in connection with the intellectual property. Nothing in this paragraph shall be construed to prohibit the licensing to any company of intellectual property rights arising from assistance provided by this Program. Page 5 of 11 Pages 6.2 The United States may reserve a non-exclusive, nontransferable, irrevocable paid-up license to practice or have practiced for, and on behalf of the United States any such intellectual property, but shall not, in the exercise of such license, publicly disclose proprietary information related to the license. 6.3 Subject to sub-paragraphs 6.1 and 6.2, all intellectual property rights relating to the PEM fuel cell sub-system shall become sole and exclusive property of H Power and all intellectual property rights relating to the propane fuel processor sub-system shall become sole and exclusive property of ADL. 7. Confidentiality Each of the Parties agrees that the Background Technology, the intellectual property rights generated during the course of the Program and the Proprietary Information of the other Party shall be covered by the Bilateral Confidentiality Agreement executed by ADL, on January 30, 1996 and by H Power on February 2, 1996. The Parties hereto further agree to extend the term of that agreement from three years from the last date of its execution to three years from the expiration of this Joint Venture Agreement. A copy of said Confidentiality Agreement is attached hereto as Exhibit B. 8. Disputes 8.1 Any question, dispute or difference arising among the Parties hereto and in particular, any matter which may affect their respective obligations or liabilities to each other or any third party, shall be resolved within the Joint Management Committee referred to in Paragraph 5 hereinabove. 8.2 If in the event that these discussions fail to reach a mutually acceptable conclusion within a reasonable period of time, then the question, dispute, difference or matter shall be referred to the respective Managing Directors/Chief Executive Officers of the Parties hereto, or to such Directors as may be appointed to act on their behalf, which Directors shall then be responsible for considering and reaching a mutually acceptable decision on said question, dispute, difference or matter. 8.3 No Party shall discontinue its efforts in pursuance of this Agreement while any question, dispute, difference or matter is under consideration by the Managing Directors/Chief Executive Officers of the Parties hereto or during arbitration proceedings as provided under this Clause. 8.4 If in the event that a decision cannot be mutually agreed then the question, dispute, difference or matter shall be determined by arbitration, in the city of Newark, New Jersey in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Page 6 of 11 Pages 9. Insurance Each Party shall obtain and maintain appropriate public liability and casualty insurance, or adequate levels of self insurance, to insure against any liability caused by that Party's obligations under this Agreement and the NIST Cooperative Agreement. 10. Termination Subject to the requirements of the NIST Cooperative Agreement, this Agreement may be terminated by either Party upon sixty (60) days written notice if the other Party hereto becomes controlled by any other company or entity that is in direct competition with any of the other Parties. 11. Force Majeure In the event that a Party is prevented or delayed from performing, fulfilling or completing an obligation provided for in this Agreement as a result of delays caused by strikes, lock-outs, unavailability of materials, acts of God, acts of any national, state or local governmental agency or authority or a foreign government, war, insurrection, rebellion, riot, civil disorder, fire, explosion or the elements, provided that such prevention or delay is not caused or due to any act or omission or negligence of the Party claiming Force Majeure, then the time for performance, fulfillment or completion shall be extended for a period not exceeding the number of days by which the same was so delayed. 12. Costs and Expenses Each Party shall bear its own costs and other related expenses incurred in the performance of this Agreement and neither Party shall be liable for any costs, expense, risk, obligation or liability related to or arising out of the other's efforts and responsibilities under this Agreement. 13. Consequential Damages Except as may be specifically provided for herein, neither Party shall be liable to the other Party under this Agreement for any indirect, incidental, special or consequential damages, however caused, whether in contract, tort, strict liability, warranty or otherwise. 14. Limited Purpose Joint Venture Nothing in this Agreement shall be deemed to constitute, create, give effect to, or otherwise any type of permanent arrangement of any kind, and the rights and obligations of the Parties hereto shall be limited to those expressly set forth herein. Nothing herein shall be construed as providing the sharing of profits or losses arising out of the efforts of any one of the Parties except as may be provided for in any resultant sub-contract agreed among the Parties. The cooperation of the Parties is for the purpose of complementing their respective capabilities. Page 7 of 11 Pages 15. Notice All notices, requests, demands or other communications which are required or may be given pursuant to the terms of this Agreement should be in writing and delivery shall be effective in all respects if delivered: (i) by telefax and promptly confirmed by letter, (ii) personally, or (iii) by registered or certified mail, postage prepaid, (or if overseas by postage paid registered [if available] international air mail) as follows: If to H Power If to ADL ------------- --------- 60 Montgomery Street 25 Acorn Park Belleville, NJ 07109 Cambridge, MA 02140 U.S.A. U.S.A. Telefax (973) 450-9850 Telefax (617) 498-7117 Attention CEO Attention General Counsel Proof of transmission in the case of telefax shall be deemed to be proof of receipt on the date and at the time of dispatch subject to a confirmed answer back at the end of the transmission. Notices hereunder shall be deemed to have been received by the receiving Party if sent by telefax upon proof of receipt on the date and at the time of dispatch as set out above, if delivered personally at time of receipt and if sent by mail five working days after the notice mailed, as the case may be, unless otherwise proved by the Party claiming non-receipt. 16. Scope This Agreement embodies all the understandings and agreements of the Parties and supersedes all prior and contemporaneous, oral or written agreements or understandings relating to the matters referred to herein, and neither of the Parties shall be bound by any definition, condition, representation, warranty, promise or provision other than is expressly set forth in this Agreement. 17. Modification This Agreement may be amended or modified only by an instrument of equal formality signed by duly authorized officers or representatives of the respective Parties. 18. Severability In the event any of the provisions of this Agreement, for any reason, shall be declared invalid, such decision shall not affect the validity of the remaining portion, which shall remain in full force and effect. The Parties hereto agree to negotiate a substitution for the provisions held invalid, illegal or unenforceable. Page 8 of 11 Pages 19. Effect of Waivers Failure of either Party hereto to insist upon strict compliance with any of the terms, covenants and conditions hereof shall not be deemed waiver or relinquishment of any similar right or power hereunder at any subsequent time or of any other provision hereof. 20. Governing Law and Venue The validity, performance, construction, and effect of this Agreement will be governed by the law of the State of New Jersey. 21. Binding Effect This Agreement shall be binding upon the Parties hereto and their respective executors, administrators, heirs, assigns and successors in interest. 22. Survival of Contents Notwithstanding anything else in this Agreement to the contrary, those provisions of this Agreement which by their nature survive the termination or expiration of this Agreement shall do so to the extent required thereby for the full observation and performance by any or all of the Parties hereto. 23. Assignment Neither Party hereto may sell, assign, transfer or hypothecate any rights or interests created under this Agreement or delegate any of its duties without the prior written consent of the other. Any such assignment or delegation of either Party hereunder without such consent shall be void. Notwithstanding the foregoing, H Power, in its sole discretion, shall have the right to assign this Agreement to an affiliate of H Power. Notwithstanding the foregoing, ADL, in its sole discretion, shall have the right to assign this Agreement to Epyx or any affiliate of ADL. 24. Indemnity Each Party shall be responsible for any and all losses or damages arising out of or incurred as a result of its own negligence. Each agrees to indemnify and hold the other harmless from and with respect to any such loss or damage including, without limitation, attorney's fees and costs. 25. No Broker or Finder The Parties acknowledge that in negotiating and entering into this Agreement, they have not been represented or assisted by any broker or finder who may be entitled to compensation. Page 9 of 11 Pages 26. Attorney's Fees If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, breach or default in connection with any of the provisions of this Agreement, the successful or prevailing Party shall be entitled to recover reasonable attorneys' fees incurred in this action or proceeding in addition to any other relief to which he or it may be entitled. 27. Power of Attorney By signing this Agreement, ADL grants to the Administrator a Power of Attorney for the sole purpose of binding ADL to the terms and conditions of the NIST Cooperative Agreement. 28. NIST Cooperative Agreement Precedence Should there be any conflict between the terms and conditions of this Agreement and the NIST Cooperative Agreement, the NIST Cooperative Agreement shall take precedence. 29. Construction The Recitals to this Agreement and all Exhibits, Schedules and Riders executed by the Parties and attached hereto shall be deemed a part of this Agreement. Any table of contents accompanying this Agreement and any heading contained herein are for directory purposes only, do not constitute a part of this Agreement, and shall not be employed in interpreting this Agreement. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. 30. Index and Captions The captions of the Clauses of this Agreement are solely for convenient reference and shall not be deemed to affect the meaning or interpretation of any paragraph hereof. 31. Cooperation Between the Parties In entering into this Agreement the Parties hereto recognize that it is impractical to make provision for every contingency that may arise in the course of the observance or performance thereof. Accordingly the Parties hereby declare it to be a cardinal principle of this Agreement and it to be their common intention that this Agreement shall operate between them with fairness and without detriment to the interests of any of them and if in the course of the performance of this Agreement unfairness to a Party hereto is disclosed or anticipated then the Parties hereto shall use their best endeavors to agree upon such action as may be necessary and equitable to remove the cause or causes of the same. Page 10 of 11 Pages 32. Additional Documentation Upon the request of either Party, each Party shall execute and deliver instruments, agreements, certificates and other documents as may be reasonably required in order to implement any of the terms or provisions of this Agreement. 33. Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, all of which shall constitute one and the same Agreement. 34. Officers of the Parties All the persons executing this Agreement are duly authorized officers of the Parties hereto and execute this Agreement in accordance with the authority vested in them by the by-laws and Board of Directors of their respective corporations. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement. For H POWER CORP. For ARTHUR D. LITTLE, INC Signed: /s/ Arthur Kaufman Signed: /s/ Jeffrey M. Bentley ------------------------------- ------------------------------ Title: Vice President Title: Vice - President ------------------------------- ------------------------------ Date: Dec. 21, 1998 Date: Dec. 29, 1998 ------------------------------- ------------------------------ Page 11 of 11 Pages EX-10.25 12 0012.txt SUBCONTRACT AGREEMENT EXHIBIT 10.25 PLUG POWER, L.L.C. SUBCONTRACT AGREEMENT NO. PP80205 SCHEDULE -------- This Subcontract Agreement entered into on November 21, 1997, by and between Plug Power, L.L.C., a limited liability corporation duly organized under the laws of Delaware and having offices in Latham, New York (hereinafter called "Buyer"), and Arthur D. Little, Inc., having offices in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, Buyer has heretofore entered into Cooperative Agreement No. DE-FC02- 97EE50472 (hereinafter called the "Prime Contract") with the U.S. Department Of Energy (hereinafter called "DOE"); and WHEREAS, in furtherance of the Prime Contract, the parties hereto desire to provide for the Seller's furnishing the services and supplies as hereinafter described; and WHEREAS, the Seller is willing to furnish said services and supplies in accordance with the provisions of this Subcontract Agreement (hereinafter called "Agreement"). NOW THEREFORE, parties do mutually agree as follows: ARTICLE I. STATEMENT OF WORK - ---------------------------- The Seller shall provide all necessary services, material, equipment, and facilities to perform the work as set forth in Appendix A, "Statement Of Work", attached hereto and made a part of this Agreement. ARTICLE II. PERIOD OF PERFORMANCE AND DELIVERY - ---------------------------------------------- a) The performance of work under this Agreement shall commence on September 9, 1997 and the Seller shall complete all work for the entire project as set forth in the Statement of Work, including the submission of all deliverables on or before March 9, 2000 (the term of this Agreement hereinafter called the "Project Budget Period"). b) Since funding for this Agreement is being provided on an incremental basis, the current funding obligation covers the period from September 9, 1997 through December 31, 1997 (such period hereinafter called the "Current Budget Period"). ARTICLE III. ALLOWABLE COSTS/APPLICABLE COST PRINCIPLES - ------------------------------------------------------- a. In accordance with the applicable cost principles cited below, the allowable costs of this award shall consist of the actual allowable direct costs incident to performance of the project, plus the allocable portion of the allowable indirect costs, if any, of the organization, less applicable credits and cost sharing. The allowable costs and cost sharing requirements are set forth in Appendix G, entitled "Special Terms and Conditions", attached hereto and made a part of this Agreement. b. The allowability of costs for work performed under this award and any subsequent lower tier subcontract will be determined in accordance with the Federal cost principles applicable to the Seller or lower tier subcontractors in effect on the effective date of this agreement or the date of any lower tier subcontracts, except as modified by other provisions of this Agreement or the lower tier subcontracts. The Seller or lower tier subcontracts shall specify in any cost-reimbursement contract under the award or lower tier subcontract the applicable cost principles cited in this provision. c. The applicable Federal cost principles for commercial firms and certain nonprofit organizations are included in Title 48 CFR Subpart 31.2, entitled "Contracts with Commercial Organizations," as supplemented by 48 CFR Subpart 931.2, applies to those nonprofit organizations not covered by OMB Circular A-122, and to all commercial organizations not covered by the cost principles set forth in title 45 CFR Part 74, Appendix E thereto entitled "Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals". ARTICLE IV. REPORTING REQUIREMENTS - ---------------------------------- Appendix F, attached hereto and made a part of this Agreement is a completed EIA 459A, "Federal Assistance Reporting Checklist," a checklist of the reports required under this Agreement. (See 10 CFR 600.151 for general reporting requirements and 10 CFR 605.19 for reporting requirements for the Office of Energy Research's Special Research Financial Assistance Program.) ARTICLE V. COST SHARING REQUIREMENTS - ------------------------------------ Any cost sharing shall defray only the allowable costs of the project in accordance with the statutes, regulations, applicable cost principles, and other terms and conditions governing this Agreement. Cost sharing contributions may be incurred either as direct or indirect costs, and include cash or in-kind contributions by the Seller and its subcontractors approved by the Buyer and accepted by the Defense Contract Audit Agency. The cost sharing may be in any allowable budget category or combination of categories. When a direct cost item represents some or all of the Seller's and its subcontractor's cost-sharing contribution, any associated indirect costs may not be charged to the Buyer but may be counted as part of the cost sharing. The 2 classification of contributed costs as direct or indirect must be consistent with the classification of similar items included in the Seller's and its subcontractor's cost accounting systems which are charged to the Buyer and be accepted by the Defense Contract Audit Agency. ARTICLE VI. BUYER'S MAXIMUM OBLIGATION - -------------------------------------- The Buyer's maximum obligation to the Seller is $680,248 and may be increased or decreased from time to time subject to the availability of funds to be provided by the DOE to the Buyer, as more fully described in Section 4, of Appendix G. Buyer shall not be obligated to make any additional, supplemental, continuation renewal, or other award for the same or any other purpose. ARTICLE VII. CHANGE OR ABSENCE OF THE PRINCIPAL INVESTIGATOR OR - --------------------------------------------------------------- DESIGNATED KEY PERSONNEL - ------------------------ Since the DOE decision to fund a project is based, to a significant extent, on the qualifications and level of participation of the principal investigators of the prime contractor and subcontractors, any change of a principal investigator or a significant change in responsibilities or level of effort of the principal investigator identified below or, in certain cases, other key personnel identified below as such is considered a change in the approved project. In addition, any continuous absence of the principal investigator in excess of three months, or plans for the principal investigator to become substantially less involved in the project than was indicated in the Seller's proposal, requires approval in writing from the Buyer. The Seller is encouraged to contact the Buyer immediately upon becoming aware that any of these changes are likely to be proposed, but in any event must do so and receive Buyer's approval before effecting any such change. PRINCIPAL INVESTIGATOR(s) OR KEY PERSONNEL ------------------------------------------ William L. Mitchell ARTICLE VIII. CHANGES IN OBJECTIVES OR SCOPE - -------------------------------------------- Any change in the objective or scope of this Agreement requires a modification to this Agreement signed by the Buyer. ARTICLE IX. TRANSFER OF SUBSTANTIVE PROGRAMMATIC EFFORT - ------------------------------------------------------- Except for the work effort to be subcontracted by the Seller as set forth in the Statement of Work (Appendix A), or the Program Budget (Appendix D) attached hereto and made a part of this Agreement, none of the substantive effort of the program may be transferred or assigned by contract or subcontract to another organization or person without the prior approval of the Buyer. This provision does not apply to the procurement of equipment, supplies, materials, or general support services; these services may, however, be subject to other prior approval requirements 3 (e.g., those found in the applicable cost principles or procurement standards). ARTICLE X. PAPERWORK REDUCTION - ------------------------------ This Agreement is subject to the requirements of the Paperwork Reduction Act of 1980 as implemented by the Office of Management and Budget rules, "Controlling Paperwork Burdens on the Public," published at 5 CFR 1320. These requirements apply if the Seller will collect information from ten or more respondents at the specific request of the Buyer, or if this Agreement requires specific Buyer approval of the information collection or the collection procedures. ARTICLE XI. NONDISCRIMINATION - ------------------------------ This Agreement is subject to the provisions of 10 CFR 1040, Nondiscrimination in Federally Assisted Programs. ARTICLE XII. PUBLIC ACCESS TO INFORMATION - ----------------------------------------- a. The Freedom of Information Act, 5 U.S.C. 552, as amended, and the DOE implementing regulations (10 CFR 1004) requires the DOE to release certain documents and records regarding awards to any person who provides a written request. The intended use of the information will not be a criterion for release. These requirements apply to information held by DOE and do not require the Seller and its lower tier subcontractors to permit public access to their records. b. Records maintained by DOE with respect to awards and are subject to the provisions of the Privacy Act, 5 U.S.C. 552a, and the DOE implementing regulations (10 CFR 1008) if those records constitute a "system of records" as defined in the Act and the regulations. Generally, records maintained by the Seller and its lower tier subcontractors are not subject to these requirements. ARTICLE XIII. ACKNOWLEDGMENT OF SUPPORT Publication of the results of the award - --------------------------------------- is encouraged, subject to any applicable restrictions set forth in this Agreement and provided a copy of any public disclosure of information related to this Agreement is provided to the Buyer prior to release of such information. Any article published shall include an acknowledgment that the research was supported, in whole or in part, by a DOE award (with the prime contract and subcontract award numbers) and a statement that such support does not constitute an endorsement by DOE or Buyer of the views expressed in the article. ARTICLE XIV. SUSPENSIONS AND TERMINATION - ---------------------------------------- a. If the DOE suspends or terminates its Prime Contract with the Buyer under the provisions of 10 CFR 600.25 and 600.161, the Buyer may suspend or terminate this Agreement, in 4 whole or in part. In addition, the Buyer may suspend or terminate this Agreement in whole or part: (1) when the Buyer believes that the recipient has materially failed to comply with the terms and conditions of the award, (2) for any reason by mutual agreement between the Buyer and the Seller upon the request of either party, or (3) when the parties cannot mutually agree to the extent of a termination. b. Normally, the Buyer's action to suspend or terminate an Agreement for cause will be taken only after the Buyer has informed the recipient of any deficiency on its part and given an opportunity to correct it. However, the Buyer may immediately suspend or terminate the award without prior notice when it believes such action is necessary to protect the interests of the Buyer and/or the Government. c. No costs incurred during a suspension period or after the effective date of a termination will be allowable, except those costs which, in the opinion of the Buyer and DOE, the Seller could not reasonably avoid or eliminate or which were otherwise authorized by the suspension or termination notice, provided such costs would otherwise be allowable under the terms of the award and the applicable Federal cost principles. d. Final allowable costs under a termination settlement shall be in accordance with the terms of the award, including this term, and the appropriate Federal cost principles. In no event will the total of payments under a terminated award exceed the amount obligated under this Agreement or the Buyer's pro rata share when cost-sharing was required, whichever is less. -------- e. Within 80 days after the termination of the award, the Seller shall submit any final financial, performance, and other reports required by the terms and conditions of the award. (See 10 CFR 600.151 and 600.152). ARTICLE XV. FOREIGN TRAVEL - -------------------------- No Foreign travel is authorized under this Agreement. ARTICLE XVI. PAYMENT - -------------------- Three copies of each invoice submitted no more frequently than once every month shall be prepared in accordance with the Billing Instructions set forth in Appendix E, attached hereto and made a part hereof. All invoices shall be submitted to: Mr. W. Sumigray Plug Power, L.L.C. 968 Albany-Shaker Road Latham, New York 12110 5 ARTICLE XVII. PRESERVATION/PACKAGING/PACKING - -------------------------------------------- The Seller shall provide preservation, packaging and packing which shall afford adequate protection against physical damage during shipment for all deliverable items. ARTICLE XVIII. ORDER OF PRECEDENCE - ---------------------------------- In the event of inconsistency among the documents constituting this Agreement, unless otherwise expressly provided herein, the inconsistency shall be resolved in the following order, the first listed documents having the highest precedence. 1. This Schedule. 2. Intellectual Property Provisions - Assistance; Large Business, State and Local Governments, or Foreign Organizations, Appendix B. 3. Special Terms and Conditions, Appendix G 4. DOE Acquisition Regulations (10 CFR Part 600 as amended by Subparts A and B, including Appendix A to Subpart B); Appendix C 5. Statement of Work, Appendix A. 6. Federal Assistance Reporting Checklist, Appendix F. 7. Program Budget, Appendix D. 8. Billing Instructions, Appendix E ARTICLE XIX. SHIPPING AND MARKING INSTRUCTIONS - ---------------------------------------------- a. Shipments shall be made to Plug Power, L.L.C., 968 Albany-Shaker Road, Latham, New York, 12110, marked for: Mr. David Hicks. b. The F.O.B. point for all items to be shipped by Seller shall be Plug Power, L.L.C., 968 Albany-Shaker Road, Latham, New York, 12110. ARTICLE XX. PURCHASING REPRESENTATIVES - -------------------------------------- The Purchasing Representative for the Buyer is: Mr. William P. Sumigray Contracts Manager Plug Power L.L.C. 968 Albany-Shaker Road Latham, New York 12110 (518) 785-2276 FAX: 518-785-2425 The Program Manager for the Buyer is: 6 Mr. David Hicks Program Manager Plug Power, L.L.C. 968 Albany-Shaker Road Latham, New York 12110 (518) 785-2499 FAX: (518)-785-2425 ARTICLE XXI. QUALITY ASSURANCE/CONTROL REQUIREMENTS - --------------------------------------------------- Documentation shall be maintained to verify conformance with Seller's Quality Assurance/Control Procedures and such documentation shall be available for review by representatives of the Buyer and DOE. ARTICLE XXII. DISPUTES - ---------------------- Either party hereto may litigate any dispute arising under or relating to this Agreement before any court of competent jurisdiction. Pending resolution of any such dispute by settlement or by final judgment, the parties shall proceed diligently with performance. Seller's performance shall be in accordance with Buyer's written instructions. ARTICLE XXIII. GOVERNMENT PROPERTY - ---------------------------------- The Seller may use its own property management standards and procedures provided it observes the provisions of Sections 600.131 through 600.137 of 10 CFR Part 600, Subpart B. ARTICLE XXIV. INTELLECTUAL PROPERTY PROVISIONS - ---------------------------------------------- The clauses set forth in Appendix B entitled, "Intellectual Property Provisions - - Assistance; Large Business, State and Local Government, or Foreign Organizations" are attached and made a part of this Agreement in their entirety, except as modified by the terms of this Agreement and as follows: 1) Substitute "Agreement" for "Contract", as appropriate. 2) Substitute "Seller" for "Contractor", as appropriate. The parties hereto understand that the DOE is considering the issuance of a class waiver of patent rights. Under the terms of the waiver, DOE will waive its principle title rights to all inventions conceived or first actually reduced to practice under each award issued under DOE's Program Research and Development Program entitled "Integrated Fuel Cell Systems and Components for Transportation and Buildings". The waiver shall be granted to the participant (Buyer) and the participant's subcontractors (the Seller) and lower-tiered subcontractors, provided such parties 7 accept the terms and conditions of the waiver. If the class waiver is approved by the DOE, the patent clause set forth in Appendix B shall be deleted in its entirety and the DOE approved patent waiver clause shall be substituted in lieu thereof and any other DOE changes to the terms in Appendix B shall also be incorporated into Appendix B. ARTICLE XXV. REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF SELLER - --------------------------------------------------------------------------- The EPACT Representation for Awards $100,000 and Over form, Certifications Regarding Lobbying; Debarment, Suspension and Other Responsibility Matters; And Drug-Free Workplace Requirements form, Assurance of Compliance, Nondiscrimination in Federally Assisted Programs prepared by the Seller and provided to the Buyer are incorporated by reference and made a part of this Agreement as are all others obtained in connection with this Agreement. ARTICLE XXVI. PROPRIETARY INFORMATION - ------------------------------------- It is understood by the parties hereto that each party may have to disclose its trade secrets or proprietary information to the other party in order to successfully fulfill their sole or mutual work obligations under this Agreement. If required, the parties hereto agree to negotiate and execute an amendment to this Agreement which shall set forth the duties and obligations of each party to protect the confidentiality of such information to be provided solely for the express purpose of conducting work related to this Agreement. ARTICLE XXVII. DEPARTMENT OF ENERGY (DOE) ASSISTANCE REGULATIONS - ---------------------------------------------------------------- a) The DOE Assistance Regulations set forth in 10 CFR Part 600, as amended by Subparts A and B, including Appendix A to Subpart B to Part 600, which are applicable to subcontracts issued under Cooperative Agreements are incorporated herein and made a part hereof as Appendix C. Substitute "Buyer" for "DOE" and "Seller" for "recipient", as appropriate. b) The Seller shall incorporate such regulations in all of its lower tier subcontracts under this Agreement. The Seller shall protect, indemnify and hold harmless the Buyer from and against all liabilities, losses, claims, damages. judgments penalties, causes of action, costs and expensed (including, without limitation, attorneys' fees and expenses) imposed upon or incurred by or asserted against the Buyer resulting from, arising out of or relating to the lower tier subcontracts made by the Seller under this Agreement. ARTICLE XXVIII. ENTIRE AGREEMENT - -------------------------------- This Agreement embodies the entire agreement and understanding between the Buyer and Seller and supersedes all prior agreements and understandings relating to the subject matter hereof. Except as otherwise expressly provided for herein, this Agreement may be changed, waived, 8 discharged or terminated only by an instrument in writing, signed by the party against which enforcement of such change, waiver, discharge or termination is sought. IN WITNESS WHEREOF, the parties have executed this Subcontract as of the day and year first above written. ARTHUR D. LITTLE INC. BY: /s/ Judith Blinn ----------------------- TITLE: Judith Blinn Contracting Officer ----------------------- DATE: 12/31/97 ----------------------- PLUG POWER, L.L.C. BY: /s/ Gary Mittleman ----------------------- TITLE: President & CEO ----------------------- DATE: Jan. 6, 1998 ----------------------- 9 APPENDIX A Statement of Work Task "0". 500 watt Demonstration of Breadboard System This task will integrate the current ADL 50 kWe fuel processor with a Los Alamos National Laboratory PROX CO clean-up device and a 500 watt (or similar) Plug Power PEM fuel cell module. This task will serve as a proof-of-concept demonstration of gasoline to electricity. It is not intended to illustrate preferred system integration schemes; although, some useful information concerning stack operation under actual reformate will be obtained. This task will be carried out in the ADL reformer laboratory. Task 1-1. 10 kWe Brassboard Evaluation Task 1-1-1 Develop Fuel Processor Configuration. In order to insure efficient system operation, the POX front end of the ADL fuel processor must be designed in order to convert a multitude of fuels including ethanol, methanol, natural gas, and all of the constituents found in RFG. Performance will be evaluated under typical and worst case fuels (sulfur, aromatics). ADL will work with Texaco R&D in order to speciate and quantify the output of the POX reactor by operating a 5 kWe experimental POX reactor in the Texaco laboratories. Testing will be carried out in order to determine POX operating points and fuel formulation effects on reformate quality, yielding an optimized POX design. In a parallel path, ADL will design an integrated 10 kWe fuel processor based on existing hardware designs that will accept the optimized POX reactor design developed based on test data furnished by Texaco. The 10 kWe design will include steady-state controls using automotive or industrial components. Task 1-1-2 Catalyst Development. Develop and test steam reforming and shift reactor catalysts optimized for operation in a transportation power system fueled by gasoline. The degree of conversion of CO to H2 achieved should be appropriate for the PROX fuel cell system while the reactor size should be in keeping with the space, weight and start-up time requirements of the system. Assess whether any of the state of the art WGS catalyst systems could provide improved activity or sulfur tolerance. Using a 5 kWe meso-scale reactor, perform tests using best currently available catalyst technology or catalyst technology identified from research studies. For the PROX reactor development, ADL will perform a limited number of small- scale tests to refine the kinetics parameters needed to scale up the catalyst bed, and then construct a PROX reactor sized to handle a reformate stream equivalent to a 10 kWe load. Next, ADL will operate the 10 kWe reactor with the brassboard system to acquire data on reaction kinetics, heat and mass transfer. A-1 APPENDIX A STATEMENT OF WORK Task 1-3. Integrate Existing 10kW Stack/Fuel Processor System This task will integrate a 10 kWe brassboard system based on existing designs for the fuel reformer and the fuel cell. Other major balance of plant items such as the air handling system will not be addressed; rather the task will focus on the close integration of the reformer and fuel cell to optimize key system operating parameters. Testing will include trade-off studies to determine reformer and PROX operating characteristics on PEMFC operation. Fuels to be tested in this task include ethanol, methanol, natural gas, and reformulated gasoline (RFG) or other simulated RFG blends. The results of these benchtop experiments will be key operating state-points that will be used to drive the 50 kWe system design from the standpoint of fluid flowrates, temperatures, and pressures. Further, this study will help direct the design of the 50 kWe components such as the PEMFC gas flow channels, air compressor, and the reformer catalyst volumes. Task 1-5 - 50 kWe Design Task 1-5-2 Selection of Operating Conditions and Control Strategy. Utilizing proprietary detailed computer simulations of polymer electrolyte fuel cell systems for mobile applications that Arthur D. Little has developed, and combined with the results from Task 1-1, the ADL fuel cell system model will be modified in order to duplicate the operation of the ADL/Plug Power hardware. The model will then be utilized to perform tradeoff studies to optimize the fully integrated system operating points, including all balance of plant components. The model will include consideration of: . Developing a consistent approach to sizing of the reformer and fuel processing system . Developing conceptual block flow diagrams to identify interaction of waste heat and other streams with units in the fuel cell propulsion system. . Establishing the critical dimensions and arrangement of the units. . Steady-state heat and mass balances for the selected option(s) will be performed. . Calculate heat duties for various heat exchangers. The control strategy for the fuel processor and integrated fuel cell system will be developed with a consideration for the integrated operation of the systems three main sub-systems: reformer, fuel cell and air handling system. The control system (and responsibility) will initially be considered as five individual modules: . Fuel cell control (thermal conditions, electrical output) - Plug Power . Reformer gas flow conditions (flow rate, temperature) - ADL . Air handling sub-systems operating point - Plug Power . Thermal and water management - Plug Power and ADL . Supervisory (or coordinating) control - Plug Power A-2 APPENDIX A STATEMENT OF WORK With baseline performance defined from Task 1-1, better optimized reformer control systems will be designed and tested against the benchmark performance already defined. Further, the robust controller will be designed to integrate with the remainder of the control system which will be developed through cooperative efforts between ADL and Plug Power. There will be a detailed design in which the specification developed throughout this phase is transformed into a definition of data and algorithms. The control system proven in Task 1-1 will establish the processing and memory requirements of the "target" hardware. The ADL and Plug Power team will review a range of control system types including fast industrial process control systems as well as automotive controls. ADL will work with Plug Power to integrate the ADL fuel processor controller with the Plug Power supervisory controller. At the conclusion of this effort, ADL will support Plug Power in the preparation for and the conduct of a 1 day Design Review with the DOE. Task 2-2. 50 kW Fuel Processor Development Task 2-2-1 Primary Fuel Processor Hardware Configuration. Using the design output from Task 1-3-1 and 1-3-2, ADL will fabricate a multi-fuel fuel processor for testing using ADL proprietary components and technology. Working with Plug Power, ADL will develop a fuel processor specification. The specification will cite the specific design goals set forth in the PRDA program objectives, and the specification will define specific mechanical, electrical, thermal, fluidic and flow stream composition interfaces. Special considerations related to testing, instrumentation and safety will also be defined. ADL's multi-fuel fuel processor design will be modified to accommodate any changes dictated by the specification or results of ADL's ongoing testing and technology development programs. A Sulfur removal capability will also be integrated into the fuel processor based on the gasoline and JP-8 fuel processor work that has been carried out by ADL during the past 2 years, with an objective of achieving less than 1 ppm output of sulfur is from the reformer. ADL will also work to optimize the fuel processor geometry and address specific system integration issues to provide the maximum conversion efficiency of gasoline to hydrogen while minimizing the carbon monoxide output. Although performance will be optimized on gasoline, comparable performance should be realized for ethanol, methanol, and natural gas fuels. ADL will work with Modine Manufacturing Company to perform a design for manufacturability and cost analysis on this design in order to identify cost savings for the final version of the fuel processor. Furthermore, Modine will supply all of the necessary heat exchangers for the complete system. A-4 APPENDIX A STATEMENT OF WORK Task 2-2-2 Catalyst Development. Using the steam reformer and WGS catalyst data from Task 1-3-2, ADL will work with the Universal Oil Products Research Center, an industrial catalyst manufacturer, to further optimize, develop and test catalysts for application in small-scale fuel processors. Using the PROX data from Task 1-3-2, ADL will design and construct a full scale (50 kWe) brassboard PROX reactor and operate it to acquire data on its performance. Those data will be used to refine the design of a second generation, full scale reactor. ADL will test the brassboard prototype, packaged reactor both as a stand alone unit and as part of the integrated fuel processor system. The result of the PROX work will be a vehicle ready device capable of handling transients and quick- start that is wholly integrated into the existing fuel processor hardware to meet the program goals of reduced system volume and mass. Finally, ADL will utilize their existing agreements with Los Alamos National Laboratories and Johnson Matthew to test their 50 kWe PROX devices as they become available, and to utilize these devices as back-up technology should the ADL PROX device not perform as anticipated. Task 2-5-2. Qualification Tests of Fuel Processor Subsystem - Utilizing existing facilities, test stands, support instrumentation, and test procedures from previous programs, ADL will evaluate the performance of the 50 kWe multi-fuel reformer. Major components (POX, shift reactors, sulfur removal, etc.) will be evaluated based upon thermal and chemical analysis. Shakedown tests will be conducted to verify proper operation of instrumentation and test hardware. A test procedure will be developed by all team members. Efficiency, emissions, and hydrogen gas purity will be key system level measurements. Intermediate temperature, pressure, and chemistry measurements will be used to establish the operating characteristics of important components and subsystems. The proposed testing will be developed in order to confirm achievement of all PRDA operational and performance goals. At the conclusion of this effort, ADL will support Plug Power in the preparation for and the conduct of a 1 day Design Review with the DOE. A-5 APPENDIX A STATEMENT OF WORK Task 3-3 Brassboard Fuel Processor Fabrication and System Integration Task 3-3-1 - Brassboard System Integration and Testing - Utilizing the fuel processor developed and tested in Task 2-2, (or another processor or a refurbished processor from task 2) ADL will work with Plug Power to integrate the unit into the programs "Brassboard" integrated system. System integration activities will be accomplished at Plug Powers Latham, NY facilities. At the conclusion of this effort, ADL will support Plug Power in the preparation for and the conduct of a 1 day Design Review with the DOE. Task 3-6 Endurance Testing Support - ADL will support Plug Power and the endurance testing program that will be conducted to demonstrate 500 hours of system operation. Personnel, spare parts and other technical assistance will be provided as required during this activity. Task 4-3. Fuel Processor Fabrication - Based upon the outcome of Task 2-2-1, Task 3-3-1, and the Modine manufacturability analysis, ADL will design and build a pre-commercial prototype multi-fuel processor for final 50kWe system integration. Possible updates to the design constructed in previous tasks may include hardware updates identified from both ongoing design work and endurance testing. Further updates may arise from the use of improved catalyst system, including the use of a fuel processor integrated PROX reactor. The proposed testing will be developed in order to confirm achievement of all PRDA operational and performance goals as shown in Table 1. This roadmap compares the current performance of the ADL fuel processor with the PRDA goals and lists activities planned in order to achieve the PRDA goals. ADL will work with Plug Power designers to optimize the mechanical layout of the integrated system to achieve PRDA system volumetric and weight objectives. Prior to the final integration of the systems, ADL will support Plug Power in the preparation for and the conduct of a 1 day Design Review with the DOE. ADL will support Plug Power in the integration and testing of the final pre- commercial prototype system. The system will be integrated at Plug Power facilities in Latham, NY and after being extensively tested, the system will be delivered to Texaco Beacon laboratories for emission, efficiency and driving cycle performance testing. A-6 APPENDIX A STATEMENT OF WORK Table 1. ADL Fuel Processor Technology Advancement Roadmap
==================================================================================================================================== Characteristic Current Performance of Planned Activities Performance PRDA Per PNGV ADL Fuel Processor Under PRDA Goal Goal Technical Roadmap August 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Multi-Fuel Feasibility testing complete Establish range of characteristics Multi-fuel Multi-fuel Capability of gasoline and other fuels capability capability Gasoline (retail) (geography, season) Ethanol (E-95) Evaluate POX performance on range of fuels available nationally Hydrated ethanol (gasoline, Etoh) Natural gas testing in-process Evaluate performance of tailored fuels deliverable through petroleum infrastructure (Texaco) Conduct thorough ethanol performance testing - ------------------------------------------------------------------------------------------------------------------------------------ Energy Efficiency Ethanol = 78%/1/ Maintain general thermal integration Ethanol = 78%/2/ 70% Gasoline = 76%/1/ Develop PROX with 10:1 CO:H\2\ Gasoline = 76%/2/ selectivity - ------------------------------------------------------------------------------------------------------------------------------------ Power Density 520/2/ Develop single-stage, monolith 600\2\ W/L 600 W/L (W/L) shift catalyst Integrate PROX into reformer shell Evaluate 5 atm reformer - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================================================================== Characteristic Current Performance of Planned Activities Performance PRDA Per PNGV ADL Fuel Processor Under PRDA Goal Goal Technical Roadmap August 1996 - ---------------------------------------------------------------------------------------------------------------------------------- Specific Power 700/2/ Develop monolith catalysts to 800/2/W/L 600 W/kg (W/kg) reduce support material weight - ---------------------------------------------------------------------------------------------------------------------------------- ___st (high-volume ADL est. $16-25/1/ Eliminate low temperature $25/kW/2/ $30/KW/2/ Production) ($/kwe) shift catalyst Chrysler est. $45/1/ Replace finned tube steam generator Replace loose catalysts with monoliths Utilize SS409 for most components - ---------------------------------------------------------------------------------------------------------------------------------- Start-up to Full 10 Eliminate low temperature shift 2 min 2 min Power (20(degrees)C) catalyst (min) Revise thermal integration to increase heat input to shift catalysts - ---------------------------------------------------------------------------------------------------------------------------------- Transient Response ADL est.(( 20 sec/1/ Develop transient capable F.P. ((20sec/2/ 20 s (10-90% rated control system using automotive output) components Conduct 10 kW and 50 kW transient tests - ---------------------------------------------------------------------------------------------------------------------------------- Emissions/3/ ((Tier 2 Repackage existing tailgas ((Tier 2 ((Tier 2 burner/converter - ----------------------------------------------------------------------------------------------------------------------------------
A-2
================================================================================================================================== Characteristic Current Performance of Planned Activities Performance PRDA Per PNGV ADL Fuel Processor Under PRDA Goal Goal Technical Roadmap August 1996 - ---------------------------------------------------------------------------------------------------------------------------------- Durability (no 200 h demonstrated Eliminate low temperature shift 500 h demonstrated 2000 h catalyst catalyst replacement) 2000 h projected Monolith catalysts to avoid crumbling - ---------------------------------------------------------------------------------------------------------------------------------- CO Content Steady *1.0%/1/ measured Develop 50 kW transient PROX with 50 ppm/4/ 10 ppm State controls - ----------------------------------------------------- ---------------------------------------- CO Content Transient *1.0%/1/ measured 100 ppm/4/ 100 ppm - ---------------------------------------------------------------------------------------------------------------------------------- H2S Content 1 ppm measured Conduct sulfur break-through tests 1 ppm over 200 h 0 ppm utilizing max sulfur content operation/4/ gasoline ==================================================================================================================================
/1/PROX not included /3/From anode burner - does not include evap. emissions /2/With PROX /4/Fuel processor levels to be harmonized with fuel cell anode requirements * less than A-3 APPENDIX A STATEMENT OF WORK Schedule and Deliverables
==================================================================================================================================== Task Description Dates Deliverables/1/ - ------------------------------------------------------------------------------------------------------------------------------------ 0 500 watt Demonstration 9/15-11/18 - ------------------------------------------------------------------------------------------------------------------------------------ 0.1 Interface Development w/PP&LANL 9/15-9/30 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 0.2 Test POX/PROX system 10/1-10/15 Test Data - ------------------------------------------------------------------------------------------------------------------------------------ 0.3 Test POX/PROX/PEM system 10/15-11/11 - ------------------------------------------------------------------------------------------------------------------------------------ 0.4 Review Test Results 11/11-11/18 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 1 System Definition 10/1-6/1/98 - ------------------------------------------------------------------------------------------------------------------------------------ 1.1 10 kWe Brassboard Evaluation 10/1-3/3/98 - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1 F.P. Design & Specification - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1.1 10 kWe F.P. Design & Spec. 10/1-10/21 Design Specs - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1.2 5 kWe F.P. Texaco Design & Spec. 10/1-10/21 - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1.3 5&10 kWe Hardware Assembly & Shakedown at ADL 10/21-1/13/98 5&10 kWe Hardware - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1.4 10 kWe F.P. Testing at ADL 1/13-2/24 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.1.5 Review 10 kWe Testing Results 2/24-3/3 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.2 Catalyst Development - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.2.1 5 kWe POX Testing at Texaco 12/9-2/24/98 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.2.2 Review Texaco Testing Results 2/24-3/3 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.2.3 10 kWe PROX Design & Assy. 10/1-12/9 Test Plan PROX Hardware - ------------------------------------------------------------------------------------------------------------------------------------ 1.1.2.4 10 kWe PROX Testing at ADL 12/9-3/3/98 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 1.3 10 kWe Brassboard Testing at ADL 3/3-6/1 - ------------------------------------------------------------------------------------------------------------------------------------
A-4 APPENDIX A STATEMENT OF WORK Schedule and Deliverables
==================================================================================================================================== Task Description Dates Deliverables/1/ - ------------------------------------------------------------------------------------------------------------------------------------ 1.3.1 System Assembly/Shakedown 3/3-3/31 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 1.3.2 System Testing 3/31-5/26 10 kWe System - ------------------------------------------------------------------------------------------------------------------------------------ 1.3.3 Review System Testing Results 5/26-6/1 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 1.5 System Definition - ------------------------------------------------------------------------------------------------------------------------------------ 1.5.2 Operating Conditions/Control Strategy 1/14/98-12/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ 1.5.2.1 System Modeling 1/14-3/16 System Sim. Analysis - ------------------------------------------------------------------------------------------------------------------------------------ 1.5.2.2 Steady-State Controls Development and Control 1/14-12/30 Control Interface Spec. Interface Spec - ------------------------------------------------------------------------------------------------------------------------------------ 2 50kWe Subsystem Development - ------------------------------------------------------------------------------------------------------------------------------------ 2.2 50kWe Fuel Processor Subsystem Development 3/15/98-10/25/98 - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.1 50 kWe Fuel Processor - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.1.1 50 kWe Design/Spec 3/15-4/15 Design Specs - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.1.2 50 kWe Assy/Shakedown 4/16-7/31 50kWe Hardware - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.1.3 50 kWe Operating Map Testing 8/1-9/14 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.1.4 Review 50 kWe Results 9/15-9/30 Test Results - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2 Catalyst Develop/Refinement - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.1 UOP Catalyst Development 3/15 - 5/15 - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.1.1 UOP Catalyst Fabrication 4/15 - 6/15 - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.1.2 UOP Cat. Screening @ ADL 6/15 - 9/1 - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.1.3 UOP Cat. Screening Review 9/1 - 9/14 - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.2 50 kWe Transient PROX PROX Hardware - ------------------------------------------------------------------------------------------------------------------------------------
A-5 APPENDIX A STATEMENT OF WORK Schedule and Deliverables
==================================================================================================================================== Task Description Dates Deliverables/1/ - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.2.1 50 kWe PROX Design/Assy 5/15 - 7/15 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 2.2.2.2.2 50 kWe PROX Testing 7/16 - 9/14 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ 2.4 Control Strategy/Hardware Dev. - ------------------------------------------------------------------------------------------------------------------------------------ 2.4.x F.P. Transient Control 3/15 - 10/25 Control Spec./Interface - ------------------------------------------------------------------------------------------------------------------------------------ 2.5 Subsystem Qualification Testing - ------------------------------------------------------------------------------------------------------------------------------------ 2.5.2 50 kWe F.P./PROX Testing - ------------------------------------------------------------------------------------------------------------------------------------ 2.5.2.1 Steady-State Testing 9/15-10/15 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 2.5.2.2 Transient Testing 10/16-10/31 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 2.5.2.3 Review 50 kWe F.P./PROX Results 11/1-11/14 Test Report - ------------------------------------------------------------------------------------------------------------------------------------ DOE Review 11/15/98 - ------------------------------------------------------------------------------------------------------------------------------------ 3 50 kWe Brassboard System Fabrication and Integration 11/15/98-8/1/99 - ------------------------------------------------------------------------------------------------------------------------------------ 3.1 System Design 11/16-1/8 - ------------------------------------------------------------------------------------------------------------------------------------ 3.3 50 kWe "Alpha" F.P. Unit 11/16-5/5 - ------------------------------------------------------------------------------------------------------------------------------------ 3.3.1 50 k We "Alpha" Design/Spec 11/16-1/8/99 Design Specs - ------------------------------------------------------------------------------------------------------------------------------------ DOE Review 1/15/99 - ------------------------------------------------------------------------------------------------------------------------------------ 3.3.2 50 kWe "Alpha" Assy/Shakedown 1/9-4/1 50kWe Hardware - ------------------------------------------------------------------------------------------------------------------------------------ 3.3.3 50 kWe "Alpha" PROX 11/16-4/1 PROX Hdware - ------------------------------------------------------------------------------------------------------------------------------------ 3.4 System Integration and Tests at P-P 4/7- 5/16 - ------------------------------------------------------------------------------------------------------------------------------------ 3.6 Endurance Testing Support 5/17-8/1 - ------------------------------------------------------------------------------------------------------------------------------------ 4 Final System Design 4/1-2/28/00 - ------------------------------------------------------------------------------------------------------------------------------------
A-6 APPENDIX A STATEMENT OF WORK Schedule and Deliverables
==================================================================================================================================== Task Description Dates Deliverables/1/ - ------------------------------------------------------------------------------------------------------------------------------------ 4.3 50 kWe "Beta" F.P. Unit 4/1-8/6 - ------------------------------------------------------------------------------------------------------------------------------------ 4.3.1 50 kWe "Beta" Design/Spec 4/1-5/1 Design Specs - ------------------------------------------------------------------------------------------------------------------------------------ 4.3.2 50 kWe "Beta" Assy/Shakedown 5/2-7/2 Test Plan - ------------------------------------------------------------------------------------------------------------------------------------ 4.3.3 50 kWe "Beta" Test 7/2-8/6 50kWe Hardware - ------------------------------------------------------------------------------------------------------------------------------------ 4.3.4 50 kWe "Beta" PROX 4/1-8/6 PROX Hdware - ------------------------------------------------------------------------------------------------------------------------------------ 4.3.5 50 kWe "Beta" Controls 4/1-8/6 Control Spec./Interface - ------------------------------------------------------------------------------------------------------------------------------------ DOE Review 8/15/1999 - ------------------------------------------------------------------------------------------------------------------------------------ 4.4 "Beta" System Assembly 8/17-10/17 - ------------------------------------------------------------------------------------------------------------------------------------ 4.5 "Beta" System Shakedown/Tests 10/18-2/15 ====================================================================================================================================
/1/ Does not necessarily mean delivery to Plug Power - i.e., these are overall program deliverables for DOE; some hardware may remain at Arthur D. Little. A-7 APPENDIX B Intellectual Property Provisions - Assistance LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS, OR FOREIGN ORGANIZATIONS (Research, Development or Demonstration)
CLAUSE REFERENCE TITLE PAGE ------ -------- ----- ---- 01. 48 C.F.R. 52.227-1 Authorization and Consent (JUL 1995), Alternate I 1 02. 48 C.F.R. 52.227-2 Notice and Assistance Regarding Patent and Copyright 1 Infringement (AUG 1996) This clause is not applicable if the award is for less than $100,000. 03. 48 C.F.R. 952.227-9 Refund of Royalties (FEB 1995) l 04. 48 C.F.R. 952.227-13 Patent Rights - Acquisition by the Government 2 (FEB 1995) 05. 43 C.F.R. 52.227-14 Rights in Data - General (JUN 1937), with Alternates 10 I and V and paragraph (d)(3) as supplemented by 10 C.F.R. Part 600.27: If this award requires the use or delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 06. 43 C.F.R. 52.227-16 Additional Data Requirements (JUN 1987) 15 07. 48 C.F.R. 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 16 Attachment 1 (for reference): Patent Rights - Retention by Contractor (Short Form) (FEB 1995); 48 C.F.R.952.227-11
B-1 52.227-1 Authorization and Consent; Alternate I (APR 1984) AUTHORIZATION AND CONSENT (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement. NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 952.227-9 Refund of Royalties 1 REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the Government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 952.227-13 Patent Rights - Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) 2 (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, 3 unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that-- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; 4 (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or assignee to be privileged and confidential and is so marked, the Department of Energy agrees that, to the extent permitted by law, it will not disclose such information to persons outside the Government. (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. (1) The Contractor is hereby granted a revocable, nonexclusive, royalty- free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractor's license extends 5 to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the invention available for licensing. (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the 6 Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary cf Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, or within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. 7 (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign counts in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: 8 (i) Interim reports every 12 months (or such loner period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. 9 (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(1) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in all subcontracts, regardless of tier, for experimental, developmental, 10 demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor--- (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. 11 (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(1) of this clause from all persons who perform any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or 12 (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of DOE or the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(1) of this clause, the Contractor: (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not 13 supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 52.227-1.4 Rights in Data - General, with Alternates I and V, and paragraph (d)(3) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. ----------- "Computer software," as used in this clause, means computer programs, computer data bases, and documentation thereof. "Data," as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. The terms does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information. "Form, fit, and function data," as used in this clause, means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithm, process, formula, and flow charts of the software. "Limited rights data," as used in this clause, means data (other than computer software) developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. "Technical data," as used in this clause, means data (other than computer software) which are of a scientific or technical nature. "Restricted computer software," as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software; including minor modifications of such computer software. "Unlimited rights," as used in this clause, means the right of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so. 14 "Limited rights," as used in this clause, means the rights of the Government in limited rights data as set forth in the Limited Rights Notice of subparagraph (g)(2) if included in this clause. "Restricted rights," as used in this clause, means the rights of the Government in restricted computer software, as set forth in a Restricted Rights Notice of subparagraph (g)(3) if included in this clause, or as otherwise may be provided in a collateral agreement incorporated in and made part of this contract, including minor modifications of such computer software. (b) Allocation of rights. -------------------- (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(1) below. (c) Copyright. --------- 15 (1) Data first produced in the performance of this contract. Unless provided otherwise in subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings or similar works. The prior, express written permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat 16 the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to establish claim to copyright in computer software first produced in the performance of this contract without prior written permission of the Contracting Officer. When such permission is granted, the Contracting Officer shall specify appropriate terms to assure dissemination of the software. The Contractor shall promptly deliver to the Contracting Officer or to the Patent Counsel designated by the Contracting Officer a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled, and other terms pertaining to the computer software to which claim to copyright is made. (e) Unauthorized marking of data. ---------------------------- (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignore. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officer's decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officers determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at 17 any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. Coast Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. (f) Omitted or incorrect markings. ----------------------------- (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractor's expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. ------------------------------------------------------------------ 18 (1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] (3) [Reserved.] (h) Subcontracting. -------------- The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractor's obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. ----------------------- Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(1) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) ALTERNATE II (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written 19 request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. ___________ (and subcontract No. __________, if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(l) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) ALTERNATE III (g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. ____________ (and subcontract_____________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; 20 (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No.___________ (and subcontract ______________, if appropriate) with ______________ (name of Contractor and subcontractor)." (End of notice) (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) 21 of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." (End of clause) 48 CFR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 48 CFR 52.227-23 Rights to Proposal Data 22 APPENDIX C DOE ACQUISITION REGULATIONS (10 CFR PART 600 AS AMENDED BY SUBPARTS A AND B, INCLUDING APPENDIX A TO SUBPART B) This Agreement incorporates 10 Code of Federal Register Part 600, as amended by Subparts A and B, including Appendix A to Subpart B, with the appropriate changes in the terms in the clauses to reflect the Buyer/Seller relationship. C-1 APPENDIX D Schedule of Cost Sharing/Co-Funding Summary ARTHUR D. LITTLE, INC ADL REF.: 2-5377
- -------------------------------------------------------------------------------------------------------------- PROFESSIONAL SERVICES TOTAL YEAR 1 YEAR 2 YEAR 3 - -------------------------------------------------------------------------------------------------------------- $ 4,164,967 $1,975,007 $1,856,042 $ 333,917 - -------------------------------------------------------------------------------------------------------------- Other Direct Costs: (Support Expense, Consultants, & Travel) 243,079 118,515 117,305 7,259 - -------------------------------------------------------------------------------------------------------------- Subcontractors: Texaco 390,000 234,000 156,000 0 Universal Oil Products 400,000 400,000 0 0 Modine 309,700 108,500 201,200 0 0 - -------------------------------------------------------------------------------------------------------------- Materials 603,500 438,500 165,000 0 0 - -------------------------------------------------------------------------------------------------------------- Material Overhead 110,708 76,765 33,943 0 - -------------------------------------------------------------------------------------------------------------- G&A On ODC's 48,616 23,703 23,461 1,452 - -------------------------------------------------------------------------------------------------------------- Subtotal $6,270,570 $3,374,990 $2,552,952 $342,627 0 - -------------------------------------------------------------------------------------------------------------- Total Program Cost $6,270,570 $3,374,990 $2,552,952 $342,627 0 0 0 0 - -------------------------------------------------------------------------------------------------------------- Total Program Value $6,270,570 $3,374,990 $2,552,952 $342,627 - -------------------------------------------------------------------------------------------------------------- Cost-Share/Co-Funding ADL ($704,618) ($337,443) ($312,006) ($55,169) 0 $0 Texaco (195,000) ($117,000) ($78,000) $0 Universal Oil Products (100,000) ($100,000) $0 $0 Modine (309,700) (108,500) (201,200) 0 Cash Contribution (Illinois) (325,000) (130,000) (130,000) (65,000) - --------------------------------------------------------------------------------------------------------------
D-1
- -------------------------------------------------------------------------------------------------------------- PROFESSIONAL SERVICES TOTAL YEAR 1 YEAR 2 YEAR 3 - -------------------------------------------------------------------------------------------------------------- Total Cost-Share/Co-Funding ($1,634,317) ($792,942) ($721,206) ($120,169) 0 0 0 0 0 0 0 - -------------------------------------------------------------------------------------------------------------- Total Cost-Share/Co-Funding ($1,634,317) ($792,942) ($721,206) ($120,169) - -------------------------------------------------------------------------------------------------------------- Co-Funding/Cost Share % 26.06% 23.49% 28.25% 35.07% - -------------------------------------------------------------------------------------------------------------- Total DOE Funding Required $4,636,254 $2,582,048 $1,831,746 $ 222,458 - -------------------------------------------------------------------------------------------------------------- _______ $2,582,048 $4,413,794 $4,636,252 - --------------------------------------------------------------------------------------------------------------
D-2 APPENDIX D.1 - ------------------------------------------------------------------------------------------------ DOE F 4620.1 U.S. Department of Energy OMB Control No. (04-93) Budget Page 1910-1400 All Other Editions Are Obsolete (See reverse for Instructions) OMB Burden Disclosure Statement on Reverse - ------------------------------------------------------------------------------------------------ ORGANIZATION Budget Page No: 1 --- Arthur D. Little, Inc. - ------------------------------------------------------------------------------------------------ PRINCIPAL INVESTIGATOR (PI)/PROJECT DIRECTOR (PD) Requested Duration:___ Jeffrey Bentley (Months) - ------------------------------------------------------------------------------------------------ A. SENIOR PERSONNEL: PI/PO, Co-Pfs, Faculty and Other Senior Associates (List each separately with Nos. A.7. DOE Funded show number in bracket(s)) Person - mo. DOE Cost Share TOTAL - ------------------------------------------------------------------------------------------------------------------------- CAL ACAD SHARE by Applicant COSTS - ------------------------------------------------------------------------------------------------------------------------- 1. - ------------------------------------------------------------------------------------------------------------------------- 2. - ------------------------------------------------------------------------------------------------------------------------- 3. - ------------------------------------------------------------------------------------------------------------------------- 4. - ------------------------------------------------------------------------------------------------------------------------- 5. - ------------------------------------------------------------------------------------------------------------------------- 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------------------- 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------------------- B. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------------------- 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------------------- 2. ( ) OTHER PROFESSIONALS (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------------------- 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------- 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------- 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------------------- 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------------------- TOTAL SALARIES AND WAGES (A + B) - ------------------------------------------------------------------------------------------------------------------------- C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------------------- TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A + B + C) see attached 1,648,702 326,305 1,975,007 - -------------------------------------------------------------------------------------------------------------------------
D.1-1 - ------------------------------------------------------------------------------------------------------------- D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT FOR EACH ITEM) TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------- E. TRAVEL 1. DOMESTIC (INCL. CANADA AND U.S. POSSESSIONS) 2. FOREIGN - ------------------------------------------------------------------------------------------------------------- TOTAL TRAVEL 14,536 0 14,536 - ------------------------------------------------------------------------------------------------------------- F. TRAINEE/PARTICIPANT COSTS 1. STIPENDS (itemize levels, types - totals on budget justification page) 2. TUITION & FEES 3. TRAINEE TRAVEL 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------- TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------- G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------- 1. MATERIALS AND SUPPLIES 438,500 0 438,500 - ------------------------------------------------------------------------------------------------------------- 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------- 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------- 4. COMPUTER (ADP) SERVICES - ------------------------------------------------------------------------------------------------------------- 5. SUBCONTRACTS 417,000 325,500 742,500 - ------------------------------------------------------------------------------------------------------------- 6. OTHER Support Expense, Misc. ODC 103,979 0 103,979 - ------------------------------------------------------------------------------------------------------------- TOTAL OTHER DIRECT COSTS 959,479 325,500 1,284,979 - ------------------------------------------------------------------------------------------------------------- H. TOTAL DIRECT COSTS (A THROUGH G) 2,622,717 651,805 3,274,522 - ------------------------------------------------------------------------------------------------------------- I. INDIRECT COSTS (SPECIFY RATE AND BASE) TOTAL INDIRECT COSTS 89,330 11,138 100,468 - ------------------------------------------------------------------------------------------------------------- J. TOTAL DIRECT AND INDIRECT COSTS (H + I) 2,712,047 662,943 3,374,990 - ------------------------------------------------------------------------------------------------------------- K. AMOUNT OF ANY REQUIRED COST-SHARING FROM NON-FEDERAL 130,000 SOURCES CASH - ------------------------------------------------------------------------------------------------------------- L. TOTAL COST OF PROJECT 2,582,047 792,943 3,374,990 ----------------------------------------- DOE Applicant TOTAL - -------------------------------------------------------------------------------------------------------------
D.1-2 APPENDIX D.1 - ------------------------------------------------------------------------------------------------------------- DOE F 4620.1 U.S. Department of Energy OMB Control No. (04-93) Budget Page 1910-1400 All Other Editions Are Obsolete (See reverse for Instructions) OMB Burden Disclosure Statement on Reverse - ------------------------------------------------------------------------------------------------------------- ORGANIZATION Budget Page No: 2 --- Arthur D. Little, Inc. - ------------------------------------------------------------------------------------------------------------- PRINCIPAL INVESTIGATOR (PI)/PROJECT DIRECTOR (PD) Requested Duration: ___ Jeffrey Bentley (Months) - ------------------------------------------------------------------------------------------------------------- A. SENIOR PERSONNEL: PI/PO, Co-Pfs, Faculty and Other Senior Associates (List each separately with Nos. A.7. show DOE Funded number in bracket(s)) Person - most DOE Cost Share TOTAL - ------------------------------------------------------------------------------------------------------------- CAL ACAD SHARE by Applicant COSTS - ------------------------------------------------------------------------------------------------------------- 1. - ------------------------------------------------------------------------------------------------------------- 2. - ------------------------------------------------------------------------------------------------------------- 3. - ------------------------------------------------------------------------------------------------------------- 4. - ------------------------------------------------------------------------------------------------------------- 5. - ------------------------------------------------------------------------------------------------------------- 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------- 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------- B. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------- 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------- 2. ( ) OTHER PROFESSIONALS (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------- 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------- 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------- 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------- 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------- TOTAL SALARIES AND WAGES (A + B) - ------------------------------------------------------------------------------------------------------------- C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------- TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A + B + C) see attached 1,549,394 306,648 1,856,042 - -------------------------------------------------------------------------------------------------------------
D.1-3 - ------------------------------------------------------------------------------------------------------------- D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT FOR EACH ITEM) TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------- E. TRAVEL 1. DOMESTIC (INCL. CANADA AND U.S. POSSESSIONS) 2. FOREIGN - ------------------------------------------------------------------------------------------------------------- TOTAL TRAVEL 14,092 0 14,092 - ------------------------------------------------------------------------------------------------------------- F. TRAINEE/PARTICIPANT COSTS 1. STIPENDS (itemize levels, types - totals on budget justification page) 2. TUITION & FEES 3. TRAINEE TRAVEL 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------- TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------- G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------- 1. MATERIALS AND SUPPLIES 165,000 0 165,000 - ------------------------------------------------------------------------------------------------------------- 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------- 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------- 4. COMPUTER (ADP) SERVICES - ------------------------------------------------------------------------------------------------------------- 5. SUBCONTRACTS 78,000 279,200 357,200 - ------------------------------------------------------------------------------------------------------------- 6. OTHER Support Exp., Misc. ODC 103,213 0 103,213 - ------------------------------------------------------------------------------------------------------------- TOTAL OTHER DIRECT COSTS 346,213 279,200 625,413 - ------------------------------------------------------------------------------------------------------------- H. TOTAL DIRECT COSTS (A THROUGH G) 1,909,699 585,848 2,495,547 - ------------------------------------------------------------------------------------------------------------- I. INDIRECT COSTS (SPECIFY RATE AND BASE) 52,046 5,358 57,404 TOTAL INDIRECT COSTS - ------------------------------------------------------------------------------------------------------------- J. TOTAL DIRECT AND INDIRECT COSTS (H + I) 1,961,745 591,206 2,552,951 - ------------------------------------------------------------------------------------------------------------- K. AMOUNT OF ANY REQUIRED COST-SHARING FROM NON-FEDERAL 130,000 SOURCES CASH - ------------------------------------------------------------------------------------------------------------- L. TOTAL COST OF PROJECT 1,831,745 721,206 2,552,951 ------------------------------------------ DOE Applicant TOTAL - -------------------------------------------------------------------------------------------------------------
D.1-4 APPENDIX D.1
- ------------------------------------------------------------------------------------------------------------- DOE F 4620.1 U.S. Department of Energy OMB Control No. (04-93) Budget Page 1910-1400 All Other Editions Are Obsolete (See reverse for Instructions) OMB Burden Disclosure Statement on Reverse - ------------------------------------------------------------------------------------------------------------- ORGANIZATION Budget Page No: 3 --- Arthur D. Little, Inc. - ------------------------------------------------------------------------------------------------------------- PRINCIPAL INVESTIGATOR (PI)/PROJECT DIRECTOR (PD) Requested Duration:___ Jeffrey Bentley (Months) - ------------------------------------------------------------------------------------------------------------- A. SENIOR PERSONNEL: PI/PO, Co-Pfs, Faculty and Other Senior Associates (List each separately with Nos. A.7. show DOE Funded number in bracket(s)) Person - most DOE Cost Share TOTAL - ------------------------------------------------------------------------------------------------------------- CAL ACAD SHARE by Applicant COSTS - ------------------------------------------------------------------------------------------------------------- 1. - ------------------------------------------------------------------------------------------------------------- 2. - ------------------------------------------------------------------------------------------------------------- 3. - ------------------------------------------------------------------------------------------------------------- 4. - ------------------------------------------------------------------------------------------------------------- 5. - ------------------------------------------------------------------------------------------------------------- 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------- 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------- B. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------- 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------- 2. ( ) OTHER PROFESSIONALS (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------- 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------- 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------- 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------- 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------- TOTAL SALARIES AND WAGES (A + B) - ------------------------------------------------------------------------------------------------------------- C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------- TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A + B + C) see attached 278,748 55,169 333,917 - -------------------------------------------------------------------------------------------------------------
D.1-5 - ------------------------------------------------------------------------------------------------------------- D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT FOR EACH ITEM) TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------- E. TRAVEL 1. DOMESTIC (INCL. CANADA AND U.S. POSSESSIONS) 2. FOREIGN - ------------------------------------------------------------------------------------------------------------- TOTAL TRAVEL - ------------------------------------------------------------------------------------------------------------- F. TRAINEE/PARTICIPANT COSTS 1. STIPENDS (itemize levels, types - totals on budget justification page) 2. TUITION & FEES 3. TRAINEE TRAVEL 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------- TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------- G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------- 1 MATERIALS AND SUPPLIES - ------------------------------------------------------------------------------------------------------------- 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------- 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------- 4. COMPUTER (ADP) SERVICES - ------------------------------------------------------------------------------------------------------------- 5. SUBCONTRACTS - ------------------------------------------------------------------------------------------------------------- 6. OTHER Support Exp., misc. ODC 7,259 -- 7,259 - ------------------------------------------------------------------------------------------------------------- TOTAL OTHER DIRECT COSTS 7,259 -- 7,259 - ------------------------------------------------------------------------------------------------------------- H. TOTAL DIRECT COSTS (A THROUGH G) 286,007 55,169 341,176 - ------------------------------------------------------------------------------------------------------------- I. INDIRECT COSTS (SPECIFY RATE AND BASE) TOTAL INDIRECT COSTS 1,452 -- 1,452 - ------------------------------------------------------------------------------------------------------------- J. TOTAL DIRECT AND INDIRECT COSTS (H + I) 287,459 55,169 342,628 - ------------------------------------------------------------------------------------------------------------- K. AMOUNT OF ANY REQUIRED COST-SHARING FROM NON-FEDERAL 65,000 SOURCES CASH - ------------------------------------------------------------------------------------------------------------- L. TOTAL COST OF PROJECT 222,459 120,169 342,628 -------------------------------------------- DOE Applicant TOTAL - -------------------------------------------------------------------------------------------------------------
D.1-6 APPENDIX F U.S. Department of Energy Error! Bookmark not defined. FEDERAL ASSISTANCE REPORTING CHECKLIST (09-92) Replaces EIA-469A All Other Editions are Obsolete
- --------------------------------------------------------------------------------------------------------- 1. Identification Number: 2. Program/Project Title: DE-FC02-97EE50472 Integrated Power System for Transportation - ---------------------------------------------------------------------------------------------------------- 3. Recipient: Plug Power, LLC Pl William D. Ernst - ---------------------------------------------------------------------------------------------------------- 4. Reporting Requirements: Frequency No. of Copies Addressees - ---------------------------------------------------------------------------------------------------------- PROGRAM/PROJECT MANAGEMENT See Block 5 below REPORTING - ---------------------------------------------------------------------------------------------------------- [X] DOE F 4600.3, "Federal Assistance Y Orig + 2 Orig B, C, & D Milestone Plan" - ---------------------------------------------------------------------------------------------------------- [X] DOE F 4600.3A, "Milestone Log" M Orig + 2 Orig B, C, & D - --------------------------------------------------------------------------------------------------------- [X] DOE F 4600.4, "Federal A Orig + 2 Orig B, C, & D Assistance Budget Information" - ---------------------------------------------------------------------------------------------------------- [X] Program Management Plan, Y Orig + 4 Orig B, 2cy to C & D (See Attachment 1) - ---------------------------------------------------------------------------------------------------------- [X] DOE F 4600.6, "Federal Assistance M Orig + 2 Orig B, C, & D Program/Project Status Report" - ---------------------------------------------------------------------------------------------------------- [X] SF-269A, "Financial Status M Orig + 2 Orig B, C, & E Report" Long Form - ---------------------------------------------------------------------------------------------------------- TECHNICAL INFORMATION REPORTING - ---------------------------------------------------------------------------------------------------------- [X] Biweekly Technical Progress Every Other Week FAX FAX to C and D below Report - ---------------------------------------------------------------------------------------------------------- [X] Technical Progress Report** Q Orig + 4 Orig + 1cy B, 2 C, 1 D - ---------------------------------------------------------------------------------------------------------- [X] Topical Report** A Orig + 4 Orig + 1cy B, 2 C, 1 D - ---------------------------------------------------------------------------------------------------------- [X] Final Technical Report** F Orig + 4 Orig + 1cy B, 2 C, 1 D - ---------------------------------------------------------------------------------------------------------- [X] Review Meeting/Meeting Agenda-10 Q Orig + 2 Orig B, C, & D days prior to any meeting. - ----------------------------------------------------------------------------------------------------------
F-1 - ---------------------------------------------------------------------------------------------------------- FREQUENCY CODES AND DUE DATES: A - As Necessary; within 5 calendar days after events. F - Final; 90 calendar days after the performance of the effort ends. Q - Quarterly; within 30 days after end of calendar quarter or portion thereof. O - One time after project starts; within 30 days after award. X - Required with proposals or the application or with significant planning changes. Y - Yearly; 30 days after the end of program year. (Financial Status Reports 90 days). S - Semiannually; within 30 days after end of program fiscal half year. - ---------------------------------------------------------------------------------------------------------- 5. Special Instructions: A. **All scientific, technical documents, and technical reports ie. monthly, quarterly, annual progress reports, periodic scientific, topical, final report, and conference papers shall be submitted with 2 copies of DOE Form 1332.15. Recommendations for the Announcement and ---------------------------------------- Distribution of Department of Energy (DOE) Scientific and Technical Information (STI). ------------------------------------------------------------------------------------- B. MAIL REPORTS TO: Original - Contracting Officer U.S. Department Of Energy Chicago Operations Office 9800 South Cass Avenue Argonne, Illinois 60439 C. JoAnn Milliken, EE-32 D. Walt Podolski E. Financial Service Group Department of Energy Argonne National Laboratory Department of Energy Germantown, MD 20874-1290 Building No. 205 9800 S. Cass Avenue FAX (202) 586-9811 Argonne, Illinois 60439 Argonne, Illinois 60439 FAX (630) 252-4176 - ---------------------------------------------------------------------------------------------------------- 6. Prepared by: (Signature and Date) 7. Reviewed by: (Signature and Date) /s/ James Miller 3-12-97 James Miller 3-12-97 - ----------------------------------------------------------------------------------------------------------
F-2 SUPPLEMENTAL AGREEMENT NO. 1 TO SUBCONTRACT AGREEMENT NO. PP80205 This Supplemental Agreement No. l entered into on March 30, 1998, by and between Plug Power, L.L.C., a limited liability corporation duly organized under the laws of Delaware and having offices at 918 Albany-Shaker Road, Latham, New York, (hereinafter called "Buyer") and Authur D. Little, Inc., having an office in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, in furtherance of the Subcontract, the parties hereto desire to amend the agreement to increase the Buyer's maximum obligation to the Seller as hereinafter described; and NOW THEREFORE, parties do mutually agree as follows: REVISIONS: 1) The end date of the Current Budget Period under Article II of the Schedule is changed from December 31, 1997 to May 29, 1998. 2) The Buyer's maximum obligation under Article VI of the Schedule is increased from $680,248 to $1,200,000. 3) Changes to Paragraph 4,b of the Special Terms and Condition (Appendix G) are: a) The Current Program Budget is increased from $920,000 to $1,622,938. b) The Buyer's estimated cost (cumulative obligation) is increased from $680,248 to $1,200,000. c) The Seller's estimated cost (cost sharing) is increased from $239,752 to $422,938. Except as provided herein, all other terms and conditions of this Subcontract remain in full force and effect. 1 IN WITNESS WHEREOF, the parties have executed this Supplemental Agreement as of the day and year first above written. ARTHUR D. LITTLE, INC. BY: /s/ Judith Blinn ________________________ TITLE: Judith Blinn Contracting Officer ________________________ DATE: 4/2/98 ________________________ PLUG POWER, L.L.C. BY: /s/ William P. Sumigray ________________________ TITLE: Contract Manager ________________________ DATE: March 30, 1998 ________________________ 2 SUPPLEMENTAL AGREEMENT NO. 2 TO SUBCONTRACT AGREEMENT NO. PP80205 This Supplemental Agreement No. 2 entered into on June 22, 1998, by and between Plug Power, L.L.C., a limited liability corporation duly organized under the laws of Delaware and having offices at 968 Albany-Shaker Road, Latham, New York, (hereinafter called "Buyer") and Authur D. Little, Inc., having an office in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, in furtherance of the Subcontract, the parties hereto desire to amend the agreement to increase the Buyer's maximum obligation to the Seller as hereinafter described; and NOW THEREFORE, parties do mutually agree as follows: REVISIONS: 1) The end date of the Current Budget Period under Article II of the Schedule is changed from May 29, 1998 to September 30, 1998. 2) The Buyer's maximum obligation under Article VI of the Schedule is increased from $1,200,000 to 2, 000,000. 3) Changes to Paragraph 4,b of the Special Terms and Condition (Appendix G) are: a) The Current Program Budget is increased from S 1,622,938 to $2,704,896. b) The Buyer's estimated cost (cumulative obligation) is increased from $1,200,000 to $2,000,000. c) The Seller's estimated cost (cost sharing) is increased from $422,938 to $704,896. 4) The attached "Patent Rights - Waiver (JUL 1996) as modified by 10 C.F.R. 784, DOE Patent Waiver Regulations" is substituted for the clause entitled "Patent Rights -Acquisition by the Government (FEB 1995)" set forth in Appendix B to Subcontract No. PP80205, except as modified as follows: 1 (1) Substitute "Agreement" for "Contract", as appropriate. (2) Substitute "Seller" for "Contractor", as appropriate. (3) Add paragraph (u) as follows: "(u) Joint Inventions. The Buyer shall have all rights to joint inventions conceived by the employees of the parties to this Agreement related to fuel cell applications, except for the Government's rights to such patents as described in this clause. The Seller agrees to assign to either the Buyer or the Government all rights, title and interest to joint inventions related to fuel cells applications, and to provide all documents and assistance required by either the Buyer or the Government to pursue patent applications. The Seller shall have all rights to joint inventions conceived by the employees of the parties to this Agreement related to fuel processor applications, except for the Government's rights and interest to such patents as described in this clause. The Buyer agrees to assign to either the Seller or the Government all rights, title and interest to joint inventions related to fuel processor applications, and to provide all documents and assistance required by the either the Seller or the Government to pursue patent applications. All other joint inventions shall be mutually owned by the parties hereto, except for the Government's rights to such patents as described in this clause." Except as provided herein, all other terms and conditions of this Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Supplemental Agreement as of the day and year first above written. ARTHUR D. LITTLE, INC. PLUG POWER, L.L.C - ---------------------- ----------------- BY: /s/ Judith Blinn BY: /s/ Gary Mittleman ----------------------- --------------------------- TITLE: Judith Blinn TITLE: President & Chief Executive Contracting Officer Officer ----------------------- --------------------------- DATE: 7/30/98 DATE: June 23, `98 ----------------------- --------------------------- 2 Replaces Clause No. 04., 48 C.F.R. 952.227-13 Patent Rights 3 52.227-12 - Patent Rights - Waiver (JUL 1996), as modified by 10 C.F.R. 784, DOE Patent Waiver Regulations PATENT RIGHTS - WAIVER (JUL 1996) (a) Definitions. As used in this clause: Background patent means a domestic patent covering an invention or discovery which is not a Subject Invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the Contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. Contract means any contract, grant, agreement, understanding, or other arrangement, which includes research, development, or demonstration work, and includes any assignment or substitution of parties. DOE patent waiver regulations means the Department of Energy patent waiver regulations at 10 CFR Part 784. Invention as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.). Made when used in relation to any invention means the conception or first actual reduction to practice of such invention. Nonprofit organization means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. Patent Counsel means the Department of Energy Patent Counsel assisting the procuring activity. Practical application means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. 1 Secretary means the Secretary of Energy. Small business firm means a small business concern as defined at Section 2 of the Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used. Subject invention means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act (7 U.S.C. 2401(d)) must also occur during the period of contract performance. (b) Allocation of principal rights. Whereas DOE has granted a waiver of rights to subject inventions to the Contractor, the Contractor may elect to retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. (S)202 and 203. With respect to any subject invention in which the Contractor elects to retain title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent applications by Contractor. (1) The Contractor shall disclose each subject invention to the Patent Counsel within six months after conception or first actual reduction to practice, whichever occurs first in the course of or under this contract, but in any event, prior to any sale, public use, or public disclosure of such invention known to the Contractor. The disclosure to the Patent Counsel shall be in the form of a written report and shall identify the inventors and the contract under which the invention was made. It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the Patent Counsel, the Contractor shall promptly notify the Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor shall elect in writing whether or not to retain title to any such invention by notifying the Patent Counsel at the time of disclosure or within 8 months of disclosure, as to those countries (including the United States) in which the Contractor will retain title; provided, than in any case where publication, on sale, or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period of election of 2 title may be shortened by the Agency to a date that is no more than 60 days prior to the end of the statutory period. The Contractor shall notify the Patent Counsel as to those countries (including the United States) in which the Contractor will retain title not later than 60 days prior to the end of the statutory period. (3) The Contractor shall file its United States patent application on an elected invention within 1 year after election, but not later than at least 60 days prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor shall file patent applications in additional countries (including the European Patent Office and under the Patent Cooperation Treaty) within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where foreign filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure to the Patent Counsel, election, and filing may, at the discretion of DOE, be granted, and will normally be granted unless the Patent Counsel has reason to believe that a particular extension would prejudice the Government's interest. (d) Conditions when the Government may obtain title notwithstanding an existing waiver. The Contractor shall convey to DOE, upon written request, title to any subject invention-- (1) If the Contractor elects not to retain title to a subject invention; (2) If the Contractor fails to disclose or elect the subject invention within the times specified in paragraph (c) of this clause (provided that DOE may only request title within 60 days after learning of the Contractor's failure to report or elect within the specified times); (3) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of DOE, the Contractor shall continue to retain title in that country; (4) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention; or (5) If the waiver authorizing the use of this clause is terminated as provided in paragraph (p) of this clause. (e) Minimum rights to Contractor when the Government retains title. 3 (1) The Contractor shall retain a nonexclusive, royalty-free license throughout the world in each subject invention to which the Government obtains title under paragraph (d) of this clause except if the Contractor fails to disclose the subject invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR part 404 and DOE licensing regulations. This license shall not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE shall furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor shall be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR part 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to: (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraphs (d) and (n)(2) of this clause, and to enable the Government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure 4 provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by paragraph (c)(1) of this clause. The Contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor shall notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement: "This invention was made with Government support under (identify the contract) awarded by DOE. The Government has certain rights in this invention." (5) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the course of or under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Patent Counsel a description of such procedures for evaluation and for determination as to their effectiveness. (6) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through Military Assistance Program of the Government or otherwise derived through the Government; to refund any amounts received as royalty charges on the subject invention in acquisitions for, or on behalf of, the Government; and to provide for such refund in any instrument transferring rights in the invention to any party. (7) The Contractor shall furnish the Patent Counsel the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Patent Counsel) from the date of the contract, listing subject inventions during that period and certifying that all subject inventions have been disclosed or that there are no such inventions. (ii) A final report, within 3 months after completion of the contracted work, listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. 5 (8) The Contractor shall promptly notify the Patent Counsel in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Patent Counsel, the Contractor shall furnish a copy of such subcontract, and no more frequently than annually, a listing of the subcontracts that have been awarded. (9) The Contractor shall provide, upon request, the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and patent number and issue date for any subject invention for which the Contractor has retained title. (10) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (g) Subcontracts. (1) Unless otherwise directed by the Contracting Officer, the Contractor shall include the clause at 48 CFR 952.227-11, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the Contractor shall include the patent rights clause at 48 CFR 952.227-13 (suitably modified to identify the parties). (2) The Contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (3) In the case of subcontractors at any tier, the Department, the subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the Department with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contracting Officer shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor and any of its licensees 6 or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by DOE in accordance with paragraph (j) of this clause. To the extent data or information supplied under this paragraph is considered by the Contractor, its licensee or assignee to be privileged and confidential and is so marked, DOE agrees that, to the extent permitted by law, it shall not disclose such information to persons outside the Government. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 48 CFR 27.304-1(g) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (1) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. 7 (k) Background Patents. (l) The Contractor agrees: (i) to grant to the Government a royalty-free, nonexclusive license under any Background Patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (ii) that, upon written application by DOE, it will grant to responsible parties for purposes of practicing a subject of this contract, nonexclusive licenses under any Background Patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive or partially exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (2) Notwithstanding paragraph (k)(1)(ii), the Contractor shall not be obligated to license any Background Patent if the Contractor demonstrates to the satisfaction of the Secretary or his designee that: (i) a competitive alternative to the subject matter covered by said Background Patent is commercially available from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said Background Patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Communications. All reports and notifications required by this clause shall be submitted to the Patent Counsel unless otherwise instructed. (m) Other inventions. Nothing contained in this clause shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention, except with respect to Background Patents, above. (n) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether- (i) Any such inventions are subject inventions; 8 (ii) The Contractor has established and maintains the procedures required by paragraphs (f)(2) and (f)(5) of this clause; and (iii) The Contractor and its inventor have complied with the procedures. (2) If the Contracting Officer determines that an inventor has not disclosed a subject invention to the Contractor in accordance with the procedures required by paragraph (f)(5) of this clause, the Contracting Officer may, within 60 days after the determination, request title in accordance with paragraphs (d)(2) and (d)(3) of this clause. However, if the Contractor establishes that the failure to disclose did not result from the Contractor's fault or negligence, the Contracting Officer shall not request title. (3) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (4) Any examination of records under this paragraph shall be conducted in such a manner as to protect the confidentiality of the information involved. (o) Withholding of payment. NOTE: This paragraph does not apply to subcontracts or grants. (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of the contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to B (i) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to paragraph (f)(5) of this clause; (ii) Disclose any subject invention pursuant to paragraph (c)(1) of this clause; (iii) Deliver acceptable interim reports pursuant to paragraph (f)(7)(I) of this clause; or (iv) Provide the information regarding subcontracts pursuant to paragraph (f)(6) of this clause, (v) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Patent Counsel all disclosures of subject inventions required by paragraph (c)(1) of this clause, an acceptable final report pursuant to paragraph (f)(7)(ii), and all past due confirmatory instruments, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. 9 (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. If the maximum amount authorized above is already being withheld under other provisions of the contract, no additional amount shall be withheld under this paragraph. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government right. (p) Waiver Terminations. Any waiver granted to the Contractor authorizing the use of this clause (including any retention of rights pursuant thereto by the Contractor under paragraph (b) of this clause) may be terminated at the discretion of the Secretary or his designee in whole or in part, if the request for waiver by the Contractor is found to contain false material statements or nondisclosure of material facts, and such were specifically relied upon by DOE in reaching the waiver determination. Prior to any such termination, the Contractor will be given written notice stating the extent of such proposed termination and the reasons therefor, and a period of 30 days, or such longer period as the Secretary or his designee shall determine for good cause shown in writing, to show cause why the waiver of rights should not be so terminated. Any waiver termination shall be subject to the Contractor's minimum license as provided in paragraph (e) of this clause. (q) Atomic Energy. No claim for pecuniary award or compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted by the Contractor or its employees with respect to any invention or discovery made or conceived in the course of or under this contract. (r) Publication. It is recognized that during the course of work under this contract, the contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of DOE or the contractor, approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. In appropriate circumstances, and after consultation with the contractor, Patent Counsel may waive the right of prepublication review. (s) Forfeiture of rights in unreported subject inventions. (1) The contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the contractor fails to report to Patent Counsel within six months after the time the contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by paragraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in paragraph (m)(1) of this clause, the contractor: (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to 10 practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the subject invention is not a subject invention, the contractor nevertheless discloses the subject invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer, or (iii) Establishes that the failure to disclose did not result from the contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Contracting Officer to be forfeited (such determination to be a Final Decision under the Disputes clause of this contract), the contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph shall be in addition to and shall not supersede any other rights and remedies which the Government may have with respect to subject inventions. (t) U.S. COMPETITIVENESS The Contractor agrees that any products embodying any waived invention or produced through the use of any waived invention will be manufactured substantially in the United States unless the Contractor can show to the satisfaction of the DOE that it is not commercially feasible to do so. The Contractor further agrees to make the above condition binding on any assignees or licensees or any entity otherwise acquiring rights to any waived invention, including subsequent assignees or licensees. Should the Contractor or other such entity receiving rights in any waived invention undergo a change in ownership amounting to a controlling interest, then the waiver, assignment, license or other transfer of rights in the waived invention is suspended until approved in writing by DOE. In the event DOE agrees to foreign manufacture, there will be a requirement that the Government's support of the technology be recognized in some appropriate manner, e.g., recoupment of the government's investment, etc. (End of clause) 11 SUPPLEMENTAL AGREEMENT NO. 3 TO SUBCONTRACT AGREEMENT NO. PP80205 This Supplemental Agreement No. 3 entered into on December 21, 1998, by and between Plug Power, L.L.C., a limited liability corporation duly organized under the laws of Delaware and having offices at 968 Albany-Shaker Road, Latham, New York, (hereinafter called "Buyer") and Authur D. Little, Inc., having an office in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, in furtherance of the Subcontract, the parties hereto desire to amend the agreement to increase the Buyer's maximum obligation to the Seller as hereinafter described; and NOW THEREFORE, parties do mutually agree as follows: REVISIONS: 1) The end date of the Current Budget Period under Article II of the Schedule is changed from September 30, 1998 to June 30, 1999. 2) The Buyer's maximum obligation under Article VI of the Schedule is increased from $2, 000,000 to $4,300,000. 3) Changes to Paragraph 4,b of the Special Terms and Condition (Appendix G) are: a) The Current Program Budget is increased from $2,704,896 to $5,815,526: b) The Buyer's estimated cost (cumulative obligation) is increased from $2,000,000 to $4,300,000. c) The Seller's estimated cost (cost sharing) is increased from $704,896 to $1,515,526. Except as provided herein, all other terms and conditions of this Agreement remain in full force and effect. 1 IN WITNESS WHEREOF, the parties have executed this Supplemental Agreement as of the day and year first above written. ARTHUR D. LITTLE, INC. PLUG POWER, L.L.C. BY: /s/ Judith Blinn BY: Gary Mittleman AG --------------------------- --------------------------- TITLE: Contracting Officer TITLE: President & Chief Executive Officer --------------------------- --------------------------- DATE: 1/19/99 DATE: --------------------------- --------------------------- 2 SUPPLEMENTAL AGREEMENT NO. 4 TO SUBCONTRACT AGREEMENT NO. PP80205 This Supplemental Agreement No. 4 entered into on September 27, 1999, by and between Plug Power, L.L.C., a limited liability corporation duly organized under the laws of Delaware and having offices at 968 Albany-Shaker Road, Latham, New York, (hereinafter called "Buyer") and Authur D. Little, Inc., having an office in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, Buyer and Seller are parties to Subcontract Agreement No. PP80205 ("Agreement") for the purpose of performing a program entitled, "Integrated Power System for Transportation", and WHEREAS, the Seller desires to perform additional work entitled "Epyx Advanced Atmospheric Fuel Processor Development", and WHEREAS, Buyer, in accordance with Seller's proposal, made a proposal to DOE under it prime contract no. DE-FC02-97EE50472, and WHEREAS, DOE approved such proposal and authorized funding to perform and complete the work set forth in such proposal, and WHEREAS, in furtherance of the Agreement, the parties hereto desire to amend the Agreement to increase the scope of work, the total program authorization, the performance period, and the Buyer's maximum obligation to the Seller, in accordance with Seller's proposal, as hereinafter described; and NOW THEREFORE, parties do mutually agree as follows: REVISIONS: 1) The Seller shall provide all necessary services, material, equipment, and facilities to perform the additional work effort as set forth in Attachment A, Statement of Work entitled, "Epyx Advanced Atmospheric Fuel Processor Development". 2) The completion date for the Project Budget Period set forth in Article II of the Schedule to the Agreement is changed from March 9, 2000 to August 31, 2000. 3) The Total Program Budget as set forth in Appendix G, Article 4a of the Agreement is hereby amended as follows: 1
Original Mod. 3 New Mod. 4 Total Program Total Program Budget Change Budget --------------- ---------------- ---------------- Buyer's Share $4,636,254 $696,486 $5,332,740 Seller's Cost Sharing 1,634,317 232,162 1,866,479 --------------- ---------------- ---------------- Totals $6,270,571 $928,648 $7,199,219
Note: DOE requires that the Total Program Budget have independent budgets for the initial Core Program and the Atmospheric Fuel Processor Development Program incorporated into this Agreement by virtue of this Supplemental Agreement No. 4, as follows:
Total Core Total Atmospheric Total Program Program Budget Program Budget Budget --------------- ---------------- ---------------- Buyer's Share $4,636,254 $696,486 $5,332,740 Seller's Cost Sharing 1,634,317 232,162 1,866,479 --------------- ---------------- ---------------- Totals $6,270,571 $928,648 $7,199,219
4) The Current Program Budget, as set forth in Appendix G, Article 4b of the Agreement is hereby amended as follows:
Original Mod. 3 Core Program Atmospheric New Mod. 4 Current Program Current Program Budget Budget --------------- ---------------- ---------------- --------------- Buyer's Share $4,300,000 $280,619 $190,746 $4,771,095 Seller's Cost Sharing 1,515,526 99,179 63,492 1,678,197 --------------- ---------------- ---------------- --------------- Totals $5,815,526 $379,798 $253,968 $6,449,292
Note: DOE requires that the Current Program Budget have independent budgets for the initial Core Program and the Atmospheric Fuel Processor Development Program incorporated into this Agreement by virtue of this Supplemental Agreement No. 4, as follows: 2 Current Current Core Atmospheric Total Program Program Budget Program Budget Budget ----------------- ----------------- -------------- Buyer's Share $4,580,619 $190,476 $4,771,095 Seller's Cost Sharing 1,614,705 63,492 1,678,197 ----------------- ----------------- -------------- Totals $6,195,324 $253,968 $6,449,292 5) The end date of the Current Budget Period under Article II of the Schedule to the Agreement is changed from June 30, 1999 to August 31, 2000. 6) Article XVI of the Schedule to the Agreement entitled, "Payment" is revised to read as follows: Three copies of each invoice shall be submitted no more frequently than once every month. The invoices shall be prepared in accordance with the Billing Instructions set forth in Appendix E, attached hereto and made a part hereof. In order to comply with DOE funding and billing instructions, each invoice shall provide a separate cost element breakdown of expenses for the initial core program and the atmospheric program. All invoices shall be submitted to: Mr. Joseph Cronin Plug Power, L.L.C. 968 Albany-Shaker Road Latham, New York 12110 7) Paragraph a) of Article XIX of the Schedule to the Agreement entitled, "Shipping and Marking Instructions" is revised as follows: a. Shipments shall be made to Plug Power, L.L.C., 968 Albany-Shaker Road, Latham, New York, 12110. Mark all packages "Attention David Smith". 8) In Article XX of the Schedule to the Agreement entitled; "Purchasing Representatives", the Program Manager is changed to Mr. David Smith. Except as provided herein, all other terms and conditions of the Agreement remain in full force and effect. 3 IN WITNESS WHEREOF, the parties have executed this Supplemental Agreement as of the day and year first above written. ARTHUR D. LITTLE, INC. PLUG POWER, L.L.C. BY: /w/ Judith Blinn BY: /s/ Gary Mittleman AG ----------------------------- ----------------------------- TITLE: J. Blinn TITLE: President & Chief Executive Contracting Officer Officer ----------------------------- ----------------------------- DATE: 9/29/99 DATE: September 27, 1999 ----------------------------- ----------------------------- 4 SUPPLEMENTAL AGREEMENT NO. 5 TO SUBCONTRACT AGREEMENT NO. PP80205 This Supplemental Agreement No. 5 entered into on July 24, 2000, by and between Plug Power Inc., a Delaware corporation and having offices at 968 Albany-Shaker Road, Latham, New York, (hereinafter called "Buyer") and Authur D. Little, Inc., having an office in Acorn Park, Cambridge, Massachusetts (hereinafter called "Seller"). WHEREAS, Buyer and Seller are parties to Subcontract Agreement No. PP80205 ("Agreement") for the purpose of performing a program entitled, "Integrated Power System for Transportation", and a program entitled "Advanced Atmospheric Fuel Processor Development". WHEREAS, the Buyer and Seller desire to revise the program entitled "Integrated Power System for Transportation". WHEREAS, Buyer, in accordance with Seller's proposal dated October 21, 1999, made a proposal to DOE under it prime contract no. DE-FC02-97EE50472, and WHEREAS, DOE approved such proposal and authorized funding to perform and complete the work set forth in the Seller's proposal, and WHEREAS, in furtherance of the Agreement, the parties hereto desire to amend the Agreement to revise the Statement of Work, increase the total program authorization and the Buyer's maximum obligation to the Seller, and to extend the performance period as hereinafter described; and NOW THEREFORE, parties do mutually agree as follows: REVISIONS: 1) Attachment A, entitled "Revisions to the Statement of Work (Dated July 24, 2000) is hereby incorporated into the Agreement. The Seller shall provide all necessary services, material, equipment, and facilities to perform the work set forth in the Statement of Work dated November 7, 1997, the Statement of Work entitled, "Epyx Advanced Atmospheric Fuel Processor Development" dated March 22, 1999, and the revisions to the work statements as set forth in Attachment A. 2) The completion date for the Project Budget Period set forth in Article II of the Schedule to the Agreement is changed from August 31, 2000 to December 31, 2000. 1 3) The Total Program Budget as set forth in Appendix G, Article 4a of the Agreement is hereby amended as follows: Original Mod. 4 Mod. 5 Total Program Total Program Budget Change Budget ----------------- ----------- -------------- Buyer's Share $5,332,740 $1,703,961 $7,036,701 Seller's Cost Sharing 1,866,479 567,998 2,434,477 -------------- ----------- -------------- Totals $7,199,219 $2,271,959 $9,471,178 Note: DOE requires that the Total Program Budget have independent budgets for the initial Core Program and the Atmospheric Fuel Processor Development Program (incorporated into this Agreement by virtue of this Supplemental Agreement No. 4), as follows: Total Core Total Atmospheric Total Program Program Budget Program Budget Budget ---------------- ------------------ --------------- Buyer's Share $6,340,215 $696,486 $7,036,701 Seller's Cost Sharing 2,202,315 232,162 2,464,477 ---------------- ------------------ --------------- Totals $8,542,530 $928,648 $9,471,178 4) The Current Program Budget, as set forth in Appendix G, Article 4b of the Agreement is hereby amended as follows: Current Program Budget ---------------------- Atmospheric Core Program Program Total Program ---------------- ------------------ --------------- Buyer's Share: - ------------- Previous Authorization $4,580,619 $190,476 $4,771,095 Increase $1,029,544 $ 0 $1,029,544 ---------------- ------------------ -------------- Total Buyer's Share $5,610,163 $190,476 $5,800,639 Seller's Share: - -------------- Previous Amount $1,614,705 $ 63,492 $1,678,197 Increase $ 343,194 $ 0 $ 343,194 ---------------- ------------------ -------------- Total Seller's Share $1,957,899 $ 63,492 $2,021,391 2 Atmospheric Core Program Program Total Program ------------ ---------------- --------------- Total Current Program Budget $7,568,062 $253,967 $7,822,030 5) The end date of the Current Budge Period under Article II of the Schedule to the Agreement is changed from August 31, 2000 to December 31, 2000. Except as provided herein, all other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Supplemental Agreement as of the day and year first above written. ARTHUR D. LITTLE, INC. PLUG POWER, L.L.C. BY: /s/ Judith Blinn BY: /s/ William D. Ernst ----------------------------- ----------------------------- TITLE: Judith Blinn TITLE: Vice President & Chief Scientist Contracting Officer ----------------------------- ----------------------------- DATE: July 26, 2000 DATE: July 24, 2000 ----------------------------- ----------------------------- 3 Plug Power Subcontract: PP80205, Attachment A to Supplemental Agreement No. 5 Revisions to the Statement of Work dated November 7, 1997 Additions to the Statement of Work Phase II - 50 kW\\e\\ Subsystem Development Task 2.7 - Second 10 kW\\e\\ Integration: A second 10 kW. integration will address the technical challenges that were discovered during the first 10 kW\\e\\ integration and further the attainment of a fully integrated system in Phase 4. The second 10 kW\\e\\ integration must meet interim performance goals in order to demonstrate to the DOE that Plug Power and ADL can meet the program's performance targets by the end of Phase 4. The second integration will meet the following targets: 1) Achieve 10 kW\\e\\ power output, 2) Interim efficiency targets (fuel cell subsystem high 40's, fuel processor system low to-mid 70's, integrated system without parasitics mid-30's), and 3) Successfully demonstrate integrated system operation on multiple transportation fuels (including the addition of M-85 and Fischer-Tropsch gasoline). In addition to meeting these performance targets, the second integration will enable Plug Power and ADL to gain additional operational experience with an integrated system that will facilitate attainment of the fully integrated system requested by the DOE for Phase 4. 4) Demonstrate low emissions when integrated with a fuel cell system on multiple fuels. This 10 kW\\e\\ demonstration will utilize the test stand developed in Task 2.6 and a 10 kW\\e\\ fuel cell stack built to the same design as the proposed Phase 3 stacks. The stack built for this task will utilize a different plate design developed during Phase 2 and will be made from different plate materials than what was used in the stack built for Task 2.6. The demonstration will provide Plug Power an opportunity to test the Phase 3 stack design under actual operating conditions. Additionally, experience will be gained operating the test stand with real reformate (as opposed to dry synthetic reformate). 1 Fuel Processor Build: Over the course of the first 12 months of the program, ADL designed and tested a new generation of reformer technology, which resulted in a significant improvement in the fuel processor subsystem performance. This new reformer design, referred to as "Model B" has been successfully operated on methanol, ethanol, natural gas, low sulfur gasoline, Pischer-Tropsch fuel and California Phase II gasoline. With each of these fuels, the ADL Model B reformer has demonstrated hydrogen concentrations in excess of 40% and reformer efficiencies in excess of the ADL performance goal of 76%. The second 10 kW\\e\\ integration will use the existing Model B reformer (sized at approximately 15 kW\\e\\) and will validate the Model B design with an integration with a Plug Power fuel cell stack. Prox Build: In these tests ADL will also use the Prox technology developed in Phase 1 of this program. A two stage Prox reactor and associated control schemes will be developed for these tests. Steady state performance of the Prox has been demonstrated at the 45 kW\\e\\ thermal input with multiple fuels. TGC Build: In order to demonstrate low emissions ADL will make modifications to the Phase 1 TGC design to improve performance with anode exhaust. In addition ADL will rent emissions analyzers and set up an emissions metering bench that will measure steady state emissions of all criteria pollutants (CO, CO2, NOx and hydrocarbons). These measurements will be conducted at the 1/4, 1/2 and full power points. These measurements will demonstrate the ability of low emissions from a fuel cell power system. System Shakedown: Art integrated fuel processing system will be developed for the 10 kW\\e\\ integration. The Model B reformer, Prox, TGC, heat exchangers, valves, sensors, actuators and other balance of plant will be integrated to support these tests. Once the system is integrated a series of shakedown tests will be conducted to evaluate performance of the integrated system with respect to the targets for the integration with the fuel cell. Integrated Testing: After demonstrating performance on the fuel processing system, it will be integrated with the Plug Power fuel processing system. Following shakedown of the integrated system detailed characterization of efficiency, emissions and multi fuel operation will be demonstrated. Phase 3 - 50 kW\\e\\ Brassboard System Integration Task 3.5 - Subsystem Design Upgrade Task 3.5.2 - 50 kW\\e\\ Integrated Fuel Processor Assembly Testing at ADL 2 In Phase 3 of the program 50 kW\\e\\ fuel processing hardware will be integrated at ADL to evaluate the following issues: system functionality, efficiency, emissions, pressure drop and its effect on parasitic's and water management. While some of these issues are explored at the 10 kWe level in Task 2.7.2 the performance at the 50 kW\\e\\ is expected to be different due to non linear scaling of the many factors involved. The 50 kW\\e\\ subsystems developed and tested will be tightly packaged onto a skid for reduction in thermal losses and pressure drops and tested as a complete fuel processing system. The skid will include all the balance of plant and will not be dependent on the laboratory facilities except for air and fuel supply. Following shakedown and detailed characterization of the system the system will be shipped to Plug Power, Latham NY for integration with a fuel cell system. Phase 4 50 kW\\e\\ Prototype System Package Task 4.3 - Fuel Processor Subsystem Development Fuel Processor: Based on the results of Phase 2 and the testing of the 50 kW\\e\\ brassboard system in Phase 3, the Prox and TGC will be designed and fabricated to meet the subsystem targets of performance, weight and volume. In Phase 4, ASME standards will not be used for pressure vessel designs. Instead internal standards of safety will be implemented. In these designs, recent advances in catalyst technology (especially with the Low Temperature Shift (LTS) catalyst advances) will be incorporated to reduce reactor weights and volumes. Over the course of the program ADL has developed a significant understanding of fuel processor and reactor devclopment technology. This knowledge will be implemented in Phase 4 to meet the fully integrated system -requirements. As major modifications in the reformer design are anticipated, ADL will test the unit before shipment to Plug Power. Any testing of the Phase 4 subsystems at ADL will be done on the Phase 3 skid, which will be returned to ADL at the completion of Phase 3. The test will include shakedown and detailed characterization. TGC Development: Advances in the Phase 2 and Phase 3 TGC's will be incorporated into the Phase 4 design. One of the biggest challenges is to operate the TGC with anode and cathode exhaust streams that are both dilute in fuel and oxidant. ADL will also work aggressively to reduce the weight and volume of the TGC. Fuel Processor - Heat Exchanger Development: In keeping with the plan to build a fully integrated system an additional heat exchanger/water separator was added to the fuel processor system during the latter portion of Phase 2. Additionally, weight and volume reduction of the heat exchangers is more challenging than originally anticipated and further development effort is required. ADL has been working with Modine Manufacturing to develop low cost compact heat exchangers for the fuel processing systems. ADL will be testing the performance of the first generation of these heat exchangers during Phase 3 of this program and will utilize them in the Phase 4 system. 3 Prox Development: In the Phase 4 Prox the same catalyst materials that were used in the Phase l and 2 systems will be used. The key challenge is to maintain low pressure drop through the Prox and advance the controls such that there is minimal loss of hydrogen in the process. The Prox will be a two stage device with a heat exchanger between the two stages. We will be evaluating this scheme in Phase 3 and make any necessary adjustments for a Phase 4 design. While no new designs will be implemented in Phase 4. modeling studies will be used to reduce catalyst volume and hence cost. Fuel Processor Controls Development and System: Results of controls testing in Phase 3 will be used to finalize the control strategy for Phase 4. This will lead to a significant reduction in the number of sensors and control hardware in the system. The goal for Phase 4 controls is a fully automated fuel processing system that is capable of following the reformate demand of the fuel cell system. In this effort ADL will also implement automotive controllers to reduce weight, volume, and cost of the balance of plant. The control scheme for the CMEU and its effect on the fuel processor and fuel cell controls will be identified and implemented in Phase 3. These components will be designed to meet the requirements of the fully integrated system and will operate off the Phase 4 DC power bus. Beta System Assembly and Tests: The Phase 4 system build will be done at Plug Power on one skid. Due to budgetary constraints, the integration of the fuel processing hardware and all balance of plant will be conducted at Plug Power by Plug Power technician staff with oversight from one ADL engineer. Plug Power technician staff will carry out all controls hardware build and wiring from the elements on the skid to control data acquisition hardware. ADL mechanical hardware and controls engineers will provide adequate documentation or guidance for this effort. ADL engineers will support all shakedown tests and characterization tests. Task 4.4 - System Assembly: The fully integrated system will be assembled at Plug Power. All components or subassemblies will be weighed and volumes will be determined. The components and subassemblies will be assembled using the design determined in Task 4.1. Instrumentation required for monitoring subsystem and component performance will be installed. The subassemblies will be united into an overall system package. The system will then be installed in Plug Power's test cell and connected to the programmable load bank, instrumentation and data acquisition system, fuel supply/measurement system, combustion air supply/measurement system, and the radiator cooling air ducts. Deletion: The following Task 3.6 is deleted in its entirety Task 3.6 - 500 Hour Endurance Test: The primary intent of the Phase 3 50 kW\\e\\ brassboard system is to gain operational experience with a higher level of integration between the fuel processor and fuel cell subsystems. The primary goals of the Phase 3 system are to demonstrate a highly integrated operational system at the 50 kW\\e\\ level and to evaluate the performance 4 (efficiency and emissions) of the system. At the conclusion of Phase 3 the performance of individual components will be evaluated and improvements will be identified for incorporation into the final Phase 4 system. It is proposed that DOE carry out the endurance test on the final Phase 4 system after it is delivered to ANL rather than having Plug Power test the Phase 3 system. Revision: Task 4.6 is revised as follows: Task 4.6 - Qualification Test and Delivery: Qualification testing, as outlined in Task 4.6 of the Statement of Work dated November 7, 1997, will be performed at Plug Power rather than at Texaco's Beacon Laboratory. With the recent construction of Plug Power's automotive laboratories, and the emissions test equipment outlined under Task 3.5, Plug Power will be able to perform all qualification testing at our own facilities with the exception of environmental chamber (low temperature) testing. This change to the program eliminates the logistical issues involved with moving and mobilizing the Phase 4 system at a remote location. 5 EX-10.26 13 0013.txt AGREEMENT EXHIBIT 10.26 U.S. DEPARTMENT OF ENERGY NOTICE OF FINANCIAL ASSISTANCE AWARD (See Instructions on Reverse) Under the authority of Public Law 95-91, U.S. Department of Energy Organization --------------------------------------------- Act and subject to legislation, regulations and policies applicable to (cite - --- legislative program title): Advanced Automotive Technologies - ----------------------------------------------------------------------------------------------------------------------------------- 1. PROJECT TITLE 2. INSTRUMENT TYPE Development of Fuel Processor, Durability Demonstration and [_] GRANT [X] COOPERATIVE AGREEMENT 10kW System - ----------------------------------------------------------------------------------------------------------------------------------- 3. RECIPIENT (Name, address, zip code, area code and 4. INSTRUMENT NO. 5. AMENDMENT NO. telephone no.) DE-FC02-99EE50580 A000 Arthur D. Little, Inc. ------------------------------------------------------------------- Acorn Park 6. BUDGET FROM: 07/15/1999 7. PROJECT FROM: 07/15/1999 Cambridge, MA 02140-2390 (617) 498-5636 PERIOD THRU: 01/14/2003 PERIOD THRU: 01/14/2003 - ----------------------------------------------------------------------------------------------------------------------------------- 8. RECIPIENT PROJECT DIRECTOR (Name and telephone no.) 10. TYPE OF AWARD William L. Mitchell [(617) 498-5097] [X] New [_] Continuation [_] Renewal - -------------------------------------------------------------- [_] Revision [_] Supplement [_] Other 9. RECIPIENT BUSINESS OFFICER (Name and telephone no.) Judith Blinn [(617) 498-5636] - ----------------------------------------------------------------------------------------------------------------------------------- 11. DOE PROJECT OFFICER (Name, address, zip code, 12. ADMINISTERED FOR DOE BY (Name, address, zip code, telephone no.) telephone no.) Pat Davis U.S. Department of Energy Denise Clarke (630) 252-2107 EE-321 Washington, DC 20585-0121 U.S. Department of Energy/ACQ 202/586-8061 9800 South Cass Avenue Argonne, IL 60439 - ----------------------------------------------------------------------------------------------------------------------------------- 13. RECIPIENT TYPE [_] STATE GOV'T [_] INDIAN TRIBAL GOV'T [_] HOSPITAL [X] FOR PROFIT [_] INDIVIDUAL ORGANIZATION [_] LOCAL GOV'T [_] INSTITUTION OF [_] OTHER NONPROFIT [_] OTHER (Specify) HIGHER EDUCATION ORGANIZATION [X] C [_] P [_] SP ___________________ - ----------------------------------------------------------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATIONS DATA 15. EMPLOYER I.D. NUMBER/SSN - -------------------------------------------------------------------------------------------------------------- a. Appropriation Symbol b. B & R Number c. FT/AFP/OC d. CFA Number 04-1549700 - ----------------------------------------------------------------------------------------------------------------------------------- 89X0215.91 EE-02-04 HA/CH/410 N/A - ----------------------------------------------------------------------------------------------------------------------------------- 16. BUDGET AND FUNDING INFORMATION - ----------------------------------------------------------------------------------------------------------------------------------- a. CURRENT BUDGET PERIOD INFORMATION b. CUMULATIVE DOE OBLIGATIONS - ----------------------------------------------------------------------------------------------------------------------------------- (1) DOE Funds Obligated This Action $ 800,000.00 (1) This Budget Period $ 800,000.00 -------------- ------------ (2) DOE Funds Authorized for Carry Over $ 0.00 [Total of lines a.(1) and a.(3)] -------------- (3) DOE Funds Previously Obligated in this Budget Period $ 0.00 (2) Prior Budget Periods $ 0.00 -------------- ------------ (4) DOE Share of Total Approved Budget $13,244,698.00 -------------- (5) Recipient Share of Total Approved Budget $ 6,609,313.00 (3) Project Period to Date $ 800,000.00 -------------- ------------ (6) Total Approved Budget $19,854,011.00 [Total of lines b.(1) and b.(2)] -------------- - ----------------------------------------------------------------------------------------------------------------------------------- 17. TOTAL ESTIMATED COST OF PROJECT N/A ------------------------------------------------------------------------- (This is the current estimated cost of the project. It is not a promise to award nor an authorization to expend funds in this amount.) - ----------------------------------------------------------------------------------------------------------------------------------- 18. AWARD/AGREEMENT TERMS AND CONDITIONS This award/agreement consists of this form plus the following: a. Special terms and conditions (if grant) or schedule, general provisions, special provisions (if cooperative agreement) b. Applicable program regulations (specify) N/A (Date) ____________________ --------------------------------------------------- c. DOE Assistance Regulations, 10 CFR Part-600, as amended Subparts A and [X] B (Other than State and Local Governments) or [_] C (State and Local Governments) d. Application/proposal dated 10/29/98, Negotiated on 7/9/99 , [_] as submitted [X] with changes as negotiated ------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- 19. REMARKS See attached Page No. 2 of this Notice of Financial Assistance Award. - -----------------------------------------------------------------------------------------------------------------------------------
20. EVIDENCE OF RECIPIENT ACCEPTANCE 21. AWARDED BY /s/ Judith Blinn 7/21/99 /s/ Charles G. Frazier Jul 14 1999 - ------------------------------------------------------------- ------------------------------------------------------------------- (Signature of Authorized Recipient Official) (Date) (Signature) (Date) Judith Blinn Charles G. Frazier - ------------------------------------------------------------- ------------------------------------------------------------------- (Name) (Name) Contracting Officer Acquisition and Assistance Group Contracting Officer - ------------------------------------------------------------- ------------------------------------------------------------------- (Title) (Title)
Cooperative Agreement No. DE-FC02-99EE50580 Page No. 2 REMARKS (continued) a. The following terms and conditions, attached hereto, are made a part hereof: (1) Budget Page - DOE F 4620.1; (2) Statement of Work;. (3) Special Terms and Conditions for Research Financial Assistance Awards, coded SPRG-0299/APM; (4) Additional Special Provisions; (5) Federal Assistance Reporting Checklist, dated 1/28/99; (6) Intellectual Property Provisions - Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations, coded LB-498. b. All references to the terms "grant(s)" or "contract(s)" shall be read as "cooperative agreement" or "agreement;" the terms "grantee" or "contractor" shall be read as "participant, recipient or awardee;" the term "subgrant" shall be read as "subaward;" and the terms "subcontract" or "contract" awarded under a grant shall be read as "contract" under a cooperative agreement. U.S. Department of Energy Budget Page (See reverse for Instructions)
- ------------------------------------------------------------------------------------------------------------------------------------ ORGANIZATION Arthur D. Little, Inc. Budget Page No: Summary - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL INVESTIGATOR/PROJECT DIRECTOR William Mitchell Subtopic 1a; 1j; 1l Requested Duration: 42 months - ------------------------------------------------------------------------------------------------------------------------------------ A. SENIOR PERSONNEL: PI/PD, Co-PI's, Faculty and Other Senior Associates COST SHARE ------------- BY TOTAL (List each separately with title; A.6. show number in brackets) Hrs $ hr. DOE SHARE APPLICANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. $ 3,328,111 $ 0 $ 3,328,111 - ------------------------------------------------------------------------------------------------------------------------------------ 2. - ------------------------------------------------------------------------------------------------------------------------------------ 3. - ------------------------------------------------------------------------------------------------------------------------------------ 4. - ------------------------------------------------------------------------------------------------------------------------------------ 5. - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------------------------------ 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------------------------------ 8. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------------------------------ 1. (0) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------------------------------ 2. (0) OTHER PROFESSIONAL (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------------------------------ 3. (0) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 4. (0) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 5. (0) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES AND WAGES (A+B) $ 3,328,111 $ 0 $ 3,328,111 - ------------------------------------------------------------------------------------------------------------------------------------ C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A+B+C) $ 3,328,111 $ 0 $ 3,328,111 - ------------------------------------------------------------------------------------------------------------------------------------ D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT FOR EACH ITEM) ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------------------------------ E. TRAVEL 1. DOMESTIC (INCL. CANADA AND U.S. POSSESSIONS) $ 93,230 $ 0 $ 93,230 - ------------------------------------------------------------------------------------------------------------------------------------ 2. FOREIGN --------------------------------------------------------------------------------------------------------- TOTAL TRAVEL $ 93,230 $ 0 $ 93,230 - ------------------------------------------------------------------------------------------------------------------------------------ F. TRAINEE/PARTICIPANT COSTS ------------------------------------------- 1. STIPENDS (Itemize levels, types + totals on budget justification page) ------------------------------------------- 2. TUITION & FEES ------------------------------------------- 3. TRAINEE TRAVEL ------------------------------------------- 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------------------------------ G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. MATERIALS AND SUPPLIES $ 2,412,201 $ 18,000 $ 2,430,201 - ------------------------------------------------------------------------------------------------------------------------------------ 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------------------------------ 3. CONSULTANT SERVICES $ 0 $ 0 $ 0 - ------------------------------------------------------------------------------------------------------------------------------------ 4. COMPUTER (ADPE) SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 5. SUBCONTRACTS $ 4,526,793 $1,438,147 $ 5,964,940 - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER (fully explain on justification page) (Supp Exp & Misc ODCs) $ 851,713 $ 4,000 $ 855,713 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER DIRECT COSTS $ 7,790,707 $1,460,147 $ 9,250,854 - ------------------------------------------------------------------------------------------------------------------------------------ H. TOTAL DIRECT COSTS (A THROUGH G) $ 11,212,048 $1,460,147 $ 12,672,195 - ------------------------------------------------------------------------------------------------------------------------------------ I. INDIRECT COSTS (SPECIFY RATE AND BASE) Labor OH @ 150% on DL & FB ------------------------------------------- Material OH @ 4% on G1 & G5 G&A @ 20% DL, FB, DLOH & ODC $ 2,032,652 $5,149,165 $ 7,181,818 ------------------------------------------- TOTAL INDIRECT COSTS $ 2,032,652 $5,149,165 $ 7,181,818 - ------------------------------------------------------------------------------------------------------------------------------------ J. TOTAL DIRECT AND INDIRECT COSTS (H+I) $ 13,244,698 $6,609,313 $ 19,854,011 - ------------------------------------------------------------------------------------------------------------------------------------ K. AMOUNT OF ANY REQUIRED COST SHARING FROM NON- FEDERAL SOURCES - ------------------------------------------------------------------------------------------------------------------------------------ L. TOTAL COST OF PROJECT (J+K) $ 13,244,698 $6,609,313 $ 19,854,011 - ------------------------------------------------------------------------------------------------------------------------------------
DOE APPLICANT TOTAL ---------------------------------------------- COOPERATIVE AGREEMENT NO. DE-FC02-99EE50580 STATEMENT OF WORK 1. Statement of Work Based on our current in-depth understanding of fuel processing and fuel cell systems, Arthur D. Little, Inc. (Epyx) shall perform a three-part program that will yield a fully optimized fuel processing subsystem. In the first part of the program, Epyx will work with Energy Partners to integrate existing hardware into a 10 kWe multi-fuel power system in order to identify key system level trade- offs in the design of a fuel processing subsystem and to allow validation of computer models developed both internally and by Argonne National Laboratories. In the second part of the program, Epyx will utilize existing integrated and disintegrated fuel processors to perform endurance testing that will identify and address material and catalyst degradation mechanisms. The output of this part of the program will feed directly into the final fuel processor design in the third part of the program. The major element of the third part of the program will be an in-depth catalysis R&D program that has been constructed to identify high-activity, low--cost catalysts. The new catalysts and supports will be integrated into a fuel processor package specifically suited to the optimized catalyst suite. The output of this program will be a fully integrated fuel processing subsystem that meets or exceeds 2004 PNGV targets. 2. Project Description The work to be performed consists of the following tasks: Task 1. Development of an Integrated State-of-the-Art Fuel Cell Power System - Topic 1A Task 2. Fuel Processor Durability -Topic 1L Task 3. Advanced Fuel Processor Development - Topic 1J 3. Performance Schedule Task 1. Completed 9 months after start of work (except support during testing at Argonne) Task 2. Completed 24 months after start of work Task 3. Completed 42 months after start of work 4. Reporting Requirement Epyx will provide a final report describing: . Performance of the fuel processor system and PROX reactor . Data from the experiments performed along with analyses based on these data . Identification of key issues 1 Additionally, Epyx will provide periodic updates and quarterly reports as per the requirements set forth in this SFAA. 5. Deliverables In addition to the reporting requirements, Epyx will deliver: . A 10 kWe fuel cell power system as DOE property for delivery to a TBD location, . A 50 kWe fuel processor for delivery to Los Alamos National Laboratory, and . The demonstration of a 50 kWe fuel processing subsystem that meets or exceeds the 2004 DOE/PNGV targets. This fuel processing subsystem will remain the property of DOE. 2 Special Terms and Conditions for Financial Assistance Awards ------------------------------------------------------------ The requirements of this attachment take precedence over all other requirements of this award found in regulations, the general terms and conditions, DOE orders, etc., except requirements of statutory law. Any apparent contradiction of statutory law stated herein should be presumed to be in error until recipient has sought and received clarification from the Contracting Officer. 1. PAYMENT OFFICE -------------- CR-54/CHO Account Payable Division U. S. Department of Energy P.O. Box 500 Germantown, MD 20874-0500 2. FINANCE OFFICE -------------- U. S. Department of Energy Chicago Operations Office Financial Services Group 9800 South Cass Avenue Argonne, Illinois 60439 3. PAYMENT - Advance Payment under this award will be made by: ------- [_] Department of Health & Human Services (DHHS) Payment Management System (PMS), formerly DOE Letter of Credit. The recipient shall request cash only as needed for immediate disbursements, shall report cash disbursements in a timely manner, and shall impose the same standards of timing and amount, including reporting requirements, on secondary recipients. [X] Automated Clearing House (ACH) An original Request for Advance or Reimbursement, SF 270, shall be submitted as necessary to the Payment Office specified in Section 1 above, and one copy of the SF 270 shall be submitted to the Contract Specialist specified in Block 12 of the Notice of Financial Assistance Award (DOE F 4600.1). The timing and amount of advances shall be as close as is administratively feasible to the actual disbursements. Such -2- requests shall not be made in excess of reasonable estimates of cash outlays for a 30 day period. SPRG-0299/APM -3- Payment under this award will be accomplished by the Payment Office via ACH, an electronic funds transfer. A completed "Automated Clearing House (ACH) Vendor Miscellaneous Payment Enrollment Form" must be on file with the Finance Office prior to processing your payment. 4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS ------------------------------------------------ Notwithstanding any other provisions of this Agreement, including but not limited to FAR 31.205-31, when applicable, as incorporated by Financial Assistance Rule 600.127(a), the Government shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioning (D&D) of any of the Recipient's facilities, or (ii) any costs which may be incurred by the Recipient in connection with the D&D of any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Agreement. 5. FEDERALLY-OWNED PROPERTY ------------------------ If you acquire federally-owned property under this award whether fabricated, furnished or purchased with Capital Equipment Funds, then a listing of such property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant & Capital Equipment, to the Contracting Officer within 45 days after August 31 of each year and within 30 days after the project period ends. The report must separately identify items which were fabricated, furnished, or purchased with Capital Equipment funds under this award. Any Capital Equipment funds and the equipment to be purchased, fabricated, or furnished with such funds are indicated on Page No. 2 of the Notice of Financial Assistance Award. 6. NOTICE REGARDING PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE ------------------------------------------------------------------------- OF CONGRESS ----------- It is the sense of the Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available under this award should be American-made. -4- SPRG-0299/APM -5- 7. NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES ---------------------------------------------------------- Recipients of financial assistance are cautioned to carefully review the allowable cost and other provisions applicable to expenditures under their particular award instruments. If financial assistance funds are spent for purposes or in amounts inconsistent with the allowable cost or any other provisions governing expenditures in an award instrument, the government may pursue a number of remedies against the recipient, including in appropriate circumstances, recovery of such funds, termination of the award, suspension or debarment of the recipient from future awards, and criminal prosecution for false statements. Particular care should be taken by the recipient to comply with the provisions prohibiting the expenditure of funds for lobbying and related activities. Financial assistance awards may be used to describe and promote the understanding of scientific and technical aspects of specific energy technologies, but not to encourage or support political activities such as the collection and dissemination of information related to potential, planned or pending legislation. 8. ADDITIONAL PROVISIONS --------------------- If the appropriation symbol contained in Block 14.a. of the Notice of Financial Assistance Award for this award is listed below, paragraph 8.a. is applicable to this award, otherwise paragraph 8.b. applies: 89X0213.91 89X0215.91 89X0218.91 89X0214.91 89X0216.91 89X0235.91 a. Department of Interior Appropriations Act Funding: ------------------------------------------------- 1. Lobbying Restriction (Department of Interior & Related Agencies --------------------------------------------------------------- Appropriations Act, 1999) ------------------------- The contractor or awardee agrees that none of the funds obligated on this award shall be made available for any activity or the publication or distribution of literature that in any way tends to promote public support or opposition to any legislative proposal on which Congressional action is not complete. This restriction is in addition to those prescribed elsewhere in statute and regulation. -6- SPRG-0299/APM -7- 2. Compliance With Buy American Act -------------------------------- In accepting this award, the recipient agrees to comply with sections 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 10a- 10c, popularly known as the "Buy American Act"). The recipient should review the provisions of the Act to ensure that expenditures made under this award are in accordance with it. b. Energy & Water Development Appropriations Act Funding: ----------------------------------------------------- Lobbying Restriction (Energy and Water Development Appropriations Act, ---------------------------------------------------------------------- 1999) ----- The contractor or awardee agrees that none of the funds obligated on this award shall be expended, directly or indirectly, to influence congressional action on any legislation or appropriation matters pending before Congress, other than to communicate to Members of Congress as described in 18 U.S.C. 1913. This restriction is in addition to those prescribed elsewhere in statute and regulation. 9. REPORTING --------- Failure to comply with the reporting requirements contained in this award will be considered a material noncompliance with the terms of the award. Noncompliance may result in a withholding of future payments, suspension or termination of the current award, and withholding of future awards. A willful failure to perform, a history of failure to perform or of unsatisfactory performance of this and/or other financial assistance awards, may also result in a debarment action to preclude future awards by Federal agencies. SPRG-0299/APM ADDITIONAL SPECIAL PROVISIONS TABLE OF CONTENTS
CLAUSE SUBJECT PAGE - ------ ------- ---- 1. Cost Share Contributions........................................................................... 1 2. Fee................................................................................................ 1 3. Statement of Substantial Involvement............................................................... 1 4. Technical Direction................................................................................ 2 5. Continuation of Work............................................................................... 4 6. Restriction on Transfer of Fuel Cell Technology to Foreign Entities................................ 4 7. Ceiling on Rate for Allowable Labor Indirect Costs to be Reimbursed by the Government.............. 4 8. Partial Funding.................................................................................... 4
ADDITIONAL SPECIAL PROVISIONS 1. COST SHARE CONTRIBUTIONS ------------------------ It is the intention of the Government and the Participant to share the allowable and allocable costs of performance of the work during this Agreement as set forth herein. The Government's contribution and support for this Agreement during the project period July 15, 1999 through January 14, 2003 will be $13,244,698.00. The Participant will contribute $6,609,313.00 toward the aforementioned project period. Notwithstanding any other provision in this Agreement, it is the intention of the Government and the Participant to share the total allowable and allocable costs of performance during the project period on a 66.7 percent (Government) and 33.3 percent (Participant) basis. It is understood by the parties that the DOE share of this project period is $13,244,698.00 and notwithstanding any other provision in this Agreement to the contrary, no additional Federal funding will be provided notwithstanding the total cost of the project at completion. In keeping with the cost share requirements set forth under this cooperative agreement the following cost sharing is necessary under each Topic: Development of an Integrated State-of-the-Art Fuel Cell Power System - Topic 1A (Cost Share 20%) Fuel Processor Durability - Topic 1L (Cost Share 35%) Advanced Fuel Processor Development - Topic 1J (Cost Share 40%) In the event the project is terminated early or not funded to its completion, the Participant understands and specifically agrees that the Government is not waiving the Participant's requisite cost share requirement and that in the event the project is not funded to its completion or otherwise terminated prior to completion, the Participant is still obligated to meet its requisite cost share. Participant further agrees that upon termination or at the completion of the project, upon notification by the Government, it will promptly submit to the Government all such sums due and owing to satisfy its requisite cost share. Failure to make such payment shall result in the Government undertaking collection action against the Participant. This understanding and agreement shall also apply to any additional budget periods within the project period wherein the Participant's aggregate cost share contribution to that date has not met the requisite cost share. 1 2. FEE --- No fee shall be paid to the Recipient. 3. STATEMENT OF SUBSTANTIAL INVOLVEMENT ------------------------------------ The Department of Energy (Department, DOE) will be substantially involved in all Tasks of the Statement of Work. The Department will collaborate with the participant in evaluating, accepting, and achieving the milestones for research as proposed by the respondent. The Department will provide technical direction to the overall program, as well as the individual program elements as it is determined to be necessary and appropriate by DOE. The Department will participate during the full duration of the project, and will have continuing rights to conduct ongoing negotiations with the participant regarding the technical direction of the work conducted under this Agreement. The Department staff members will attend meetings and participate in the formation and direction of scope of the key development activities. The DOE Project Officer will participate in the development, review and approval of all proposed statements of work, including subcontractor statements of work, prior to the execution of any subcontract. The Department will review technical progress reports and provide input to these reports as deemed necessary. In addition, the Department will have the right to have National Laboratories or selected private organizations perform independent tests and evaluations of the cooperative agreement's deliverables, thus providing an additional measure of technical progress. The Department may collaborate with the participant in the allocation of funds budgeted for this Agreement. Further, as work progresses, funding needs may change and depending upon availability of funds, the Department may collaborate with the participant to reallocate funds budgeted between the different programs and projects. The Department will thus be actively monitoring all phases of the participant's research and development activities, including participation in the participant's reviews of its contractor's activities and review of the contractor's reports to the participant. The Department will actively participate in the participant's process of reviewing and approving each phase of the proposed programs and projects. The substantial involvement by the Department under this Agreement will remain in effect for the term of the cooperative agreement award unless otherwise amended in writing by the Contracting Officer. Moreover, this 2 statement of substantial involvement by the Department does not increase the Department of Energy's liability under the Agreement award. 4. TECHNICAL DIRECTION ------------------- A. The work to be performed by the Participant under this Cooperative Agreement is subject to the surveillance and written Technical Direction of a "DOE Project Officer," identified in block 11 of the face page. The term "Technical Direction" is defined to include, without limitation, the following: 1. Directions to the Participant which redirects the work effort, shifts work emphasis between work areas or tasks, require pursuit of certain lines of inquiry, fill in details or otherwise provide technical guidance to the Participant in order to accomplish the tasks and requirements stated in the Statement of Work as contained in the agreement. 2. Provision of information to the Participant which assists in the interpretation of drawings, specifications or technical portions of the Statement of Work as contained in the Agreement. 3. Review and, where required by the Cooperative Agreement, approval of technical reports, drawings, specifications or technical information to be delivered by the Participant to DOE under the Cooperative Agreement. 4. The DOE Project Officer shall monitor the Participant's performance with respect to compliance with the requirements of this Cooperative Agreement. B. Technical direction and management surveillance shall not impose tasks or requirements upon the Participant additional to or different from the tasks and requirements stated in the Statement of Work of this Agreement. The Technical Direction to be valid: 1. Must be issued in writing consistent with the tasks and requirements stated in the Statement of Work of this Agreement; and 2. May not: 3 a. constitute an assignment of additional work outside the tasks and requirements stated in the Statement of Work of this Agreement; b. in any manner cause an increase or decrease in the total estimated project cost or the time required for project performance; c. change any of the expressed terms, conditions or specification of the Cooperative Agreement; or d. accept non-conforming work. C. The Participant shall proceed promptly with the performance of Technical Directions duly issued by the DOE Project Officer in the manner prescribed by paragraph B. above and which are within his authority under the provisions of paragraph A. above; provided, however, that the Participant shall immediately cease the performance of any Technical Direction upon receipt of a written instruction to that effect from the Contracting Officer. D. If in the opinion of the Participant any Technical Direction issued by the DOE Project Officer is within one of the categories as defined in B. 2. (a) through (d) above, the Participant shall not proceed but shall notify the Contracting Officer in writing within five working days after the receipt of any such Technical Direction and shall request the Contracting Officer to rescind such direction or mutually agree to modify the agreement accordingly. E. The only persons authorized to give Technical Direction to the Participant under this Agreement are the Contracting Officer and any "DOE Project Officer" as listed in Block 11 of the face page. Any action taken by the Participant in response to any direction given by any person other than the Contracting Officer or DOE Project Officer shall not be binding upon the Government. 5. CONTINUATION OF WORK -------------------- There will be an evaluation of the progress near the end of each year of the work to determine to either continue, redirect, or terminate the project. 4 6. RESTRICTION OF TRANSFER OF FUEL CELL TECHNOLOGY TO FOREIGN ENTITIES ------------------------------------------------------------------- It is agreed that the Participant shall obtain adequate recognition of the United States support for the technology developed under this Program in any contracts, assistance, licenses, or other agreements which involve the transfer to foreign entities of the fuel cell technology developed in whole or in part at Government expense. The Participant agrees to notify DOE, as represented by DOE Patent Counsel, in writing, of the adequate recognition obtained prior to entering into any such contracts, assistance, licenses, or other agreements. The Participant shall not enter into any such contracts, assistance, licenses, or other agreements without the concurrence shall be at the sole discretion of DOE and is not subject to the Disputes or Appeals (at 10 CFR 600.22) or otherwise subject to litigation under the Contracts Disputes Act of 1978 (41 U.S.C. 601 et seq.). The determination shall be in writing and shall be furnished to the Participant by the Contracting Officer. Examples of such an adequate recognition could include: (1) a commitment to manufacture in the U.S.A., (2) a requirement to reimburse the U.S. Government for its R&D costs, and/or (3) a commitment to jointly sponsor the R&D program. 7. CEILING ON RATES FOR ALLOWABLE LABOR INDIRECT COSTS TO BE REIMBURSED BY THE --------------------------------------------------------------------------- GOVERNMENT ---------- Reimbursement to the Participant for labor indirect costs shall be subject to a ceiling rate of 150% of allowable Direct Labor and Fringe Benefits costs. Any and all labor overhead costs in excess the aforesaid ceiling rate shall be unallowable under this agreement and shall be absorbed by the Participant without reimbursement by the Government under this agreement or any other Government award. 8. PARTIAL FUNDING --------------- This cooperative agreement is partially funded on a cost reimbursement basis without fee or profit. The total estimated cost of the project to be conducted during the current budget period is $19,854,011.00 of which the estimated cost to DOE is $13,244,698.00 and the estimated cost to the Participant is $6,609,313.00. The Cumulative DOE Obligation for the current budget period is $800,000.00 and, subject to the availability of additional funds, DOE anticipates obligating an additional $12,444,698.00 hereunder for the current budget period. The Participant shall not be obligated to continue performance of the project beyond the total of: (a) the amount of funds set forth as the Cumulative DOE Obligation for the current budget period in Block 16.b.(1) of 5 the face page, (b) the amount, if any, set forth as DOE Funds Authorized for Carry Over in Block 16.a.(2) of the face page, and (c) the amount of the Participant's corresponding obligation for the current budget period, viz., $399,212.00; provided, however, that once the Cumulative DOE Obligations for the current budget period have been increased by DOE to $13,244,698.00, the Participants' obligation for the current budget period shall be increased to a total of $6,609,313.00, and the Participant shall be expected to bring the project (covered by the current budget period) to its conclusion within the amount of $13,244,698.00, and there is no commitment by DOE to provide any additional funding to the Participant. This cooperative agreement is subject to a refund of unexpended funds to DOE. 6 U.S. Department of Energy FEDERAL ASSISTANCE REPORTING CHECKLIST - ----------------------------------------------------------------------------------------------------------------- 1. Identification Number: DE-FC02-99EE50580 2. Program/Project Title: Development of Fuel Processor, Durability Demonstration and 10kW System - ----------------------------------------------------------------------------------------------------------------- 3. Recipient: Arthur D. Little, Inc. - ----------------------------------------------------------------------------------------------------------------- 4. Reporting Requirements: Frequency No. of Copies Addressees - ----------------------------------------------------------------------------------------------------------------- PROGRAM/PROJECT MANAGEMENT REPORTING [X] Program Management Plan, See Attachment 1 Y Original + 2 Orig + 2cys, B copies [_] DOE F 4600.3A, "Milestone Log" [_] DOE F 4600.4, "Federal Assistance Budget Information" [_] DOE F 4600.5, "Federal Assistance Management Summary Report" [_] DOE F 4600.6, "Federal Assistance Program/Project Status Report" [X] SF-269, "Federal Assistance Program/Project Status Report" Q Original + 1 copy Orig A, (1) B TECHNICAL INFORMATION REPORTING [_] DOE F 1430.22, Notice of Energy RD&D Project [X] Technical Progress Report Y* Original + 2 Orig + 2cys B copies [X] Topical Report A Original + 2 Orig + 2cys B copies [X] Final Technical Report F** Original + 2 Orig + 1 A copies (1) B - ----------------------------------------------------------------------------------------------------------------- FREQUENCY CODES AND DUE DATES: A - As Necessary; within 5 calendar days after events. F - Final; 90 calendar days after the performance of the effort ends. Q - Quarterly; within 30 days after end of calendar quarter or portion thereof. O - One time after project starts; within 30 days after award. X - Required with proposals or the application or with significant planning changes. Y - Yearly; 30 days after the end of program year. (Financial Status Reports 90 days). S - Semiannually; within 30 days after end of program fiscal half year. - ----------------------------------------------------------------------------------------------------------------- 5. Special Instructions: Technical Progress Report: An original and 2 copies of the report must be - ------------------------- submitted annually. The report must be accompanied by two copies of DOE F 241.1, "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." - -----------------------------------------------------------------------------------------------------------------
*Final Report: An original and 2 copies must be submitted within 90 days after the expiration ------------ date of the total performance period, if the project is not to be renewed or extended, and must be accompanied by two copies of DOE F241.1 "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." MAIL REPORTS TO: A. Contract Specialist, ACQ B. See Block No. 11 of the face page U.S. Department of Energy Department of Energy Chicago Operations Office 1000 Independence Avenue, S.W. 9800 South Cass Avenue Washington, D.C. 20585-0121 Argonne, Illinois 60439 JAN 28 1999 - ------------------------------------------------------------------------------------------------ 6. Prepared by: (Signature and Date) /s/ Ronald J. Fiskum Jan 28 1999 - ------------------------------------------------------------------------------------------------
ATTACHMENT 1 PROGRAM MANAGEMENT PLAN GUIDELINES ---------------------------------- The following guidelines indicate the information to be prepared in submitting a Program Management Plan. As a minimum, the Program Management Plan shall contain the following sections: 1. Purpose of R&D Effort --------------------- The Participant shall briefly describe the overall purpose, objectives and scope of the R&D effort described in the plan. 2. Remaining Technology Development Areas -------------------------------------- The Participant shall clearly outline the remaining problem areas in technology development in a few descriptive paragraphs. These areas will be described in order of importance and priority. 3 Description of Tasks -------------------- The Participant shall provide a detailed work breakdown structure (WBS) defining different areas of activity as discrete tasks and the interrelation among the tasks. A written description of each task including objective, planned activities and clearly defined milestones shall also be provided. The Awardee shall also provide the following: a. A schedule and milestone plan b. A cost plan by task and month 4. Schedule -------- The Participant shall prepare a baseline detailed activity schedule (critical path network schedule or equivalent). 5. Deliverables ------------ In addition to the hardware to be delivered, the Participant shall provide a description of the reports to be supplied under the agreement and provide a schedule of their delivery dates. Intellectual Property Provisions Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations 01. FAR 52.227-1 Authorization and Consent (JUL 1995), Alternate I 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996) This clause is not applicable if the award is for less than $100,000. 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) If this award requires the use or delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 04. FAR 52.227-16 Additional Data Requirements (JUN 1987) 05. FAR 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 06. DEAR 952.227-9 Refund of Royalties (MAR 1995) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government (MAR 1995) Attachment 1 (for reference only): Patent Rights - Retention by Contractor (Short Form) (MAR 1995); DEAR 952.227-11 LB-498 01. FAR 52.227-1 Authorization and Consent; Alternate I AUTHORIZATION AND CONSENT (JUL 1995) (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 1 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. ----------- (1) Computer data bases, as used in this clause, means a collection of data in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. The term does not include computer software. (2) Computer software, as used in this clause, means (i) computer programs which are data comprising a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations and (ii) data comprising source code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the computer program to be produced, created, or compiled. The term does not include computer data bases. (3) Data, as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. For the purposes of this clause, the term does not include data incidental to the administration of this contract, such as financial, administrative, cost and pricing, or management information. (4) Form, fit, and function data, as used in this clause, means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithm, process, formulae, and flow charts of the software. (5) Limited rights data, as used in this clause, means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. The Government's rights to use, duplicate, or disclose limited rights data are as set forth in the Limited Rights Notice of subparagraph (g)(2) of this section if included in this clause. (6) Restricted computer software, as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software, including minor modifications of any such computer software. The Government's rights to use, duplicate, or disclose restricted computer software are as set forth in the Restricted Rights Notice of subparagraph (g)(3) of this section if included in this clause. (7) Technical data, as used in this clause, means recorded data, regardless of form or characteristic, that are of a scientific or technical nature. Technical data does 2 not include computer software, but does include manuals and instructional materials and technical data formatted as a computer data base. (8) Unlimited rights, as used in this clause, means the rights of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, including by electronic means, and perform publicly and display publicly, in any manner, including by electronic means, and for any purpose whatsoever, and to have or permit others to do so. (b) Allocation of rights. -------------------- (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(1) below. (c) Copyright. --------- (1) Data first produced in the performance of this contract. Unless provided otherwise in subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings or similar works. The prior, express written permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the 3 Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. ------------------------------------ (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to assert copyright in computer software first produced in the performance of this contract without prior written permission of the DOE Patent Counsel assisting the contracting activity. When such permission is granted, the Patent Counsel shall specify appropriate terms, conditions, and submission requirements to assure utilization, dissemination, and commercialization of the data. The 4 Contractor, when requested, shall promptly deliver to Patent Counsel a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled. (e) Unauthorized marking of data. ---------------------------- (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignored. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officer's decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officer's determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. Coast 5 Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. (f) Omitted or incorrect markings. ----------------------------- (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractor's expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. ------------------------------------------------------------------ (1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] 6 (3) [Reserved.] (h) Subcontracting. -------------- The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractor's obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. ----------------------- Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(1) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) Alternate II (Jun 1987) (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. __________________ (and subcontract No. ________________, if appropriate). 7 These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(1) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) Alternate III(Jun 1987) (g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. _____ (and subcontract ______________________________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the 8 Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. __________________ (and subcontract __________________, if appropriate) with __________________ (name of Contractor and subcontractor)." (End of notice) (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." 04. FAR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing 9 contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 05. FAR 52.227-23 Rights to Proposal Data RIGHTS TO PROPOSAL DATA (TECHNICAL)(JUN 1987) Except for data contained on pages 3-26, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the "Rights in Data--General" clause contained in this contract) in and to the technical data contained in the proposal dated 10/29/98, upon which this contract is based. 06. DEAR 952.227-9 Refund of Royalties REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. 10 (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 07. DEAR 952.227-13 Patent Rights -Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as 11 to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. See 10 CFR part 784. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. 12 (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations (10 CFR part 784) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that-- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; 13 (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or assignee to be privileged and confidential and is so marked, the Department of Energy agrees that, to the extent permitted by law, it will not disclose such information to persons outside the Government. (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. 14 (1) The Contractor is hereby granted a revocable, nonexclusive, royalty- free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractor's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: 15 (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the invention available for licensing. (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended 16 substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, or within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign country in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such 17 invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. 18 (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(1) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or 19 (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in all subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor-- (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. 20 (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(1) of this clause from all persons who perform any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. 21 (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of DOE or 22 the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(1) of this clause, the Contractor: (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 23 Attachment 1: 952.227-11 Patent Rights - Retention by the Contractor (short form) PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the conception of first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501 (a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. 24 (7) "Agency licensing regulations" and "agency regulations concerning the licensing of Government-owned inventions" mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Department of Energy (DOE) within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the DOE, the Contractor will promptly notify that agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying DOE within 2 years of disclosure to DOE. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by DOE to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within 1 year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. 25 (4) Requests for extension of the time for disclosure, election, and filing under subparagraphs (c)(1), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title; provided, that DOE may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or the 26 domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations concerning the licensing of Government owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraph (d) of this clause and to enable the government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify 27 the contract) awarded by the United States Department of Energy. The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) The contractor shall include in all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work the patent rights clause at 952.227-13. (3) In the case of subcontracts, at any tier, DOE, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received, by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceeding undertaken by that agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), DOE agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful 28 efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and, if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when DOE deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and 29 (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractor's licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when that Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). (l) Communications. (1) The contractor shall direct any notification, disclosure, or request to DOE provided for in this clause to the DOE patent counsel assisting the DOE contracting activity, with a copy of the communication to the Contracting Officer. (2) Each exercise of discretion or decision provided for in this clause, except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is not a claim or dispute and is not subject to the Contract Disputes Act of 1978. (3) Upon request of the DOE Patent Counsel or the contracting officer, the contractor shall provide any or all of the following: (i) a copy of the patent application, filing date, serial number and title, patent number, and issue date for any subject invention in any country in which the contractor has applied for a patent; (ii) a report, not more often than annually, summarizing all subject inventions which were disclosed to DOE individually during the reporting period specified; or (iii)a report, prior to closeout of the contract, listing all subject inventions or stating that there were none. (End of clause) 30 EX-10.27 14 0014.txt SUBCONTRACT AGREEMENT Exhibit 10.27 SUBCONTRACT AGREEMENT BETWEEN ARTHUR D. LITTLE, INC. AND CORNING INCORPORATED AGREEMENT NO. A11790 This Subcontract is entered into between Arthur D. Little, Inc. Acorn Park, Cambridge, Massachusetts 02140 (hereinafter referred to as "ADL" or "EPYX") and Corning Incorporated, One Riverfront Plaza, Corning, NY 14831 (hereinafter referred to as "CORNING", "SUBCONTRACTOR", or "Seller"). WITNESSETH WHEREAS, ADL has entered into a Subcontract with CORNING under Prime Cooperative Agreement No. DE-FC02-99EE50580 with the United States Government, Department of Energy, and WHEREAS, ADL desires to enter into a subcontract with CORNING under said prime contract on a 35% Cost Sharing basis for assistance on the program entitled "New Millennium Fuel Processor for Transportation Fuel Cell Power System, Subtopic l.j.," NOW THEREFORE, the parties hereto to mutually agree as follows: SCHEDULE OF ARTICLES -------------------- ARTICLE I - STATEMENT OF WORK - ----------------------------- CORNING shall furnish, on a best reasonable efforts basis, the personnel, materials, services, equipment, facilities, and do all things necessary or incident to perform the tasks specified in the attached Statement of Work identified as Exhibit A, which is incorporated herein and made a part hereof. AGREEMENT No. A11790 Page 2 of 6 ARTICLE II - PERIOD OF PERFORMANCE - ---------------------------------- The period of performance of this subcontract shall be from October 1, 1999 through January 14, 2003 inclusive of all reports. ARTICLE III - COST-SHARING ARRANGEMENT - -------------------------------------- A. Estimated Cost - The total estimated cost for the work to be accomplished under this subcontract is $1,708,628. CORNING agrees to cost-share 35% of its estimated contribution to the project. Therefore, if CORNING incurs costs of $1,708,628 it will cost share $598,020 and be reimbursed $1,110,608. B. Cost Overrun or Additional Effort - If ADL approves a cost overrun or --------------------------------- additional effort under this subcontract, CORNING agrees that it will share 35% of the overrun cost or additional effort. If costs exceed $1,708,628, CORNING will not be obligated to proceed unless it agrees to do so and such a cost overrun or additional effort is approved. ARTICLE IV - INVOICES - --------------------- Invoices shall be submitted monthly, in original and one copy referencing this Subcontract number and mailed to the following addressees for approval and payment: Original to: Copy to: ------------ -------- Arthur D. Little, Inc. Arthur D. Little, Inc. Attn.: Mr. Prashant S. Chintawar Attn: Ms. Hieu Do 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The invoices will contain, by element, actual expenditures for the current period, total cumulated billings to date, and will also indicate cost share amount and amount due. The period of services and agreement number should also be cited. Each current month's actual charges will be reduced by the 35% cost share amount. ARTICLE V - PROVISIONAL BILLING RATES - ------------------------------------- Pending establishment of final overhead rates for any fiscal period, CORNING shall invoice at such provisional overhead rates as agreed upon between CORNING and ADL and/or the Government for application to this subcontract, AGREEMENT No. A11790 Page 3 of 6 subject to appropriate adjustment when the final rates for that period are established. To prevent substantial over- and under-payments, provisional billing rates may, at the request of either party, be revised by mutual agreement, either retroactively or prospectively. Please refer to "Additional Special Provisions, Item No. 7" for additional information regarding this subject. ARTICLE VI - SUBCONTRACT SURVEILLANCE - ------------------------------------- Authorized representatives of ADL and/or DOE shall, upon reasonable request, have access to CORNING's facilities in order to review the progress, discuss problems or failures, and witness testing pertaining to the requirements of this subcontract. CORNING shall provide adequate information on subcontract performance in response to reasonable requests by ADL and/or DOE representatives. Our surveillance shall be during normal business hours and will be with reasonable notice. ARTICLE VII - TECHNICAL DIRECTION AND SUBCONTRACT ADMINISTRATION - ---------------------------------------------------------------- ADL's Program Manager and Subcontract Administrator for this subcontract are: Program Manager Subcontract Administrator --------------- ------------------------- Mr. Prashant S. Chintawar Ms. Judith Blinn Arthur D. Little, Inc. Arthur D. Little, Inc. 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The Program Manager will act as ADL's representative for technical matters providing technical direction and discussion as necessary with respect to the Statement of Work, and monitoring the progress and quality of CORNING's performance. The Program Manager is not authorized to take any action, either directly or indirectly, that would change the pricing, quantity, quality, place of performance, delivery schedule or any other terms and conditions of the basic subcontract, or to direct the accomplishment of effort which goes beyond the scope of the basic contractual Statement of Work. When, in the opinion of CORNING, the Program Manager requests efforts outside the existing scope of the subcontract, CORNING shall promptly notify Judith Blinn, the ADL Subcontract Administrator, in writing. No action shall be taken by CORNING under such direction until the ADL Subcontract Administrator has issued a subcontract modification or otherwise resolved the issue. AGREEMENT No. A11790 Page 4 of 6 ARTICLE VIII - INSPECTION AND ACCEPTANCE - ---------------------------------------- ADL shall inspect and provisionally accept the materials and services provided under this subcontract and shall advise of any defect in materials and services not in accordance with the SOW or requested changes therein. In addition, the Contracting Officer under the prime contract, or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract including those provided under this subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Contracting Officer. ARTICLE IX - INDEMNIFICATION FOR DEFECTIVE COST OR PRICING DATA - --------------------------------------------------------------- In the event ADL suffers a price reduction under the prime contract as a result of defective cost or pricing data furnished by CORNING in connection with this subcontract or any modification thereof, CORNING shall indemnify ADL in the full amount of such reduction. ARTICLE X - ADDITIONAL PROVISIONS - --------------------------------- The clauses set forth in Attachment I, ADL Standard Provisions for Services and Supply Contracts (1998), Attachment II, Special Terms and Conditions for Research Financial Assistance Awards coded SPRG-0299/APM, Attachment III, Additional Special Provisions, Attachment IV, Federal Assistance Reporting Checklist, dated 1/28/99, Attachment V, Intellectual Property Provisions-- Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations, coded LB-498 and DOE Assistance Regulations AND 10 CFR Part 600, as Amended Subparts A and B which are Incorporated by Reference, and Attachment VI, Guidelines for Intellectual Property Agreement for SFAA l.j., apply to this subcontract and are made a part hereof. ARTICLE XI - AUDIT RESTRICTIONS - ------------------------------- Nothing of this subcontract shall be construed as granting to ADL the right of access to the financial books and records of CORNING for purposes of this subcontract and ADL's compliance with its obligations to the Government Prime Contract. Excluded from terms' substitution of "ADL" for the "Government" or the "Contracting Officer," in the DOE provisions are all of the provisions that would allow ADL access to CORNING's financial books and records. For purposes of those excluded clauses, the terms "Government," "Controller General," "Department of Energy," or "Contracting Officer" shall remain AGREEMENT No. A11790 Page 5 of 6 unchanged, and any required access to such CORNING financial books and records shall be limited to the cognizant Government activity and its authorized representatives. ARTICLE XII - ORDER OF PRECEDENCE - --------------------------------- In the event of an inconsistency in this subcontract, unless otherwise provided herein, the inconsistency shall be resolved by giving precedence in the following descending order (i.e. a. has highest priority, b. has next to highest priority, etc.): a. Agreement No. A11790 and Exhibit A, Statement of Work b. Attachment I--ADL Standard Provisions for Services and Supply Contracts (1998) c. Attachment II--Special Terms and Conditions for Research Financial Assistance Awards d. Attachment III--Additional Special Provisions e. Attachment IV--Federal Assistance Reporting Checklist, dated 1/28/99 f. Attachment V--Intellectual Property Provisions - Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations and Incorporation of 10 CFR 600 incorporated by reference g. Attachment VI--Guidelines for Intellectual Property Agreement for SFAA l.j. All references to the terms "grant(s)" or "contracts(s)" shall be read as "cooperative agreement" or "agreement;" the terms "grantee" or "contractor" shall be read as "participant, recipient or awardee;" the term "subgrant" shall be read as "subaward;" and the terms "subcontract" or "contract" awarded under a grant shall be read as "contract" under a cooperative agreement. BOTH PARTIES HERETO WARRANT and REPRESENT that they have full right, power and authority to execute this subcontract. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day of year last specified below. ARTHUR D. LITTLE, INC. CORNING INCORPORATED By: /s/ Judith Blinn By: /s/Steven Suttle ----------------------------- ----------------------------- AGREEMENT No. A11790 Page 6 of 6 Typed Typed Name: Judith Blinn Name: Steven Suttle ----------------------------- ---------------------------- Title: Contracting Officer Title: Vice President ----------------------------- ---------------------------- Date: 6 Dec. 1999 Date: 03 Dec. 1999 ----------------------------- ---------------------------- In witness whereof, the duly authorized representatives of IFC and ADL have executed this Subaward on the dates shown. A. D. LITTLE, INC. INTERNATIONAL FUEL CELLS CORPORATION By /s/ Judith Blinn By /s/ Robert L. Suttmiller ----------------------------- ---------------------------------- Name Name (Typed) Judith Blinn (Typed) Robert L. Suttmiller ------------------------ ------------------------------ Title Contracting Officer Title President -------------------------- -------------------------------- Date 1/5/98 Date 1/6/98 --------------------------- --------------------------------- 7 Exhibit 10.27 ATTACHMENT I ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 ATTACHMENT 1 ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 1. INDEPENDENT CONTRACTOR Subcontractor shall perform under this Subcontract as an independent contractor. Nothing herein contained shall be construed as creating the relationship of employer and employee or principal and agent between ADL and Subcontractor or any employee or agent of Subcontractor. Neither Subcontractor nor any of its employees or agents have any authority to represent, commit, or bind ADL to any person, firm, association, corporation or government agency. 2. INDEMNITY AGAINST CLAIMS Subcontractor hereby agrees to indemnify and save harmless ADL, its agents and employees, against any and all liability, obligations, claims, loss and expense, (a) caused or created by Subcontractor, its suppliers, or the agents and employees of either, arising as a result of willful misconduct or gross negligence, or (b) arising directly or indirectly out of injuries suffered or allegedly suffered by employees of Subcontractor or its suppliers (i) in the course of their employment, (ii) in the performance of work hereunder, or (iii) upon premises owned or controlled by ADL. 3. PATENT INDEMNITY Subcontractor warrants that all products and materials which it furnishes to ADL hereunder which are not of ADL's design, composition or manufacture do not infringe any valid patent, copyright or trademark. Subcontractor shall indemnify and save ADL harmless from any and all expense, liability and/or loss, including attorney's fees, arising out of claims, suits or actions alleging such infringement. 4. INSURANCE If in the performance of this Subcontract Subcontractor's employees are required to enter premises owned or controlled by ADL or the prime contractor, Subcontractor shall maintain Workmen's Compensation and Comprehensive Public Liability and Property Damage, including Automobile Public Liability and Property Damage coverage in amounts, in forms and with carriers satisfactory to ADL, and shall on request furnish certificates attesting to such insurance or submit the policies for inspection by ADL. 5. RELEASE OF INFORMATION No news release, including photographs and films, public announcements or confirmation of same, or any part of the subject matter of this Subcontract, or any phase of any program hereunder shall be made without the prior written approval of ADL. Such approval will not be unreasonably withheld. The Subcontractor further agrees to insert the provisions of this clause in any of its subcontracts, purchase orders, or consulting agreements issued under this Subcontract. 6. NOTICE OF LABOR DISPUTES Whenever an actual or potential labor dispute is delaying or threatens to delay the performance of the work, Subcontractor shall immediately notify ADL in writing. Such notice shall include all relevant information concerning the dispute and its background. 7. TAXES Subcontractor agrees that, unless otherwise indicated in this Subcontract, (a) the prices herein do not include any state or local sales, use or other tax from which an exemption is available for purposes of this Subcontract, and (b) the prices herein include all other applicable federal, state and local taxes in effect at the date of this Subcontract. Subcontractor agrees to accept any use tax exemption certificates when supplied by ADL if acceptable to the taxing authorities. In case it shall ever be determined that any tax included in the prices herein was not required to be paid by Subcontractor, Subcontractor agrees to notify ADL and to make prompt application for the refund thereof, to take all proper steps to procure the same and when received to pay the same to ADL. 8. ASSIGNMENT OF CLAIMS Subcontractor shall not assign any rights or claims under this Subcontract or for breach thereof, without prior written consent of ADL. Attempted assignments not having ADL approval shall be void. In no event shall copies of this Subcontract, specification or other similar documents relating to work under this Subcontract be furnished to any assignees of claim arising under this Subcontract without the prior written consent of the ADL Subcontract Administrator. 9. SUBCONTRACTING None of the work to be performed by the Subcontractor under this Subcontract shall be subcontracted without the prior written consent of ADL; however, this limitation shall not apply to the purchase of standard commercial supplies or raw material. 10. CONFIDENTIAL UNDERSTANDING In the performance of the work under this Subcontract, ADL and Subcontractor (the parties) and their employees may be exposed to, or have contact with, or knowledge of developments, research projects, manufacturing or trade secrets, identification of clients or business confidences of the other party to the extent identified in writing and delivered to the receiving party. Accordingly, the parties agree to hold in confidence all such matters both during and after completion of the work called for under this Subcontract and to secure a like agreement from any of their personnel assigned to perform services related to this Subcontract. Excluded from the foregoing restriction is information which has become a part of the public domain, information which the other party can reasonably show is in its possession at the time of disclosure and was not acquired directly or indirectly from the other party, and information received by either party from a third party having the legal right to transmit the same information which the receiving party can demonstrate was independently developed without the use of the disclosed information. The obligations of confidentiality hereunder shall remain in force for a period of five years after the date of termination or expiration of this Subcontract. 11. WAIVER The failure of ADL to insist upon the performance of any provision of this Subcontract, to exercise any right or privilege granted to ADL under this Subcontract shall not be construed as waiving any such provision, and the same shall continue in force. 12. COMPLIANCE WITH LAWS/PERMITS Subcontractor agrees to comply with the requirements of the Fair Labor Standards Act of 1938, as amended, and of regulations and orders of the United States Department of Labor under Section 14 thereof. Except as otherwise directed by ADL, Subcontractor shall procure all necessary permits or licenses and abide by all applicable laws, regulations and ordinances required by the political subdivision in which the work and/or services under this Subcontract is performed. 13. SUBCONTRACT SURVEILLANCE Upon reasonable request, authorized representatives of ADL and/or the prime contractor shall have access to Subcontractor's facilities in order to review progress and discuss problems pertaining to the requirements of this Subcontract. Subcontractor shall provide adequate information on Subcontract performance in response to reasonable requests by ADL and/or the prime contractor. 14. INSPECTION AND ACCEPTANCE All material and work, including raw materials, component, and end products, shall be subject to inspection and test by ADL and the Government to the extent practicable at all times and places, and the plants of Subcontractor and its subcontractors of any tier shall be subject to inspection by ADL and the Government. The exercise of this right of inspection and test, however, shall in no way relieve Subcontractor of its obligation to furnish all material and work in strict accordance with this order. In case any material or work is found to be defective, ADL shall have the right to reject, rework or sort the same or require that it be corrected or replaced promptly, all at Subcontractor's expense. If inspection and test are made on the premises of Subcontractor or any subcontractor of Subcontractor, Subcontractor or such subcontractor shall furnish without additional charge all reasonable facilities and assistance for the safe and convenient inspections and tests required. All inspections and tests shall be performed in such manner as not to delay the work unduly. ADL shall inspect and provisionally accept the materials and services provided under this Subcontract and shall advise Subcontractor of any defect or required changes therein. In addition, the Contracting Officer under the prime contract or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract, including those provided under this Subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Government Contracting Officer. 15. GOVERNMENT-FURNISHED PROPERTY If any Government property is furnished to Subcontractor in connection with performance of this order, title thereof shall remain in the Government and the Government shall have access thereto, at all reasonable times. Subcontractor shall return such property in the condition in which it was received, except for reasonable wear and tear and except to the extent that such property has been incorporated in material delivered under this order or has been consumed in normal performance of this order. Subcontractors shall comply with the provisions of FAR Part 45. 16. DISPUTES Either party may litigate any dispute arising under or relating to this Subcontract before any court of competent jurisdiction. Pending resolution of any such dispute by settlement or by final judgment, the parties shall proceed diligently with performance. Subcontractor's performance shall be in accordance with ADL'S written instructions. All references to disputes procedures in Government clauses incorporated by reference shall be deemed to be superseded by this clause. 17. CHANGES ADL may at any time, by a written notice, make reasonable changes in the specifications, designs or drawings, samples or other description to which the articles are to conform, in methods of shipment and packaging, place of delivery, or the amount of ADL/Government-furnished property. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this order, whether changed or not changed by any such order, an equitable adjustment shall be made in the price or delivery schedule, or both, and this order modified in writing accordingly. Any claim by Subcontractor for an adjustment must be made in writing within thirty (30) days of the receipt of any such notice, provided, however, that ADL may, at its discretion, receive and act upon any such claim so made at any time prior to final payment under this order. Nothing in this clause shall excuse the Subcontractor from proceeding without delay to perform this Subcontract as changed. 18. TERMINATION (a) ADL may terminate this Subcontract, in whole or in part, in accordance with the provisions of the Termination clause set forth in FAR 52.249-6 if Subcontractor fails to comply with any of the provisions hereof, or if Subcontractor becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors. (b) Without effecting its right to terminate this order under paragraph (a) hereof, ADL may, for its convenience, terminate this Subcontract in whole or, from time to time, in part, except the term "1 year" in paragraph (f) is changed to "6 months." 19. RESERVED ---------------- Last Item EXHIBIT A STATEMENT OF WORK Corning will do bulk of its work in the period October 1, 1999 to April 30, 2002 with supplemental support in the last portion of the contract. For FY2000 (October 1, 1999 -- September 30, 2000), Corning will receive $0.65 MM and for October 1, 2000 -- November 30, 2000 period, $ 50,000. All figures include Corning's cost share. Importance of catalysts and adsorbents Epyx fuel processing approach consists of a series of chemical reactions, which are assisted by catalysts and adsorbents. These materials play an important role in obtaining satisfactory performance and Corning's role will crucial to the overall success of the program. The catalysts and adsorbents developed in this program will be all based on very high cell density monolith/foam/reticulate type substrates made by Corning. They offer a high potential for reduction of weight & volume of the catalysts and system pressure drop. For a transportation specific fuel processor application, some of the desired characteristics of catalysts are: 1. Activity per unit mass and volume about an order of magnitude higher than that of conventional syn gas catalysts 2. High thermal and mechanical integrity/longevity 3. High selectivity towards desired product(s) of reaction 4. Ability for rapid startup, shut-down, and transients 5. Ability to withstand intermittent operation 6. Heat transfer capability 7. High tolerance for contaminant(s) such as sulfur, chlorine, etc. 8. Ability to process multiple fuels such as reformulated gasoline, natural gas, ethanol, etc. 9. Ability to operate under high humidity conditions 10. Low cost Overview of SOW Contract No. DE-FC02-99EE50580 STATEMENT OF WORK Period: October 1, 1999 -- November 30, 2000 EXHIBIT A Fuel Processor Substrate & Catalyst Development Program between Corning Incorporated and Epyx/A. D. Little, Inc. Introduction Over the past few years, fuel cell power systems for stationary and mobile applications have made tremendous advances. These advances have been possible due to fundamental understanding of catalysis, thermodynamics, reaction engineering, reactor design, and controls. Consequently, transportation fuel cell power systems are on the verge of commercialization. For example, current performance of the Epyx fuel processor on gasoline exceeds PNGV (Partnership for New Generation Vehicles) 2004 targets for energy efficiency and steady state emissions. Dry hydrogen concentrations of --45% have been observed at the LTS exit corresponding to --85% efficiency of the fuel processor (based on LHV of H2). However, there is still substantial work that must be performed in order for the Epyx fuel processor to meet the most stringent PNGV 2004 targets of power density, specific power, start-up time, transient response, endurance, and cost. The objective of this joint development program between Corning Incorporated (Corning) and A. D. Little, Inc./Epyx (Epyx) is to develop fuel processor specific substrate and catalyst technology suitable for Epyx Next Millennium Fuel Processor(TM). The work to be conducted is a part of Department of Energy SFAA program with the objective to develop, design, fabricate, and demonstrate two PEM fuel cell integrated 50 kWe multi-fuel processors for the transportation application. In addition to Corning, there are other subcontractors and Corning is expected to work closely with them. An important feature of this program is a close interaction among Epyx and all the subcontractors. The duration of Phase I of the program is July 15, 1999 to July 31, 2001 with a go/no-go after Phase I. This SOW covers the period 10/1/1999 -- 11/30/2000; Epyx and Corning will draft the SOW for 12/1/2000--7/31/2001 in December 2000. Corning's commitment to total program has been agreed to be $1,708,268 for the period 10/1/1999 -- 1/14/2003. Epyx confidential The transportation fuel cell power system, of which the fuel processor is a component, is expected to meet or exceed PNGV 2004 targets. These performance and cost targets for fuel processor have been established for operation on California Phase II reformulated gasoline (RFG) and are shown in Table 1; fuel processor performance for other fuels is expected to exceed the target values for gasoline. Based on a proprietary automotive fuel cell system model, Epyx is currently establishing separate fuel processor performance and cost targets, which may be more stringent, and will be available within two months. Table 1. PNGV technical targets: fuel-flexible fuel processors(a) (Excludes fuel storage, includes controls, shift reactors, CO clean-up, heat exchangers)
- ------------------------------------------------------------------------------------------------ Calendar Year ------------------------------------- Characteristics Units 1997 2000 2004 - ------------------------------------------------------------------------------------------------------------------------ Energy Efficiency(b) % 70 75 80 - ------------------------------------------------------------------------------------------------------------------------ Power Density W/L 400 600 750 - ------------------------------------------------------------------------------------------------------------------------ Specific Power W/kg 400 600 750 - ------------------------------------------------------------------------------------------------------------------------ Cost(c) $/kWe 50 30 10 - ------------------------------------------------------------------------------------------------------------------------ Start-up to Full Power Min 2 1 0.5 - ------------------------------------------------------------------------------------------------------------------------ Transient Response (time from 10 to 90% power) Sec 30 20 10 - ----------------------------------------------------------------------------------------------------------------------- Emissions(d) less than Tier 2 less than Tier 2 less than Tier 2 - ------------------------------------------------------------------------------------------------------------------------ Durability(e) Hours 1000 2000 5000 - ------------------------------------------------------------------------------------------------------------------------ CO Content Steady State(f) PPM 100 10 10 - ------------------------------------------------------------------------------------------------------------------------ CO Content Transient(f) PPM 5000 500 100 - ------------------------------------------------------------------------------------------------------------------------ H2S Content in Product Stream PPM 0 0 0 - ------------------------------------------------------------------------------------------------------------------------ NH3 Content in Product Stream PPM less than 10 less than 10 less than 10 - ------------------------------------------------------------------------------------------------------------------------
(a) Targets pertain to gasoline fuel and are consistent with those of the PNGV. (b) fuel processor efficiency = total fuel cell system efficiency/fuel cell stack system efficiency, where total fuel cell system efficiency accounts for thermal integration. (c) High-volume production: 500,000 units per year. (d) Emission levels will comply with emission regulations projected to be in place when the technology is available for market introduction. (e) Time between catalyst replacement. (f) Dependent on stack development (CO tolerance) progress. To meet the PNGV 2004 targets, the following assistance is needed from Corning for Phase I of the SFAA: 1. Conceive, design, develop, characterize, and provide prototypes (for the lab scale and pilot plant testing) of fuel processor specific substrates for the following catalytic reaction zones: reforming, high temperature shift (HTS), ultra low temp shift (ULTS), preferential oxidation (PROX), and tail gas combustor (TGC). 2. Custom extrusion of pre-fuel processor assembly (FPA) and FPA internal sulfur traps developed by UCI. 3. Transformation of Epyx proprietary pelleted water gas shift (WGS) catalyst into monolith/reticulate/foam version, optimization of the composition, and characterization. Washcoating the optimized composition on other components of the fuel processor. 4. Assistance in thermal integration and packaging of advanced substrate based catalysts/sorbents with Epyx automotive fuel processor. 5. Consultation to Epyx regarding performance of the fuel processor and consultation to subcontractors, if and when needed, regarding washcoating very high cell density substrates. 6. Cost analyses In Phase I of this program, Epyx will evaluate these advanced substrate based catalysts and adsorbents in micro/meso reactor, MPR (modular pressurized reformer -- a disintegrated 50 kWe fuel processor), and integrated 5O kWe fuel processor - with and without PEMFC. The performance data obtained from such testing under simulated and real reformate conditions will be conveyed to Corning and others in order for them to improve the material performance. Epyx will also collect kinetic data, design the reactors, and integrate them with the Next Millennium Fuel Processor(TM) - all with guidance from subcontractors. Detailed description of SOW Task 1 Substrate selection: Based on the information provided in Table 2, Corning will prepare a comprehensive list of candidate substrates (for each reaction zone) based on their following requirements in the descending order: o High catalytic activity per unit volume o High catalytic activity per unit mass o Low thermal mass o High ease of heat & mass transfer-- axially and radially o Ability to undergo rapid thermal cycling (between room temperature and Table 2 temperature), and frequent start-up and shut-down o Compatible with all reactants, products, trace species, air, and water o Washcoating capability o Resistant to plugging by foreign species o High commercial viability or low cost For certain reaction zones, such as reforming, high heat transfer rates are extremely important to attain high catalytic activity. Therefore, a metallic reticulate type substrate is preferred. Table 2. Requirements of advanced catalysts/sorbents for Epyx Next Millennium Fuel Processor(TM)
- ------------------------------------------------------------------------------------------------------------------------------------ Reaction zone Temp S/C 0/C Trace species Max thermal mass Expected ((degree)F) (kJ/L(degree)C) Life (h) - ------------------------------------------------------------------------------------------------------------------------------------ Pre-FPA sulfur removal TBD 0 0 - TBD 3000* - ------------------------------------------------------------------------------------------------------------------------------------ Reforming 1250-2300 2.25-3.00 0.40-0.45 Sulfur, HCs 0.146 2000 - ------------------------------------------------------------------------------------------------------------------------------------ High shift 650-1200 2.25-3.00 0 H2S, HCs, NH3 0.146 2000 - ------------------------------------------------------------------------------------------------------------------------------------ FPA internal sulfur removal 400-800 2.25-3.00 0 H2S, HCs, NH3 0.146 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Low shift 400-650 2.25-3.00 0 H2S, HCs, NH3 0.146 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Ultra low shift 300-400 2.25-3.00 0 H2S, HCs, NH3 0.146 2000 - ------------------------------------------------------------------------------------------------------------------------------------ PROX Sulfur, HCs, NH3 TBD 2000 - ------------------------------------------------------------------------------------------------------------------------------------ TGC 300-1200 less than 0.5 less than 0.5 Sulfur, NH3 TBD 2000 - ------------------------------------------------------------------------------------------------------------------------------------
* miles The list should, include various geometries such as straight flow monolith, crossflow foam, reticulate on ceramic and metallic low and high surface area substrates. Corning will also calculate pressure drop/L for uncatalyzed substrate and catalyzed substrate (assuming 40 um washcoat thickness). Corning will include CPSI, composition, mechanical strength (MOR), temperature limitation, etc. for each candidate substrate. Based on results of above Task, Epyx and Corning will select substrate(s) for each reaction zone, characterize (pore volume, pore size distribution, surface area, XRD, composition, etc.), and supply less than or equal to 50 samples (d:O.75" X h: 1.5") for each reaction zone for washcoating by UCI and SCI. Only low to medium cell density substrates will be used initially (by SCI and UCI) for testing in the Epyx microreactor. However, MPR and Phase I fuel processor testing will need larger substrates of very high cell density, less than or equal to 10 L, for each reaction zone. The following table should assist Corning in the selection of the substrate/extrusion technology for each reaction zone.
- ------------------------------------------------------------------------------------------------------ Reaction zone Current formulation Probable new composition Source - ------------------------------------------------------------------------------------------------------ Pre-FPA sulfur trap None Ni/A12O3, mol sieve UCI - ------------------------------------------------------------------------------------------------------ ATR Ni+K/A1203 PGM on thermally stable support UCI - ------------------------------------------------------------------------------------------------------ HTS Fe/Cr PGM on thermally stable support UCI - ------------------------------------------------------------------------------------------------------ Polishing sulfur trap ZnO ZnO, Cu/Zn UCI - ------------------------------------------------------------------------------------------------------ LTS Cu/Zn Pt/ZrO2 Corning - ------------------------------------------------------------------------------------------------------ ULTS None ?? (PGM based?) UCI - ------------------------------------------------------------------------------------------------------ PROX Pt/SnOx Modified Pt/SnOx SCI - ------------------------------------------------------------------------------------------------------
Epyx is also currently evaluating several proprietary promising candidate materials (in the powdered or pelleted form) as catalyst for the above reaction zones. Therefore, Corning's assistance may also be sought in transforming one or more of these catalysts into advanced substrate form. Task 2: Extrusion of sulfur traps: As a part of the SFAA, UCI will develop two sulfur traps (adsorbents) -- one prior to the fuel processor and the other inside it (polishing). Corning will extrude both the traps into low pressure drop substrates. These substrates will be tested in microreactor, and if they show acceptable performance will also be made in large sizes for MPR, and Phase I multi-fuel processor testing. The shapes and sizes of these traps could be different from the Corning's commercially available product. Task 3: Epyx WGS catalyst transformation: Epyx has developed a proprietary water gas shift (WGS) catalyst which is superior to the conventional low temperature shift catalyst. This material is in the pelleted form and needs to be transferred into monolith/reticulate form for its suitability in the Next Millennium Fuel Processor. Upon commencement of the program, Epyx will share the data on this material to Corning. The advanced substrate based WGS catalyst is expected to meet the requirements listed in Table 3. Table 3. Requirement matrix for Epyx WGS
- ---------------------------------------------------------------------------------------------------------- Operating conditions* S/C: 2.25-3.00, temp: 400-650 F, pressure: 3 atm - ---------------------------------------------------------------------------------------------------------- Design wet gas space velocity greater or equal 30,000 h/-1/ - ---------------------------------------------------------------------------------------------------------- Lifetime greater or equal 500 h with less than 10% decrease in performance - ---------------------------------------------------------------------------------------------------------- Selectivity No formation of MeOH and other trace species - ---------------------------------------------------------------------------------------------------------- *in the worst case, S/C is 1.4 and WGSV is 10,000 h/-1/.
TASK 4 IS NOW DELETED FROM CORNING SOW Task 4: TGC catalyst design or emission control technology: An advanced substrate based combustion catalyst is needed to abate start-up and steady state emissions from the TGC which contains a mixture of CO2, H2, N2, O2, H2O, and trace hydrocarbons. The catalyst will probably be based on high cell density substrate washcoated with precious metals. The current Epyx TGC catalyst is effective only at high temperatures and in the presence of large excess of oxidant. A fast light-off compact catalyst, which can operate under conditions indicated in Tables 4 and 5, is required. Table 4. Requirement matrix for Epyx TGC catalyst - -------------------------------------------------------------------------------- Light-off temperature less than or equal to 300 F - -------------------------------------------------------------------------------- Conversion efficiency less than or equal to 99.5% - -------------------------------------------------------------------------------- Design wet gas space velocity greater than or equal to 75,000 h-1 - -------------------------------------------------------------------------------- Lifetime greater than or equal to 5,000 h - -------------------------------------------------------------------------------- Selectivity No formation of noxious by-products - -------------------------------------------------------------------------------- Table 5. Gas composition for Epyx TGC catalyst ---------------------------------------- Component Vol % ---------------------------------------- N2 60-80 ---------------------------------------- H2 0-10 ---------------------------------------- C02 10-20 ---------------------------------------- CH4 0-5 ---------------------------------------- H20 2-10 ---------------------------------------- 02 0-10* ---------------------------------------- ATTACHMENT II SPECIAL TERMS AND CONDITIONS FOR RESEARCH FINANCIAL ASSISTANCE AWARDS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Special Terms and Conditions for Financial Assistance Awards The requirements of this attachment take precedence over all other requirements of this award found in regulations, the general terms and conditions, DOE orders, etc., except requirements of statutory law. Any apparent contradiction of statutory law stated herein should be presumed to be in error until recipient has sought and received clarification from the Contracting Officer. 1. PAYMENT OFFICE N/A 2. FINANCE OFFICE N/A 3. PAYMENT N/A -2- 4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS Notwithstanding any other provisions of this Agreement, including but not limited to FAR 31.205-31, when applicable, as incorporated by Financial Assistance Rule 600.127(a), the Government shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioning (D&O) of any of the Recipient's facilities, or (ii) any costs which may be incurred by the Recipient in connection with the D&D of any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Agreement. 5. FEDERALLY-OWNED PROPERTY If you acquire federally-owned property under this award whether fabricated, furnished or purchased with Capital Equipment Funds, then a listing of such property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant & Capital Equipment, to the Contracting Officer within 45 days after August 31 of each year and within 30 days after the project period ends. The report must separately identify items which were fabricated, furnished, or purchased with Capital Equipment funds under this award. Any Capital Equipment funds and the equipment to be purchased, fabricated, or furnished with such funds are indicated on Page No. 2 of the Notice of Financial Assistance Award. 6. NOTICE REGARDING PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS It is the sense of the Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available under this award should be American-made -3- 7. NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES Recipients of financial assistance are cautioned to carefully review the allowable cost and other provisions applicable to expenditures under their particular award instruments. If financial assistance funds are spent for purposes or in amounts inconsistent with the allowable cost or any other provisions governing expenditures in an award instrument, the government may pursue a number of remedies against the recipient, including in appropriate circumstances, recovery of such funds, termination of the award, suspension or debarment of the recipient from future awards, and criminal prosecution for false statements. Particular care should be taken by the recipient to comply with the provisions prohibiting the expenditure of funds for lobbying and related activities. Financial assistance awards may be used to describe and promote the understanding of scientific and technical aspects of specific energy technologies, but not to encourage or support political activities such as the collection and dissemination of information related to potential, planned or pending legislation 8. ADDITIONAL PROVISIONS If the appropriation symbol contained in Block 14.a. of the Notice of Financial Assistance Award for this award is listed below, paragraph 8.a. is applicable to this award, otherwise paragraph 8.b. applies: 89X0213.91 89X0215.91 89X0218.91 89X0214.91 89X0216.91 89X0235.91 a. Department of Interior Appropriations Act Funding: 1. Lobbying Restriction (Department of Interior & Related Agencies Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be made available for any activity or the publication or distribution of literature that in any way tends to promote public support or opposition to any legislative proposal on which Congressional action is not complete. This restriction is in addition to those prescribed elsewhere in statute and regulation. -4- 2. Compliance With Buy American Act In accepting this award, the recipient agrees to comply with sections 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 1Oa-1Oc, popularly known as the "Buy American Act"). The recipient should review the provisions of the Act to ensure that expenditures made under this award are in accordance with it. b. Energy & Water Development Appropriations Act Funding: Lobbying Restriction (Energy and Water Development Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be expended, directly or indirectly, to influence congressional action on any legislation or appropriation matters pending before Congress, other than to communicate to Members of Congress as described in 18 U.S.C. 1913. This restriction is in addition to those prescribed elsewhere in statute and regulation. 9. REPORTING Failure to comply with the reporting requirements contained in this award will be considered a material noncompliance with the terms of the award. Noncompliance may result in a withholding of future payments, suspension or termination of the current award, and withholding of future awards. A willful failure to perform, a history of failure to perform. or of unsatisfactory performance of this and/or other financial assistance awards, may also result in a debarment action to preclude future awards by Federal agencies. ATTACHMENT III ADDITIONAL SPECIAL PROVISIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. ADDITIONAL SPECIAL PROVISIONS TABLE OF CONTENTS CLAUSE SUBJECT PAGE - ------ ------- ---- 1. Cost Share Contributions ....................................... 1 2. Fee ............................................................ 1 3. Statement of Substantial Involvement ........................... 1 4. Technical Direction ............................................ 2 5. Continuation of Work ........................................... 4 6. Restriction on Transfer of Fuel Cell ........................... 4 Technology to Foreign Entities 7. Ceiling on Rate for Allowable Labor ............................ 4 Indirect Costs to be Reimbursed by the Government 8. Partial Funding ................................................ 4 ADDITIONAL SPECIAL PROVISIONS 1. COST SHARE CONTRIBUTIONS It is the intention of the Government and the Participant to share the allowable and allocable costs of performance of the work during this Agreement as set forth herein. The Government's contribution and support for this Agreement during the project period Oct. 1, 1999 through January 14, 2003 will be $1,110,608. The Participant will contribute $598,020 toward the aforementioned project period. Notwithstanding any other provision in this Agreement, it is the intention of the Government and the Participant to share the total allowable and allocable costs performance during the project period on a 65 percent (Government) and 35 percent (Participant) basis. It is understood by the parties that the DOE share of this project period is $1,110,608 and notwithstanding any other provision in this Agreement to the contrary additional Federal funding will be provided notwithstanding the total cost of the project at completion. In keeping with the cost share requirements set forth under this cooperative agreement the following cost sharing is necessary under each Topic: Development of an Integrated State-of-the-Art Fuel Cell Power System-- Topic 1.J. (Cost Share 35%) In the event the project is terminated early or not funded to its completion, the Participant understands and specifically agrees that the Government is not waiving the Participant's requisite cost share requirement and that in the event the project is not funded to its completion or otherwise terminated prior to completion, the Participant is still obligated to meet its requisite cost share. Participant further agrees that upon termination or at the completion of the project, upon notification by the Government, it will promptly submit to the Government all such sums due and owing to satisfy its requisite cost share. Failure to make such payment shall result in the Government undertaking collection action against the Participant. This understanding and agreement shall also apply to any additional budget periods within the project period wherein the Participant's aggregate cost share contribution to that date has not met the requisite cost share. 2. FEE No fee shall be paid to the Recipient. 3. STATEMENT OF SUBSTANTIAL INVOLVEMENT The Department of Energy (Department, DOE) will be substantially involved in all Tasks of the Statement of Work. The Department will collaborate with the participant in evaluating, accepting, and achieving the milestones for research as proposed by the respondent. The Department will provide technical direction to the overall program, as well as the individual program elements as it is determined to be necessary and appropriate by DOE. The Department will participate during the full duration of the project, and will have continuing rights to conduct ongoing negotiations with the participant regarding the technical direction of the work conducted under this Agreement. The Department staff members will attend meetings and participate in the formation and direction of scope of the key development activities. The DOE Project Officer will participate in the development, review and approval of all proposed statements of work, including subcontractor statements of work, prior to the execution of any subcontract. The Department will review technical progress reports and provide input to these reports as deemed necessary. In addition, the Department will have the right to have National Laboratories or selected private organizations perform independent tests and evaluations of the cooperative agreement's deliverables, thus providing an additional measure of technical progress. The Department may collaborate with the participant in the allocation of funds budgeted for this Agreement. Further, as work progresses, funding needs may change and depending upon availability of funds, the Department may collaborate with the participant to reallocate funds budgeted between the different programs and projects. The Department will thus be actively monitoring all phases of the participant's research and development activities, including participation in the participant's reviews of its contractor's activities and review of the contractor's reports to the participant. The Department will actively participate in the participant's process of reviewing and approving each phase of the proposed programs and projects. The substantial involvement by the Department under this Agreement will remain in effect for the term of the cooperative agreement award unless otherwise amended in writing by the Contracting Officer. Moreover, this statement of substantial involvement by the Department does not increase the Department of Energy's liability under the Agreement award. 4. TECHNICAL DIRECTION A. The work to be performed by the Participant under this Cooperative Agreement is subject to the surveillance and written Technical Direction of a "DOE Project Officer." The term "Technical Direction" is defined to include, without limitation, the following: 1. Directions to the Participant which redirects the work effort, shifts work emphasis between work areas or tasks, require pursuit of certain lines of inquiry, fill in details or otherwise provide technical guidance to the Participant in order to accomplish the tasks and requirements stated in the Statement of Work as contained in the agreement. 2. Provision of information to the Participant which assists in the interpretation of drawings, specifications or technical portions of the Statement of Work as contained in the Agreement. 2 3. Review and, where required by the Cooperative Agreement, approval of technical reports, drawings, specifications or technical information to be delivered by the Participant to DOE under the Cooperative Agreement. 4. The DOE Project Officer shall monitor the Participant's performance with respect to compliance with the requirements of this Cooperative Agreement B. Technical direction and management surveillance shall not impose tasks or requirements upon the Participant additional to or different from the tasks and requirements stated in the Statement of Work of this Agreement. The Technical Direction to be valid: 1. Must be issued in writing consistent with the tasks and requirements stated in the Statement of Work of this Agreement; and 2. May not: a. constitute an assignment of additional work outside the tasks and requirements stated in the Statement of Work of this Agreement; b. in any manner cause an increase or decrease in the total estimated project cost or the time required for project performance; c. change any of the expressed terms, conditions or specification of the Cooperative Agreement; or d. accept non-conforming work. C. The Participant shall proceed promptly with the performance of Technical Directions duly issued by the DOE Project Officer in the manner prescribed by paragraph B. above and which are within his authority under the provisions of paragraph A. above; provided, however, that the Participant shall immediately cease the performance of any Technical Direction upon receipt of a written instruction to that effect from the Contracting Officer. D. If in the opinion of the Participant any Technical Direction issued by the DOE Project Officer is within one of the categories as defined in B. 2. (a) through (d) above, the Participant shall not proceed but shall notify the Contracting Officer in writing within five working days after the receipt of any such Technical Direction and shall request the Contracting Officer to rescind such direction or mutually agree to modify the agreement accordingly. E. The only persons authorized to give Technical Direction to the Participant under this Agreement are the Contracting Officer and any "DOE Project Officer." Any action taken by the Participant in response to any direction given by any person other than the Contracting Officer or DOE Project Officer shall not be binding upon the Government. 3 5. CONTINUATION OF WORK There will be an evaluation of the progress near the end of each year of the work to determine to either continue, redirect, or terminate the project. 6. RESTRICTION OF TRANSFER OF FUEL CELL TECHNOLOGY TO FOREIGN ENTITIES It is agreed that the Participant shall obtain adequate recognition of the United States support for the technology developed under this Program in any contracts, assistance, licenses, or other agreements which involve the transfer to foreign entities of the fuel cell technology developed in whole or in part at Government expense. The Participant agrees to notify DOE, as represented by DOE Patent Counsel, in writing, of the adequate recognition obtained prior to entering into any such contracts, assistance, licenses, or other agreements. The Participant shall not enter into any such contracts, assistance, licenses, or other agreements without the concurrence shall be at the sole discretion of DOE and is not subject to the Disputes or Appeals (at 10 CFR 600.22) or otherwise subject to litigation under the Contracts Disputes Act of 1978 (41 U.S.C. 601 et. seq.). The determination shall be in writing and shall be furnished to the Participant by the Contracting Officer. Examples of such an adequate recognition could include: (1) a commitment to manufacture in the U.S.A., (2) a requirement to reimburse the U.S. Government for its R&D costs, and/or (3) a commitment to jointly sponsor the R&D program. 7. CEILING ON RATES FOR ALLOWABLE LABOR INDIRECT COSTS TO BE REIMBURSED BY THE GOVERNMENT Reimbursement to the Participant for labor indirect costs shall be subject to a ceiling rate of * of allowable Direct Labor and Fringe Benefits costs. Any and all labor overhead costs in excess the aforesaid ceiling rate shall be unallowable under this agreement and shall be absorbed by the Participant without reimbursement by the Government under this agreement or any other Government award. 8. PARTIAL FUNDING This cooperative agreement is partially funded on a cost reimbursement basis without fee or profit. The total estimated cost of the project to be conducted during the TOTAL budget period is $1,708,628 of which the estimated cost to DOE is $1,110,608 and the estimated cost to the Participant is 598,020. The Cumulative DOE Obligation for the current budget period is $422,500 and, subject to the availability of additional funds, DOE anticipates obligating an additional $688,108 hereunder for future budget periods. The Participant shall not be obligated to continue performance of the project beyond the total of: (a) the amount of funds set forth as the Cumulative DOE Obligation for the current budget period in Block 16.b.(1) of the face page, (b) the amount, if any, set forth as DOE Funds Authorized for Carry Over in Block 16.a.(2) of the face page, and (c) the amount of the Participant's corresponding obligation for the current budget period, viz., $422,500 provided, however, that once the Cumulative DOE Obligations for the current budget period have been * Whatever rate was included in CORNING'S cost proposal on which this award is based. 4 increased by DOE to $1,110,608, the Participants' obligation for the current budget period shall be increased to a total of $598,020 and the Participant shall be expected to bring the project (covered by the current budget period) to its conclusion within the amount of $1,110,608, and there is no commitment by DOE to provide any additional funding to the Participant. This cooperative agreement is subject to a refund of unexpended funds to DOE. 5 ATTACHMENT IV FEDERAL ASSISTANCE REPORTING CHECKLIST DATED 1/28/99 (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. U.S. Department of Energy FEDERAL ASSISTANCE REPORTING CHECKLIST - -------------------------------------------------------------------------------------------------------------------- Identification Number: DE-FCO2-99EE50580 2. Program/Project Title Development of Fuel Processor, Durability Demonstration and 10kW System - -------------------------------------------------------------------------------------------------------------------- Recipient: Arthur D. Little, Inc.
- -------------------------------------------------------------------------------------------------------------------- Reporting Requirements: Frequency No. of Copies Addressees ----------------------------------------------------- GRAM/PROJECT MANAGEMENT REPORTING Program Management Plan, See Attachment 1 Y Original + 2 copies Orig + 2cys, B DOE F 4600.3A, "Milestone Log" DOE F 4600.4, "Federal Assistance Budget Information" DOE F 4600.5, "Federal Assistance Management Summary Report" DOE F 4600.6, "Federal Assistance Program/Project Status Report" SF-269, "Financial Status Report" (Long Form) Q Original + 1 Copy Orig A, (1) B FINANCIAL INFORMATION REPORTING DOE F 1430.22, Notice of Energy RD&D Project Technical Progress Report Y* Original + 2 copies Orig + 2cys B Topical Report A Original + 2 copies Orig + 2cys B Final Technical Report F** Original + 2 copies Orig + 1 A (1) B - --------------------------------------------------------------------------------------------------------------------
FREQUENCY CODES AND DUE DATES: - - As Necessary: within 5 calendar days after events. - - Final: 90 calendar days after the performance of the effort ends. - - Quarterly: within 30 days after end of calendar quarter or portion thereof. - - One time after project starts; within 30 days after award. - - Required with proposals or the application or with significant planning changes. - - Yearly: 30 days after the end of program year. (Financial Status Reports 90 days). - - Semiannually: within 30 days after end of program fiscal half year. - -------------------------------------------------------------------------------- Special Instructions: Technical Progress Report: An original and 2 copies of the report must be submitted annually. The report must be accompanied by two copies of DOE F 241.1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." Final Report: An original and 2 copies must be submitted within 90 days after the expiration date of the total Performance period, if the project is not to be renewed or extended, and must be accompanied by two copies of DOE F 1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." FINAL REPORTS TO: A. Contract Specialist, ACQ B. See Block No. 11 of the U.S. Department of Energy face page Chicago Operations Office Department of Energy 9800 South Cass Avenue 1000 Independence Avenue, S.W. Argonne, Illinois 60439 Washington, D.C. 20585-0121
JAN 28 1999 - -------------------------------------------------------------------------------- Prepared by: (Signature and Date) /s/ Ronald J. Fiskum - -------------------------------------------------------------------------------- ATTACHMENT 1 PROGRAM MANAGEMENT PLAN GUIDELINES The following guidelines indicate the information to be prepared in submitting a Program Management Plan. As a minimum, the Program Management Plan shall contain the following sections: 1. Purpose of R&D Effort The Participant shall briefly describe the overall purpose, objectives and scope of the R&D effort described in the plan. 2. Remaining Technology Development Areas The Participant shall clearly outline the remaining problem areas in technology development in a few descriptive paragraphs. These areas will be described in order of importance and priority. 3. Description of Tasks The Participant shall provide a detailed work breakdown structure (WBS) defining different areas of activity as discrete tasks and the interrelation among the tasks. A written description of each task including objective, planned activities and clearly defined milestones shall also be provided. The Awardee shall also provide the following: a. A schedule and milestone plan b. A cost plan by task and month 4. Schedule The Participant shall prepare a baseline detailed activity schedule (critical path network schedule or equivalent) 5. Deliverables In addition to the hardware to be delivered, the Participant shall provide a description of the reports to be supplied under the agreement and provide a schedule of their delivery dates. ATTACHMENT V INTELLECTUAL PROPERTY PROVISIONS-- RESEARCH, DEVELOPMENT, OR DEMONSTRATION LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS, AND FOREIGN ORGANIZATION, CODED LB-498 AND DOE ASSISTANCE REGULATIONS, 10 CFR PART 600, AS AMENDED SUBPARTS A AND B ARE INCORPORATED BY REFERENCE (Flow-down from DOE Cooperative Agreement No. DE-FC02-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. 01. FAR 52.227-1 Authorization and Consent; Alternate I AUTHORIZATION AND CONSENT (JUL 1995) (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. (1) Computer data bases, as used in this clause, means a collection of data in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. The term does not include computer software. (2) Computer software, as used in this clause, means (i) computer programs which are data comprising a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations and (ii) data comprising source code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the computer program to be produced, created, or compiled. The term does not include computer data bases. (3) Data, as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. For the purposes of this clause, the term does not include data incidental to the administration of this contract, such as financial, administrative, cost and pricing, or management information. (4) Form, fit, and function data, as used in this clause, means data relating to items, components, or Co processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and 1 performance requirements but specifically excludes the source code, algorithm, process, formulae and flow charts of the software. (5) Limited rights data, as used in this clause, means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. The Government's rights to use, duplicate, or disclose limited rights data are as set forth in the Limited Rights Notice of subparagraph (g)(2) of this section if included in this clause. (6) Restricted computer software, as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software, including minor modifications of any such computer software. The Government's rights to use, duplicate, or disclose restricted computer software are as set forth in the Restricted Rights Notice of subparagraph (g)(3) of this section if included in this clause. (7) Technical data, as used in this clause, means recorded data, regardless of form or characteristic, that are of a scientific or technical nature. Technical data does not include computer software, but does include manuals and instructional materials and technical data formatted as a computer data base. (8) Unlimited rights, as used in this clause, means the rights of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, including by electronic means, and perform publicly and display publicly, in any manner, including by electronic means, and for any purpose whatsoever, and to have or permit others to do so. (b) Allocation of rights. (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(1) below. (c) Copyright. (1) Data first produced in the performance of this contract. Unless provided otherwise in subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings, or similar works. The prior, express written permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, 2 unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to assert copyright in computer software first produced in the performance of this contract without prior written permission of the DOE Patent Counsel assisting the contracting activity. Where such permission is granted, the Patent Counsel shall specify appropriate terms, conditions, and submission requirements to assure utilization, dissemination, and commercialization of the data. The Contractor, when requested, shall promptly deliver to Patent Counsel a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled. (e) Unauthorized marking of data. (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignore. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officers decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officers determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. Coast Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. 3 (f) Omitted or incorrect markings. (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractors expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. (1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] (3) [Reserved.] (h) Subcontracting. The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractors obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(l) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) Alternate II (Jun 1987) (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor 4 may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. _____________ (and subcontract No. ___________, if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(1) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) Alternate III (Jun 1987) (g)(3)Q) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (1) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. ____________ (and subcontract ________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. _______ (and subcontract __________, if appropriate) with __________________ (name of Contractor and subcontractor)." (End of notice) 5 (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." 04. FAR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 05. FAR 52.227-23 Rights to Proposal Data RIGHTS TO PROPOSAL DATA (TECHNICAL)(JUN 1987) Except for data contained on pages 3-26, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the "Rights in Data--General" clause contained in this contract) in and to the technical data contained in the proposal dated 10/29/98, upon which this contract is based. 06. DEAR 952.227-9 Refund of Royalties REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. 6 (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. See 10 CFR part 784. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to 7 the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations (10 CFR part 784) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that-- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or 8 assignee to be privileged and confidential and is so marked, the Department of Energy agrees that to the extent permitted by law, it will not disclose such information to persons outside the Government (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. (1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractors license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractors domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions an decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the 00 invention available for licensing. 9 (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, or within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign country in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed o Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. 10 (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. 11 (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officers opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(1) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in all subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor-- (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractors reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual 1.0 obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. 12 (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(1) of this clause from all persons who perform any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that 13 public disclosure of such information will not adversely affect the patent interests of DOE or the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(1) of this clause, the Contractor (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 14 Attachment 1: 952.227-11 Patent Rights - Retention by the Contractor (short form) PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the conception of first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501 (c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that is benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-538 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121 .3-8 and 13 CFR 121 .3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (7) "Agency licensing regulations" and "agency regulations concerning the licensing of Government-owned inventions" mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Department of Energy (DOE) within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the DOE, the Contractor will promptly notify that agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying DOE CO within 2 years of disclosure to DOE. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by DOE to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within 1 year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure, election, and filing under subparagraphs (c)(l), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title; provided, that DOE may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractors license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations concerning the licensing of Government owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraph (d) of this clause and to enable the government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent mailers and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by the United States Department of Energy. The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) The contractor shall include in all other subcontracts, regardless of tier, for experimental, developmental. demonstration, or research work the patent rights clause at 952.227-13. (3) In the case of subcontracts, at any tier, DOE, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received, by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceeding undertaken by that agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), DOE agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and, if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when DOE deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractors licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when that Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). (l) Communications. (1) The contractor shall direct any notification, disclosure, or request to DOE provided for in this clause to the DOE patent counsel assisting the DOE contracting activity, with a copy of the communication to the Contracting Officer. (2) Each exercise of discretion or decision provided for in this clause, except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is not a claim or dispute and is not subject to the Contract Disputes Act of 1978. (3) Upon request of the DOE Patent Counsel or the contracting officer, the contractor shall provide any or all of the following: (i) a copy of the patent application, filing date, serial number and title, patent number, and issue date for any subject invention in any country in which the contractor has applied for a patent; (ii) a report, not more often than annually, summarizing all subject inventions which were disclosed to DOE individually during the reporting period specified; or (iii) a report, prior to closeout of the contract, listing all subject inventions or stating that there were none. (End of clause) ATTACHMENT VI DOE ASSISTANCE REGULATIONS, 10 CFR PART-600, AS AMENDED SUBPARTS A AND B (OTHER THAN STATE AND LOCAL GOVERNMENT) The Department of Energy Assistance Regulations as set forth in 10 CRF Part-600, as Amended Subparts A and B (Other than State and Local Governments) are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and Ad's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. ATTACHMENT VII GUIDELINES FOR INTELLECTUAL PROPERTY AGREEMENT FOR SFAA 1.j. 1. "Program" means the joint development program between Contractor and Subcontractor described in Exhibit A to Agreement No. A11792. 2. "Program Invention" means any invention, patentable or otherwise, relating to the Contractor Field of Use or the Subcontractor Field of Use, and conceived and/or made during the course of work performed under the Program by employees or agents of Contractor and/or Subcontract. 3. "Sole Program Invention" means any Program Invention which is made exclusively by one or more employees or agents of only one of the parties. 4. "Joint Program Invention" means any Program Invention which is jointly made by one or more employees or agents of both parties. A Joint Program Invention requires an inventive contribution to the conception or reduction to practice of the invention by each inventor (and not merely an implementation of the suggestions or instructions of the inventor); and can be made even though the inventors did not physically work together or at the same time, did not each make the same type or amount of contribution, or did not each make a contribution to the subject matter of every claim of any patent covering the invention. 5. "Background Invention" means any invention in the possession of one of the parties created, acquired and/or developed either prior to the start of the Program or during the term of Agreement No. A11792 but independently of the word carried out under the Program. 6. "Contractor Field of Use" means business activities and opportunities on a world-wide basis relating to the manufacture and sale of hydrocarbon conversion devices. 7. "Subcontractor Field of Use" means business activities and opportunities on a world-wide basis relating to the manufacture and sale of catalysts, adsorbents and/or washcoat for catalysts. 1. All Background Inventions owned or controlled by either party before the effective date of Agreement No. A11792 or owned or controlled by a party during the course of the Program shall continue to be owned or controlled by such party to the full extent permitted by law. 2. The entire right, title and interest throughout the world in and to any Sole Program Invention will be vested in the party whose employees or agents made the invention. 3. The right, title and interest throughout the world in and to any Joint Program Invention will be vested jointly in Contractor and Subcontractor, subject to the following: (i) if the Joint Program Invention is a catalyst or adsorbent, then Subcontractor will have the following rights: (A) Subcontractor will be free to supply catalyst or adsorbent samples to third parties for testing under non-disclosure/non-analysis agreements, (B) Subcontractor will have exclusive rights to manufacture and sell the catalyst or adsorbent, with protection to Contractor on price and availability, and (C) Subcontractor will be free to supply the catalyst or adsorbent commercially to third parties, with a reasonable royalty paid to Contractor. (ii) if the Joint Program Invention is a process in the Contractor Field of Use, then ADL shall have a royalty free, exclusive license (including the exclusion of UCI and the right to grant sublicenses of equal or lesser scope) under any such Joint Program Invention covering the manufacture and sale of hydrocarbon conversion devices. 2 Arthur D. Little Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 U.S.A. Telephone (1) 617.498.5000 Fax (1) 617.498.7200 December 1, 1999 Mr. Jon P. Wagner United Catalysts, Inc. 1600 West Hill Street Louisville, KY 40210 Subject: Agreement A11792 Dear Mr. Wagner: Please find enclosed three (3) copies of Agreement No. A11792 for your review. If you take no exceptions to the agreement, please sign all three (3) copies and return two (2) to my attention for full execution. We look forward to working with you on this exciting program. If you have any questions, please call me at (617) 498-5636. Very truly yours, ARTHUR D. LITTLE, INC. /s/ Judith Blinn Judith Blinn Contracting Officer JB:amh Enclosures Intellectual Property Provisions Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations 01. FAR 52.227-1 Authorization and Consent (JUL 1995), Alternate 1 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996) This clause is not applicable if the award is for less than $100,000. 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) If this award requires the use of delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 04. FAR 52.227-16 Additional Data Requirements (JUN 1987) 05. FAR 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 06. DEAR 952.227-9 Refund of Royalties (MAR 1995) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government (MAR 1995) Attachment 1 (for reference only): Patent Rights - Retention by Contractor (Short Form)(MAR 1995); DEAR 952.227-11. LB-498 EX-10.28 15 0015.txt SUBCONTRACT AGREEMENT EXHIBIT 10.28 SUBCONTRACT AGREEMENT BETWEEN ARTHUR D. LITTLE, INC. AND UNITED CATALYSTS INC. AGREEMENT NO. A11792 This Subcontract is entered into between Arthur D. Little, Inc. Acorn Park, Cambridge, Massachusetts 02140 (hereinafter refereed to as "ADL or EPYX") and United Catalysts Inc., 1600 West Hill Street, Louisville, KY 40210 (hereinafter referred to as "UCI", "SUBCONTRACTOR", or "Seller"). W I T N E S S E T H WHEREAS, ADL has entered into a Subcontract with UCI under Prime Cooperative Agreement No. DE-FC02-99EE50580 with the United States Government, Department of Energy, and WHEREAS, ADL desires to enter into a subcontract with UCI under said prime contract on a 35% Cost Sharing basis for assistance on the program entitled "New Millennium Fuel Processor for Transportation Fuel Cell Power System, Subtopic 1.j.," NOW THEREFORE, the parties hereto mutually agree as follows: SCHEDULE OF ARTICLES -------------------- ARTICLE I - STATEMENT OF WORK - ----------------------------- UCI shall furnish the necessary personnel, materials, services, equipment, facilities, and do all things necessary or incident to perform the tasks specified in the attached Statement of Work identified as Exhibit A, which is incorporated herein and made a part hereof. ARTICLE II - PERIOD OF PERFORMANCE - ---------------------------------- Agreement No. A11792 Page 2 of 6 The period of performance of this subcontract shall be from December 1, 1999 through January 14, 2003, inclusive of all reports. ARTICLE III - COST-SHARING ARRANGEMENT - -------------------------------------- A. Estimated Cost - The total estimated cost for the work to be -------------- accomplished under this subcontract is $1,168,218. UCI agrees to cost-share 35% of its estimated contribution to the project. Therefore, if UCI incurs costs of $1,168,218 it will cost share $408,877 and be reimbursed $759,341. B. Cost Overrun/Additional Work - If ADL approves a cost overrun or ---------------------------- additional work under this subcontract, UCI agrees that it will share 35% of the overrun cost or additional work. ARTICLE IV - INVOICES - --------------------- Invoices shall be submitted monthly, in original and one copy referencing this Subcontract number and mailed to the following addressees for approval and payment: Original to: Copy to: ----------- ------- Arthur D. Little, Inc. Arthur D. Little, Inc. Attn.: Mr. Prashant S. Chintawar Attn.: Ms. Hieu Do 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The invoices will contain, by element, actual expenditures for the current period, total cumulated billings to date, and will also indicate cost share amount and amount due. The period of services and agreement number should also be cited. Each current month's actual charges will be reduced by the 35% cost share amount. ARTICLE V - PROVISIONAL BILLING RATES - ------------------------------------- Pending establishment of final overhead rates for any fiscal period, UCI shall invoice at such provisional overhead rates as agreed upon between UCI and ADL and/or the Government for application to this subcontract, subject to appropriate adjustment when the final rates for that period are established. To prevent substantial over- and under-payments, provisional billing rates may, at the request of either party, be revised by mutual agreement, either retroactively or Agreement No. A11792 Page 3 of 6 prospectively. Please refer to "Additional Special Provisions, Item No. 7 for additional information regarding this subject. ARTICLE VI - SUBCONTRACT SURVEILLANCE - ------------------------------------- Authorized representatives of ADL and/or DOE shall have access to UCI's facilities in order to review the progress, discuss problems or failures, and witness testing pertaining to the requirements of this subcontract. UCI shall provide adequate information on subcontract performance in response to reasonable requests by ADL and/or DOE representatives. Our surveillance shall be during normal business hours and will be with reasonable notice, provided, in no event, will the exercise of rights under this Article include access to or observation of UCI's proprietary manufacturing processes. ARTICLE VII - TECHNICAL DIRECTION AND SUBCONTRACT ADMINISTRATION - ---------------------------------------------------------------- ADL's Program Manager and Subcontract Administrator for this subcontract are: Program Manager Subcontract Administrator --------------- ------------------------- Mr. Prashant S. Chintawar Ms. Judith Blinn Arthur D. Little, Inc. Arthur D. Little, Inc. 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The Program manager will act as ADL's representative for technical matters providing technical direction and discussion as necessary with respect to the Statement of Work, and monitoring the progress and quality of UCI's performance. The Program manager is not authorized to take any action, either directly or indirectly, that would change the pricing, quantity, quality, place of performance, delivery schedule or any other terms and conditions of the basic subcontract, or to direct the accomplishment of effort which goes beyond the scope of the basic contractual Statement of Work. When, in the opinion of UCI, the Program Manager requests efforts outside the existing scope of the subcontract, UCI shall promptly notify Judith Blinn, the ADL Subcontract Administrator, in writing. No action shall be taken by UCI under such direction until the ADL Subcontract Administrator has issued a subcontract modification or otherwise resolved the issue. Agreement No. A11792 Page 4 of 6 ARTICLE VIII - INSPECTION AND ACCEPTANCE - ---------------------------------------- ADL shall inspect and provisionally accept the materials and services provided under this subcontract and shall advise of any defect in materials and services not in accordance with the SOW or requested changes therein. In addition, the Contracting Officer under the prime contract, or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract including those provided under this subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Contracting Officer. For the purposes of this Article, materials and services shall be considered defective if there is a defect in the physical nature of any catalyst samples submitted by UCI. Materials and services shall not be considered defective because of catalyst performance failures, if UCI complied with industry standards of due care in its work on such materials and services. ARTICLE IX - INDEMNIFICATION FOR DEFECTIVE COST OR PRICING DATA - --------------------------------------------------------------- In the event ADL suffers a price reduction under the prime contract as a result of defective cost or pricing data furnished by UCI in connection with this subcontract or any modification thereof, UCI shall indemnify ADL in the full amount of such reduction. ARTICLE X - ADDITIONAL PROVISIONS - --------------------------------- The clauses set forth in Attachment I, ADL Standard Provisions for Services and Supply Contracts (1998), Attachment II, Special Terms and Conditions for Research Financial Assistance Awards, Attachment III, Additional Special Provisions, Attachment IV, Federal Assistance Reporting Checklist, dated 1/28/99, Attachment V, Intellectual Property Provisions - Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations, coded LB-498, Attachment VI, DOE Assistance Regulations, 10 CRF Part-600, as amended Subparts A and B (Other than State and Local Governments), and Attachment VII, Guidelines for Intellectual Property Agreement for SFAA 1.j., apply to this subcontract and are made a part hereof. ARTICLE XI - AUDIT RESTRICTIONS - ------------------------------- Nothing of this subcontract shall be construed as granting to ADL the right of access to the financial books and records of UCI for purposes of this subcontract and ADL's compliance with its obligations to the Government Prime Contract Agreement No. A11792 Page 5 of 6 Excluded from terms' substitution of "ADL" for the "Government" or the "Contracting Officer," in the DOE provisions are all of the provisions that would allow ADL access to UCI's financial books and records. For purposes of those excluded clauses, the terms "Government," "Controller General," "Department of Energy," or "Contracting Officer" shall remain unchanged, and any required access to such UCI financial books and records shall be limited to the cognizant Government activity and its authorized representatives. ARTICLE XII - ORDER OF PRECEDENCE - --------------------------------- In the event of an inconsistency in this subcontract, unless otherwise provided herein, the inconsistency shall be resolved by giving precedence in the following descending order (i.e. a. has highest priority, b. has next to highest priority, etc.): a. Agreement No. A11792 and Exhibit A, Statement of Work b. Attachment I - ADL Standard Provisions for Services and Supply Contracts (1998) c. Attachment II - Special Terms and Conditions for Research Financial Assistance Awards d. Attachment III - Additional Special Provisions e. Attachment IV - Federal Assistance Reporting Checklist, dated 1/28/99 f. Attachment V - Intellectual Property Provisions - Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations, coded LB-498 g. Attachment VI - DOE Assistance Regulations, 10 CFR Part-600, as amended Subparts A and B (Other than State and Local Governments) h. Attachment VII - Guidelines for Intellectual Property Agreement for SFAA 1.j., All references to the terms "grant(s)" or "contracts(s)" shall be read as "cooperative agreement" or "agreement;" the terms "grantee" or "contractor" shall be read as "participant, recipient or awardee;" the term "subgrant" shall be read as "subaward;" and the terms "subcontract" or "contract" awarded under a grant shall be read as "contract" under a cooperative agreement. BOTH PARTIES HERETO WARRANT and REPRESENT that they have full right, power and authority to execute this subcontract. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day of year last specified below. Agreement No. A11792 Page 6 of 6 ARTHUR D. LITTLE, INC. UNITED CATALYSTS INC. By: /s/ Judith Blinn By: /s/ Robert E. Stockwell ------------------------ ------------------------------ Typed Typed Name: Judith Blinn Name: Robert E. Stockwell ------------------------- --------------------------- Title: Contracting Officer Title: V.P./Business Manager ------------------------ --------------------------- Date: 27 January 00 Date: 14 Jan 00 ------------------------- --------------------------- Exhibit 10.28 EXHIBIT A STATEMENT OF WORK Epyx confidential Agreement No. A11792 STATEMENT OF WORK Period: January 17, 2000 -- November 30, 2000 EXHIBIT A Fuel Processor Catalysts and Adsorbents Development Program between United Catalysts, Inc. and Epyx/A. D. Little, Inc. Introduction Over the past few years, fuel cell power systems for stationary and mobile applications have made tremendous advances. These advances have been possible due to fundamental understanding of catalysis, thermodynamics, reaction engineering, reactor design, and controls. Consequently, transportation fuel cell power systems are on the verge of commercialization. For example, current performance of the Epyx fuel processor on gasoline exceeds PNGV (Partnership for New Generation Vehicles) 2004 targets for energy efficiency and steady state emissions. Dry hydrogen concentrations of --45% have been observed at the LTS exit corresponding to --85% efficiency of the fuel processor (based on LHV of H2). However, there is still substantial work that must be performed in order for the Epyx fuel processor to meet the most stringent PNGV 2004 targets of power density, specific power, start-up time, transient response, endurance, and cost. The objective of this joint development program between United Catalysts, Inc. (UCI) and A. D. Little, Inc./Epyx (Epyx) is to develop next generation state-of-the-art catalyst and adsorbent technology suitable for Epyx Next Millennium Fuel Processor(TM). The work to be conducted is a part of Department of Energy SFAA program with the objective to develop, design, fabricate, and demonstrate two PEM fuel cell integrated 50 kWe multi-fuel processors for the transportation application. In addition to UCI, there will be other subcontractors and UCI is expected to work closely with them. An important feature of this program is a close interaction among Epyx and all the subcontractors. The duration of Phase I of the program is July 15, 1999 to July 31, 2001 with a go/no-go after Phase I. This SOW covers the period 10/1/1999 -- 11/30/2000; Epyx and UCI will draft the SOW for 12/1/2000 -- 7/31/2001 in December 2000. UCI's commitment to total program has been agreed to be $1,168,218 for the period October 1, 1999 to January 14, 2003. For FY2000 (October 1, 1999 -- September 30, 2000), UCI will receive $0.45 MM and for October 1, 2000 -- November 30, 2000 period, 1 Epyx confidential $50,000; contingent upon DOE funding. All figures include UCI's cost share, which is minimum 35%. Importance of catalysts and adsorbents Epyx fuel processing approach consists of series of chemical reactions, which are assisted by catalysts and adsorbents. These material play a crucial role in obtaining satisfactory performance and UCI's role will crucial to the overall success of the program. The catalysts and adsorbents developed in this program will be dramatically different in size, shape, form, and composition from the conventional syn gas catalysts and adsorbents. For a transportation specific fuel processor application, some of the desired characteristics of catalysts are: 1. Activity per unit mass and volume about an order of magnitude higher than that of conventional syn gas catalysts 2. High thermal and mechanical integrity/longevity 3. High selectivity towards desired product(s) of reaction 4. Ability for rapid startup, shut-down and transients 5. Ability to withstand intermittent operation 6. Heat transfer capability 7. High tolerance for contaminant(s) such as sulfur, chlorine, etc. 8. Ability to process multiple fuels such as reformulated gasoline, natural gas, ethanol, etc. 9. Ability to operate under high humidity conditions 10. Low cost To meet these goals, new catalysts and adsorbents - different from pelleted base metal syn gas catalysts - will be developed by UCI. They will be based on advanced substrates such as very high cell density ceramic/metallic monoliths, reticulates, and foams, which offer high potential for weight, volume reduction of the catalysts and reduced system pressure drop. The advanced substrates and their properties will be provided by Corning and UCI will washcoat suitable compositions onto these substrates. Washcoating is an extremely important part of this program and UCI is expected to have/acquire world-class expertise in this area. UCI will work 2 Epyx confidential closely with its subsidiary -- Prototech Company - and will also get assistance from Corning, when and if needed. Overview of Phase I SOW The transportation fuel cell power system, of which the fuel processor is a component, is expected to meet or exceed PNGV 2004 targets. These performance and cost targets for fuel processor have been established for operation on California Phase II reformulated gasoline (RFG) and are shown in Table 1; fuel processor performance for other fuels is expected to exceed the target values for gasoline. Based on proprietary automotive fuel cell system model, Epyx is currently establishing independent fuel processor performance and cost targets, which may be more stringent, and will be available soon. Table 1. PNGV technical targets: fuel-flexible fuel processors(a) (Excludes fuel storage, includes controls, shift reactors, CO clean-up, heat exchangers)
- ----------------------------------------------------------------------------------------------------------------------------- Calendar Year ------------------------------------ Characteristics Units 1997 2000 2004 - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Energy Efficiency(b) % 70 75 80 - ----------------------------------------------------------------------------------------------------------------------------- Power Density W/L 400 600 750 - ----------------------------------------------------------------------------------------------------------------------------- Specific Power W/kg 400 600 750 - ----------------------------------------------------------------------------------------------------------------------------- Cost(c) $/kW 50 30 10 - ----------------------------------------------------------------------------------------------------------------------------- Start-up to Full Power Min 2 1 0.5 - ----------------------------------------------------------------------------------------------------------------------------- Transient Response (time from 10 to 90% power) Sec 30 20 10 - ----------------------------------------------------------------------------------------------------------------------------- Emissions(d) less than Tier 2 less than Tier 2 less than Tier 2 - ----------------------------------------------------------------------------------------------------------------------------- Durability(e) Hours 1000 2000 5000 - ----------------------------------------------------------------------------------------------------------------------------- CO Content Steady State(f) PPM 100 10 10 - ----------------------------------------------------------------------------------------------------------------------------- CO Content Transient(f) PPM 5000 500 100 - ----------------------------------------------------------------------------------------------------------------------------- H2S Content in Product Stream PPM 0 0 0 - ----------------------------------------------------------------------------------------------------------------------------- NH3 Content in Product Stream PPM less than 10 less than 10 less than 10 - -----------------------------------------------------------------------------------------------------------------------------
(a) Targets pertain to gasoline fuel and are consistent with those of the PNGV. (b) fuel processor efficiency = total fuel cell system efficiency/fuel cell stack system efficiency, where total fuel cell system efficiency accounts for thermal integration. (c) High-volume production: 500,000 units per year. (d) Emission levels will comply with emission regulations projected to be in place when the technology is available for market introduction. (e) Time between catalyst replacement. (f) Dependent on stack development (CO tolerance) progress. 3 Epyx confidential To meet the PNGV 2004 targets, the following technologies are needed from UCI, in the descending order of their importance, for Phase I of the SFAA: 1. Ultra-low-temp-shift (ULTS) catalyst: Desired outlet CO (dry) concentration from the reformer is less than or equal to 500 ppm or equilibrium, under conditions stated in Table 2. In the future, UCI and Epyx may jointly decide to pursue an alternative technology, such as selective CO methanation. 2. Pre-FPA multi-fuel (liquid and gaseous) hydrocarbon sulfur removal trap: Desired sulfur removal efficiency is greater than or equal to 85%. 3. Polishing sulfur trap (inside the FPA): Desired outlet sulfur concentration is less than or equal to 10 ppb. 4. RFG reforming catalyst that can operate in the presence of sulfur with >98% approach to equilibrium under conditions stated in Table 5. 5. High temp shift (HTS) catalyst which can operate over a wide temperature range (650-1200(degree)F). 6. Consultation to Epyx on ammonia removal technology for automotive application. All shift catalysts are expected to have greater than or equal to 30,000 h-1 design wet gas space velocity (WGSV) and greater than or equal to 50,000 h-1 for reforming catalyst. Only catalysts which can be transferred onto high density substrates are of interest here. With respect to these new technologies, UCI's role in this program will be: 1. Conceptualization, synthesis, and washcoating of catalysts onto suitable substrates 2. Washcoating optimized catalyst compositions on other components of the fuel processor 3. Pre- and post reaction characterization which includes, but is not limited to, XRD, XRF, BET, SEM/TEM, acidity, composition, thermal techniques, etc. These techniques will be used only when necessary for selected catalyst/adsorbents. 4. Analyses of the performance data generated by Epyx 5. Consultation to Epyx regarding screening, contaminant tolerance testing, kinetic evaluation, and (accelerated) aging studies of catalysts and adsorbents 6. Consultation to Epyx related to the performance of the fuel processor 7. Cost analyses of preferred catalyst/adsorbent system(s) 4 Epyx confidential In Phase I of this program, Epyx will evaluate these novel catalysts and adsorbents based on advanced substrates in micro/meso reactor, MPR (modular pressurized reformer -- a disintegrated 50 kWe fuel processor), and integrated 50 kWe fuel processor. The performance data obtained from such testing under simulated and real reformate conditions will be conveyed to UCI in order for UCI to improve the material performance. Epyx will also collect kinetic data, design the reactor, and integrate them with the Next Millennium Fuel Processor(TM) - all with guidance from UCI. Although UCI will be dependent upon Epyx for performance testing, if it performs evaluation of catalysts (which are being developed as a part of this program), it will share the results with Epyx. Detailed description of SOW Task 1. ULTS development: A shift catalyst is needed which will meet the specifications listed in Table 2. Additionally, it must be compatible with trace contaminants of the FPA or fuel, able to withstand frequent start-up and shut-down with minimal care (no N2 purge, etc.), resistant to water condensation and air seepage, and environmentally friendly (non-pyrophoric). It is preferred to have a catalyst which does not need activation. Copper containing catalysts (e.g., Cu/Zn/A1, Cu/CeOx, etc.) are not of any interest in this program. Table 2. Requirement matrix for Epyx ULTS ----------------------------------------------------------------------------- Outlet CO (dry) less than or equal to 500 ppm or equilibrium ----------------------------------------------------------------------------- Operating conditions* S/C: 2.25 -- 3.00, temp: 300-400 F ----------------------------------------------------------------------------- Trace contaminant less than or equal to 10 ppb H2S ----------------------------------------------------------------------------- Design wet gas space velocity greater than or equal to 30,000 h-1 ----------------------------------------------------------------------------- Lifetime greater than or equal to 2000 h with less than 10% decrease in performance ----------------------------------------------------------------------------- Selectivity No formation trace species and loss of H2 ----------------------------------------------------------------------------- * in the worst case, S/C is 1.4 and WGSV is 10,000 h-1. 1. UCI will conceive and synthesize less than 50 powdered/pelleted catalysts - greater than or equal to 5% of which must be washcoated. 2. Epyx will screen these catalysts in the ureactor. 3. Epyx and UCI will jointly select six or less most promising candidates (WGSV greater than or equal to 10,000 h-1). 4. UCI will improve these candidates and washcoat them on low/medium cell density substrate. 5. Epyx will perform screening and contaminant tolerance testing of washcoated catalysts. 5 Epyx confidential 6. Epyx and UCI will jointly select two or less most promising washcoated candidates (WGSV greater than or equal to 20,000 h-1). 7. UCI will washcoat this composition onto high cell density substrates. 8. Epyx will perform kinetic evaluation of the most promising candidate (WGSV greater than or equal to 30,000 h-1). 9. UCI will make catalyst for the MPR testing. 10. Epyx will perform MPR testing. 11. UCI will make catalyst for Phase I FPA. Task 2. Pre-FPA sulfur trap development: UCI will develop a pre-FPA multi-fuel (liquid and gaseous) hydrocarbon sulfur removal trap suitable for Epyx multifuel processor. This trap is envisioned to be similar to the conventional automotive "oil filter" and will be replaced every 3000 miles. The requirements of the pre-FPA trap are given in Table 3. Table 3. Requirement matrix for Epyx pre-FPA sulfur trap ----------------------------------------------------------------- Sulfur removal efficiency greater than or equal to 5% ----------------------------------------------------------------- Weight and volume (for 3 kmiles) less than or equal to 2 L ----------------------------------------------------------------- Pressure drop less than or equal to 10 psi ----------------------------------------------------------------- 1. Based on its industrial sulfur removal knowledge, UCI will prepare a comprehensive report on potential technologies for removal of greater than or equal to 85% sulfur from the RFG; the composition of which is given in Appendix A. The list will include mini hydro-desulfurization (HDS) with and without H2 recycle, catalytic distillation, hot gas desulfurization (zinc titanate, etc.), adsorbents (mol sieve, alumina, etc.). The mini-HDS report should include recommended catalyst type, amount of catalyst, hydrogen partial pressure requirements, temperature, total pressure, lifetime, etc. for two feeds -- RFG and US natural gas. 2. Based on results of Task 1, UCI and Epyx will jointly select the technology for development in SFAA. The selection criteria will include removal efficiency, weight, volume and pressure drop of the technology, energy (and H2) requirements, ease of operation, and ability to handle multiple fuels. We will also jointly decide the test conditions to be used by Epyx to evaluate this new technology in the reactor lab. 3. If adsorbent is the preferred choice, UCI will prepare less than 15 powdered/pelleted samples (less than l lb. each). 6 Epyx confidential 4. Epyx will test these powdered samples per the protocols defined in Task 2. 5. Epyx and UCI will jointly select three candidates for extrusion. 6. Coming will perform the extrusion and Epyx will test the extruded versions of the sulfur trap and perform sizing studies for 50 kWe Phase I FPA. 7. UCI will prepare 2X amount of the required sulfur trap material (powdered/pelleted form) and Corning will extrude two large pieces for testing in 50 kWe MPR. 8. Epyx will perform MPR testing and return the used material to UCI for characterization. This testing will involve accelerated aging, multiple fuels, frequent start-up and shut-down, transient drive cycle testing, etc. Upon completion of testing, Epyx will discuss data with all subs and find avenues for improvement for Phase I FPA build. UCI will characterize the sulfur trap. 9. UCI and Corning will prepare two new sulfur traps for Phase I 50 kWe fuel processor testing. Task 3: Development of polishing (FPA internal) sulfur trap: High reformate purity (low concentrations of H2S, CO, and NH3) is important for satisfactory performance of the PEM fuel cell. An FPA internal/polishing trap is needed, the requirements of which are given in Table 4, to remove the last traces of sulfur from the reformate. UCI's assistance is also needed in defining the location of this trap, based on kinetics and thermodynamics of sulfur (mainly H2S) removal from the humid reformate and Epyx' expected gas composition and operating conditions. Table 4. Requirement matrix for Epyx polishing sulfur trap -------------------------------------------------------------------- Exit H2S concentration less than or equal to 10 ppb -------------------------------------------------------------------- Operating conditions TBD -------------------------------------------------------------------- Design wet gas space velocity TBD -------------------------------------------------------------------- Lifetime greater than or equal to 2000 h -------------------------------------------------------------------- 1. Epyx and UCI will follow steps 2-9 as listed in task 2. Task 4. Gasoline reforming catalyst development: A reforming catalyst is needed which will meet the specifications listed in Table 5. Additionally, it must be compatible with trace contaminants of the FPA, able to withstand frequent start-up and shut-down, resistant to water condensation & air seepage, and environmentally friendly (non-pyrophoric). 7 Epyx confidential 1. Based on its industrial steam reforming knowledge, UCI will prepare a comprehensive report on the feasibility of steam reforming RFG for automotive fuel processor application. The report should include ease of operation, energy and fuel purity requirements, S/C requirements, ability to handle upsets in desulfurizer, carbon formation, catalyst requirements, etc. The report is expected from UCI before November 1, 1999. Table 5. Requirement matrix for Epyx reforming catalyst ----------------------------------------------------------------------------- Methane and higher HC slip greater than 98% approach to equilibrium ----------------------------------------------------------------------------- Operating conditions S/C: 2.25-3.00, temp: 1250-2300 F, 0/C: 0.40-0.45 ----------------------------------------------------------------------------- Trace contaminant Sulfur (leakage from pre-FPA sulfur trap) ----------------------------------------------------------------------------- Design wet gas space velocity greater than or equal to 50,000 h-1 ----------------------------------------------------------------------------- Lifetime greater than or equal to 2000 h with less than l0% decrease in performance ----------------------------------------------------------------------------- * in the worst case, S/C is 1.4 and WGSV is 17,000 h-1. 2. Epyx and UCI will follow steps 1-11 as listed in task 1. However, Epyx will test greater than or equal to 25 powdered reforming catalysts and final WGSV goal greater than or equal to 50,000 h-1. Task 5. HTS development: A WGS catalyst is needed which will meet the specifications listed in Table 6. Additionally, it must be compatible with trace contaminants of the FPA, able to withstand frequent start-up and shut-down, resistant to water condensation & air seepage, and environmentally friendly (non-pyrophoric). Copper containing catalysts (e.g., Cu/Zn/Al, Cu/CeOx, etc.) are not of any interest in this program. Table 6. Requirement matrix for Epyx HTS ----------------------------------------------------------------------------- Operating conditions* S/C: 2.25-3.00, temp: 650-1200 F ----------------------------------------------------------------------------- Design wet gas space velocity greater than or equal to 30,000 h-1 ----------------------------------------------------------------------------- Trace contaminant H2S (leakage from pre-FPA sulfur trap) ----------------------------------------------------------------------------- Lifetime greater than or equal to 2000 h with less than 10% decrease in performance ----------------------------------------------------------------------------- Selectivity No formation of CH4 and other trace species ----------------------------------------------------------------------------- * in the worst case, S/C is 1.4 and WGSV is 10,000 h-1. 1. Epyx and UCI will follow steps 1-11 as listed in task 1 8 Epyx confidential Task 6: Ammonia removal/suppression: Ammonia has been shown to be a irreversible poison to PEMFCs at >30 ppm levels. It is suspected that lower levels are also detrimental to the performance. Ammonia control is therefore an important issue for ATR/POX based fuel processor systems. 1. Based on its industrial ammonia control knowledge, UCI will prepare a comprehensive report summarizing ammonia control and suppression technologies. This should include the likelihood of ammonia formation over various reforming and shift catalyst materials, as well as options for ammonia clean-up following its formation. UCI will recommend the best option(s) for achieving ammonia targets listed in Table 7. Table 7. Requirement matrix for Epyx ammonia clean-up technology ----------------------------------------------------------------------------- Exit NH3 concentration* less than or equal to 10 ppm ----------------------------------------------------------------------------- Design wet gas space velocity TBD ----------------------------------------------------------------------------- Lifetime greater than or equal to 2000 h with less than 10% decrease in performance ----------------------------------------------------------------------------- *subject to change given input from fuel cell subcontractor. Can be achieved by suppression or clean-up or combination of the two. Reporting Requirements Throughout the program, UCI will provide the following support to Epyx: 1. Biweekly progress reports through telephone conversation/video conferencing and e-mail. 2. Support for quarterly DOE meetings 3. Monthly financial report and bi-monthly progress report The key contact at Epyx will be Dr. Prashant S. Chintawar. The management of the intellectual property generated during this program will be governed by the agreement reached between Epyx and UCI. 9 Gantt Chart for period October 1, 1999 - November 30, 2000 [GRAPHIC] Gantt Chart for period October 1, 1999 - November 30, 2000 (CONTINUED) [GRAPHIC] ATTACHMENT I ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 Arthur D Little Page 1 of 5 ATTACHMENT I ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 1. INDEPENDENT CONTRACTOR Subcontractor shall perform under this Subcontract as an independent contractor. Nothing herein contained shall be construed as creating the relationship of employer and employee or principal and agent between ADL and Subcontractor or any employee or agent of Subcontractor. Neither Subcontractor nor any of its employees or agents have any authority to represent, commit, or bind ADL to any person, firm, association, corporation or government agency. 2. INDEMNITY AGAINST CLAIMS Subcontractor hereby agrees to indemnify and save harmless ADL, its agents and employees, against any and all liability, obligations, claims, loss and expense, (a) caused or created by Subcontractor, its suppliers, or the agents and employees of either, arising (i) as a result of willful misconduct or gross negligence, or (ii) directly or indirectly out of the performance of the work; or (b) arising directly or indirectly out of injuries suffered or allegedly suffered by employees of Subcontractor or its suppliers (i) in the course of their employment, (ii) in the performance of work hereunder, or (iii) upon premises owned or controlled by ADL. 3. PATENT INDEMNITY Subcontractor warrants that all products and materials which it furnishes to ADL hereunder which are not of ADL's design, composition or manufacture do not infringe any valid patent, copyright or trademark. Subcontractor shall indemnify and save ADL harmless from any and all expense, liability and/or loss, including attorney's fees, arising out of claims, suits or actions alleging such infringement. 4. INSURANCE If in the performance of this Subcontract Subcontractor's employees are required to enter premises owned or controlled by ADL or the prime contractor, Subcontractor shall maintain Workmen's Compensation and Comprehensive Public Liability and Property Damage, including Automobile Public Liability and Property Damage coverage in amounts, in forms and with carriers satisfactory to ADL, and shall on request furnish certificates attesting to such insurance or submit the policies for inspection by ADL. Arthur D Little Page 2 of 5 5. RELEASE OF INFORMATION No news release, including photographs and films, public announcements or confirmation of same, or any part of the subject matter of this Subcontract, or any phase of any program hereunder shall be made without the prior written approval of ADL. Such approval will not be unreasonably withheld. The Subcontractor further agrees to insert the provisions of this clause in any of its subcontracts, purchase orders, or consulting agreements issued under this Subcontract. 6. NOTICE OF LABOR DISPUTES Whenever an actual or potential labor dispute is delaying or threatens to delay the performance of the work, Subcontractor shall immediately notify ADL in writing. Such notice shall include all relevant information concerning the dispute and its background. 7. TAXES Subcontractor agrees that, unless otherwise indicated in this Subcontract, (a) the prices herein do not include any state or local sales, use or other tax from which an exemption is available for purposes of this Subcontract, and (b) the prices herein include all other applicable federal, state and local taxes in effect at the date of this Subcontract. Subcontractor agrees to accept any use tax exemption certificates when supplied by ADL if acceptable to the taxing authorities. In case it shall ever be determined that any tax included in the prices herein was not required to be paid by Subcontractor, Subcontractor agrees to notify ADL and to make prompt application for the refund thereof, to take all proper steps to procure the same and when received to pay the same to ADL. 8. ASSIGNMENT OF CLAIMS Subcontractor shall not assign any rights or claims under this Subcontract or for breach thereof, without prior written consent of ADL. Attempted assignments not having ADL approval shall be void. In no event shall copies of this Subcontract, specification or other similar documents relating to work under this Subcontract be furnished to any assignees of claim arising under this Subcontract without the prior written consent of the ADL Subcontract Administrator. 9. SUBCONTRACTING None of the work to be performed by the Subcontractor under this Subcontract shall be subcontracted without the prior written consent of ADL; however, this limitation shall not apply CO to the purchase of standard commercial supplies or raw material. Arthur D Little Page 3 of 5 10. CONFIDENTIAL UNDERSTANDING In the performance of the work under this Subcontract, ADL and Subcontractor (the parties) and their employees may be exposed to, or have contact with, or knowledge of developments, research projects, manufacturing or trade secrets, identification of clients or business confidences of the other party. Accordingly, the parties agree to hold in confidence all such matters both during and after completion of the work called for under this Subcontract and to secure a like agreement from any of their personnel assigned to perform services related to this Subcontract. Excluded from the foregoing restriction is information which has become a part of the public domain, information which the other party can reasonably show is in its possession at the time of disclosure and was not acquired directly or indirectly from the other party, and information received by either party from a third party having the legal right to transmit the same. The obligations of confidentiality hereunder shall remain in force for a period of five years after the date of termination or expiration of this Subcontract. 11. WAIVER The failure of ADL to insist upon the performance of any provision of this Subcontract, to exercise any right or privilege granted to ADL under this Subcontract shall not be construed as waiving any such provision, and the same shall continue in force. 12. COMPLIANCE WITH LAWS/PERMITS Subcontractor agrees to comply with the requirements of the Fair Labor Standards Act of 1938, as amended, and of regulations and orders of the United States Department of Labor under Section 14 thereof. Except as otherwise directed by ADL, Subcontractor shall procure all necessary permits or licenses and abide by all applicable laws, regulations and ordinances required by the political subdivision in which the work and/or services under this Subcontract is performed. 13. SUBCONTRACT SURVEILLANCE Authorized representatives of ADL and/or the prime contractor shall have access to Subcontractor's facilities in order to review progress and discuss problems pertaining to the requirements of this Subcontract. Subcontractor shall provide adequate information on Subcontract performance in response to reasonable requests by ADL and/or the prime contractor. Arthur D Little Page 4 of 5 14. INSPECTION AND ACCEPTANCE All material and work, including raw materials, component, and end products, shall be subject to inspection and test by ADL and the Government to the extent practicable at all times and places, and the plants of Subcontractor and its subcontractors of any tier shall be subject to inspection by ADL and the Government. The exercise of this right of inspection and test, however, shall in no way relieve Subcontractor of its obligation to furnish all material and work in strict accordance with this order. In case any material or work is found to be defective, ADL shall have the right to reject, rework or sort the same or require that it be corrected or replaced promptly, all at Subcontractor's expense. If inspection and test are made on the premises of Subcontractor or any subcontractor of Subcontractor, Subcontractor or such subcontractor shall furnish without additional charge all reasonable facilities and assistance for the safe and convenient inspections and tests required. All inspections and tests shall be performed in such manner as not to delay the work unduly. ADL shall inspect and provisionally accept the materials and services provided under this Subcontract and shall advise Subcontractor of any defect or required changes therein. In addition, the Contracting Officer under the prime contract or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract, including those provided under this Subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Government Contracting Officer. Provided, in no event will the exercise of rights under this Article include access to or observation of UCI's proprietary manufacturing processes. For purposes of this Article, materials and services shall be considered defective if there is a defect in the physical nature of any catalyst samples submitted by UCI. Materials and services shall not be considered defective because of catalyst performance failures, if UCI complied with industry standards of due care in its work on such materials and services. 15. GOVERNMENT-FURNISHED PROPERTY If any Government property is furnished to Subcontractor in connection with performance of this order, title thereof shall remain in the Government and the Government shall have access thereto, at all reasonable times. Subcontractor shall return such property in the condition in which it was received, except for reasonable wear and tear and except to the extent that such property has been incorporated in material delivered under this order or has been consumed in normal performance of this order. Subcontractors shall comply with the provisions of FAR Part 45. 16. DISPUTES Either party may litigate any dispute arising under or relating to this Subcontract before any court of competent jurisdiction. Pending resolution of any such dispute by settlement or by final judgment, the parties shall proceed diligently with performance. Subcontractor's performance shall be in accordance with ADL's written instructions. All references to disputes procedures in Government clauses incorporated by reference shall be deemed to be superseded by this clause. Arthur D Little Page 5 of 5 17. CHANGES ADL may at any time, by a written notice, make changes in the specifications, designs or drawings, samples or other description to which the articles are to conform, in methods of shipment and packaging, place of delivery, or the amount of ADL/Government-furnished property. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this order, whether changed or not changed by any such order, an equitable adjustment shall be made in the price or delivery schedule, or both, and this order modified in writing accordingly. Any claim by Subcontractor for an adjustment must be made in writing within thirty (30) days of the receipt of any such notice, provided, however, that ADL may, at its discretion, receive and act upon any such claim so made at any time prior to final payment under this order. Nothing in this clause shall excuse the Subcontractor from proceeding without delay to perform this Subcontract as changed. 18. TERMINATION (a) ADL may terminate this Subcontract, in whole or in part if Subcontractor fails to comply with any of the provisions hereof, or if Subcontractor becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors. (b) Without effecting its right to terminate this order under paragraph (a) hereof, ADL may, for any reason, terminate this Subcontract in whole or, from time to time, in part. 19. FOREIGN NATIONALS RESERVED ----------------- Last Item Arthur D Little ATTACHMENT II - ADDITIONAL PROVISIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and Ad's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Arthur D Little Special Terms and Conditions for Financial Assistance Awards The requirements of this attachment take precedence over all other requirements of this award found in regulations, the general terms and conditions, DOE orders, etc., except requirements of statutory law. Any apparent contradiction of statutory law stated herein should be presumed to be in error until recipient has sought and received clarification from the Contracting Officer. 1. PAYMENT OFFICE N/A 2. FINANCE OFFICE N/A 3. PAYMENT N/A -2- 4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS Notwithstanding any other provisions of this Agreement, including but not limited to FAR 31.205-31, when applicable, as incorporated by Financial Assistance Rule 600.127(a), the Government shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioning (D&D) of any of the Recipient's facilities, or (ii) any costs which may be incurred by the Recipient in connection with the D&D of any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Agreement. 5. FEDERALLY-OWNED PROPERTY If you acquire federally-owned property under this award whether fabricated, furnished or purchased with Capital Equipment Funds, then a listing of such property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant & Capital Equipment, to the Contracting Officer within 45 days after August 31 of each year and within 30 days after the project period ends. The report must separately identify items which were fabricated, furnished, or purchased with Capital Equipment funds under this award. Any Capital Equipment funds and the equipment to be purchased, fabricated, or furnished with such funds are indicated on Page No. 2 of the Notice of Financial Assistance Award. 6. NOTICE REGARDING PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS It is the sense of the Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available under this award should be American-made. -3- 7. NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES Recipients of financial assistance are cautioned to carefully review the allowable cost and other provisions applicable to expenditures under their particular award instruments. If financial assistance funds are spent for purposes or in amounts inconsistent with the allowable cost or any other provisions governing expenditures in an award instrument, the government may pursue a number of remedies against the recipient, including in appropriate circumstances, recovery of such funds, termination of the award, suspension or debarment of the recipient from future awards, and criminal prosecution for false statements. Particular care should be taken by the recipient to comply with the provisions prohibiting the expenditure of funds for lobbying and related activities. Financial assistance awards may be used to describe and promote the understanding of scientific and technical aspects of specific energy technologies, but not to encourage or support political activities such as the collection and dissemination of information related to potential, planned or pending legislation 8. ADDITIONAL PROVISIONS If the appropriation symbol contained in Block 14.a. of the Notice of Financial Assistance Award for this award is listed below, paragraph 8.a. is applicable to this award, otherwise paragraph 8.b. applies: 89X0213.91 89X0215.91 89X0218.91 89X0214.91 89X0216.91 89X0235.91 a. Department of Interior Appropriations Act Funding 1. Lobbying Restriction (Department of Interior & Related Agencies Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be made available for any activity or the publication or distribution of literature that in any way tends to promote public support or opposition to any legislative proposal on which Congressional action is not complete. This restriction is in addition to those prescribed elsewhere in statute and regulation. -4- 2. Compliance With Buy American Act In accepting this award, the recipient agrees to comply with sections 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 1Oa-1Oc, popularly known as the "Buy American Act"). The recipient should review the provisions of the Act to ensure that expenditures made under this award are in accordance with it. b. Energy & Water Development Appropriations Act Funding: Lobbying Restriction (Energy and Water Development Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be expended, directly or indirectly, to influence congressional action on any legislation or appropriation matters pending before Congress, other than to communicate to Members of Congress as described in 18 U.S.C. 1913. This restriction is in addition to those prescribed elsewhere in statute and regulation. 9. REPORTING Failure to comply with the reporting requirements contained in this award will be considered a material noncompliance with the terms of the award. Noncompliance may result in a withholding of future payments, suspension or termination of the current award, and withholding of future awards. A willful failure to perform, a history of failure to perform. or of unsatisfactory performance of this and/or other financial assistance awards, may also result in a debarment action to preclude future awards by Federal agencies. ATTACHMENT III ADDITIONAL SPECIAL PROVISIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Arthur D Little ADDITIONAL SPECIAL PROVISIONS TABLE OF CONTENTS CLAUSE SUBJECT PAGE - ------ ------- ---- 1. Cost Share Contributions ....................................... 1 2. Fee ............................................................ 1 3. Statement of Substantial Involvement ........................... 1 4. Technical Direction ............................................ 2 5. Continuation of Work ........................................... 4 6. Restriction on Transfer of Fuel Cell ........................... 4 Technology to Foreign Entities 7. Ceiling on Rate for Allowable Labor ............................ 4 Indirect Costs to be Reimbursed by the Government 8. Partial Funding ................................................ 4 GOV'T/DOE = ADL PARTICIPANT = UCI CONTRACTING OFFICER/DOE PROJECT OFFICER = ADL ADDITIONAL SPECIAL PROVISIONS 1. COST SHARE CONTRIBUTIONS It is the intention of the Government and the Participant to share the allowable and allocable costs of performance of the work during this Agreement as set forth herein. The Government's contribution and support for this Agreement during the project period OCT. 1, 1999 through January 14, 2003 will be $759,341. The Participant will contribute $408,877 toward the aforementioned project period. Notwithstanding any other provision in this Agreement, it is the intention of the Government and the Participant to share the tota1 allowable and allocable costs of performance during the project period on a 65 percent (Government) and 35 percent (Participant) basis. It is understood by the parties that the DOE share of this project period is $759,341 and notwithstanding any other provision in this Agreement to the contrary, no additional Federal funding will be provided notwithstanding the total cost of the project at completion. In keeping with the cost share requirements set forth under this cooperative agreement the following cost sharing is necessary under each Topic: Development of an Integrated State-of-the-Art Fuel Cell Power System-- Topic 1.J. (Cost Share 35%) In the event the project is terminated early or not funded to its completion, the Participant understands and specifically agrees that the Government is not waiving the Participant's requisite cost share requirement and that in the event the project is not funded to its completion or otherwise terminated prior to completion, the Participant is still obligated to meet its requisite cost share. Participant further agrees that upon termination or at the completion of the project, upon notification by the Government, it will promptly submit to the Government all such sums due and owing to satisfy its requisite cost share. Failure to make such payment shall result in the Government undertaking collection action against the Participant. This understanding and agreement shall also apply to any additional budget periods within the project period wherein the Participant's aggregate cost share contribution to that date has not met the requisite cost share. 2. FEE No fee shall be paid to the Recipient. 3. STATEMENT OF SUBSTANTIAL INVOLVEMENT The Department of Energy (Department, DOE) will be substantially involved in all Tasks of the Statement of Work. The Department will collaborate with the participant in evaluating, accepting, and achieving the milestones for research as proposed by the respondent. 1 The Department will provide technical direction to the overall program, as well as the individual program elements as it is determined to be necessary and appropriate by DOE. The Department will participate during the full duration of the project, and will have continuing rights to conduct ongoing negotiations with the participant regarding the technical direction of the work conducted under this Agreement. The Department staff members will attend meetings and participate in the formation and direction of scope of the key development activities. The DOE Project Officer will participate in the development, review and approval of all proposed statements of work, including subcontractor statements of work, prior to the execution of any subcontract. The Department will review technical progress reports and provide input to these reports as deemed necessary. In addition, the Department will have the right to have National Laboratories or selected private organizations perform independent tests and evaluations of the cooperative agreement's deliverables, thus providing an additional measure of technical progress. The Department may collaborate with the participant in the allocation of funds budgeted for this Agreement. Further, as work progresses, funding needs may change and depending upon availability of funds, the Department may collaborate with the participant to reallocate funds budgeted between the different programs and projects. The Department will thus be actively monitoring all phases of the participant's research and development activities, including participation in the participant's reviews of its contractor's activities and review of the contractor's reports to the participant. The Department will actively participate in the participant's process of reviewing and approving each phase of the proposed programs and projects. The substantial involvement by the Department under this Agreement will remain in effect for the term of the cooperative agreement award unless otherwise amended in writing by the Contracting Officer. Moreover, this statement of substantial involvement by the Department does not increase the Department of Energy's liability under the Agreement award. 4. TECHNICAL DIRECTION A. The work to be performed by the Participant under this Cooperative Agreement is subject to the surveillance and written Technical Direction of a "DOE Project Officer." The term "Technical Direction" is defined to include, without limitation, the following: 1. Directions to the Participant which redirects the work effort, shifts work emphasis between work areas or tasks, require pursuit of certain lines of inquiry, fill in details or otherwise provide technical guidance to the Participant in order to accomplish the tasks and requirements stated in the Statement of Work as contained in the agreement. 2. Provision of information to the Participant which assists in the interpretation of drawings, specifications or technical portions of the Statement of Work as contained in the Agreement. 2 3. Review and, where required by the Cooperative Agreement, approval of technical reports, drawings, specifications or technical information to be delivered by the Participant to DOE under the Cooperative Agreement. 4. The DOE Project Officer shall monitor the Participant's performance with respect to compliance with the requirements of this Cooperative Agreement. B. Technical direction and management surveillance shall not impose tasks or requirements upon the Participant additional to or different from the tasks and requirements stated in the Statement of Work of this Agreement The Technical Direction to be valid: 1. Must be issued in writing consistent with the tasks and requirements stated in the Statement of Work of this Agreement; and 2. May not: a. constitute an assignment of additional work outside the tasks and requirements stated in the Statement of Work of this Agreement; b. in any manner cause an increase or decrease in the total estimated project cost or the time required for project performance; c. change any of the expressed terms, conditions or specification of the Cooperative Agreement; or d. accept non-conforming work. C. The Participant shall proceed promptly with the performance of Technical Directions duly issued by the DOE Project Officer in the manner prescribed by paragraph B. above and which are within his authority under the provisions of paragraph A. above; provided, however, that the Participant shall immediately cease the performance of any Technical Direction upon receipt of a written instruction to that effect from the Contracting Officer. D. If in the opinion of the Participant any Technical Direction issued by the DOE Project Officer is within one of the categories as defined in B. 2. (a) through (d) above, the Participant shall not proceed but shall notify the Contracting Officer in writing within five working days after the receipt of any such Technical Direction and shall request the Contracting Officer to rescind such direction or mutually agree to modify the agreement accordingly. E. The only persons authorized to give Technical Direction to the Participant under this Agreement are the Contracting Officer and any "DOE Project Officer." Any action taken by the Participant in response to any direction given by any person other than the Contracting Officer or DOE Project Officer shall not be binding upon the Government. 3 5. CONTINUATION OF WORK There will be an evaluation of the progress near the end of each year of the work to determine to either continue, redirect, or terminate the project. 6. RESTRICTION OF TRANSFER OF FUEL CELL TECHNOLOGY TO FOREIGN ENTITIES It is agreed that the Participant shall obtain adequate recognition of the United States support for the technology developed under this Program in any contracts, assistance, licenses, or other agreements which involve the transfer to foreign entities of the fuel cell technology developed in whole or in part at Government expense. The Participant agrees to notify DOE, as represented by DOE Patent Counsel, in writing, of the adequate recognition obtained prior to entering into any such contracts, assistance, licenses, or other agreements. The Participant shall not enter into any such contracts, assistance, licenses, or other agreements without the concurrence shall be at the sole discretion of DOE and is not subject to the Disputes or Appeals (at 10 CFR 600.22) or otherwise subject to litigation under the Contracts Disputes Act of 1978 (41 U.S.C. 601 et. seq.). The determination shall be in writing and shall be furnished to the Participant by the Contracting Officer. Examples of such an adequate recognition could include: (1) a commitment to manufacture in the U.S.A., (2) a requirement to reimburse the U.S. Government for its R&D costs, and/or (3) a commitment to jointly sponsor the R&D program. 7. CEILING ON RATES FOR ALLOWABLE LABOR INDIRECT COSTS TO BE REIMBURSED BY THE GOVERNMENT Reimbursement to the Participant for labor indirect costs shall be subject to a ceiling rate of *% of allowable Direct Labor and Fringe Benefits costs. Any and all labor overhead costs in excess the aforesaid ceiling rate shall be unallowable under this agreement and shall be absorbed by the Participant without reimbursement by the Government under this agreement or any other Government award. 8. PARTIAL FUNDING This cooperative agreement is partially funded on a cost reimbursement basis without fee or profit. The total estimated cost of the project to be conducted during the current budget period is $1,168,218 of which the estimated cost to DOE is $759,341 and the estimated cost to the Participant is $408,877. The Cumulative DOE Obligation for the current budget period is $292,500, subject to the availability of additional funds, DOE anticipates obligating an additional $ -0- hereunder for the current budget period. The Participant shall not be obligated to continue performance of the project beyond the total of: (a) the amount of funds set forth as the Cumulative DOE Obligation for the current budget period in Block 16.b.(1) of the face page, (b) the amount, if any, set forth as DOE Funds Authorized for Carry Over in Block 16.a.(2) of the face page, and (c) the amount of the Participant's corresponding obligation for the current budget period, ______________, provided, however, that once the Cumulative DOE Obligations for the current budget period have been * Whatever rate was included in UCI's cost proposal on which this award is based. 4 increased by DOE to $759,341, the Participants' obligation for the current budget period shall be increased to a total of $408,877, and the Participant shall be expected to bring the project (covered by the current budget period) to its conclusion within the amount of $759,341, and there is no commitment by DOE to provide any additional funding to the Participant. This cooperative agreement is subject to a refund of unexpended funds to DOE. 5 ATTACHMENT IV FEDERAL ASSISTANCE REPORTING CHECKLIST DATED 1/28/99 (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Arthur D Little U.S. Department of Energy FEDERAL ASSISTANCE REPORTING CHECKLIST - -------------------------------------------------------------------------------------------------------------------- Identification Number: DE-FCO2-99EE50580 2. Program/Project Title Development of Fuel Processor, Durability Demonstration and 10kW System - -------------------------------------------------------------------------------------------------------------------- Recipient: Arthur D. Little, Inc.
- -------------------------------------------------------------------------------------------------------------------- Reporting Requirements: Frequency No. of Copies Addressees ----------------------------------------------------- GRAM/PROJECT MANAGEMENT REPORTING Program Management Plan, See Attachment 1 Y Original + 2 copies Orig + 2cys, B DOE F 4600.3A, "Milestone Log" D0E F 4600.4, "Federal Assistance Budget Information" DOE F 4600.5, "Federal Assistance Management Summary Report" D0E F 4600.6, "Federal Assistance Program/Project Status Report" SF-269, "Financial Status Report" (Long Form) Q Original + 1 Copy Orig A, (1) B FINANCIAL INFORMATION REPORTING DOE F 1430.22, Notice of Energy RD&D Project Technical Progress Report Y* Original + 2 copies Orig + 2cys B Topical Report A Original + 2 copies Orig + 2cys B Final Technical Report F** Original + 2 copies Orig + 1 A (1) B - --------------------------------------------------------------------------------------------------------------------
FREQUENCY CODES AND DUE DATES: - - As Necessary: within 5 calendar days after events. - - Final: 90 calendar days after the performance of the effort ends. - - Quarterly: within 30 days after end of calendar quarter or portion thereof. - - One time after project starts; within 30 days after award. - - Required with proposals or the application or with significant planning changes. - - Year1y: 30 days after the end of program year. (Financial Status Reports 90 days). - - Semiannually: within 30 days after end of program fiscal half year. - -------------------------------------------------------------------------------- Special Instructions: Technical Progress Report: An original and 2 copies of the report must be submitted annually. The report must be accompanied by two copies of DOE F 241.1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." Final Report: An original and 2 copies must be submitted within 90 days after the expiration date of the total Performance period, if the project is not to be renewed or extended, and must be accompanied by two copies of DOE F 1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." FINAL REPORTS TO: A. Contract Specialist, ACQ B. See Block No. 11 of the U.S. Department of Energy face page Chicago Operations Office Department of Energy 9800 South Cass Avenue 1000 Independence Avenue. S.W. Argonne, Illinois 60439 Washington, D.C. 20585-0121
JAN 28 1999 - -------------------------------------------------------------------------------- Prepared by: (Signature and Date) /s/ Ronald J. Fiskum - -------------------------------------------------------------------------------- ATTACHMENT 1 PROGRAM MANAGEMENT PLAN GUIDELINES The following guidelines indicate the information to be prepared in submitting a Program Management Plan. As a minimum, the Program Management Plan shall contain the following sections: 1. Purpose of R&D Effort The Participant shall briefly describe the overall purpose, objectives and scope of the R&D effort described in the plan. 2. Remaining Technology Development Areas The Participant shall clearly outline the remaining problem areas in technology development in a few descriptive paragraphs. These areas will be described in order of importance and priority. 3. Description of Tasks The Participant shall provide a detailed work breakdown structure (WBS) defining different areas of activity as discrete tasks and the interrelation among the tasks. A written description of each task including objective, planned activities and clearly defined milestones shall also be provided. The Awardee shall also provide the following: a. A schedule and milestone plan b. A cost plan by task and month 4. Schedule The Participant shall prepare a baseline detailed activity schedule (critical path network schedule or equivalent). 5. Deliverables In addition to the hardware to be delivered, the Participant shall provide a description of the reports to be supplied under the agreement and provide a schedule of their delivery dates. ATTACHMENT V INTELLECTUAL PROPERTY PROVISIONS-- RESEARCH, DEVELOPMENT, OR DEMONSTRATION LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS, AND FOREIGN ORGANIZATION, CODED LB-498 (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. The word "contract" and like terms shall mean this subcontract. Arthur D Little Intellectual Property Provisions Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations 01. FAR 52.227-1 Authorization and Consent (JUL 1995), Alternate 1 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996) This clause is not applicable if the award is for less than $100,000. 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) If this award requires the use of delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 04. FAR 52.227-16 Additional Data Requirements (JUN 1987) 05. FAR 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 06. DEAR 952.227-9 Refund of Royalties (MAR 1995) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government (MAR 1995) Attachment 1 (for reference only): Patent Rights - Retention by Contractor (Short Form)(MAR 1995); DEAR 952.227-11. 01. FAR 52.227-1 Authorization and Consent; Alternate I AUTHORIZATION AND CONSENT (JUL 1995) (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. (1) Computer data bases, as used in this clause, means a collection of data in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. The term does not include computer software. (2) Computer software, as used in this clause, means (i) computer programs which are data comprising a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations and (ii) data comprising source code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the computer program to be produced, created, or compiled. The term does not include computer data bases. (3) Data, as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. For the purposes of this clause, the term does not include data incidental to the administration of this contract, such as financial, administrative, cost and pricing, or management information. (4) Form, fit, and function data, as used in this clause, means data relating to items, components, or Co processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and 1 performance requirements but specifically excludes the source code, algorithm, process, formulae and flow charts of the software. (5) Limited rights data, as used in this clause, means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. The Government's rights to use, duplicate, or disclose limited rights data are as set forth in the Limited Rights Notice of subparagraph (g)(2) of this section if included in this clause. (6) Restricted computer software, as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software, including minor modifications of any such computer software. The Government's rights to use, duplicate, or disclose restricted computer software are as set forth in the Restricted Rights Notice of subparagraph (g)(3) of this section if included in this clause. (7) Technical data, as used in this clause, means recorded data, regardless of form or characteristic, that are of a scientific or technical nature. Technical data does not include computer software, but does include manuals and instructional materials and technical data formatted as a computer data base. (8) Unlimited rights, as used in this clause, means the rights of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, including by electronic means, and perform publicly and display publicly, in any manner, including by electronic means, and for any purpose whatsoever, and to have or permit others to do so. (b) Allocation of rights. (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(1) below. (c) Copyright. (1) Data first produced in the performance of this contract. Unless provided otherwise in subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings, or similar works. The prior, express written permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, 2 unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to assert copyright in computer software first produced in the performance of this contract without prior written permission of the DOE Patent Counsel assisting the contracting activity. Where such permission is granted, the Patent Counsel shall specify appropriate terms, conditions, and submission requirements to assure utilization, dissemination, and commercialization of the data. The Contractor, when requested, shall promptly deliver to Patent Counsel a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled. (e) Unauthorized marking of data. (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignore. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officers decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officers determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. Coast Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. 3 (f) Omitted or incorrect markings. (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractors expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. (1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] (3) [Reserved.] (h) Subcontracting. The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractors obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(l) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) Alternate II (Jun 1987) (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor 4 may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. _____________ (and subcontract No. ___________, if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(1) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) Alternate III (Jun 1987) (g)(3)Q) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (1) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. ____________ (and subcontract ________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. _______ (and subcontract __________, if appropriate) with __________________ (name of Contractor and subcontractor)." (End of notice) 5 (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." 04. FAR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 05. FAR 52.227-23 Rights to Proposal Data RIGHTS TO PROPOSAL DATA (TECHNICAL)(JUN 1987) Except for data contained on pages 3-26, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the "Rights in Data--General" clause contained in this contract) in and to the technical data contained in the proposal dated 10/29/98, upon which this contract is based. 06. DEAR 952.227-9 Refund of Royalties REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. 6 (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. See 10 CFR part 784. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to 7 the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations (10 CFR part 784) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that-- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or 8 assignee to be privileged and confidential and is so marked, the Department of Energy agrees that to the extent permitted by law, it will not disclose such information to persons outside the Government (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. (1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractors license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractors domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions an decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the 00 invention available for licensing. 9 (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, or within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign country in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed o Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. 10 (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. 11 (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officers opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(1) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in all subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor-- (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractors reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual 1.0 obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. 12 (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(1) of this clause from all persons who perform any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that 13 public disclosure of such information will not adversely affect the patent interests of DOE or the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(1) of this clause, the Contractor (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 14 Attachment 1: 952.227-11 Patent Rights - Retention by the Contractor (short form) PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the conception of first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501 (c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that is benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-538 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121 .3-8 and 13 CFR 121 .3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (7) "Agency licensing regulations" and "agency regulations concerning the licensing of Government-owned inventions" mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Department of Energy (DOE) within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the DOE, the Contractor will promptly notify that agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying DOE CO within 2 years of disclosure to DOE. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by DOE to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within 1 year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure, election, and filing under subparagraphs (c)(l), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title; provided, that DOE may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractors license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations concerning the licensing of Government owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraph (d) of this clause and to enable the government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent mailers and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by the United States Department of Energy. The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) The contractor shall include in all other subcontracts, regardless of tier, for experimental, developmental. demonstration, or research work the patent rights clause at 952.227-13. (3) In the case of subcontracts, at any tier, DOE, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received, by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceeding undertaken by that agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), DOE agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and, if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when DOE deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractors licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when that Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). (l) Communications. (1) The contractor shall direct any notification, disclosure, or request to DOE provided for in this clause to the DOE patent counsel assisting the DOE contracting activity, with a copy of the communication to the Contracting Officer. (2) Each exercise of discretion or decision provided for in this clause, except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is not a claim or dispute and is not subject to the Contract Disputes Act of 1978. (3) Upon request of the DOE Patent Counsel or the contracting officer, the contractor shall provide any or all of the following: (i) a copy of the patent application, filing date, serial number and title, patent number, and issue date for any subject invention in any country in which the contractor has applied for a patent; (ii) a report, not more often than annually, summarizing all subject inventions which were disclosed to DOE individually during the reporting period specified; or (iii) a report, prior to closeout of the contract, listing all subject inventions or stating that there were none. (End of clause) ATTACHMENT VI DOE ASSISTANCE REGULATIONS, 10 CFR PART-600, AS AMENDED SUBPARTS A AND B (OTHER THAN STATE AND LOCAL GOVERNMENTS) The Department of Energy Assistance Regulations as set forth in 10 CFR Part-600, as Amended Subparts A and B (Other than State and Local Governments) are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and Ad's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Arthur D Little ATTACHMENT VII GUIDELINES FOR INTELLECTUAL PROPERTY AGREEMENT FOR SFAA 1.j. 1. "Program" means the joint development program between Contractor and Subcontractor described in Exhibit A to Agreement No. A11792. 2. "Program Invention" means any invention, patentable or otherwise, relating to the Contractor Field of Use or the Subcontractor Field of Use, and conceived and/or made during the course of work performed under the Program by employees or agents of Contractor and/or Subcontractor. 3. "Sole Program Invention" means any Program Invention which is made exclusively by one or more employees or agents of only one of the parties. 4. "Joint Program Invention" means any Program Invention which is jointly made by one or more employees or agents of both parties. A Joint Program Invention requires an inventive contribution to the conception or reduction to practice of the invention by each inventor (and not merely an implementation of the suggestions or instructions of the inventor); and can be made even though the inventors did not physically work together or at the same time, did not each make the same type or amount of contribution, or did not each make a contribution to the subject matter of every claim of any patent covering the invention. 5. "Background Invention" means any invention in the possession of one of the parties created, acquired and/or developed either prior to the start of the Program or during the term of Agreement No. A11792 but independently of the work carried out under the Program. 6. "Contractor Field of Use" means business activities and opportunities on a world-wide basis relating to the manufacture and sale of hydrocarbon conversion devices. 7. "Subcontractor Field of Use" means business activities and opportunities on a world-wide basis relating to the manufacture and sale of catalysts, adsrobents and/or washcoat for catalysts. 1. All Background Inventions owned or controlled by either party before the effective date of Agreement No. A11792 or owned or controlled by a party during the course of the Program shall continue to be owned or controlled by such party to the full extent permitted by law. 2. The entire right, title and interest throughout the world in and to any Sole Program Invention will be vested in the party whose employees or agents made the invention. 3. The right, title and interest throughout the world in and to any Joint Program Invention will be vested jointly in Contractor and Subcontractor, subject to the following: Arthur D Little (i) if the Joint Program Invention is a catalyst or adsorbent, then Subcontractor will have the following rights: (A) Subcontractor will be free to supply catalyst or adsorbent samples to third parties for testing under non-disclosure/non-analysis agreements, (B) Subcontractor will have exclusive rights to manufacture and sell the catalyst or adsorbent, with protection to Contractor on price and availability, and (C) Subcontractor will be free to supply the catalyst or adsorbent commercially to third parties, with a reasonable royalty paid to Contractor. (ii) if the Joint Program Invention is a process in the Contractor Field of Use, then ADL shall have a royalty free, exclusive license (including the exclusion of UCI and the right to grant sublicenses of equal or lesser scope) under any such Joint Program Invention covering the manufacture and sale of hydrocarbon conversion devices. 2 Arthur D. Little Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 U.S.A. Telephone (1) 617.498.5000 Fax (1) 617.498.7200 December 1, 1999 Mr. Jon P. Wagner United Catalysts, Inc. 1600 West Hill Street Louisville, KY 40210 Subject: Agreement A11792 Dear Mr. Wagner: Please find enclosed three (3) copies of Agreement No. A11792 for your review. If you take no exceptions to the agreement, please sign all three (3) copies and return two (2) to my attention for full execution. We look forward to working with you on this exciting program. If you have any questions, please call me at (617) 498-5636. Very truly yours, ARTHUR D. LITTLE, INC. /s/ Judith Blinn Judith Blinn Contracting Officer JB:amh Enclosures EX-10.29 16 0016.txt SUBCONTRACT AGREEMENT Exhibit 10.29 SUBCONTRACT AGREEMENT BETWEEN ARTHUR D. LITTLE, INC. AND STC CATALYSTS, INC. AGREEMENT NO. A11793 This Subcontract is entered into between Arthur D. Little, Inc. Acorn Park, Cambridge, Massachusetts 02140 (hereinafter referred to as "ADL" or "EPYX") and STC Catalysts, Inc., 10 Basil Sawyer Drive, Hampton, VA 23666 (hereinafter referred to as "SCI", "SUBCONTRACTOR", or "Seller"). W I T N E S S E T H WHEREAS, ADL has entered into Prime Cooperative Agreement No. DE-FC02-99EE50580 with the United States Government, Department of Energy, and WHEREAS, ADL desires to enter into a subcontract with SCI under said prime contract on a 35% Cost Sharing basis for assistance on the program entitled "New Millennium Fuel Processor for Transportation Fuel Cell Power System, Subtopic l.j.," NOW THEREFORE, the parties hereto to mutually agree as follows: SCHEDULE OF ARTICLES -------------------- ARTICLE I - STATEMENT OF WORK - ----------------------------- SCI shall furnish personnel, materials, services, equipment, facilities, and do all things necessary or incident to perform the tasks specified in the attached Statement of Work identified as Exhibit A, which is incorporated herein and made a part hereof. ARTICLE II - PERIOD OF PERFORMANCE - ---------------------------------- Agreement No. A11793 Page 2 of 5 The period of performance of this subcontract shall be from December 20, 1999 through January 14, 2003, inclusive of all reports. ARTICLE III - COST-SHARING ARRANGEMENT - -------------------------------------- A. Estimated Cost - The total estimated cost for the work to be accomplished -------------- under this subcontract is $92,308. SCI agrees to cost-share 35% of its estimated contribution to the project. Therefore, if SCI incurs costs of $92,308, it will cost share $32,308 and be reimbursed $60,000. B. Cost Overrun/Additional Work - If ADL approves a cost overrun or additional ---------------------------- work under this subcontract, SCI agrees that it will share 35% of the overrun cost or additional work. ARTICLE IV - INVOICES - --------------------- Invoices shall be submitted monthly, in original and one copy referencing this Subcontract number and mailed to the following addressees for approval and payment: Original to: Copy to: ----------- ------- Arthur D. Little, Inc. Arthur D. Little, Inc. Attn.: Mr. Prashant S. Chintawar Attn: Ms. Hieu Do 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The invoices will contain, by element, actual expenditures for the current period, total cumulated billings to date, and will also indicate cost share amount and amount due. The period of services and agreement number should also be cited. Each current month's actual charges will be reduced by the 35% cost share amount. ARTICLE V - PROVISIONAL BILLING RATES - ------------------------------------- Pending establishment of final overhead rates for any fiscal period, SCI shall invoice at such provisional overhead rates as agreed upon between SCI and ADL and/or the Government for application to this subcontract, subject to appropriate adjustment when the final rates for that period are established. To prevent substantial over- and under-payments, provisional billing rates may, at the request of either party, be revised by mutual agreement, either retroactively or prospectively. Please refer to "Additional Special Provisions, Item No. 7" for additional information regarding this subject. Agreement No. A11793 Page 3 of 5 ARTICLE VI - SUBCONTRACT SURVEILLANCE - ------------------------------------- Authorized representatives of ADL and/or DOE shall have access to SCI's facilities in order to review the progress, discuss problems or failures, and witness testing pertaining to the requirements of this subcontract. SCI shall provide adequate information on subcontract performance in response to reasonable requests by ADL and/or DOE representatives. Our surveillance shall be during normal business hours and will be with reasonable notice. ARTICLE VII - TECHNICAL DIRECTION AND SUBCONTRACT ADMINISTRATION - ---------------------------------------------------------------- ADL's Program Manager and Subcontract Administrator for this subcontract are: Program Manaser Subcontract Administrator --------------- ------------------------- Mr. Prashant S. Chintawar Ms. Judith Blinn Arthur D. Little, Inc. Arthur D. Little, Inc. 15 Acorn Park 20 Acorn Park Cambridge, MA 02140-2390 Cambridge, MA 02140-2390 The Program Manager will act as ADL's representative for technical matters providing technical direction and discussion as necessary with respect to the Statement of Work, and monitoring the progress and quality of SCI's performance. The Program Manager is not authorized to take any action, either directly or indirectly, that would change the pricing, quantity, quality, place of performance, delivery schedule or any other terms and conditions of the basic subcontract, or to direct the accomplishment of effort which goes beyond the scope of the basic contractual Statement of Work. When, in the opinion of SCI, the Program Manager requests efforts outside the existing scope of the subcontract, SCI shall promptly notify Judith Blinn, the ADL Subcontract Administrator, in writing. No action shall be taken by SCI under such direction until the ADL Subcontract Administrator has issued a subcontract modification or otherwise resolved the issue. ARTICLE VIII - INSPECTION AND ACCEPTANCE - ---------------------------------------- ADL shall inspect and provisionally accept the materials and services provided under this subcontract and shall advise of any defect in materials and services not in accordance with the SOW or requested changes therein. In addition, the Agreement No. A11793 Page 4 of 5 Contracting Officer under the prime contract, or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract including those provided under this subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Contracting Officer. ARTICLE IX - INDEMNIFICATION FOR DEFECTIVE COST OR PRICING DATA - --------------------------------------------------------------- In the event ADL suffers a price reduction under the prime contract as a result of defective cost or pricing data furnished by SCI in connection with this subcontract or any modification thereof, SCI shall indemnify ADL in the full amount of such reduction. ARTICLE X - ADDITIONAL PROVISIONS - --------------------------------- The clauses set forth in Attachment I, ADL Standard Provisions for Services and Supply Contracts (1998), Attachment I(1) Guidelines for Intellectual Property Agreement for SFAA 1.j., Attachment II, Special Terms and Conditions for Research Financial Assistance Awards, Attachment III, Additional Special Provisions, Attachment III.a. DOE Assistance Regulation, 10 CFR Part-600, as amended Subparts A and B, Attachment IV, Federal Assistance Reporting Checklist, dated 1/28/99 and Attachment V, Intellectual Property Provisions -- Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations apply to this subcontract and are made a part hereof. ARTICLE XI - AUDIT RESTRICTIONS - ------------------------------- Nothing of this subcontract shall be construed as granting to ADL the right of access to the financial books and records of SCI for purposes of this subcontract and ADL's compliance with its obligations to the Government Prime Contract. Excluded from terms' substitution of "ADL" for the "Government" or the "Contracting Officer," in the DOE provisions are all of the provisions that would allow ADL access to -SCI's financial books and records. For purposes of those excluded clauses, the terms "Government," "Controller General," "Department of Energy," or "Contracting Officer" shall remain unchanged, and any required access to such SCI financial books and records shall be limited to the cognizant Government activity and its authorized representatives. ARTICLE XII - ORDER OR PRECEDENCE - --------------------------------- Agreement No. A11793 Page 5 of 5 In the event of an inconsistency in this subcontract, unless otherwise provided herein, the inconsistency shall be resolved by giving precedence in the following descending order (i.e. a. has highest priority, b. has next to highest priority, etc.): a. Agreement No. A11793 and Exhibit A, Statement of Work b. Attachment I - ADL Standard Provisions for Services and Supply Contracts (1998) c. Attachment II - Special Terms and conditions for Research Financial Assistance Awards d. Attachment III - Additional Special Provisions e. Attachment III.a. - DOE Assistance Regulations, 10 CFR Part-600, as amended Subparts A and B f. Attachment IV - Federal Assistance Reporting Checklist, dated 1/28/99 g. Attachment V - Intellectual Property Provisions - Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations h. Attachment VI - Guidelines for Intellectual Property Agreement for SFAA 1.j. All references to the terms "grant(s)" or "contracts(s)" shall be read as "cooperative agreement" or "agreement;" the terms "grantee" or "contractor" shall be read as "participant, recipient or awardee;" the term "subgrant" shall be read as "subaward;" and the terms "subcontract" or "contract" awarded under a grant shall be read as "contract" under a cooperative agreement. Agreement No. A11793 Page 6 of 5 BOTH PARTIES HERETO WARRANT and REPRESENT that they have full right, power and authority to execute this subcontract. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day of year last specified below. ARTHUR D. LITTLE, INC. STC CATALYSTS, INC. By: /s/ Judith Blinn By: /s/ C. Deepak -------------------------- ------------------ Typed Typed Name: Judith Blinn Name: Chand Deepak ----------------------- ----------------- Title: Contracting Officer Title: President ---------------------- --------------- Date: March 20, 2000 Date: March 2, 2000 ----------------------- ----------------- Exhibit 10.29 EXHIBIT A STATEMENT OF WORK Epyx/SCi Confidential and Proprietary Contract No. DE-FCO2-99EE50580 CONFIDENTIAL STATEMENT OF WORK EXHIBIT A Preferential Oxidation Catalyst Development Program between STC Catalysts, Inc. and Epyx Corporation Introduction The objective of this Joint development program is to develop a state-of-the art preferential oxidation (PROX) catalyst technology suitable for removal of trace levels less than or equal to 10,000 ppm) of CO from hydrogen rich humid gaseous streams (the reformate) and its integration with Epyx Next Millennium Fuel Processor(TM). The PROX is an integral part of the fuel processor subsystem and its satisfactory performance over a wide range of conditions is necessary for the satisfactory operation of the fuel cell power systems. In this program, STC Catalysts, Inc. (SCi) will work closely with Epyx and a substrate manufacturer subcontractor to develop the PROX reactor and catalyst. These substrates include- but are not limited to - very high cell density metallic or ceramic monoliths, reticulates, foams, etc. Catalyst development will include activities such as conceptualization, synthesis, washcoating (or solution deposition), pre- and post-reaction characterization of selected samples, etc. SCI will also assist Epyx in performing manufacturing and cost analyses of the PROX systems. In this program, Epyx will evaluate these advanced substrate based PROX catalysts in both in the microreactor and the pilot plant. The information such as activity, selectivity, and stability obtained from testing under simulated and real reformate conditions, will be conveyed to SCi in order for SCI to improve its PROX formulation. Epyx will also collect kinetic data, design the PROX reactor(s), and integrate it (them) with the Next Millennium Fuel Processor(TM). The management of the intellectual property generated during this program will be governed by the agreement reached between Epyx and SCi signed by Chand Deepak, President, on behalf of Sci and by Jeffery Bentley, President, on behalf of Epyx. 1 Epyx/SCi Confidential and Proprietary Description of the SOW The transportation fuel cell power system, of which the fuel processor is a component, is expected to meet or exceed PNGV 2004 targets. These performance and cost targets for fuel processor have been established and are shown in Table 1. The PROX catalyst is expected to give less than or equal to 10 ppm CO outlet concentration at steady state with selectivity (ratio of moles H2 consumed to moles of CO oxidized) of less than or equal to 1.5 and will operate at less than or equal to 100 C in a high humidity stream. Table 1. PNGV Technical Targets: Fuel-Flexible Fuel Processors (Excludes fuel storage, includes controls, shift reactors, CO clean-up, heat exchangers)
Calendar Year Characteristics Units 1997 2000 2004 Energy Efficiency % 70 75 80 Power Density W/L 400 600 750 Specific Power W/kg 400 600 750 Cost $/kW 50 30 10 Start-up to Full Power Min 2 1 0.5 Transient Response Sec 30 20 1.0 (time from 10 to 90% power) Emissions(a) less than Tier 2 less than Tier 2 less than Tier 2 Durability(b) Hours 1000 2000 5000 CO Content Steady State(c) ppm 100 10 1.0 CO Content Transient ppm 5000 500 100 H2S Content in Product Stream ppm 0 0 0 NH3 Content in Product Stream ppm less than 10 10 less than 10
Targets pertain to gasoline fuel and are consistent with those of the PNGV. Fuel processor efficiency = total fuel cell system efficiency/fuel cell stack system efficiency, where total fuel cell system efficiency accounts for thermal integration. high-volume production: 500,000 units per year. (a): Emission levels will comply with emission regulations projected to be in place when the technology is available for market introduction. (b): Time between catalyst replacement. (c): dependent on stack development (CO tolerance) progress. From Table 1 and the foregoing discussion, it is clear that desired performance characteristics of the PROX catalyst are as follows: o High activity towards oxidation of CO (and other potential contaminants such as NH3 and zero 2 Epyx/SCi Confidential and Proprietary or near zero consumption of hydrogen (via oxidation, methanation, etc.) o No activity for reverse water gas shift reaction o Ability to operate with stoichiometric or near stoichiometric amounts of oxygen o High thermal and mechanical integrity/longevity o Ability for rapid startup, shut-down and transients o Ability to withstand intermittent operation o Heat transfer capability o High tolerance for contaminant(s) such as sulfur, chlorine, etc. o Ability to withstand reformate feed streams emanating from multiple fuels such as reformulated gasoline, natural gas, ethanol, etc. o Ability to operate under high humidity conditions Epyx currently has a PROX catalyst, which meets many of these above characteristics. The comparison of the activity and selectivity of this catalyst and SCi's material along with the reaction conditions are shown in Figure 1. Sci manufactures and markets a Noble Metal Reducible Oxide (NMRO) catalyst consisting primarily of Pt and SnOx using a proprietary coating process and incorporating certain metal oxide promoters. From Figure 1, it is clear that SCI's PROX catalyst is less selective than the Epyx PROX catalyst. The SCi catalyst seems to have a large activity for H2 consumption - probably via H2 oxidation; an unwanted reaction. In Phase I of this program, SCI will use its best efforts to meet or exceed performance and the cost of the Epyx baseline catalyst and provide >|= 10 samples to Epyx for evaluation. The primary objectives in Phase I are to determine if the selective oxidation of the SCi catalyst can be enhanced and to extend the proprietary SCi coating process to alternative high density substrates. Along with the properties mentioned above, the current corderite substrate may not be suitable for Epyx fuel processor application. If this is determined to be the case, SCi will use its best efforts to modify its manufacturing process so as to deposit the low temperature CO oxidation Pt/SnOx catalyst composition on advanced catalytic substrates for the PROX application. Throughout this program, SCI will receive assistance from Epyx on the catalyst composition and advanced substrates. The objectives stipulated in this Statement of Work will be carried out in a series of clearly 3 Epyx/SCi Confidential and Proprietary defined tasks. Critical Reviews will be performed at the completion of Tasks 1,3,6, and 10. The performance rate and completion is dependent upon the availability of funding. An explanation of each task is given below: Task 1: SCi will undertake modifications of the base Pt/SnOx catalyst necessary for improvement based on data presented in Figure 1. To perform this task, Sci will study the competitive effect of water & the synergistic effect of hydrogen on the performance, using detailed spectroscopic characterization of its proprietary Pt/SnOx catalyst, and other investigations normally employed during catalyst development as needed. The studies and tests conducted by SCi will be only those sufficient to identify the hydrogen oxidation path and to verify that the catalyst or promoters has been successfully deposited on the substrate. The modified catalyst samples will be furnished to Epyx for full scale testing. Epyx will test these Pt/SnOx catalysts in the microreactor under simulated gasoline reforming conditions and collect activity and selectivity data - similar to data depicted in Figure 1. For every PROX catalyst tested, Epyx will provide the input to SCi regarding its performance and will return (if desired) the used PROX catalyst for evaluation by SCi. Due to difficulties involved in achieving uniform coatings on very high cell density substrates, and to better delineate the effect of composition change on the performance, SCi will deposit these compositions only on 400 cell per square inch cordierite and/or 40 to 60 mesh chromatographic grade silica gel substrates for Task 1. Task 2: Upon successful conclusion of Task 1, Epyx, SCi, and Corning will jointly decide the details of the advanced substrates, which will be used by SCi for PROX catalyst preparation. These details include cell density, pore volume, pore size and its distribution, material (metal, ceramic, etc.), substrate geometry suitable for Epyx evaluation, etc. Among others, substrate selection for Next Millennium Fuel Processor(TM) criteria will include allowable pressure drop, allowable thermal mass for rapid start-up, and ease of coating with the catalyst. The substrates, in the form of a cylinder (d: 0.75" X h: 1.5"), and its properties will be provided by Epyx to SCI for catalyst preparation - although they will be made by Corning. These cylinders are suitable for screening in the Epyx microreactor. SCi will use its best efforts to modify its proprietary coating process for the alternative substrates. Task 3: SCI will prepare samples on Epyx specified substrates that are compatible with the SCi 4 Epyx/SCi Confidential and Proprietary coating process, and in a quantity mutually determined to be statistically sufficient to validate performance. SCI will measure activity and reactivate the samples before sending them to Epyx. Epyx will perform extended testing and will furnish data as obtained to SCI for cooperative evaluation. Task 4: When the PROX catalysts prepared in Task 1 and 3 have been evaluated, Epyx and SCI will jointly discuss and analyze the performance data and catalyst characteristics, compare the performance and cost of the best SCI catalyst with Epyx baseline material. This meeting may also be attended by Corning. If the SCi material exceeds the performance of Epyx baseline PROX catalyst, the discussion will be focused on strategies for cost reduction. On the contrary, if performance is an issue then we will find avenues for its further improvement. Task 5: Based on the results of Task 4, Epyx and SCI will continue the effort of task 3. In conducting task 5, SCi will, if necessary, prepare the catalysts on alternative substrates, which may have high cell density. Corning will provide the characteristics of these substrates. Task 6: If the data from Task 5 show the performance of the SCi catalyst to be satisfactory, Epyx will undertake the kinetic evaluation of the new SCi PROX catalyst in the microreactor. Epyx and SCi will jointly decide the candidate for kinetic evaluation and SCi will perform detailed manufacturing cost analyses of this catalyst. However, if the catalyst performance is not acceptable, a "go/no-go" decision will be made jointly at this time. Task 7: Assuming a successful completion of task 6, Epyx will collect kinetic data on the mutually determined PROX catalysts manufactured in Task 5. This data will be shared with SCi as it is taken. Task 8: Based on the kinetic results and on completion of Task 7, SCi will prepare two PROX catalysts on large substrate suitable for the Epyx 50 kWe system (a few liters in volume) for evaluation in the pilot plant facility with real reformate. Epyx will provide these large substrates and its properties in a size and configuration compatible with the SCi manufacturing process. Task 9: Epyx will design the reactor(s) suitable for the SCi PROX catalyst and integrate it/them with the modular pressurized reformer (MPR). The MPR will be tested in the pilot plant for 2-3 5 Epyx/SCi Confidential and Proprietary week period. This testing will involve multiple fuels, frequent start-up and shut-down, transient testing, etc. Task 10: Epyx and SCi will jointly discuss the results of the pilot plant testing and will jointly make the "go/no-go" decision. If a "go" decision is made, SCi will assist Epyx in drafting, the Phase H SOW. Reporting Requirements Throughout the program, SCI will provide the following support to Epyx: 1. Program management plan 2. Biweekly progress reports through telephone conversation /video conferencing and email. 3. Support for quarterly DOE meetings 4. Monthly financial reports 5. Monthly progress reports The key contact at Epyx will be Dr. Prashant S. Chintawar and at SCi will be Dr. George M. Wood. Time required for performance for Phase 1 is 8 months. The cost-shared funding for Phase 1 (including SCi's cost share) is $92,308. 6 Preferential CO Oxidation Catalyst Comparison: CO Conversion & Selectivity SCI and EPYX Catalysts (100 mg samples) Wet Feed Composition: 0.8% CO, 1.2% O2, 13.7% CO2, 28.1% H2, 36.5% N2, 19.7% H2O Space Velocity (wet) = 1,220 cc/min-g cat [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] [insert plot points] ATTACHMENT I ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 Page 1 of 5 ATTACHMENT I ARTHUR D. LITTLE, INC. STANDARD PROVISIONS FOR SERVICES AND SUPPLY SUBCONTRACTS 1998 1. INDEPENDENT CONTRACTOR Subcontractor shall perform under this Subcontract as an independent contractor. Nothing herein contained shall be construed as creating the relationship of employer and employee or principal and agent between ADL and Subcontractor or any employee or agent of Subcontractor. Neither Subcontractor nor any of its employees or agents have any authority to represent, commit, or bind ADL to any person, firm, association, corporation or government agency. 2. INDEMNITY AGAINST CLAIMS Subcontractor hereby agrees to indemnify and save harmless ADL, its agents and employees, against any and all liability, obligations, claims, loss and expense, (a) caused or created by Subcontractor, its suppliers, or the agents and employees of either, arising (i) as a result of willful misconduct or gross negligence, or (ii) directly or indirectly out of the performance of the work; or (b) arising directly or indirectly out of injuries suffered or allegedly suffered by employees of Subcontractor or its suppliers (i) in the course of their employment, (ii) in the performance of work hereunder, or (iii) upon premises owned or controlled by ADL. 3. PATENT INDEMNITY Subcontractor warrants that all products and materials which it furnishes to ADL hereunder which are not of ADL's design, composition or manufacture do not infringe any valid patent, copyright or trademark. Subcontractor shall indemnify and save ADL harmless from any and all expense, liability and/or loss, including attorney's fees, arising out of claims, suits or actions alleging such infringement. 4. INSURANCE If in the performance of this Subcontract Subcontractor's employees are required to enter premises owned or controlled by ADL or the prime contractor, Subcontractor shall maintain Workmen's Compensation and Comprehensive Public Liability and Property Damage, including Automobile Public Liability and Property Damage coverage in amounts, in forms and with carriers satisfactory to ADL, and shall on request furnish certificates attesting to such insurance or submit the policies for inspection by ADL. Page 2 of 5 5. RELEASE OF INFORMATION No news release, including photographs and films, public announcements or confirmation of same, or any part of the subject matter of this Subcontract, or any phase of any program hereunder shall be made without the prior written approval of ADL. Such approval will not be unreasonably withheld. The Subcontractor further agrees to insert the provisions of this clause in any of its subcontracts, purchase orders, or consulting agreements issued under this Subcontract. 6. NOTICE OF LABOR DISPUTES Whenever an actual or potential labor dispute is delaying or threatens to delay the performance of the work, Subcontractor shall immediately notify ADL in writing. Such notice shall include all relevant information concerning the dispute and its background. 7. TAXES Subcontractor agrees that, unless otherwise indicated in this Subcontract, (a) the prices herein do not include any state or local sales, use or other tax from which an exemption is available for purposes of this Subcontract, and (b) the prices herein include all other applicable federal, state and local taxes in effect at the date of this Subcontract. Subcontractor agrees to accept any use tax exemption certificates when supplied by ADL if acceptable to the taxing authorities. In case it shall ever be determined that any tax included in the prices herein was not required to be paid by Subcontractor, Subcontractor agrees to notify ADL and to make prompt application for the refund thereof, to take all proper steps to procure the same and when received to pay the same to ADL. 8. ASSIGNMENT OF CLAIMS Subcontractor shall not assign any rights or claims under this Subcontract or for breach thereof, without prior written consent of ADL. Attempted assignments not having ADL approval shall be void. In no event shall copies of this Subcontract, specification or other similar documents relating to work under this Subcontract be furnished to any assignees of claim arising under this Subcontract without the prior written consent of the ADL Subcontract Administrator. 9. SUBCONTRACTING None of the work to be performed by the Subcontractor under this Subcontract shall be subcontracted without the prior written consent of ADL; however, this limitation shall not apply to the purchase of standard commercial supplies or raw material. Page 3 of 5 10. CONFIDENTIAL UNDERSTANDING In the performance of the work under this Subcontract, ADL and Subcontractor (the parties) and their employees may be exposed to, or have contact with, or knowledge of developments, research projects, manufacturing or trade secrets, identification of clients or business confidences of the other party. Accordingly, the parties agree to hold in confidence all such matters both during and after completion of the work called for under this Subcontract and to secure a like agreement from any of their personnel assigned to perform services related to this Subcontract. Excluded from the foregoing restriction is information which has become a part of the public domain, information which the other party can reasonably show is in its possession at the time of disclosure and was not acquired directly or indirectly from the other party, and information received by either party from a third party having the legal right to transmit the same. The obligations of confidentiality hereunder shall remain in force for a period of five years after the date of termination or expiration of this Subcontract. 11. WAIVER The failure of ADL to insist upon the performance of any provision of this Subcontract, to exercise any right or privilege granted to ADL under this Subcontract shall not be construed as waiving any such provision, and the same shall continue in force. 12. COMPLIANCE WITH LAWS/PERMITS Subcontractor agrees to comply with the requirements of the Fair Labor Standards Act of 1938, as amended, and of regulations and orders of the United States Department of Labor under Section 14 thereof. Except as otherwise directed by ADL, Subcontractor shall procure all necessary permits or licenses and abide by all applicable laws, regulations and ordinances required by the political subdivision in which the work and/or services under this Subcontract is performed. 13. SUBCONTRACT SURVEILLANCE Authorized representatives of ADL and/or the prime contractor shall have access to Subcontractor's facilities in order to review progress and discuss problems pertaining to the requirements of this Subcontract. Subcontractor shall provide adequate information on Subcontract performance in response to reasonable requests by ADL and/or the prime contractor. Page 4 of 5 14. INSPECTION AND ACCEPTANCE All material and work, including raw materials, component, and end products, shall be subject to inspection and test by ADL and the Government to the extent practicable at all times and places, and the plants of Subcontractor and its subcontractors of any tier shall be subject to inspection by ADL and the Government. The exercise of this right of inspection and test, however, shall in no way relieve Subcontractor of its obligation to furnish all material and work in strict accordance with this order. In case any material or work is found to be defective, ADL shall have the right to reject, rework or sort the same or require that it be corrected or replaced promptly, all at Subcontractor's expense. If inspection and test are made on the premises of Subcontractor or any subcontractor of Subcontractor, Subcontractor or such subcontractor shall furnish without additional charge all reasonable facilities and assistance for the safe and convenient inspections and tests required. All inspections and tests shall be performed in such manner as not to delay the work unduly. ADL shall inspect and provisionally accept the materials and services provided under this Subcontract and shall advise Subcontractor of any defect or required changes therein. In addition, the Contracting Officer under the prime contract or his duly authorized representative is authorized to perform inspection and to accept the materials and services provided under the prime contract, including those provided under this Subcontract. Any provisional acceptance by ADL is subject to final acceptance by the Government Contracting Officer. Provided, in no event will the exercise of rights under this Article include access to or observation of SCI's proprietary manufacturing processes. For purposes of this Article, materials and services shall be considered defective if there is a defect in the physical nature of any catalyst samples submitted by SCI. Materials and services shall not be considered defective because of catalyst performance failures, if SCI complied with industry standards of due care in its work on such materials and services. 15. GOVERNMENT-FURNISHED PROPERTY If any Government property is furnished to Subcontractor in connection with performance of this order, title thereof shall remain in the Government and the Government shall have access thereto, at all reasonable times. Subcontractor shall return such property in the condition in which it was received, except for reasonable wear and tear and except to the extent that such property has been incorporated in material delivered under this order or has been consumed in normal performance of this order. Subcontractors shall comply with the provisions of FAR Part 45. 16. DISPUTES Either party may litigate any dispute arising under or relating to this Subcontract before any court of competent jurisdiction. Pending resolution of any such dispute by settlement or by final judgment, the parties shall proceed diligently with performance. Subcontractor's performance shall be in accordance with ADL's written instructions. All references to disputes procedures in Government clauses incorporated by reference shall be deemed to be superseded by this clause. Page 5 of 5 17. CHANGES ADL may at any time, by a written notice, make changes in the specifications, designs or drawings, samples or other description to which the articles are to conform, in methods of shipment and packaging, place of delivery, or the amount of ADL/Government-furnished property. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this order, whether changed or not changed by any such order, an equitable adjustment shall be made in the price or delivery schedule, or both, and this order modified in writing accordingly. Any claim by Subcontractor for an adjustment must be made in writing within thirty (30) days of the receipt of any such notice, provided, however, that ADL may, at its discretion, receive and act upon any such claim so made at any time prior to final payment under this order. Nothing in this clause shall excuse the Subcontractor from proceeding without delay to perform this Subcontract as changed. 18. TERMINATION (a) ADL may terminate this Subcontract, in whole or in part, in accordance with the provisions of the Termination clause set forth in FAR 52.249-6 if Subcontractor fails to comply with any of the provisions hereof, or if Subcontractor becomes the subject of a proceeding under state or federal law for relief of debtors or makes an assignment for the benefit of creditors. (b) Without effecting its right to terminate this order under paragraph (a) hereof, ADL may, for its convenience, terminate this Subcontract in whole or, from time to time, in part, except the term "1 year" in paragraph (f) is changed to "6 months." 19. FOREIGN NATIONALS RESERVED __________________ Last Item ATTACHMENT II - ADDITIONAL PROVISIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Special Terms and Conditions for Financial Assistance Awards The requirements of this attachment take precedence over all other requirements of this award found in regulations, the general terms and conditions, DOE orders, etc., except requirements of statutory law. Any apparent contradiction of statutory law stated herein should be presumed to be in error until recipient has sought and received clarification from the Contracting Officer. 1. PAYMENT OFFICE N/A 2. FINANCE OFFICE N/A 3. PAYMENT- N/A -2- Payment under this award will be accomplished by the Payment Office via ACH, an electronic funds transfer. A completed "Automated Clearing House (ACH) Vendor Miscellaneous Payment Enrollment Form" must be on file with the Finance Office prior to processing your payment. 4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS Notwithstanding any other provisions of this Agreement, including but not limited to FAR 31.205-31, when applicable, as incorporated by Financial Assistance Rule 600.127(a), the Government shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioning (D&D) of any of the Recipient's facilities, or (ii) any costs which may be incurred by the Recipient in connection with the D&D of any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Agreement. 5. FEDERALLY-OWNED PROPERTY If you acquire federally-owned property under this award whether fabricated, furnished or purchased with Capital Equipment Funds, then a listing of such property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant & Capital Equipment, to the Contracting Officer within 45 days after August 31 of each year and within 30 days after the project period ends. The report must separately identify items which were fabricated, furnished, or purchased with Capital Equipment funds under this award. Any Capital Equipment funds and the equipment to be purchased, fabricated, or furnished with such funds are indicated on Page No. 2 of the Notice of Financial Assistance Award. 6. NOTICE REGARDING PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS It is the sense of the Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available under this award should be American-made. -3- 7. NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES Recipients of financial assistance are cautioned to carefully review the allowable cost and other provisions applicable to expenditures under their particular award instruments. If financial assistance funds are spent for purposes or in amounts inconsistent with the allowable cost or any other provisions governing expenditures in an award instrument, the government may pursue a number of remedies against the recipient, including in appropriate circumstances, recovery of such funds, termination of the award, suspension or debarment of the recipient from future awards, and criminal prosecution for false statements. Particular care should be taken by the recipient to comply with the provisions prohibiting the expenditure of funds for lobbying and related activities. Financial assistance awards may be used to describe and promote the understanding of scientific and technical aspects of specific energy technologies, but not to encourage or support political activities such as the collection and dissemination of information related to potential, planned or pending legislation. 8. ADDITIONAL PROVISIONS If the appropriation symbol contained in Block 14.a. of the Notice of Financial Assistance Award for this award is listed below, paragraph 8.a. is applicable to this award, otherwise paragraph 8.b. applies: 89X0213.91 89X0215.91 89X0218.91 89X0214.91 89X0216.91 89X0235.91 a. Department of Interior Appropriations Act Funding: 1. Lobbying Restriction (Department of Interior & Related Agencies Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be made available for any activity or the publication or distribution of literature that in any way tends to promote public support or opposition to any legislative proposal on which Congressional action is not complete. This restriction is in addition to those prescribed elsewhere in statute and regulation. -4- 2. Compliance With Buy American Act In accepting this award, the recipient agrees to comply with sections 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 10a-10c, popularly known as the "Buy American Act"). The recipient should review the provisions of the Act to ensure that expenditures made under this award are in accordance with it. b. Energy & Water Development Appropriations Act Funding: Lobbying Restriction (Energy and Water Development Appropriations Act, 1999) The contractor or awardee agrees that none of the funds obligated on this award shall be expended, directly or indirectly, to influence congressional action on any legislation or appropriation matters pending before Congress, other than to communicate to Members of Congress as described in 18 U.S.C. 1913. This restriction is in addition to those prescribed elsewhere in statute and regulation. 9. REPORTING Failure to comply with the reporting requirements contained in this award will be considered a material noncompliance with the terms of the award. Noncompliance may result in a withholding of future payments, suspension or termination of the current award, and withholding of future awards. A willful failure to perform, a history of failure to perform, or of unsatisfactory performance of this and/or other financial assistance awards, may also result in a debarment action to preclude future awards by Federal agencies. ATTACHMENT III ADDITIONAL SPECIAL PROVISIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. ADDITIONAL SPECIAL PROVISIONS TABLE OF CONTENTS CLAUSE SUBJECT PAGE 1. Cost Share Contributions ............................ 1 2. Fee ................................................. 1 3. Statement of Substantial Involvement ................ 1 4. Technical Direction ................................. 2 5. Continuation of Work ................................ 4 6. Restriction on Transfer of Fuel Cell ................ 4 Technology to Foreign Entities 7. Ceiling on Rate for Allowable Labor.................. 4 Indirect Costs to be Reimbursed by the Government 8. Partial Funding ..................................... 4 GOV'T/DOE = ADL PARTICIPANT = SCI CONTRACTING OFFICER/DOE PROJECT OFFICER = ADL ADDITIONAL SPECIAL PROVISIONS 1. COST SHARE CONTRIBUTIONS It is the intention of the Government and the Participant to share the allowable and allocable costs of performance of the work during this Agreement as set forth herein. The Government's contribution and support for this Agreement during the project period Oct 1, 1999 through January 14, 2003 will be $759,341. The Participant will contribute $408,877 toward the aforementioned project period. Notwithstanding any other provision in this Agreement, it is the intention of the Government and the Participant to share the total allowable and allocable costs of performance during the project period on a 65 percent (Government) and 35 percent (Participant) basis. It is understood by the parties that the DOE share of this project period is $759,341 and notwithstanding any other provision in this Agreement to the contrary, no additional Federal funding will be provided notwithstanding the total cost of the project at completion. In keeping with the cost share requirements set forth under this cooperative agreement the following cost sharing is necessary under each Topic: Development of an Integrated State-of-the-Art Fuel Cell Power System-- Topic 1.J. (Cost Share 35%) In the event the project is terminated early or not funded to its completion, the Participant understands and specifically agrees that the Government is not waiving the Participant's requisite cost share requirement and that in the event the project is not funded to its completion or otherwise terminated prior to completion, the Participant is still obligated to meet its requisite cost share. Participant further agrees that upon termination or at the completion of the project, upon notification by the Government, it will promptly submit to the Government all such sums due and owing to satisfy its requisite cost share. Failure to make such payment shall result in the Government undertaking collection action against the Participant. This understanding and agreement shall also apply to any additional budget periods within the project period wherein the Participant's aggregate cost share contribution to that date has not met the requisite cost share. 2. FEE No fee shall be paid to the Recipient. 3. STATEMENT OF SUBSTANTIAL INVOLVEMENT The Department of Energy (Department, DOE) will be substantially involved in all Tasks of the Statement of Work. The Department will collaborate with the participant in evaluating, accepting, and achieving the milestones for research as proposed by the respondent. 1 The Department will provide technical direction to the overall program, as well as the individual program elements as it is determined to be necessary and appropriate by DOE. The Department will participate during the full duration of the project, and will have continuing rights to conduct ongoing negotiations with the participant regarding the technical direction of the work conducted under this Agreement. The Department staff members will attend meetings and participate in the formation and direction of scope of the key development activities. The DOE Project Officer will participate in the development, review and approval of all proposed statements of work, including subcontractor statements of work, prior to the execution of any subcontract. The Department will review technical progress reports and provide input to these reports as deemed necessary. In addition, the Department will have the right to have National Laboratories or selected private organizations perform independent tests and evaluations of the cooperative agreement's deliverables, thus providing an additional measure of technical progress. The Department may collaborate with the participant in the allocation of funds budgeted for this Agreement. Further, as work progresses, funding needs may change and depending upon availability of funds, the Department may collaborate with the participant to reallocate funds budgeted between the different programs and projects. The Department will thus be actively monitoring all phases of the participant's research and development activities, including participation in the participant's reviews of its contractor's activities and review of the contractor's reports to the participant. The Department will actively participate in the participant's process of reviewing and approving each phase of the proposed programs and projects. The substantial involvement by the Department under this Agreement will remain in effect for the term of the cooperative agreement award unless otherwise amended in writing by the Contracting Officer. Moreover, this statement of substantial involvement by the Department does not increase the Department of Energy's liability under the Agreement award. 4. TECHNICAL DIRECTION A. The work to be performed by the Participant under this Cooperative Agreement is subject to the surveillance and written Technical Direction of a "DOE Project Officer." The term "Technical Direction" is defined to include, without limitation, the following: 1. Directions to the Participant which redirects the work effort, shifts work emphasis between work areas or tasks, require pursuit of certain lines of inquiry, fill in details or otherwise provide technical guidance to the Participant in order to accomplish the tasks and requirements stated in the Statement of Work as contained in the agreement. 2. Provision of information to the Participant which assists in the interpretation of drawings, specifications or technical portions of the Statement of Work as contained in the Agreement. 2 3. Review and, where required by the Cooperative Agreement, approval of technical reports, drawings, specifications or technical information to be delivered by the Participant to DOE under the Cooperative Agreement. 4. The DOE Project Officer shall monitor the Participant's performance with respect to compliance with the requirements of this Cooperative Agreement. B. Technical direction and management surveillance shall not impose tasks or requirements upon the Participant additional to or different from the tasks and requirements stated in the Statement of Work of this Agreement. The Technical Direction to be valid: 1. Must be issued in writing consistent with the tasks and requirements stated in the Statement of Work of this Agreement; and 2. May not: a. constitute an assignment of additional work outside the tasks and requirements stated in the Statement of Work of this Agreement; b. in any manner cause an increase or decrease in the total estimated project cost or the time required for project performance; c. change any of the expressed terms, conditions or specification of the Cooperative Agreement; or d. accept non-conforming work. C. The Participant shall proceed promptly with the performance of Technical Directions duly issued by the DOE Project Officer in the manner prescribed by paragraph B. above and which are within his authority under the provisions of paragraph A. above; provided, however, that the Participant shall immediately cease the performance of any Technical Direction upon receipt of a written instruction to that effect from the Contracting Officer. D. If in the opinion of the Participant any Technical Direction issued by the DOE Project Officer is within one of the categories as defined in B. 2. (a) through (d) above, the Participant shall not proceed but shall notify the Contracting Officer in writing within five working days after the receipt of any such Technical Direction and shall request the Contracting Officer to rescind such direction or mutually agree to modify the agreement accordingly. E. The only persons authorized to give Technical Direction to the Participant under this Agreement are the Contracting Officer and any "DOE Project Officer." Any action taken by the Participant in response to any direction given by any person other than the Contracting Officer or DOE Project Officer shall not be binding upon the Government. 3 5. CONTINUATION OF WORK There will be an evaluation of the progress near the end of each year of the work to determine to either continue, redirect, or terminate the project. 6. RESTRICTION OF TRANSFER OF FUEL CELL TECHNOLOGY TO FOREIGN ENTITIES It is agreed that the Participant shall obtain adequate recognition of the United States support for the technology developed under this Program in any contracts, assistance, licenses, or other agreements which involve the transfer to foreign entities of the fuel cell technology developed in whole or in part at Government expense. The Participant agrees to notify DOE, as represented by DOE Patent Counsel, in writing, of the adequate recognition obtained prior to entering into any such contracts, assistance, licenses, or other agreements. The Participant shall not enter into any such contracts, assistance, licenses, or other agreements without the concurrence shall be at the sole discretion of DOE and is not subject to the Disputes or Appeals (at 10 CFR 600.22) or otherwise subject to litigation under the Contracts Disputes Act of 1978 (41 U.S.C. 601 et. seq.). The determination shall be in writing and shall be furnished to the Participant by the Contracting Officer. Examples of such an adequate recognition could include: (1) a commitment to manufacture in the U.S.A., (2) a requirement to reimburse the U.S. Government for its R&D costs, and/or (3) a commitment to jointly sponsor the R&D program. 7. CEILING ON RATES FOR ALLOWABLE LABOR INDIRECT COSTS TO BE REIMBURSED BY THE GOVERNMENT Reimbursement to the Participant for labor indirect costs shall be subject to a ceiling rate of * % of allowable Direct Labor and Fringe Benefits costs. Any and all labor overhead costs in excess the aforesaid ceiling rate shall be unallowable under this agreement and shall be absorbed by the Participant without reimbursement by the Government under this agreement or any other Government award. 8. PARTIAL FUNDING This cooperative agreement is partially funded on a cost reimbursement basis without fee or profit. The total estimated cost of the project to be conducted during the current budget period is $1,168,218 of which the estimated cost to DOE is $759,341 and the estimated cost to the Participant is $408,877. The Cumulative DOE Obligation for the current budget period is $292,500. * Whatever rate was included in SCI's cost proposal on which this award is based. 4 ATTACHMENT III.a. DOE ASSISTANCE REGULATIONS, 10 CFR PART-600, AS AMENDED SUBPARTS A AND B. These Regulations are Incorporated by Reference The Department of Energy Assistance Regulations as set forth in 10 CFR Part-600, as Amended Subparts A and B are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. ATTACHMENT IV FEDERAL ASSISTANCE REPORTING CHECKLIST DATED 1/28/99 (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and Ad's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. U.S. Department of Energy FEDERAL ASSISTANCE REPORTING CHECKLIST - -------------------------------------------------------------------------------------------------------------------- Identification Number: DE-FCO2-99EE50580 2. Program/Project Title Development of Fuel Processor, Durability Demonstration and 10kW System - -------------------------------------------------------------------------------------------------------------------- Recipient: Arthur D. Little, Inc.
- -------------------------------------------------------------------------------------------------------------------- Reporting Requirements: Frequency No. of Copies Addressees ----------------------------------------------------- GRAM/PROJECT MANAGEMENT REPORTING Program Management Plan, See Attachment 1 Y Original + 2 copies Orig + 2cys, B DOE F 4600.3A, "Milestone Log" D0E F 4600.4, "Federal Assistance Budget Information" DOE F 4600.5, "Federal Assistance Management Summary Report" D0E F 4600.6, "Federal Assistance Program/Project Status Report" SF-269, "Financial Status Report" (Long Form) Q Original + 1 Copy Orig A, (1) B FINANCIAL INFORMATION REPORTING DOE F 1430.22, Notice of Energy RD&D Project Technical Progress Report Y* Original + 2 copies Orig + 2cys B Topical Report A Original + 2 copies Orig + 2cys B Final Technical Report F** Original + 2 copies Orig + 1 A (1) B - --------------------------------------------------------------------------------------------------------------------
FREQUENCY CODES AND DUE DATES: - - As Necessary: within 5 calendar days after events. - - Final: 90 calendar days after the performance of the effort ends. - - Quarterly: within 30 days after end of calendar quarter or portion thereof. - - One time after project starts; within 30 days after award. - - Required with proposals or the application or with significant planning changes. - - Year1y: 30 days after the and of program year. (Financial Status Reports 90 days). - - Semiannually: within 30 days after end of program fiscal half year. - -------------------------------------------------------------------------------- Special Instructions: Technical Progress Report: An original and 2 copies of the report must be submitted annually. The report must be accompanied by two copies of DOE F 241.1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." Final Report: An original and 2 copies must be submitted within 90 days after the expiration date of the total Performance period, if the project is not to be renewed or extended, and must be accompanied by two copies of DOE F 1. "Announcement of U.S. Department of Energy (DOE) Scientific and Technical Information (STI)." FINAL REPORTS TO: A. Contract Specialist, ACQ B. See Block No. 11 of the U.S. Department of Energy face page Chicago Operations Office Department of Energy 9800 South Cass Avenue 1000 Independence Avenue. S.W. Argonne, Illinois 60439 Washington, D.C. 20585-0121
JAN 28 1999 - -------------------------------------------------------------------------------- Prepared by: (Signature and Date) /s/ Ronald J. Fiskum - -------------------------------------------------------------------------------- ATTACHMENT 1 PROGRAM MANAGEMENT PLAN GUIDELINES The following guidelines indicate the information to be prepared in submitting a Program Management Plan. As a minimum, the Program Management Plan shall contain the following sections: 1. Purpose of R&D Effort The Participant shall briefly describe the overall purpose, objectives and scope of the R&D effort described in the plan. 2. Remaining Technology Development Areas The Participant shall clearly outline the remaining problem areas in technology development in a few descriptive paragraphs. These areas will be described in order of importance and priority. 3. Description of Tasks The Participant shall provide a detailed work breakdown structure (WBS) defining different areas of activity as discrete tasks and the interrelation among the tasks. A written description of each task including objective, planned activities and clearly defined milestones shall also be provided. The Awardee shall also provide the following: a. A schedule and milestone plan b. A cost plan by task and month 4. Schedule The Participant shall prepare a baseline detailed activity schedule (critical path network schedule or equivalent). 5. Deliverables In addition to the hardware to be delivered, the Participant shall provide a description of the reports to be supplied under the agreement and provide a schedule of their delivery dates. ATTACHMENT V INTELLECTUAL PROPERTY PROVISIONS-- RESEARCH, DEVELOPMENT, OR DEMONSTRATION LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS, AND FOREIGN ORGANIZATIONS (Flow-down from DOE Cooperative Agreement No. DE-FCO2-99-EE50580) The Federal Acquisition Regulation (FAR) clauses, Department of Energy Regulations (DEAR) clauses set forth on the attached listing are hereby incorporated by reference in this subcontract. All such clauses shall, with respect to rights, duties and obligations of ADL and the Subcontractor hereunder, be interpreted and construed in such manner as to recognize and give effect to the contractual relationship between ADL and the Subcontractor under this subcontract and the rights of the U.S. Government with respect thereto under the Prime Contract from which such clauses are derived. As used therein the terms "the Contractor" and equivalent terms shall mean the Subcontractor and the terms "the Government" and "the Contracting Officer" shall include ADL and ADL's authorized representative hereunder, respectively, except under those clauses relating to the rights to audit or examine the Subcontractor's financial records in which case the terms "the Government" and "the Contracting Officer" shall mean the U.S. Government and the Contracting Officer under the Prime Contract, respectively. The word "contract" and like terms shall mean this subcontract. Intellectual Property Provisions Research, Development, or Demonstration Large Business, State and Local Governments, and Foreign Organizations 01. FAR 52.227-1 Authorization and Consent (JUL 1995), Alternate I 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (AUG 1996) This clause is not applicable if the award is for less than $100,000. 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) If this award requires the use or delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 04. FAR 52.227-16 Additional Data Requirements (JUN 1987) 05. FAR 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 06. DEAR 952.227-9 Refund of Royalties (MAR 1995) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government (MAR 1995) Attachment 1 (for reference only): Patent Rights - Retention by Contractor (Short Form) (MAR 1995); DEAR 952.227-11 LB-498 01. FAR 52.227-1 Authorization and Consent; Alternate I AUTHORIZATION AND CONSENT (JUL 1995) (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 02. FAR 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 03. FAR 52.227-14 Rights in Data - General, as modified by DEAR 927.409 (Effective Apr 1998) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. (1) Computer data bases, as used in this clause, means a collection of data in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. The term does not include computer software. (2) Computer software, as used in this clause, means (i) computer programs which are data comprising a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations and (ii) data comprising source code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the computer program to be produced, created, or compiled. The term does not include computer data bases. (3) Data, as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. For the purposes of this clause, the term does not include data incidental to the administration of this contract, such as financial, administrative, cost and pricing, or management information. (4) Form, fit, and function data, as used in this clause, means data relating to items, components, or Co processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and 1 performance requirements but specifically excludes the source code, algorithm, process, formulae and flow charts of the software. (5) Limited rights data, as used in this clause, means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. The Government's rights to use, duplicate, or disclose limited rights data are as set forth in the Limited Rights Notice of subparagraph (g)(2) of this section if included in this clause. (6) Restricted computer software, as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software, including minor modifications of any such computer software. The Government's rights to use, duplicate, or disclose restricted computer software are as set forth in the Restricted Rights Notice of subparagraph (g)(3) of this section if included in this clause. (7) Technical data, as used in this clause, means recorded data, regardless of form or characteristic, that are of a scientific or technical nature. Technical data does not include computer software, but does include manuals and instructional materials and technical data formatted as a computer data base. (8) Unlimited rights, as used in this clause, means the rights of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, including by electronic means, and perform publicly and display publicly, in any manner, including by electronic means, and for any purpose whatsoever, and to have or permit others to do so. (b) Allocation of rights. (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(1) below. (c) Copyright. (1) Data first produced in the performance of this contract. Unless provided otherwise in subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings, or similar works. The prior, express written permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U.S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, 2 unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to assert copyright in computer software first produced in the performance of this contract without prior written permission of the DOE Patent Counsel assisting the contracting activity. Where such permission is granted, the Patent Counsel shall specify appropriate terms, conditions, and submission requirements to assure utilization, dissemination, and commercialization of the data. The Contractor, when requested, shall promptly deliver to Patent Counsel a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled. (e) Unauthorized marking of data. (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignore. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officers decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officers determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. Coast Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. 3 (f) Omitted or incorrect markings. (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractors expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. (1) When data other than that listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] (3) [Reserved.] (h) Subcontracting. The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractors obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(l) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) Alternate II (Jun 1987) (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor 4 may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. _____________ (and subcontract No. ___________, if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(1) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) Alternate III (Jun 1987) (g)(3)Q) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (1) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. ____________ (and subcontract ________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. _______ (and subcontract __________, if appropriate) with __________________ (name of Contractor and subcontractor)." (End of notice) 5 (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." 04. FAR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 05. FAR 52.227-23 Rights to Proposal Data RIGHTS TO PROPOSAL DATA (TECHNICAL)(JUN 1987) Except for data contained on pages 3-26, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the "Rights in Data--General" clause contained in this contract) in and to the technical data contained in the proposal dated 10/29/98, upon which this contract is based. 06. DEAR 952.227-9 Refund of Royalties REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract here-under. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that is represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. 6 (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 07. DEAR 952.227-13 Patent Rights - Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. See 10 CFR part 784. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to 7 the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations (10 CFR part 784) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that-- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or 8 assignee to be privileged and confidential and is so marked, the Department of Energy agrees that to the extent permitted by law, it will not disclose such information to persons outside the Government (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. (1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractors license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractors domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions an decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the 00 invention available for licensing. 9 (ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, or within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign country in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed o Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. 10 (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. 11 (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officers opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(1) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in all subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor-- (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractors reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual 1.0 obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. 12 (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(1) of this clause from all persons who perform any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that 13 public disclosure of such information will not adversely affect the patent interests of DOE or the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(1) of this clause, the Contractor (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 14 Attachment 1: 952.227-11 Patent Rights - Retention by the Contractor (short form) PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the conception of first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501 (c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that is benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-538 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121 .3-8 and 13 CFR 121 .3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (7) "Agency licensing regulations" and "agency regulations concerning the licensing of Government-owned inventions" mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Department of Energy (DOE) within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the DOE, the Contractor will promptly notify that agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying DOE CO within 2 years of disclosure to DOE. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by DOE to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within 1 year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure, election, and filing under subparagraphs (c)(l), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title; provided, that DOE may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractors license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the Contractors business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations concerning the licensing of Government owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraph (d) of this clause and to enable the government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent mailers and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by the United States Department of Energy. The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractors subject inventions. (2) The contractor shall include in all other subcontracts, regardless of tier, for experimental, developmental. demonstration, or research work the patent rights clause at 952.227-13. (3) In the case of subcontracts, at any tier, DOE, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received, by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceeding undertaken by that agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), DOE agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and, if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when DOE deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractors licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when that Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). (l) Communications. (1) The contractor shall direct any notification, disclosure, or request to DOE provided for in this clause to the DOE patent counsel assisting the DOE contracting activity, with a copy of the communication to the Contracting Officer. (2) Each exercise of discretion or decision provided for in this clause, except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is not a claim or dispute and is not subject to the Contract Disputes Act of 1978. (3) Upon request of the DOE Patent Counsel or the contracting officer, the contractor shall provide any or all of the following: (i) a copy of the patent application, filing date, serial number and title, patent number, and issue date for any subject invention in any country in which the contractor has applied for a patent; (ii) a report, not more often than annually, summarizing all subject inventions which were disclosed to DOE individually during the reporting period specified; or (iii) a report, prior to closeout of the contract, listing all subject inventions or stating that there were none. (End of clause) ATTACHMENT VI GUIDELINES FOR INTELLECTUAL PROPERTY AGREEMENT FOR SFAA l.j. All Intellectual provisions, definitions and clauses set forth in Attachment V and Attachments thereto shall apply unless expressly modified hereunder. The following modifications are subject to Contractor acquiring greater rights in accordance with DOE patent waiver regulations at HICFR9-9.109-6, with respect to subject inventions. 1. Subcontractor agrees to grant an exclusive, irrevocable, royalty free license throughout the world in and to each subject invention developed solely by the Subcontractor under this agreement with application in the hydrocarbon conversion devices for fuels cells field of use. 2. With respect to subject inventions developed under this agreement having application in the hydrocarbon conversion devices for fuels cells field of use developed jointly by Contractor and Subcontractor, Subcontractor agrees to assign to Contractor the entire right, title, and interest throughout the world in each subject invention in the hydrocarbon conversion devices for fuels cells field of use. Subcontractor and Contractor will each retain undivided interests in the inventions for other fields of use. 3. With respect to subject inventions developed under this agreement having application in the catalysts composition and production procedure field of use developed jointly by Contractor and Subcontractor, Contractor agrees to assign to Subcontractor the entire right, title, and interest throughout the world in each subject invention in the catalyst composition and production procedure fields of use, except in the hydrocarbon conversion devices for fuel cells field of use. Subcontractor and Contractor will each retain undivided interests in the inventions for other fields of use. EX-10.30 17 0017.txt SUBAWARD AGREEMENT EXHIBIT 10.30 SUBAWARD AGREEMENT This Subaward Agreement, effective November 1, 1997, is made between International Fuel Cells Corporation (hereinafter known as "IFC"), a Maryland corporation with principal offices in South Windsor, Connecticut, and A.D. Little, Inc. (hereinafter known as "ADL"), with principal offices in Cambridge, Massachusetts. The effort to be performed by ADL under this Subaward Agreement will be part of IFC's Financial Assistance Award DE-FC02-97EE50471 which has been issued by the Department of Energy. WITNESSETH THAT: In consideration of the mutual promises, covenants, and agreements herein set forth, the Parties agree that ADL shall perform all of the services set forth herein, for the consideration stated herein. The rights and obligations of the Parties to this Subaward Agreement shall be subject to and governed by the General Provisions for Subawards and other documents or specifications attached hereto or referenced herein. The titles used herein are for convenience only and shall in no way be construed as part of this Subaward. ARTICLE I - SCOPE OF WORK ADL shall, in conformance with the teams and conditions more particularly set forth herein, provide the necessary personnel, material, and facilities and do all things necessary and/or incidental to the furnishing and delivery to IFC of the services set forth in the Statement of Work, Appendix A hereto and made a part of this Subaward. ARTICLE II - BUDGET A. The total budget for the services to be provided hereunder is $2,331,653. B. ADL shall share approximately 25% of all allowable and allocable costs resulting from the work performed under this Subaward Agreement in accordance with the Budget Plan set forth in Appendix B. IFC's maximum liability under this Subaward is $1,746,335 unless additional cost sharing is authorized in accordance with Article IV. C. Cost sharing contributions may be incurred either as direct or indirect costs, and include cash or third party in-kind contributions by ADL. The cost sharing may be in any allowable budget category or combination of categories. When a direct cost item represents some or all of the non-federal contribution, any associated indirect costs may not be charged to Federal funds but may be counted as part of the cost sharing. The classification of contributed costs as direct or indirect must be consistent with the classification of similar items charged to DOE funds. D. Valuation of third party in-kind contributions and documentation of cost sharing shall be in accordance with 10 CFR Part 600.123. ARTICLE III - ALLOWABLE COSTS/APPLICABLE COST PRINCIPLES A. In accordance with 10 CFR Part 600.121, the allowable costs of this Subaward shall consist of the actual allowable direct costs incident to performance of the project, plus the allocable portion of the allowable indirect costs, if any, of the organization, less applicable credits. The allowable costs shall not exceed the amount shown in Article II. B. The allowability of costs for work performed under this Subaward will be determined in accordance with the Federal cost principles applicable to ADL in effect on the date of the Subaward, except as modified by other provisions of this Subaward. C. The Federal cost principles applicable to ADL are Title 48 CFR Subpart 31.2, "Contracts with Commercial Organizations," as supplemented by 48 CFR Subpart 931.2. ARTICLE IV - COST OVERRUNS The Parties shall share in overruns authorized in writing by IFC on the same basis as the overall cost sharing of this Subaward, unless otherwise agreed to by the Parties. Notwithstanding this Section, however, ADL shall meet with IFC to discuss potential sources of funding and what amendments, if any, should be made to this Subaward should the potential for a cost overrun situation occur. Additionally, ADL shall notify IFC immediately if it is suspected that a cost overrun may occur. ARTICLE V - AUDIT REQUIREMENTS The Contracting Officer of the Department of Energy may audit, or cause to be audited, awards to commercial organizations, individuals, and hospitals not covered by the audit provisions of Office of Management and Budget Circular A- 133 in the degree 2 of detail deemed necessary. The Contracting Officer shall rely on available reports in determining the need for and the scope of such audits. ARTICLE VI - SUBAWARD MANAGEMENT A. IFC's Subaward Administrator for this Subaward is C. M. Zimmer. IFC may, by written notice to the ADL, change such Subaward Administrator at any time. B. No request, notice, authorization, direction or order received by ADL and issued, either pursuant to a Section or clause of this Subaward, to a provision of any document incorporated into this Subaward by reference, or otherwise shall be binding upon either ADL or IFC, or serve as the basis for change in the Subaward budget or any other provision of the Subaward, unless issued or confirmed in writing by IFC's Subaward Administrator named herein or by a person with signature authority for IFC. ADL shall immediately notify, in writing, the Subaward Administrator whenever a change request has been received from a representative of IFC other than the Subaward Administrator which would affect the price, terms and conditions and delivery schedule of this Subaward. ARTICLE VII - TECHNICAL DIRECTION A. Vincent Callaghan is designated as the representative to act as technical representative under this Subaward. The technical representative shall represent the Subaward Administrator in the technical phases of the work by providing technical direction. The term "technical direction" is defined to include, without limitation: 1. Directions to ADL which redirect the Subaward effort, shift work emphasis between work areas or tasks, require pursuit of certain lines of inquiry, fill in details or otherwise serve to accomplish the contractual Statement of Work. 2. Provision of written information to the ADL which assists in the interpretation of drawings, specifications or technical portions of the work description. 3. Review and, where required by the Subaward, approval of technical reports, drawings, specifications and technical information to be delivered by ADL to IFC under the Subaward. 3 B. Technical direction must be within the scope of work stated in the Subaward. The technical representative does not have the authority to, and may not, issue any technical direction which: 1. Constitutes an assignment of additional work outside the Statement of Work; 2. Constitutes a change; 3. In any manner causes an increase or decrease in the total estimated Subaward budget or the time required for Subaward performance; 4. Changes any of the expressed terms, conditions or specifications of the Subaward; or 5. Interferes with ADL's right to perform the terms and conditions of the Subaward. C. All technical directions shall be issued in writing. D. ADL shall proceed promptly with the performance of technical direction duly issued by the technical representative in the manner prescribed by this clause and within his authority under the provisions of this clause. If, in the opinion of ADL, any instruction or direction by the technical representative falls within one of the categories defined in B.1 through B.5 above, ADL shall not proceed but shall notify the Subaward Administrator in writing within five (5) working days after receipt of any such instruction or direction and shall request the Subaward Administrator to modify the Subaward accordingly. Upon receiving the notification from ADL, the Subaward Administrator shall: 1. Advise ADL in writing within thirty (30) days after receipt of ADL's letter that the technical direction is within the scope of the Subaward effort and does not constitute a change; 2. Advise the ADL in writing within a reasonable time that IFC will issue a written change order. ARTICLE VIII - KEY PERSONNEL ADL's key personnel for this Subaward is William Mitchell. 4 In the event that the key personnel assigned to this program needs to be replaced, ADL agrees to (1) replace the personnel with alternate personnel of essentially equal or greater qualifications, (2) provide IFC with written notification of such change thirty (30) days prior to the effective date of such change. ARTICLE IX - INDEMNIFICATION A. To the extent that the Government does not indemnify either IFC or ADL, the negligent party shall indemnify and save the other party harmless from and against any and all liability for injury to persons or property occasioned wholly or in part by an act or omission of the negligent party, its lower tier subcontractors, agents, or employees, including any and all expense, legal or otherwise, incurred by the other party in the defense of any claim or suit arising out of the work done under this Subaward; provided, however, that ADL shall not be liable for injury to persons or property caused by the sole negligence of IFC, its agents and employees and IFC shall not be liable for injury to persons or property caused by the sole negligence of ADL, its agents and employees. B. IFC shall promptly notify ADL of any claim against IFC which is covered by this indemnification provision and shall authorize representatives of ADL to settle or defend any such claim or suit and to represent IFC in, or to take charge of, any litigation in connection therewith. ARTICLE X - NOTICE OF DELAY In addition to its obligations herein with respect to notice of labor disputes, whenever any other actual or potential event is delaying or threatening to delay performance of the services under this Subaward, ADL shall as soon as possible give notice thereof to IFC. ARTICLE XI - NON-WAIVER OF RIGHTS The failure of IFC or ADL to insist upon strict performance of any of the terms and conditions in the Subaward, or to exercise any rights or remedies, shall not be construed as a waiver of its rights to assert any of the same or to rely on any such terms or conditions at any time thereafter. The invalidity in whole or part of any term or condition of this Subaward shall not affect the validity of other parts hereof. ARTICLE XII - NOTICES 5 Whenever any notice is required or authorized to be given hereunder, such notice shall for all purposes be deemed to be given and received if given in writing and sent by registered mail, postage prepaid, or by facsimile, to the respective parties at the following addresses. If sent by IFC to ADL, addressed as follows: Arthur D. Little, Inc. Acorn Park Cambridge, Massachusetts 02140-2390 Attention: Judith Blinn Contracting Officer And if sent by ADL to IFC, addressed as follows: International Fuel Cells Corporation 195 Governor's Highway South Windsor, CT 06074 Attention: Counsel Each party may, by written notice, change its address as herein above given. ARTICLE XIII - ENTIRE AGREEMENT Upon acceptance of this Subaward, ADL agrees that the provisions under this Subaward, including the documents listed below which are incorporated by reference, shall constitute the entire agreement between the parties hereto and supersede all prior agreements relating to the subject hereof. This Subaward may not be modified or terminated orally, and no modification nor any claimed waiver of any provisions hereof shall be binding unless in writing and signed by the party against whom such modification or waiver is sought to be enforced. A Appendix A - Statement of Work B. Appendix B - Budget Plan C. Appendix C - Intellectual Property Provisions D. Appendix D - General Provisions For Subawards 6 In witness whereof, the duly authorized representatives of IFC and ADL have executed this Subaward on the dates shown. A. D. LITTLE, INC. INTERNATIONAL FUEL CELLS CORPORATION By /s/ Judith Blinn By /s/ Robert L. Suttmiller ----------------------------- ---------------------------------- Name Name (Typed) Judith Blinn (Typed) Robert L. Suttmiller ------------------------ ------------------------------ Title Contracting Officer Title President -------------------------- -------------------------------- Date 1/5/98 Date 1/6/98 --------------------------- --------------------------------- 7 APPENDIX A STATEMENT OF WORK FUEL PROCESSOR DEVELOPMENT Task 1.1 Support for the development of Integrated Power System for Transportation (IPST) system and subsystem design requirements, trade studies, and detailed design IPST Requirements Document -------------------------- ADL shall participate with IFC to develop and reach consensus on the IPST Requirements Document that contains for the ISPT and its subsystems requirements, clarification of requirements, and the current agreed upon approach to meeting requirements. This document will be maintained by IFC and ADL as the program proceeds to coordinate program requirements and approaches. Conceptual and Detailed Design Information ------------------------------------------ ADL shall participate with IFC to develop and reach consensus on ISPT conceptual flow and block diagrams and sub-system interface maps to ensure team alignment and coordination. ADL shall participate with IFC in defining detailed interfacing design information such as component envelope definitions, and mechanical and process, including controls, interface requirements to support IFC activities in IPST packaging design. Program Metrics and Baseline Design Evaluation ---------------------------------------------- ADL shall participate with IFC to develop and reach consensus on the format and content for metrics to record performance goals versus current status versus prediction on program completion. The metrics will include weight, volume, efficiency and steady state and transient performance characteristics. Also included are metrics for Tasks 1.3 POX development and Task 1.4 Catalyst Development.(IFC will provide sample formats.) ADL shall participate with IFC to evaluate conceptual designs to select a baseline design for further development in the program. 8 Task 1.2 Fuel Processor Subsystem Design ADL shall perform system level conceptual and detailed design of the fuel processor subsystems. ADL will conduct the following: 1. Undertake air supply trade studies to determine appropriate reformer pressure; 2. Develop an improved reformer simulation tool integrating existing kinetics, equilibrium and Computational Fluid Dynamics models; 3. Employ fuel processor simulation model to evaluate anode energy utilization options; 4. Develop sub-system level detailed design information including process and instrumentation diagrams, sequential and continuous control logic, and sub-system component requirements, mechanical and process interface drawings, weights, volumes, performance data, etc.; 5. Develop conceptual and detailed interface requirements consistent with the fuel cell system. ADL shall deliver the following to IFC: 1. Fuel processor sub-system performance, design, and interface information consistent with Task 1.1 format and content. Task 1.3 Partial Oxidizer Subsystem Development Under this Task, ADL shall refine the existing partial oxidation subsystem for the range of fuels and operating conditions. ADL shall complete the following subtasks: 1. Construct a 10 kw partial oxidizer (POX) reformer and control system for testing at Texaco; 9 2. determine a test matrix of fuels, POX conditions and catalysts; 3. execute the test matrix of fuels, POX conditions and catalysts; 4. evaluate the performance for typical and worst case fuels. ADL shall deliver the following to IFC: 1. Metrics that compare present status to goals along with an assessment of program impact. What the limitations of existing catalysts and configurations are and what is the program impact of accommodating all fuels, e.g., weight, volume, cost, performance. 2. Report impact of this Task on Fuel Processor Subsystem performance using Task 1.1 format and content. Task 1.4 Catalyst Development Under this Task, ADL shall develop optimized reformer and shift reactor catalysts. ADL will perform the following effort: 1. Develop models and metrics to guide catalyst selection and subsystem operating parameters; and 2. work with Universal Oil Products to advance shift catalyst state of the art; and 3. screen catalysts in 5kW and 10kW reactors. ADL shall deliver to IFC: 1. metrics that compare present status to goals of effort for optimized reformer and shift catalyst performance along with an assessment of potential benefits to the program (weight, cost, or volume). 10 2. report impact of this task on Fuel Processor Subsystem performance using Task 1.1 format and content. Task 1.5 Control and Transient Performance Under this Task, ADL shall evaluate multiple PROX subsystem approaches for controlling carbon monoxide during transients. ADL shall 1. Perform small scale tests to refine kinetics of ADL PROX catalyst; 2. test PROX scaled to 10kW then 50kW; 3. test Los Alamos and Johnson Matthey carbon dioxide control technologies as alternatives; 4. develop a model extending steady state controls developed in Chrysler/DOE program; 5. select control hardware consistent with automotive cost/durability goals; and 6. assist in developing transient model of the entire IPST. ADL shall deliver the following: 1. PROX control interface, software and hardware specification, to the IPST controller. 2. Control system requirements. 3. PROX subsystem requirements. 4. Report impact of steady state operation and transients on Fuel Processor Subsystem performance using Task 1.1 format and content. Task 1.6 50kW Fuel Processor Design and Test Under this Task, ADL shall 11 1. Perform packaging design based on thermal integration requirements; 2. collaborate with Modine Manufacturing to design for manufacturability; 3. evaluate special requirements related to instrumentation and safety; 4. test subsystems and assemble the fuel processor; and 5. test the fuel processor for key steady state and transient performance parameters. ADL shall deliver a 50kW fuel processor and the as built performance parameters meeting all the IPST interface requirements and a manual addressing installation, operation (procedures and operating limits) and maintenance. Task 2 Program Management and Reporting Requirements Throughout the program, ADL shall provide the following support and reports: 1. Program Management Plan (due one month after Subaward) 2. Kickoff meeting with DOE 3. Monthly Financial Reports 4. Monthly Technical Reports 5. Biweekly Technical Progress Reports 6. Final Report 12 APPENDIX B BUDGET PLAN ADL REF.: 2-5376 Revised
TOTAL YEAR 1 YEAR 2 YEAR 3 PROFESSIONAL SERVICES $ 1,574,814 $ 658,622 $ 434,142 $ 482,049 Other Direct Costs: (Support Expense, Consultants, & Travel) 146,570 65,884 71,260 9,426 Subcontractors 0 0 0 0 Equipment 70,000 70,000 0 0 0 0 0 0 0 Materials 475,500 125,500 350,000 0 Material Overhead 35,458 12,708 22,750 0 G&A on ODC's 29,314 13,177 14,252 1,885 ------------ ---------- ----------- ---------- Subtotal $ 2,331,653 $ 945,894 $ 892,403 $ 493,356 0 ------------ ---------- ----------- ---------- Total Program Cost $ 2,331,653 $ 945,894 $ 892,403 $ 493,356 0 0 0 0 ------------ ---------- ----------- ---------- Total Program Value $ 2,331,653 $ 945,894 $ 892,403 $ 493,356 Cost-Share/Co-Funding ADL $ (405,732) $ (170,297) $ (111,562) $ (123,873) Lab Chargebacks w/G&A $ (105,036) $ (40,889) $ (64,147) $ 0 Materials/Equipment w/MOH $ (74,550) $ (74,550) $ 0 $ 0 0 0 0 0 ------------ ---------- ----------- ---------- Total Cost-Share/Co-Funding $ (585,318) $ (285,736) $ (175,709) $ (123,873) 0 0 0 0 ------------ ---------- ----------- ---------- Total Cost-Share/Co-Funding $ (585,318) $ (285,736) $ (175,709) $ (123,873) Co-Funding/Cost Share % 25.10% 30.21% 19.69% 25.11%
Total Doe Funding Required $ 1,746,335 $ 660,158 $ 716,694 $ 369,484 Cum Doe Funding Required $ 660,158 $ 1,376,852 $1,746,336
13 - ------------------------------------------------------------------------------------------------------------------------------------ [illegible] U.S. Department of Energy [illegible] Budget Page (See reverse for Instructions) - ------------------------------------------------------------------------------------------------------------------------------------ ORGANIZATION Budget Page No: 1 Arthur D. Little, Inc. --- - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL INVESTIGATOR/PROJECT DIRECTOR Requested Duration: _____ (months) Jeffrey M. Bentley - ------------------------------------------------------------------------------------------------------------------------------------ A. SENIOR PERSONNEL PI/PD, Co-Pl's, Faculty and Other Senior Associates DOE COST SHARE TOTAL (List each separately with title; A.6. show number in brackets) -------------- ----------------------------------------- Cal ACAD SHARE BY APPLICANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. - ------------------------------------------------------------------------------------------------------------------------------------ 2. - ------------------------------------------------------------------------------------------------------------------------------------ 3. - ------------------------------------------------------------------------------------------------------------------------------------ 4. - ------------------------------------------------------------------------------------------------------------------------------------ 5. - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------------------------------ 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------------------------------ 8. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------------------------------ 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------------------------------ 2. ( ) OTHER PROFESSIONAL (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------------------------------ 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES AND WAGES (A+B) - ------------------------------------------------------------------------------------------------------------------------------------ C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A+B+C) See Attached 488,325 170,297 658,622 - ------------------------------------------------------------------------------------------------------------------------------------ D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT --------------------------------------------- FOR EACH ITEM) --------------------------------------------- --------------------------------------------- --------------------------------------------- TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------------------------------ E. TRAVEL 1. Domestic (incl. Canada and U.S. Possessions) - ------------------------------------------------------------------------------------------------------------------------------------ 2. Foreign --------------------------------------------------------------------------------------------------------- TOTAL TRAVEL 12,931 12,931 - ------------------------------------------------------------------------------------------------------------------------------------ F. TRAINEE/PARTICIPANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. STIPENDS (Itemize levels, types + totals on budget justification page) - ------------------------------------------------------------------------------------------------------------------------------------ 2. TUITION & FEES - ------------------------------------------------------------------------------------------------------------------------------------ 3. TRAINEE TRAVEL - ------------------------------------------------------------------------------------------------------------------------------------ 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------------------------------ G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. MATERIALS AND SUPPLIES 125,500 70,000 195,500 - ------------------------------------------------------------------------------------------------------------------------------------ 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------------------------------ 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 4. COMPUTER (ADPE) SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 5. SUBCONTRACTS - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER (fully explain on justification page) (Supp Exp & Misc ODCs) 18,878 34,074 52,952 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER DIRECT COSTS 144,378 104,074 248,452 - ------------------------------------------------------------------------------------------------------------------------------------ H. TOTAL DIRECT COSTS (A THROUGH G) 645,634 274,371 920,005 - ------------------------------------------------------------------------------------------------------------------------------------ I. INDIRECT COSTS (SPECIFY RATE AND BASE) 14,524 11,365 25,889 TOTAL INDIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ J. TOTAL DIRECT AND INDIRECT COSTS (H+I) 660,158 285,736 945,894 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ K. AMOUNT OF ANY REQUIRED COST SHARING FROM NON- FEDERAL SOURCES - ------------------------------------------------------------------------------------------------------------------------------------ L. TOTAL COST OF PROJECT (J+K) 660,158 285,736 945,894 - ------------------------------------------------------------------------------------------------------------------------------------ DOE Applicant TOTAL - ------------------------------------------------------------------------------------------------------------------------------------
14 - ------------------------------------------------------------------------------------------------------------------------------------ [illegible] U.S. Department of Energy [illegible] Budget Page (See reverse for Instructions) - ------------------------------------------------------------------------------------------------------------------------------------ ORGANIZATION Budget Page No: 2 Arthur D. Little, Inc. --- - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL INVESTIGATOR/PROJECT DIRECTOR Requested Duration: _____ (months) Jeffrey M. Bentley - ------------------------------------------------------------------------------------------------------------------------------------ A. SENIOR PERSONNEL PI/PD, Co-Pl's, Faculty and Other Senior Associates DOE COST SHARE TOTAL (List each separately with title; A.6. show number in brackets) ---------------- --------------------------------------------- Cal ACAD SHARE BY APPLICANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. - ------------------------------------------------------------------------------------------------------------------------------------ 2. - ------------------------------------------------------------------------------------------------------------------------------------ 3. - ------------------------------------------------------------------------------------------------------------------------------------ 4. - ------------------------------------------------------------------------------------------------------------------------------------ 5. - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------------------------------ 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------------------------------ 8. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------------------------------ 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------------------------------ 2. ( ) OTHER PROFESSIONAL (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------------------------------ 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES AND WAGES (A+B) - ------------------------------------------------------------------------------------------------------------------------------------ C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A+B+C) See Attached 322,580 111,562 434,142 - ------------------------------------------------------------------------------------------------------------------------------------ D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT --------------------------------------------- FOR EACH ITEM) --------------------------------------------- --------------------------------------------- --------------------------------------------- TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------------------------------ E. TRAVEL 1. Domestic (incl. Canada and U.S. Possessions) - ------------------------------------------------------------------------------------------------------------------------------------ 2. Foreign --------------------------------------------------------------------------------------------------------- TOTAL TRAVEL 9,315 9,315 - ------------------------------------------------------------------------------------------------------------------------------------ F. TRAINEE/PARTICIPANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. STIPENDS (Itemize levels, types + totals on budget justification page) - ------------------------------------------------------------------------------------------------------------------------------------ 2. TUITION & FEES - ------------------------------------------------------------------------------------------------------------------------------------ 3. TRAINEE TRAVEL - ------------------------------------------------------------------------------------------------------------------------------------ 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------------------------------ G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. MATERIALS AND SUPPLIES 350,000 350,000 - ------------------------------------------------------------------------------------------------------------------------------------ 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------------------------------ 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 4. COMPUTER (ADPE) SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 5. SUBCONTRACTS - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER Support Expense & Miscellaneous ODC's 8,489 53,456 61,945 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER DIRECT COSTS 358,489 53,456 411,945 - ------------------------------------------------------------------------------------------------------------------------------------ H. TOTAL DIRECT COSTS (A THROUGH G) 690,384 165,018 855,402 - ------------------------------------------------------------------------------------------------------------------------------------ I. INDIRECT COSTS (SPECIFY RATE AND BASE) 26,310 10,691 37,001 TOTAL INDIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ J. TOTAL DIRECT AND INDIRECT COSTS (H+I) 716,694 175,709 892,403 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ K. AMOUNT OF ANY REQUIRED COST SHARING FROM NON- FEDERAL SOURCES - ------------------------------------------------------------------------------------------------------------------------------------ L. TOTAL COST OF PROJECT (J+K) 716,694 175,709 892,403 - ------------------------------------------------------------------------------------------------------------------------------------ DOE Applicant TOTAL - ------------------------------------------------------------------------------------------------------------------------------------
15 - ------------------------------------------------------------------------------------------------------------------------------------ [illegible] U.S. Department of Energy [illegible] Budget Page (See reverse for Instructions) - ------------------------------------------------------------------------------------------------------------------------------------ ORGANIZATION Budget Page No: 3 Arthur D. Little, Inc. --- - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL INVESTIGATOR/PROJECT DIRECTOR Requested Duration: _____ (months) Jeffrey M. Bentley - ------------------------------------------------------------------------------------------------------------------------------------ A. SENIOR PERSONNEL PI/PD, Co-Pl's, Faculty and Other Senior Associates DOE COST SHARE TOTAL (List each separately with title; A.6. show number in brackets) ---------------- --------------------------------------------- Cal ACAD SHARE BY APPLICANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. - ------------------------------------------------------------------------------------------------------------------------------------ 2. - ------------------------------------------------------------------------------------------------------------------------------------ 3. - ------------------------------------------------------------------------------------------------------------------------------------ 4. - ------------------------------------------------------------------------------------------------------------------------------------ 5. - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHERS (LIST INDIVIDUALLY ON BUDGET EXPLANATION PAGE) - ------------------------------------------------------------------------------------------------------------------------------------ 7. ( ) TOTAL SENIOR PERSONNEL (1-6) - ------------------------------------------------------------------------------------------------------------------------------------ 8. OTHER PERSONNEL (SHOW NUMBERS IN BRACKETS) - ------------------------------------------------------------------------------------------------------------------------------------ 1. ( ) POST DOCTORAL ASSOCIATES - ------------------------------------------------------------------------------------------------------------------------------------ 2. ( ) OTHER PROFESSIONAL (TECHNICIAN, PROGRAMMER, ETC.) - ------------------------------------------------------------------------------------------------------------------------------------ 3. ( ) GRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 4. ( ) UNDERGRADUATE STUDENTS - ------------------------------------------------------------------------------------------------------------------------------------ 5. ( ) SECRETARIAL - CLERICAL - ------------------------------------------------------------------------------------------------------------------------------------ 6. ( ) OTHER - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES AND WAGES (A+B) - ------------------------------------------------------------------------------------------------------------------------------------ C. FRINGE BENEFITS (IF CHARGED AS DIRECT COSTS) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL SALARIES, WAGES AND FRINGE BENEFITS (A+B+C) See Attached 358,176 123,873 482,049 - ------------------------------------------------------------------------------------------------------------------------------------ D. PERMANENT EQUIPMENT (LIST ITEM AND DOLLAR AMOUNT --------------------------------------------- FOR EACH ITEM) --------------------------------------------- --------------------------------------------- --------------------------------------------- TOTAL PERMANENT EQUIPMENT - ------------------------------------------------------------------------------------------------------------------------------------ E. TRAVEL 1. Domestic (incl. Canada and U.S. Possessions) - ------------------------------------------------------------------------------------------------------------------------------------ 2. Foreign --------------------------------------------------------------------------------------------------------- TOTAL TRAVEL - ------------------------------------------------------------------------------------------------------------------------------------ F. TRAINEE/PARTICIPANT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. STIPENDS (Itemize levels, types + totals on budget justification page) - ------------------------------------------------------------------------------------------------------------------------------------ 2. TUITION & FEES - ------------------------------------------------------------------------------------------------------------------------------------ 3. TRAINEE TRAVEL - ------------------------------------------------------------------------------------------------------------------------------------ 4. OTHER (fully explain on justification page) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL PARTICIPANTS ( ) TOTAL COST - ------------------------------------------------------------------------------------------------------------------------------------ G. OTHER DIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ 1. MATERIALS AND SUPPLIES - ------------------------------------------------------------------------------------------------------------------------------------ 2. PUBLICATION COSTS/DOCUMENTATION/DISSEMINATION - ------------------------------------------------------------------------------------------------------------------------------------ 3. CONSULTANT SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 4. COMPUTER (ADPE) SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ 5. SUBCONTRACTS - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER Support Expense & Miscellaneous ODC's 9,426 9,426 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER DIRECT COSTS 9,426 9,426 - ------------------------------------------------------------------------------------------------------------------------------------ H. TOTAL DIRECT COSTS (A THROUGH G) 367,602 123,873 491,475 - ------------------------------------------------------------------------------------------------------------------------------------ I. INDIRECT COSTS (SPECIFY RATE AND BASE) 1,881 1,881 TOTAL INDIRECT COSTS - ------------------------------------------------------------------------------------------------------------------------------------ J. TOTAL DIRECT AND INDIRECT COSTS (H+I) 369,484 123,873 493,356 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ K. AMOUNT OF ANY REQUIRED COST SHARING FROM NON- FEDERAL SOURCES - ------------------------------------------------------------------------------------------------------------------------------------ L. TOTAL COST OF PROJECT (J+K) 369,484 123,873 493,356 - ------------------------------------------------------------------------------------------------------------------------------------ DOE Applicant TOTAL - ------------------------------------------------------------------------------------------------------------------------------------
16 APPENDIX C Intellectual Property Provisions - Assistance LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS, OR FOREIGN ORGANIZATIONS (Research, Development or Demonstration)
Clause Reference Title Page 01. 48 C.F.R 52.227-1 Authorization and Consent (JUL 1995), 1 Alternate I 02. 48 C.F.R 52.227-2 Notice and Assistance Regarding Patent and l Copyright Infringement (AUG 1996) This clause is not applicable if the award is for less than $ 100, 000. 03. 48 C.F.R 952.227-9 Refund of Royalties (FEB 1995) 1 04. 48 C.F.R 952.227-13 Patent Rights -- Acquisition by the Government 2 (FEB 1995) 05. 48 C.F.R 52.227-14 Rights in Data -- General (JUN 1987), with 10 Alternates I and V, and paragraph (d)(3) as supplemented by 10 C.F.R. Part 600.27 If this award requires the use or delivery of limited rights data and/or restricted computer software, Alternates II and III are incorporated, unless modified upon recommendation of Patent Counsel. 06. 48 C.F.R 52.227-16 Additional Data Requirements (JUN 1987) 15 07. 48 C.F.R 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 16 Attachment 1 (for reference): Patent Rights -- Retention by Contractor (Short Form) (FEB 1995); 48 C.F.R 952.227-11
52.227-1 Authorization and Consent; Alternate I (APR 1984) AUTHORIZATION AND CONSENT (a) The Government authorizes and consents to all use and manufacture of any invention described in and covered by a United States patent in the performance of this contract or any subcontract at any tier. (b) The Contractor agrees to include, and require inclusion of, this clause, suitably modified to identify the parties, in all subcontracts at any tier for supplies or 17 services (including construction, architect-engineer services, and materials, supplies, models, samples, and design or testing services expected to exceed the simplified acquisition threshold); however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, does not affect this authorization and consent. (End of clause) 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement. NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996) (a) The Contractor shall report to the Contracting Officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of any claim or suit against the Government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the Contractor shall furnish to the Government, when requested by the Contracting Officer, all evidence and information in possession of the Contractor pertaining to such suit or claim. Such evidence and information shall be furnished at the expense of the Government except where the Contractor has agreed to indemnify the Government. (c) The Contractor agrees to include, and require inclusion of, this clause in all subcontracts at any tier for supplies or services (including construction and architect-engineer subcontracts and those for material, supplies, models, samples, or design or testing services) expected to exceed the simplified acquisition threshold at FAR 2.101. (End of clause) 952.227-9 Refund of Royalties REFUND OF ROYALTIES (FEB 1995) (a) The contract price includes certain amounts for royalties payable by the Contractor or subcontractors or both, which amounts have been reported to the Contracting Officer. 18 (b) The term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract hereunder. The term also includes any costs or charges associated with the access to, use of, or other right pertaining to data that represented to be proprietary and is related to the performance of this contract or the copying of such data or data that is copyrighted. (c) The Contractor shall furnish to the Contracting Officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. (d) The Contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the Contracting Officer to be properly chargeable to the Government and allocable to the contract. To the extent that any royalties that are included in the contract price are not, in fact, paid by the Contractor or are determined by the Contracting Officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. Repayment or credit to the Government shall be made as the Contracting Officer directs. The approval by DOE of any individual payments or royalties shall not prevent the Government from contesting at any time the enforceability, validity, scope of, or title to, any patent or the proprietary nature of data pursuant to which a royalty or other payment is to be or has been made. (e) If, at any time within 3 years after final payment under this contract, the Contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer of that fact and shall reimburse the Government in a corresponding amount. (f) The substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (End of clause) 19 952.227-13 Patent Rights - Acquisition by the Government PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995) (a) Definitions. "Invention", as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). "Practical application", as used in this clause, means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. "Subject invention", as used in this clause, means any invention of the Contractor conceived or first actually reduced to practice in the course of or under this contract. "Patent Counsel", as used in this clause, means the Department of Energy Patent Counsel assisting the procuring activity. "DOE patent waiver regulations", as used in this clause, means the Department of Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations. "Agency licensing regulations" and "applicable agency licensing regulations", as used in this clause, mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocations of principal rights. (1) Assignment to the Government. The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each subject invention, except to the extent that rights are retained by the Contractor under subparagraph (b)(2) and paragraph (d) of this clause. 20 (2) Greater rights determinations. (i) The contractor, or an employee-inventor after consultation with the Contractor, may request greater rights than the nonexclusive license and the foreign patent rights provided in paragraph (d) of this clause on identified inventions in accordance with the DOE patent waiver regulations. A request for a determination of whether the Contractor or the employee-inventor is entitled to acquire such greater rights must be submitted to the Patent Counsel with a copy to the Contracting Officer at the time of the first disclosure of the invention pursuant to subparagraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the Contracting Officer for good cause shown in writing by the Contractor. Each determination of greater rights under this contract shall be subject to paragraph (c) of this clause, unless otherwise provided in the greater rights determination, and to the reservations and conditions deemed to be appropriate by the Secretary of Energy or designee. (ii) Within two (2) months after the filing of a patent application, the Contractor shall provide the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and, promptly upon issuance of a patent, provide the patent number and issue date for any subject invention in any country for which the Contractor has been granted title or the right to file and prosecute on behalf of the United States by the Department of Energy. (iii) Not less than thirty (30) days before the expiration of the response period for any action required by the Patent and Trademark Office, notify the Patent Counsel of any decision not to continue prosecution of the application. (iv) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (c) Minimum rights acquired by the Government. (1) With respect to each subject invention to which the Department of Energy grants the Contractor principal or exclusive rights, the Contractor agrees as follows: 21 (i) The Contractor hereby grants to the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced each subject invention throughout the world by or on behalf of the Government of the United States (including any Government agency). (ii) The Contractor agrees that with respect to any subject invention in which DOE has granted it title, DOE has the right in accordance with the procedures in the DOE patent waiver regulations to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if it determines that- (A) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (B) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (C) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (D) Such action is necessary because the agreement required by paragraph (i) of this clause has neither been obtained nor waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (iii) The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization of a subject invention or on efforts at obtaining such utilization that are being made by the 22 Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by that agency in accordance with subparagraph (c)(l)(ii) of this clause. To the extent data or information supplied under this section is considered by the Contractor, its licensee, or assignee to be privileged and confidential and is so marked, the Department of Energy agrees that, to the extent permitted by law, it will not disclose such information to persons outside the Government. (iv) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, to refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the Government, and to provide for such refund in any instrument transferring rights in the invention to any party. (v) The Contractor agrees to provide for the Government's paid-up license pursuant to subparagraph (c)(1)(i) of this clause in any instrument transferring rights in a subject invention and to provide for the granting of licenses as required by subparagraph (c)(1)(ii) of this clause, and for the reporting of utilization information as required by subparagraph (c)(1)(iii) of this clause, whenever the instrument transfers principal or exclusive rights in a subject invention. (2) Nothing contained in this paragraph (c) shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention. (d) Minimum rights to the Contractor. (1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention and any resulting patent in which the Government obtains title, unless the Contractor fails to disclose the subject invention within the times specified in subparagraph (e)(2) of this clause. The Contractor's license extends to its 23 domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the tune the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical applications and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR Part 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (4) The Contractor may request the right to acquire patent rights to a subject invention in any foreign country where the Government has elected not to secure such rights, subject to the conditions in subparagraphs (d)(4)(i) through (d)(4)(vii) of this clause. Such request must be made in writing to the Patent Counsel as part of the disclosure required by subparagraph (e)(2) of this clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will be based on a determination that this would best serve the national interest. (i) The recipient of such rights, when specifically requested by DOE, and three years after issuance of a foreign patent disclosing the subject invention, shall furnish DOE a report stating: 24 (A) The commercial use that is being made, or is intended to be made, of said invention, and (B) The steps taken to bring the invention to the point of practical application or to make the invention available for licensing. (ii) The Government shall retain at least, an irrevocable, nonexclusive, paid-up license to make, use, and sell the invention throughout the world by or on behalf of the Government (including any Government agency) and States and domestic municipal governments, unless the Secretary of Energy or designee determines that it would not be in the public interest to acquire the license for the States and domestic municipal governments. (iii) If noted elsewhere in this contract as a condition of the grant of an advance waiver of the Government's title to inventions under this contract, or, if no advance waiver was granted but a waiver of the Government's title to an identified invention is granted pursuant to subparagraph (b)(2) of this clause upon a determination by the Secretary of Energy that it is in the Government's best interest, this license shall include the right of the Government to sublicense foreign governments pursuant to any existing or future treaty or agreement with such foreign governments. (iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right to terminate the foreign patent rights granted in this subparagraph (d)(4) in whole or in part unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee that effective steps necessary to accomplish substantial utilization of the invention have been taken or within a reasonable time will be taken. (v) Subject to the rights granted in subparagraphs (d)(l), (2), and (3) of this clause, the Secretary of Energy or designee shall have the right, commencing four years after foreign patent rights are accorded under this subparagraph (d)(4), to require the granting of a nonexclusive or partially exclusive license to a responsible applicant or applicants, upon terms reasonable under the circumstances, and in appropriate circumstances to terminate said foreign patent rights in 25 whole or in part, following a hearing upon notice thereof to the public, upon a petition by an interested person justifying such hearing: (A) If the Secretary of Energy or designee determines, upon review of such material as he deems relevant, and after the recipient of such rights or other interested person has had the opportunity to provide such relevant and material information as the Secretary or designee may require, that such foreign patent rights have tended substantially to lessen competition or to result in undue market concentration in any section of the United States in any line of commerce to which the technology relates; or (B) Unless the recipient of such rights demonstrates to the satisfaction of the Secretary of Energy or designee at such hearing that the recipient has taken effective steps, br within a reasonable time thereafter is expected to take such steps, necessary to accomplish substantial utilization of the invention. (vi) If the contractor is to file a foreign patent application on a subject invention, the Government agrees, upon written request, to use its best efforts to withhold publication of such invention disclosures for such period of time as specified by Patent Counsel, but in no event shall the Government or its employees be liable for any publication thereof. (vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of this clause, the contractor or inventor agrees to convey to the Government, upon request, the entire right, title, and interest in any foreign country in which the contractor or inventor fails to have a patent application filed in a timely manner or decides not to continue prosecution or to pay any maintenance fees covering the invention. To avoid forfeiture of the patent application or patent, the contractor or inventor shall, not less than 60 days before the expiration period for any action required by any patent office, notify the Patent Counsel of such failure or decision, and deliver to the Patent Counsel, the executed instruments necessary for the conveyance specified in this paragraph. (e) Invention identification, disclosures, and reports. 26 (1) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness. (2) The Contractor shall disclose each subject invention to the DOE Patent Counsel with a copy to the Contracting Officer within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters or, if earlier, within 6 months after the Contractor becomes aware that a subject invention has been made, but in any event before any on sale, public use, or publication of such invention known to the Contractor. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale, or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to DOE, the Contractor shall promptly notify Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. The report should also include any request for a greater rights determination in accordance with subparagraph (b)(2) of this clause. When an invention is disclosed to DOE under this paragraph, it shall be deemed to have been made in the manner specified in Sections (a)(1) and (a)(2) of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the invention is disclosed that is was not so made. (3) The Contractor shall furnish the Contracting Officer the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the 27 contract, listing subject inventions during that period, and certifying that all subject inventions have been disclosed (or that there are not such inventions) and that the procedures required by subparagraph (e)(1) of this clause have been followed. (ii) A final report, within 3 months after completion of the contracted work listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (4) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (e)(2) of this clause. (5) The Contractor agrees, subject to FAR 27.302(j), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) Examination of records relating to inventions. (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by subparagraphs (e)(1) and (4) of this clause; 28 (iii) The Contractor and its inventors have complied with the procedures. (2) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved. (g) Withholding of payment (NOTE: This paragraph does not apply to subcontracts). (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to-- (i) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause; (ii) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to subparagraph (e)(l) of this clause; (iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this clause; (iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(i) of this clause; or (v) Provide the information regarding subcontracts pursuant to subparagraph (h)(4) of this clause. (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies 29 exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of subject inventions required by subparagraph (e)(2) of this clause, and acceptable final report pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights. (h) Subcontracts. (1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably modified to identify the parties) in , all subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work to be performed by a small business firm or domestic nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the contractor shall include this clause (suitably modified to identify the parties). The contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor - (i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter, and (ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer. 30 (3) In the case of subcontracts at any tier, DOE, the subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (5) The contractor shall identify all subject inventions of the subcontractor of which it acquires knowledge in the performance of this contract and shall notify the Patent Counsel, with a copy to the contracting officer, promptly upon identification of the inventions. (i) Preference United States industry. Unless provided otherwise, no Contractor that receives title to any subject invention and no assignee of any such Contractor shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement may be waived by the Government upon a showing by the Contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) Atomic energy. (1) No claim for pecuniary award of compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted with respect to any invention or discovery made or conceived in the course of or under this contract. (2) Except as otherwise authorized in writing by the Contracting Officer, the Contractor will obtain patent agreements to effectuate the provisions of subparagraph (e)(l) of this clause from all persons who perform 31 any part of the work under this contract, except nontechnical personnel, such as clerical employees and manual laborers. (k) Background Patents. (1) Background Patent means a domestic patent covering an invention or discovery which is not a subject invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture, or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. (2) The Contractor agrees to and does hereby grant to the Government a royalty-free, nonexclusive license under any background patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (3) The Contractor also agrees that upon written application by DOE, it will grant to responsible parties, for purposes of practicing a subject of this contract, nonexclusive licenses under any background patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not be obligated to license any background patent if the Contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (i) a competitive alternative to the subject matter covered by said background patent is commercially available or readily introducible from one or more other sources; or 32 (ii) the Contractor or its licensees are supplying the subject matter covered by said background patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (l) Publication. It is recognized that during the course of the work under this contract, the Contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of DOE or the Contractor, patent approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. (m) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the Contractor fails to report to Patent Counsel within six months after the time the Contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by subparagraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in subparagraph (m)(l) of this clause, the Contractor: (i) Prepares a written decision based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the invention is not a subject invention, the Contractor nevertheless discloses the invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer; or 33 (iii) Establishes that the failure to disclose did not result from the Contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Secretary of Energy or designee to be forfeited (such determination to be a final decision under the Disputes clause of this contract), the Contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph (m) shall be in addition to and shall not supersede other rights and remedies which the Government may have with respect to subject inventions. (End of clause) 52.227-14 Rights in Data - General, with Alternates I and V, and paragraph (d) (3) RIGHTS IN DATA - GENERAL (JUN 1987) (a) Definitions. ----------- "Computer software," as used in this clause, means computer programs, computer data bases, and documentation thereof. "Data," as used in this clause, means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. The terms does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information. "Form, fit, and function data," as used in this clause, means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, as well as data identifying source, size, configuration, mating, and attachment characteristics, functional characteristics, and performance requirements; except that for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithm, process, formula, and flow charts of the software. "Limited rights data," as used in this clause, means data (other than computer software) developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. 34 "Technical data," as used in this clause, means data (other than computer software) which are of a scientific or technical nature. "Restricted computer software," as used in this clause, means computer software developed at private expense and that is a trade secret; is commercial or financial and is confidential or privileged; or is published copyrighted computer software; including minor modifications of such computer software. "Unlimited rights," as used in this clause, means the right of the Government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so. "Limited rights," as used in this clause, means the rights of the Government in limited rights data as set forth in the Limited Rights Notice of subparagraph (g)(2) if included in this clause. "Restricted rights," as used in this clause, means the rights of the Government in restricted computer software, as set forth in a Restricted Rights Notice of subparagraph (g)(3) if included in this clause, or as otherwise may be provided in a collateral agreement incorporated in and made part of this contract, including minor modifications of such computer software. (b) Allocation of rights. --------------------- (1) Except as provided in paragraph (c) below regarding copyright, the Government shall have unlimited rights in: (i) Data first produced in the performance of this contract; (ii) Form, fit, and function data delivered under this contract; (iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair items, components, or processes delivered or furnished for use under this contract; and (iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) below. 35 (2) The Contractor shall have the right to: (i) Use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, unless provided otherwise in paragraph (d) below; (ii) Protect from unauthorized disclosure and use those data which are limited rights data or restricted computer software to the extent provided in paragraph (g) below; (iii) Substantiate use of, add or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) below; and (iv) Establish claim to copyright subsisting in data first produced in the performance of this contract to the extent provided in subparagraph (c)(l) below. (c) Copyright. --------- (1) Data first produced in the performance of this contract. Unless provided otherwise subparagraph (d) below, the Contractor may establish, without prior approval of the Contracting Officer, claim to copyright subsisting in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings or similar works. The prior, express written. permission of the Contracting Officer is required to establish claim to copyright subsisting in all other data first produced in the performance of this contract. When claim to copyright is made, the Contractor shall affix the applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of Government sponsorship (including contract number) to the data when such data are delivered to the Government, as well as when the data are published or deposited for registration as a published work in the U. S. Copyright Office. For data other than computer software the Contractor grants to the Government, and others acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government. For computer software, the Contractor grants to the Government and others acting in its behalf, a paid-up nonexclusive, irrevocable worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly by or on behalf of the Government. 36 (2) Data not first produced in the performance of this contract. The Contractor shall not, without prior written. permission of the Contracting Officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and which contains the copyright notice of 17 U.S.C. 401 and 402, unless the Contractor identifies such data and grants to the Government, or acquires on its behalf, a license of the same scope as set forth in subparagraph (1) above; provided, however, that if such data are computer software the Government shall acquire a copyright license as set forth in subparagraph (g)(3) below if included in this contract or as otherwise may be provided in a collateral agreement incorporated in or made part of this contract. (3) Removal of copyright notices. The Government agrees not to remove any copyright notices place on data pursuant to this paragraph (c), and to include such notices on all reproductions of the data. (d) Release, publication and use of data. ------------------------------------- (1) The Contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the Contractor in the performance of this contract, except to the extent such data may be subject to the Federal export control or national security laws or regulations, or unless otherwise provided below in this paragraph or expressly set forth in this contract. (2) The Contractor agrees that to the extent it receives or is given access to data necessary for the performance of this contract which contain restrictive markings, the Contractor shall treat the data in accordance with such markings unless otherwise specifically authorized in writing by the Contracting Officer. (3) The Contractor agrees not to establish claim to copyright in computer software first produced in the performance of this contract without prior written permission of the Contracting Officer. When such permission is granted, the Contracting Officer shall specify appropriate terms to assure dissemination of the software. The Contractor shall promptly deliver to the Contracting Officer or to the Patent Counsel designated by the Contracting Officer a duly executed and approved instrument fully confirmatory of all rights to which the Government is entitled, and other terms pertaining to the computer software to which claim to copyright is made. (e) Unauthorized marking of data. ----------------------------- (1) Notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices 37 specified in subparagraphs (g)(2) or (g)(3) below and use of such is not authorized by this clause, or if such data bears any other restrictive or limiting markings not authorized by this contract, the Contracting Officer may at any time either return the data to the Contractor, or cancel or ignore the markings. However, the following procedures shall apply prior to canceling or ignoring the markings. (i) The Contracting Officer shall make written inquiry to the contractor affording the Contractor 30 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) If the Contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 30-day period (or a longer time not exceeding 90 days approved in writing by the Contracting Officer for good cause shown), the Government shall have the right to cancel or ignore the markings at any time after said period and the data will not longer be made subject to any disclosure prohibitions. (iii) If the Contractor provides written justification to substantiate the propriety of the markings within the period set in subdivision (i) above, the Contracting Officer shall consider such written justification and determine whether or not the markings are to be canceled or ignore. If the Contracting Officer determines that the markings are authorized, the Contractor shall be so notified in writing. If the Contracting Officer determines, with concurrence of the Head of the Contracting Activity, that the markings are not authorized, the Contracting Officer shall furnish the Contractor a written determination, which determination shall become the final agency decision regarding the appropriateness of the markings unless the Contractor files suit in a court of competent jurisdiction within 90 days of receipt of the Contracting Officer's decision. The Government shall continue to abide by the markings under this subdivision (iii) until final resolution of the matter either by the Contracting Officer's determination becoming final (in which instance the Government shall thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) The time limits in the procedures set forth in subparagraph (1) above may be modified in accordance with agency regulations implementing the Freedom of Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder. (3) This paragraph (e) does not apply if this contract is for a major system or for support of a major system by a civilian agency other than NASA and the U.S. 38 Coast Guard subject to the provisions of Title III of the Federal Property and Administrative Services Act of 1949. (4) Except to the extent the Government's action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the Contractor is not precluded by this paragraph (e) from bringing a claim under the Contract Disputes Act, including pursuant to the Disputes clause of this contract, as applicable, that may arise as the result of the Government removing or ignoring authorized markings on data delivered under this contract. (f) Omitted or incorrect markings. ------------------------------ (1) Data delivered to the Government without either the limited rights or restricted rights notice as authorized by paragraph (g) below, or the copyright notice required by paragraph (c) above, shall be deemed to have been furnished with unlimited rights, and the Government assumes no liability for disclosure, use, or reproduction of such data. However, to the extent the data has not been disclosed without restriction outside the Government, the Contractor may request, within 6 months (or a longer time approved by the Contracting Officer for good cause shown) after delivery of such data, permission to have notices placed on qualifying data at the Contractor's expense, and the Contracting Officer may agree to do so if the Contractor: (i) Identifies the data to which the omitted notice is to be applied; (ii) Demonstrates that the omission of the notice was inadvertent; (iii) Establishes that the use of the proposed notice is authorized; and (iv) Acknowledges that the Government has no liability with respect to the disclosure, use, or reproduction of any such data made prior to the addition of the notice or resulting from the omission of the notice. (2) The Contracting Officer may also (i) permit correction at the Contractor's expense of incorrect notices if the Contractor identifies the data on which correction of the notice is to be made, and demonstrates that the correct notice is authorized, or (ii) correct any incorrect notices. (g) Protection of limited rights data and restricted computer software. ------------------------------------------------------------------- 39 (1) When data other than that-listed in subparagraphs (b)(1)(i), (ii), and (iii) above are specified to be delivered under this contract and qualify as either limited rights data or restricted computer software, if the Contractor desires to continue protection of such data, the Contractor shall withhold such data and not furnish them to the Government under this Contract. As a condition to this withholding, the Contractor shall identify the data being withheld and furnish form, fit, and function data in lieu thereof. Limited rights data that are formatted as a computer data base for delivery to the Government is to be treated as limited rights data and not restricted computer software. (2) [Reserved.] (3) [Reserved.] (h) Subcontracting. --------------- The Contractor has the responsibility to obtain from its subcontractors all data and rights therein necessary to fulfill the Contractor's obligations to the Government under this contract. If a subcontractor refuses to accept terms affording the Government such rights, the Contractor shall promptly bring such refusal to the attention of the Contracting Officer and not proceed with subcontract award without further authorization. (i) Relationship to patents. ------------------------ Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government. (j) The Contractor agrees, except as may be otherwise specified in this contract for specific data items listed as not subject to this paragraph, that the Contracting Officer or an authorized representative may, up to three years after acceptance of all items to be delivered under this contract, inspect at the Contractor's facility any data withheld pursuant to paragraph (g)(1) above, for purposes of verifying the Contractor's assertion pertaining to the limited rights or restricted rights status of the data or for evaluating work performance. Where the Contractor whose data are to be inspected demonstrates to the Contracting Officer that there would be a possible conflict of interest if the inspection where made by a particular representative, the Contracting Officer shall designate an alternate inspector. (End of clause) 40 ALTERNATE II (g)(2) Notwithstanding subparagraph (g)(l) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. ________ (and subcontract No. ________, if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: -[Agencies may list additional purposes as set forth in 27.404(d)(1) or if none, so state] (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) ALTERNATE III (g)(3)(i) Notwithstanding subparagraph (g)(l) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the Notice: RESTRICTED RIGHTS NOTICE (JUN 1987) 41 (a) This computer software is submitted with restricted rights under Government Contract No. ________ (and subcontract ________, if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computed may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any others rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) 42 (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof. RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. ___________ (and subcontract ___________ if appropriate) with _____________ (name of Contractor and subcontractor)." (End of notice) (iii) If restricted computer software is delivered with the copyright notice of 17 U.S.C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." (End of clause) 48 CFR 52.227-16 Additional Data Requirements ADDITIONAL DATA REQUIREMENTS (JUN 1987) (a) In addition to the data (as defined in the clause at 52.227-14, Rights in Data-General clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the Contracting Officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) The Rights in Data-General clause or other equivalent included in this contract is applicable to all data ordered under this Additional Data Requirements clause. Nothing contained in this clause shall require the Contractor to deliver any data the withholding of which is authorized by the Rights in Data-General or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. 43 (c) When data are to be delivered under this clause, the Contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) The Contracting Officer may release the Contractor from the requirements of this clause for specifically identified data items at any time during the 3-year period set forth in paragraph (a) of this clause. (End of clause) 48 CFR 52.227-23 Rights to Proposal Data RIGHTS TO PROPOSAL DATA (TECHNICAL)(JUN 1987) Except for data contained on pages ________, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the Government shall have unlimited rights (as defined in the "Rights in Data-General" clause contained in this contract) in and to the technical data contained in the proposal dated ____________ upon which this contract is based. Attachment 1: 952.227-11 Patent Rights - Retention by the Contractor (short form) PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995) (a) Definitions. (1) "Invention" means any invention or discovery which is or may be patentable or otherwise protectable under title 35 of the United States Code, or any novel variety of plant whip is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any invention means the conception of first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 44 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that is benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41 (d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (7) "Agency licensing regulations" and "agency regulations concerning the licensing of Government-owned inventions" mean the Department of Energy patent licensing regulations at 10 CFR Part 781. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure; election of title, and filing of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Department of Energy (DOE) within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to DOE shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the 45 invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the DOE, the Contractor will promptly notify that agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying DOE within 2 years of disclosure to DOE. However, in any case where publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by DOE to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within 1 year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy order. (4) Requests for extension of the time for disclosure, election, and filing under subparagraphs (c)(l), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention - (1) If the Contractor fails to disclose or elect title to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain title; provided, that DOE may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified times. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the Federal agency, the Contractor shall continue to retain title in that country. 46 (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Federal agency, except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations. This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, DOE will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations concerning the licensing of Government owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the 47 Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraph (d) of this clause and to enable the government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by the United States Department of Energy. The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (2) The contractor shall include in all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work the patent rights clause at 952.227-13. 48 (3) In the case of subcontracts, at any tier, DOE, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and DOE with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received, by the Contractor, and such other data and information as DOE may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceeding undertaken by that agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(4), DOE agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and, if the Contractor, assignee, or exclusive licensee refuses such a request, DOE has the right to grant such a license itself if DOE determines that - (1) Such action is necessary because the Contractor or assignee has not taken; or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs 49 which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that - (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when DOE deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education; and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the Contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractor's licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when that Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). 50 (l) Communications. (1) The contractor shall direct any notification, disclosure, or request to DOE provided for in this clause to the DOE patent counsel assisting the DOE contracting activity, with a copy of the communication to the Contracting Officer. (2) Each exercise of discretion or decision provided for in this clause, except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is not a claim or dispute and is not subject to the Contract Disputes Act of 1978. (3) Upon request of the DOE Patent Counsel or the Contracting Officer, the Contractor shall provide any or all of the following: (i) a copy of the patent application, filing date, serial number and title, patent number, and issue date for any subject invention in any country in which the contractor has applied for a patent; (ii) a report, not more often than annually, summarizing all subject inventions which were disclosed to DOE individually during the reporting period specified; or (iii) a report, prior to closeout of the contract, listing all subject inventions or stating that there were none. (End of clause) 51 APPENDIX D GENERAL PROVISIONS FOR SUBAWARDS 1. INTELLECTUAL PROPERTY PROVISIONS The patent and data provisions for this Subaward, found at Appendix C, are subject to revision upon the grant of an Advance Patent Waiver to IFC from DOE. If an Advanced Patent Waiver is submitted and not approved, as specified in 10 CFR Part 600.25(d), ADL may initiate a termination of this Subaward. Such initiation must include a notice to IFC in writing, specifying the reason for requesting the termination, the proposed effective date of the termination, and appropriate budget revision. Any resulting termination shall be in accordance with all applicable termination provisions of 10 CFR Part 600, and this Subaward. 2. PROJECT SITE AND ACCESS a. The project shall be performed principally at: A D. Little, Inc., Cambridge, MA b. At the request of the DOE Contracting Officer or Project Officer or IFC, ADL shall provide Government officials and interested members of the public, as determined by DOE, with access to the project site to observe project operations, except where access must be limited due to valid safety or security concerns. Pertaining to the interested members of the public, access may generally be restricted to certain areas such that proprietary information and expertise is not compromised, and ADL shall have access approval rights but shall not unreasonably withhold such approval. Such access shall be at reasonable times, be the subject of reasonable prior notice by DOE, and with reasonable limitations on the number of people during each visit. 3. PROPERTY STANDARDS AND INVENTORY a. The uniform property standards governing management and disposition of property furnished by the Federal Government, or whose cost is charged to this financial assistance Subaward, are set forth in 10 CFR Part 600.130 through 137. ADL shall observe these standards under 52 this Subaward, and shall not impose additional requirements upon itself or its subrecipients, unless specifically required by federal statute or program regulations. The ADL may use its own property management standards and procedures, provided they conform to the standards at 10 CFR 600.130 through 137. b. If ADL acquires federally-owned property under this Subaward whether fabricated, furnished or purchased with Capital Equipment Funds, then a listing of such property shall be submitted on DOE Form 4300.3, Summary Report of DOE-Owned Plant & Capital Equipment, to the IFC Subcontract Administrator within thirty (30) days after February 28 of each year and within thirty (30) days after the project period ends. The report must separately identify items which were fabricated, furnished, or purchased with Capital Equipment Funds under this Subaward. ADL shall submit a final inventory listing as part of close out procedures. 4. NONDISCRIMINATION This Subaward is subject to the provisions of 10 CFR 1040.4(b), Nondiscrimination in Federally Assisted Programs. 5. PUBLIC ACCESS TO INFORMATION The ADL recognizes that any documents it submits to 1FC and/or DOE under this Subaward are subject to public disclosure under the Freedom of Information Act ("Act"), as amended, and the DOE Implementing Regulations (10 CFR 1004). The Act requires public access to information in DOE's possession, unless that information is protected under an exemption to the Act and does not require recipients, their subrecipients or their contractors to permit public access to their records. An exemption to the Act protects trade secrets and confidential, commercial and financial information submitted by ADL. Prior to responding to a request for ADL's information in the possession of DOE, DOE will obtain ADL's views on whether the information should be exempted. 7. SUSPENSION AND TERMINATION a. Subawards may be suspended, or terminated in whole or in part, only if paragraph (a)(1), (2), (3), or (4) of this provision apply. 53 1. By DOE and/or IFC, if ADL materially fails to comply with the terms and conditions of a Subaward, or is debarred from providing goods or services to the Federal Government. Normally, DOE and/or IFC action to suspend or terminate an award for cause will be taken only after DOE and/or IFC has informed ADL of any deficiency on its part and given an opportunity to correct it. However, DOE and/or IFC may immediately suspend or terminate the Subaward without prior notice when it believes such action is necessary to protect the interests of the Government. 2. By DOE and /or IFC with the consent of ADL, in which case the two parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. 3. By DOE and/or IFC, if DOE and/or IFC has notice of or has reasonable cause to believe that ADL is insolvent due to facts which indicate the ADL is unable to pay its obligations as they mature in the ordinary course of business, or if ADL, its parent, or creditors of ADL, files a petition in bankruptcy against, or if a court of competent jurisdiction appoints a receiver, trustee, liquidator or conservator with control over the business affairs of ADL. In such instances, DOE and/or IFC may terminate the Subaward in whole or in part, or suspend payments, if it is determined in the best interests of DOE and/or IFC to do so. 4. By ADL upon sending to DOE and/or IFC written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. However, if DOE and/or IFC determines in the case of a partial termination that the reduced or modified portion of the Subaward will not accomplish the purposes for which the Subaward was made, it may terminate the Subaward in its entirety under the paragraph (a)(1) or (2) of this provision. b. If costs are incurred under a Subaward , the responsibilities of ADL referred to in 10 CFR 600.171(a), including those property management as applicable, shall be considered in the termination of the Subaward, and provision shall be made for continuing responsibilities of ADL after termination, as appropriate. 54 8. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS Notwithstanding any other provisions of this Subaward, including but not limited to FAR 31.205-31, when applicable, as incorporated by Financial Assistance Rule 600.127 (a), the Government and/or IFC shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioned (D&D) of any of ADUs facilities, or (ii) any costs which may be incurred by ADL in connection with the D&D if any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Subaward. 9. PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS - FISCAL YEAR 1997 It is the sense of Congress that, to the greatest extent practicable, all equipment and products purchased with fiends made available under this Subaward should be American-made. 10. PARTIAL FUNDING This Subaward is partially funded on a cost reimbursement basis without fee or profit. The total estimated cost of the project to be conducted is $2,331,653 of which the estimated cost to IFC is $1,746,335 and the estimated cost to ADL is $585,318. The cumulative IFC obligation for the budget period through February 28, 1998 is $220,000. ADL shall not be obligated to continue performance of the project beyond the total funding of $220,000 provided, however, that once the cumulative IFC obligations for the current budget period shall be increased to a total of $1,746,335, ADL shall be expected to bring the project to its conclusion within the amount of $2,331,653 and there is no commitment by IFC to provide any additional funding to ADL. 55 U.S. DEPARTMENT OF ENERGY NOTICE OF FINANCIAL ASSISTANCE AWARD (See Instructions on Reverse) Under the authority of Public Law 95-91, U.S. Department of Energy Organization Act and subject to legislation, regulations and policies applicable to (cite legislative program title): Advanced Automotive Technologies and Transportation Technologies - --------------------------------------------------------------------------------------------------------------------------------- 1. PROJECT TITLE 2. INSTRUMENT TYPE Development of Second Generation Scroll Compressor Expander Module for PEM Fuel Cell Pressurization [_] GRANT [X] COOPERATIVE AGREEMENT - --------------------------------------------------------------------------------------------------------------------------------- 3. RECIPIENT (Name, address, zip code, area code and telephone no.) 4. INSTRUMENT NO. 5. AMENDMENT NO. -------------------------------------------------------- Arthur D. Little, Inc. 6. BUDGET FROM: 09/30/1997 7. BUDGET FROM: 09/301997 Acorn Park Cambridge, MA 02140-2390 [(617) 498-5636] - --------------------------------------------------------------------------------------------------------------------------------- 8. RECIPIENT PROJECT DIRECTOR (Name and telephone no.) 10. TYPE OF AWARD John T. Dieckmann [(617) 496-5818] - --------------------------------------------------------------------- [_] New [_] Continuation [_] Renewal 9. RECIPIENT BUSINESS OFFICER (Name and telephone no.) [X] Revision [_] Supplement [_] Other Judith Blinn [(617-498-5636] - ------------------------------------------------------------------------------------------------------------------------------------ 11. DOE PROJECT OFFICER (Name, address, zip code, telephone no.) 12. ADMINISTERED FOR DOE BY (Name, address, zip code, telephone no.) Steven G. Chalk U.S. Department of Energy Denise Clarke (630) 252-2107 EE-32 1000 Independence Ave., S.W. U.S. Department of Energy/ACQ 202/586-3388 Washington, DC 20585-0121 9800 South Cass Avenue Argonne, IL 60439 - ------------------------------------------------------------------------------------------------------------------------------------ 13. RECIPIENT TYPE [_] STATE GOV'T [_] INDIAN TRIBAL GOV'T [_] HOSPITAL [X] FOR PROFIT [_] INDIVIDUAL ORGANIZATION ------------------ [_] LOCAL GOV'T [_] INSTITUTION OF [_] OTHER NONPROFIT [_] OTHER (Specify) HIGHER EDUCATION ORGANIZATION [X] C [_] P [_] SP ------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 14. ACCOUNTING AND APPROPRIATIONS DATA 15. EMPLOYER I.D. NUMBER/SSN - ---------------------------------------------------------------------------------------------------------- 04-1549700 a. Appropriation Symbol b. B & R Number c. FT/AFP/OC d. CFA Number - ------------------------------------------------------------------------------------------------------------------------------------ N/A N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ 16. BUDGET AND FUNDING INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ a. CURRENT BUDGET PERIOD INFORMATION b. CUMULATIVE DOE OBLIGATIONS - ------------------------------------------------------------------------------------------------------------------------------------ (1) DOE Funds Obligated This Action $ 0.00 (1) This Budget Per Period ----------- (2) DOE Funds Authorized for Carry Over $ 0.00 [Total of lines a.(1) and a.(3)] ____________ ----------- (3) DOE Funds Previously Obligated in this Budget Period ___________ (4) DOE Share of Total Approved Budget ___________ (2) Prior Budget Periods ____________ (5) Recipient Share of Total Approved Budget ___________ (6) Total Approved Budget ___________ (3) Project Period to Date [Total of lines b.(1) and b.(2)] ____________ - ------------------------------------------------------------------------------------------------------------------------------------ 17. TOTAL ESTIMATED COST OF PROJECT N/A ------------------------ (This is the current estimated cost of the project. It is not a promise to award nor an authorization to expend funds in this amount.) - ------------------------------------------------------------------------------------------------------------------------------------ 18. AWARD/AGREEMENT TERMS AND CONDITIONS This award/agreement consists of this form plus the following:__________________________ a. Special terms and conditions (if grant) or schedule, general provisions, special provisions (if cooperative agreement) b. Applicable program regulations (specify N/A (Date) ----------------------------- _______________________________ c. DOE Assistance Regulations, 10 CFR Part-600, as amended Subparts A and [X] B (Other than State and Local Governments) or [_] C (State and Local Governments) d. Application/proposal dated 3/14/97 , [X] as submitted [_] with changes as negotiated - ------------------------------------------------------------------------------------------------------------------------------------ 9. REMARKS See attached Page No. 2 of this Notice of Financial Assistance Award. - ------------------------------------------------------------------------------------------------------------------------------------ 20. EVIDENCE OF RECIPIENT ACCEPTANCE 21. AWARDED BY
56 /s/ Judith Blinn 8/21/98 /s/ Renee L. Irwin Jun 17 1998 - ----------------------------------------------------------- ------------------------------------------------------------ (Signature of Authorized Recipient Official) (Date) (Signature) (Date) Judith Blinn Renee L. Irwin - ----------------------------------------------------------- ------------------------------------------------------------- (Name) (Name) Acquisition and Assistance Group Contracting Officer Contracting Officer - ----------------------------------------------------------- ------------------------------------------------------------- (Title) (Title)
57 Amendment No. M002 Cooperative Agreement No. Page No. 2 19. REMARKS Effective for performance under this grant on or after the effective date of this amendment: a. The Federal Assistance Reporting Checklist, dated March 12, 1997 (Rev. 1), attached hereto, is substituted for the Federal Assistance Reporting Checklist, dated March 12, 1997, previously incorporated into this agreement. b. The Intellectual Property Provisions - Assistance for LARGE BUSINESS, STATE AND LOCAL ORGANIZATIONS (Research, Development or Demonstration), coded GLB-697, previously incorporated into this agreement, are revised as follows: (i) The clause in Attachment 1, 52.227-12 Patent Rights - Waiver (JUL 1996), as modified by 10 CFR 784, DOE Patent Waiver Regulations, is substituted for Clause 04., 48 CFR 952.227-13, Patent Rights - Acquisition by the Government (FEB 1995); and (ii) For Clause 05. Rights in Data - General, substitute the language for Alternate II and Alternate III specified in Attachment 2 for that presently used in the clause and add paragraph (k) in Attachment 3. All other terms and conditions remain unchanged. 58 U.S. Department of Energy FEDERAL ASSISTANCE REPORTING CHECKLIST
- ------------------------------------------------------------------------------------------------------------------------------------ 1. Identification Number: 2. Program/Project Title: Development of Second Generation DE-FC02-97EE50487 Scroll Compressor Expander Module for PEM Fuel Cell Pressurization - ------------------------------------------------------------------------------------------------------------------------------------ Recipient: Arthur D. Little, Inc. John T. Dieckmann - ------------------------------------------------------------------------------------------------------------------------------------ Reporting Requirements: Frequency No. of Copies Addresses ------------------------------------------------------------- Program/Project Management Reporting See Block 5 Below ------------------------------------------------------------- [_] DOE F 46CC.3. "Federal Assistance Milestone Plan" Y Orig. + 2 Orig. B, C, & D ------------------------------------------------------------- [_] DOE F 4600.3A. "Milestone Log" M Orig. + 2 Orig. B, C, & D ------------------------------------------------------------- [_] DOE F 4600.4. "Federal Assistance Budget Information A Orig. + 2 Orig. B, C, & D ------------------------------------------------------------- [_] Program Management Plan (See Attachment 1) Y Orig. + 4 Orig. B, 2cy to C & D ------------------------------------------------------------- [_] DOE F 4600.5. "Federal Assistance Program/Project Status Report" M Orig. + 2 Orig. B, C, & D ------------------------------------------------------------- [_] SF-269A, "Financial Status Report" Long Form M Orig. + 2 Orig. B, C, & E ------------------------------------------------------------- TECHNICAL INFORMATION REPORTING ------------------------------------------------------------- [_] Biweekly Technical Progress Report ------------------------------------------------------------- [_] Technical Progress Report** Q Orig. + 4 Orig. + 1 cy B, 2 C, 1 D ------------------------------------------------------------- [_] Topical Report** A Orig. + 4 Orig. + 1 cy B, 2 C, 1 D ------------------------------------------------------------- [X] Final Technical Report** F Orig. + 4 Orig. + 1 cy B, 2 C, 1 D ------------------------------------------------------------- [X] Review Meeting Agenda 10 days prior to any Meeting Q Orig. + 2 Orig. B C & D - ------------------------------------------------------------------------------------------------------------------------------------ FREQUENCY CODES AND DUE DATES: A. ______ Necessary within 5 calendar days after events. F. Final 90 calendar days after the performance of the effort ends. Q. Quarterly: within 30 days after end of calendar quarter or portion thereof. O. One time after project starts; within 30 days after award. X. Required with proposals or the application or with significant planning changes. Y. Yearly; 30 days after the end of program year. (Financial Status Reports 90 days). S. Semiannually; within 30 days after end of program fiscal half year. - ------------------------------------------------------------------------------------------------------------------------------------ __. Special Instructions: A. All scientific, technical documents, and technical reports i.e., monthly, quarterly, annual progress reports, periodic scientific, topical, final report, and conference papers shall be submitted with 2 copies of DOE Form 1332.15, Recommendations --------------- for the Announcement and Distribution of Department of Energy (DOE) Scientific and Technical (STI). -------------------------------------------------------------------------------------------------- B. MAIL REPORTS TO: Original - Contracting Officer U.S. Department of Energy Chicago Operations Office 9800 South Cass Avenue Argonne, Illinois 60439 C. Steve Chalk, EE-32 D. Gary Henriksen E. Financial Service Group Department of Energy Argonne National Laboratory Department of Energy 1000 Independence Avenue Building No. 205 9800 S. Cass Avenue Washington, DC 20585-0121 Argonne, Illinois 60439 Argonne, Illinois 60439
59 - -------------------------------------------------------------------------------- 6. Prepared by: (Signature and Date) 7. Reviewed by: (Signature and Date) /s/ James Miller 3-12-97 /s/ James Miller 3-12-97 - -------------------------------------------------------------------------------- 60 Attachment 1 Replaces Clause No. 04., 48 C.F.R. 952.227-13 Patent Rights 61 52.227-l2 Patent Rights - Waiver (JUL 1996), as modified by 10 C.F.R. 784, DOE Patent Waiver Regulations PATENT RIGHTS - WAIVER (JUL 1996) (a) Definitions. As used in this clause: Background patent means a domestic patent covering an invention or discovery which is not a Subject Invention and which is owned or controlled by the Contractor at any time through the completion of this contract: (i) Which the Contractor, but not the Government, has the right to license to others without obligation to pay royalties thereon, and (ii) Infringement of which cannot reasonably be avoided upon the practice of any specific process, method, machine, manufacture or composition of matter (including relatively minor modifications thereof) which is a subject of the research, development, or demonstration work performed under this contract. Contract means any contract, grant, agreement, understanding, or other arrangement, which includes research, development, or demonstration work, and includes any assignment or substitution of parties. DOE patent waiver regulations means the Department of Energy patent waiver regulations at 10 CFR Part 784. Invention as used in this clause, means any invention or discovery which is or may be patentable or otherwise protectable under Title 35 of the United States Code or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.). Made when used in relation to any invention means the conception or first actual reduction to practice of such invention. Nonprofit organization means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S. C. 501(a)) or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. Patent Counsel means the Department of Energy Patent Counsel assisting the procuring activity. 62 Practical application means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system: and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms. Secretary means the Secretary of Energy. Small business firm means a small business concern as defined at Section 2 of the Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business concerns involved in Government procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, will be used. Subject invention means any invention of the Contractor conceived or first actually reduced to practice to the course of or under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act (7 U.S.C. 2401(d)) must also occur during the period of contract performance. (b) Allocation of principal rights. Whereas DOE has granted a waiver of rights to subject inventions to the Contractor, the Contractor may elect to retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. (S)(S)202 and 203. With respect to any subject invention in which the Contractor elects to retain title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and tiling of patent applications by Contractor. ( l) The Contractor shall disclose each subject invention to the Patent Counsel within six months after conception or first actual reduction to practice, whichever occurs first in the course of or under this contract, but in any event, prior to any sale, public use, or public disclosure of such invention known to the Contractor. The disclosure to the Patent Counsel shall be in the form of a written report and shall identify the inventors and the contract under which the invention was made. It shall be sufficiently complete in technical detail to convey a clear understanding, to the extent known at the time of the disclosure, of the nature, purpose, operation, and physical, chemical, biological, or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing 63 the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the Patent Counsel, the Contractor shall promptly notify the Patent Counsel of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor shall elect in writing whether or not to retain title to any such invention by notifying the Patent Counsel at the time of disclosure or within 8 months of disclosure, as to those countries (including the United States) in which the Contractor will retain title; provided, that in any case where publication, on sale, or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period of election of title may be shortened by the Agency to a date that is no more than 60 days prior to the end of the statutory period. The Contractor shall notify the Patent Counsel as to those countries (including the United States) in which the Contractor will retain title not later than 60 days prior to the end of the statutory period. (3) The Contractor shall file its United States patent application on an elected invention within 1 year after election, but not later than at least 60 days prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The Contractor shall file patent applications in additional countries (including the European Patent Office and under the Patent Cooperation Treaty) within either 10 months of the corresponding initial patent application or 6 months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where foreign filing has been prohibited by a Secrecy Order. (4) Requests for extension of the time for disclosure to the Patent Counsel, election, and filing may, at the discretion of DOE, be granted, and will normally be granted unless the Patent Counsel has reason to believe that a particular extension would prejudice the Government's interest. (d) Conditions when the Government may obtain title notwithstanding an existing waiver. The Contractor shall convey to DOE, upon written request, title to any subject invention-- (1) If the Contractor elects not to retain title to a subject invention; (2) If the Contractor fails to disclose or elect the subject invention within the times specified in paragraph (c) of this clause (provided that DOE may only request title 64 within 60 days after learning of the Contractor's failure to report or elect within the specified times); (3) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the Contractor has tiled a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of DOE, the Contractor shall continue to retain title in that country; (4) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention; or (5) If the waiver authorizing the use of this clause is terminated as provided in paragraph (p) of this clause. (e) Minimum rights to Contractor when the Government retains title. (1 ) The Contractor shall retain a nonexclusive, royalty-free license throughout the world in each subject invention to which the Government obtains title under paragraph (d) of this clause except if the Contractor fails to disclose the subject invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a part and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of DOE except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by DOE to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions in 37 CFR part 404 and DOE licensing regulations. This license shall not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of DOE to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. 65 (3) Before revocation or modification of the license, DOE shall furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor shall be allowed 30 days (or such other time as may be authorized by DOE for good cause shown by the Contractor) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable agency licensing regulations and 37 CFR part 404 concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of its license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees to execute or to have executed and promptly deliver to DOE all instruments necessary to: (i) establish or confirm the rights the Government has throughout the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to DOE when requested under paragraphs (d) and (n)(2) of this clause, and to enable the Government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum. the information required by paragraph (c)(1) of this clause. The Contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor shall notify DOE of any decision not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the 66 following statement: "This invention was made with Government support under (identify the contract) awarded by DOE. The Government has certain rights in this invention." (5) The Contractor shall establish and maintain active and effective procedures to assure that subject inventions are promptly identified and disclosed to Contractor personnel responsible for patent matters within 6 months of conception and/or first actual reduction to practice, whichever occurs first in the course of or under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show that the procedures for identifying and disclosing the inventions are followed. Upon request, the Contractor shall furnish the Patent Counsel a description of such procedures for evaluation and for determination as to their effectiveness. (6) The Contractor agrees, when licensing a subject invention, to arrange to avoid royalty charges on acquisitions involving Government funds, including funds derived through Military Assistance Program of the Government or otherwise derived through the Government; to refund any amounts received as royalty charges on the subject invention in acquisitions for, or on behalf of, the Government; and to provide for such refund in any instrument transferring rights in the invention to any party. (7) The Contractor shall furnish the Patent Counsel the following: (i) Interim reports every 12 months (or such longer period as may be specified by the Patent Counsel) from the date of the contract, listing subject inventions during that period and certifying that all subject inventions have been disclosed or that there are no such inventions. (ii) A final report, within 3 months after completion of the contracted work, listing all subject inventions or certifying that there were no such inventions, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts. (8) The Contractor shall promptly notify the Patent Counsel in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Patent Counsel, the Contractor shall furnish a copy of such subcontract, and no more frequently than annually, a listing of the subcontracts that have been awarded. 67 (9) The Contractor shall provide, upon request, the filing date, serial number and title, a copy of the patent application (including an English-language version if filed in a language other than English), and patent number and issue date for any subject invention for which the Contractor has retained title. (10) Upon request, the Contractor shall furnish the Government an irrevocable power to inspect and make copies of the patent application file. (g) Subcontracts. (1) Unless otherwise directed by the Contracting Officer, the Contractor shall include the clause at 43 CFR 952.227-11, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or nonprofit organization, except where the work of the subcontract is subject to an Exceptional Circumstances Determination by DOE. In all other subcontracts, regardless of tier, for experimental, developmental, demonstration, or research work, the Contractor shall include the patent rights clause at 48 CFR 952.227-13 (suitably modified to identify the parties). (2) The Contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. (3) In the case of subcontractors at any tier, the Department, the subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the Department with respect to those matters covered by this clause. (4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contracting Officer shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (h) Reporting on utilization of subject inventions. The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor and any of its licensees or assignees. Such reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the Contractor, and such other data and information as DOE may 68 reasonably specify. The Contractor also agrees to provide additional reports as may be requested by DOE in connection with any march-in proceedings undertaken by DOE in accordance with paragraph (j) of this clause. To the extent data or information supplied under this paragraph is considered by the Contractor, its licensee or assignee to be privileged and confidential and is so marked, DOE agrees that, to the extent permitted by law, it shall not disclose such information to persons outside the Government. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by DOE upon a showing by the Contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that with respect to any subject invention in which it has acquired title, DOE has the right in accordance with the procedures in 48 CFR 27.304-1(g) to require the Contractor, an assignee, or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request. DOE has the right to grant such a license itself if DOE determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or 69 (4) Such action is necessary because the agreement required by paragraph (1) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Background Patents. (1) The Contractor agrees: (i) to grant to the Government a royalty-free, nonexclusive license under any Background Patent for purposes of practicing a subject of this contract by or for the Government in research, development, and demonstration work only. (ii) that, upon written application by DOE, it will grant to responsible parties for purposes of practicing a subject of this contract, nonexclusive licenses under any Background Patent on terms that are reasonable under the circumstances. If, however, the Contractor believes that exclusive or partially exclusive rights are necessary to achieve expeditious commercial development or utilization, then a request may be made to DOE for DOE approval of such licensing by the Contractor. (2) Notwithstanding paragraph (k)(1)(ii) the Contractor shall not be obligated to license any Background Patent if the Contractor demonstrates to the satisfaction of the Secretary or his designee that: (i) a competitive alternative to the subject matter covered by said Background Patent is commercially available from one or more other sources; or (ii) the Contractor or its licensees are supplying the subject matter covered by said Background Patent in sufficient quantity and at reasonable prices to satisfy market needs, or have taken effective steps or within a reasonable time are expected to take effective steps to so supply the subject matter. (1) Communications. All reports and notifications required by this clause shall be submitted to the Patent Counsel unless otherwise instructed. (m) Other inventions. Nothing contained in this clause shall be deemed to grant to the Government any rights with respect to any invention other than a subject invention, except with respect to Background Patents, above. (n) Examination of records relating to inventions. 70 (1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether-- (i) Any such inventions are subject inventions; (ii) The Contractor has established and maintains the procedures required by paragraphs (f)(2) and (f)(5) of this clause; and (iii) The Contractor and its inventor have complied with the procedures. (2) If the Contracting Officer determines that an inventor has not disclosed a subject invention to the Contractor in accordance with the procedures required by paragraph (f)(5) of this clause, the Contracting Officer may, within 60 days after the determination, request title in accordance with paragraphs (d)(2) and (d)(3) of this clause. However, if the Contractor establishes that the failure to disclose did not result from the Contractor's fault or negligence, the Contracting Officer shall not request title. (3) If the Contracting Officer learns of an unreported Contractor invention which the Contracting Officer believes may be a subject invention, the Contractor may be required to disclose the invention to DOE for a determination of ownership rights. (4) Any examination of records under this paragraph shall be conducted in such a manner as to protect the confidentiality of the information involved. (o) Withholding of payment. NOTE: This paragraph does not apply to subcontracts or grants. (1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or percent of the amount of the contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to-- (i) Establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to paragraph (f)(5) of this clause: (ii) Disclose any subject invention pursuant to paragraph (c)(l) of this clause; (iii) Deliver acceptable interim reports pursuant to paragraph (f)(7)(i) of this clause; or (iv) Provide the information regarding subcontracts pursuant to paragraph (f)(6) of this clause; (v) Convey to the Government, using a DOE-approved form, the title and/or rights of the Government in each subject invention as required by this clause. 71 (2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) Final payment under this contract shall not be made before the Contractor delivers to the Patent Counsel all disclosures of subject inventions required by paragraph (c)(1) of this clause, an acceptable final report pursuant to paragraph (f)(7)(ii) of this clause, and all past due confirmatory instruments, and Patent Counsel has issued a patent clearance certification to the Contracting Officer. (4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. If the maximum amount authorized above is already being withheld under other provisions of the contract, no additional amount shall be withheld under this paragraph. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government right. (p) Waiver Terminations. Any waiver granted to the Contractor authorizing the use of this clause (including any retention of rights pursuant thereto by the Contractor under paragraph (b) of this clause may be terminated at the discretion of the Secretary or his designee in whole or in part, if the request for waiver by the Contractor is found to contain false material statements or nondisclosure of material facts, and such were specifically relied upon by DOE in reaching the waiver determination. Prior to any such termination, the Contractor will be given written notice stating the extent of such proposed termination and the reasons therefor, and a period of 30 days, or such longer period as the Secretary or his designee shall determine for good cause shown in writing, to show cause why the waiver of rights should not be so terminated. Any waiver termination shall be subject to the Contractor's minimum license as provided in paragraph (e) of this clause. (q) Atomic Energy. No claim for pecuniary award or compensation under the provisions of the Atomic Energy Act of 1954, as amended, shall be asserted by the Contractor or its employees with respect to any invention or discovery made or conceived in the course of or under this contract. (r) Publication. It is recognized that during the course of work under this contract, the contractor or its employees may from time to time desire to release or publish information regarding scientific or technical developments conceived or first actually reduced to practice in the course of or under this contract. In order that public disclosure of such information will not adversely affect the patent interests of DOE or the contractor, approval for release of publication shall be secured from Patent Counsel prior to any such release or publication. In appropriate circumstances, and after 72 consultation with the contractor, Patent Counsel may waive the right of prepublication review. (s) Forfeiture of rights in unreported subject inventions. (1) The Contractor shall forfeit and assign to the Government, at the request of the Secretary of Energy or designee, all rights in any subject invention which the contractor fails to report to Patent Counsel within six months after the time the contractor: (i) Files or causes to be filed a United States or foreign patent application thereon; or (ii) Submits the final report required by paragraph (e)(2)(ii) of this clause, whichever is later. (2) However, the Contractor shall not forfeit rights in a subject invention if, within the time specified in paragraph (m)(1) of this clause, the contractor: (i) Prepares a written decision, based upon a review of the record that the invention was neither conceived nor first actually reduced to practice in the course of or under the contract and delivers the decision to Patent Counsel, with a copy to the Contracting Officer; or (ii) Contending that the subject invention is not a subject invention, the contractor nevertheless discloses the subject invention and all facts pertinent to this contention to the Patent Counsel, with a copy to the Contracting Officer, or (iii) Establishes that the failure to disclose did not result from the contractor's fault or negligence. (3) Pending written assignment of the patent application and patents on a subject invention determined by the Contracting Officer to be forfeited (such determination to be a Final Decision under the Disputes clause of this contract), the contractor shall be deemed to hold the invention and the patent applications and patents pertaining thereto in trust for the Government. The forfeiture provision of this paragraph shall be in addition to and shall not supersede any other rights and remedies which the Government may have with respect to subject inventions. (t) U S. COMPETITIVENESS. The Contractor agrees that any products embodying any waived invention or produced through the use of any waived invention will be manufactured substantially in the United States unless the Contractor can show to the satisfaction of the DOE that it is not commercially feasible to do so. The Contractor further agrees to make the above condition, binding on any assignees or licensees or any entity otherwise acquiring rights to any waived invention, including subsequent assignees or licensees. Should the Contractor or other such entity receiving rights in any waived invention undergo a change in ownership amounting to a controlling interest, then the waiver, assignment, license or other transfer of rights in the waived invention is suspended until approved in writing by DOE. In the event DOE agrees to foreign manufacture, there will be a requirement that the Government's support of the 73 technology be recognized in some appropriate manner, e.g., recoupment of the government's investment, etc. (End of clause) 74 Attachment 2 75 ALTERNATE II (g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the Contracting Officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be withholdable. If delivery of such data is so required, the Contractor may affix the following "Limited Rights Notice" to the data and the Government will thereafter treat the data, subject to the provisions of paragraph (e) and (f) of this clause, in accordance with such Notice: LIMITED RIGHTS NOTICE (JUN 1987) (a) These data are submitted with limited rights under Government contract No. (and subcontract No. , if appropriate). These data may be reproduced and used by the Government with the express limitation that they will not, without written permission of the Contractor, be used for purposes of manufacture nor disclosed outside the Government; except that the Government may disclose these data outside the Government for the following purposes, if any, provided that the Government makes such disclosure subject to prohibition against further use and disclosure: (i) Use (except for manufacture) by support service contractors. (ii) Evaluation by nongovernment evaluators. (iii) Use (except for manufacture) by other contractors participating in the Government's program of which the specific contract is a part, for information and use in connection with the work performed under each contract. (b) This Notice shall be marked on any reproduction of these data, in whole or in part. (End of notice) ALTERNATE III (g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the Contracting Officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be withholdable. If delivery of such computer software is so required, the Contractor may affix the following "Restricted Rights Notice" to the computer software and the Government will thereafter treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the Notice: 76 RESTRICTED RIGHTS NOTICE (JUN 1987) (a) This computer software is submitted with restricted rights under Government Contract No. (and subcontract , if appropriate). It may not be used, reproduced, or disclosed by the Government except as provided in paragraph (b) of this Notice or as otherwise expressly stated in the contract. (b) This computer software may be: (1) Used or copied for use in or with the computer or computers for which it was acquired, including use at any Government installation to which such computer or computers may be transferred; (2) Used or copied for use in a backup computer if any computer for which it was acquired is inoperative; (3) Reproduced for safekeeping (archives) or backup purposes; (4) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software are made subject to the same restricted rights; (5) Disclosed to and reproduced for use by support service Contractors in accordance with subparagraphs (b)(1) through (4) of this clause, provided the Government makes such disclosure or reproduction subject to these restricted rights; and (6) Used or copied for use in or transferred to a replacement computer. (c) Notwithstanding the foregoing, if this computer software is published copyrighted computer software, it is licensed to the Government, without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. (d) Any other rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) This Notice shall be marked on any reproduction of this computer software, in whole or in part. (End of notice) 77 (ii) Where it is impractical to include the Restricted Rights Notice on restricted computer software, the following short-form Notice may be used in lieu thereof: RESTRICTED RIGHTS NOTICE SHORT FORM (JUN 1987) "Use, reproduction, or disclosure is subject to restrictions set forth in Contract No. (and subcontract, if appropriate) with (name of Contractor and subcontractor)." (End of notice) (iii) If restricted computer software is delivered with the copyright notice of 17 U.S. C. 401, it will be presumed to be published copyrighted computer software licensed to the Government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause, unless the Contractor includes the following statement with such copyright notice: "Unpublished-rights reserved under the Copyright Laws of the United States." 78 Attachment 3 79 Alternate VI, Contractor Licensing As prescribed at 48 CFR 927 404(l) insert Alternate VI to require the contractor to license data regarded as limited rights data or restricted computer software to DOE and third parties at reasonable royalties upon request by the Department of Energy. (k) Contractor Licensing. Except as may be otherwise specified in this contract as data not subject to this paragraph, the contractor agrees that upon written application by DOE, it will grant to the Government and responsible third parties, for purposes of practicing a subject of this contract, a nonexclusive license in any limited rights data or restricted rights software on terms and conditions reasonable under the circumstances including appropriate provisions for confidentiality; provided, however, the contractor shall not be obligated to license any such data if the contractor demonstrates to the satisfaction of the Secretary of Energy or designee that: (1) Such data are not essential to the manufacture or practice of hardware designed or fabricated, or processes developed, under this contract; (2) Such data, in the form of results obtained by their use, have a commercially competitive alternate available or readily introducible from one or more other sources; (3) Such data, in the form of results obtained by their use, are being supplied by the contractor or its licensees in sufficient quantity and at reasonable prices to satisfy market needs, or the contractor or its licensees have taken effective steps or within a reasonable time are expected to take effective steps t so supply such data in the form of results obtained by their use; or (4) Such data, in the form of results obtained by their use, can be furnished by another firm skilled in the art of manufacturing items or performing processes of the same general type and character necessary to achieve the contract results. The paragraph (k) will be included in all subcontracts for research, development or demonstration, at any tier, other than subcontracts with domestic small businesses and nonprofit organizations. 80 STATEMENT OF CONSIDERATIONS ADVANCE CLASS WAIVER OF PATENT RIGHTS FOR TECHNOLOGY DEVELOPED UNDER DOE FUNDING AGREEMENTS RELATING TO DOE'S INTEGRATED FUEL CELL SYSTEMS AND COMPONENTS FOR TRANSPORTATION AND BUILDINGS W(C)-97-005 The Department of Energy is providing federal assistance for research on fuel cell technology directed toward transportation and buildings applications under its Integrated Fuel Cell Systems and Components for Transportation and Buildings Programs (IFCS). To date a total of 22 separate awards have been made under these Programs. This advance class waiver is intended to apply to inventions of all current and future contractors and subcontractors participating in the IFCS Program, regardless of tier, except participants eligible to obtain title pursuant to P.L. 96-517, as amended, and National Laboratories. Under the IFCS Programs, DOE is selecting a number of participants to perform research and development in three topic areas. Topic (1) will consist of design studies and fabrication, Topic (2) is for studies of critical components and subsystems integrated into the complete fuel cell power system, and Topic (3) connects evaluation, research and development, and ultimately the use of non-federal capital to pursue various commercial applications. Teaming arrangements among participants were anticipated and have been encouraged. Each team will be composed of a prime contractor and one or more subcontractors. It is also anticipated that teams will develop an appropriate allocation of patent rights among the participants to facilitate the commercial development of the respective technical areas to be developed under the IFCS program. It is the purpose of this class waiver to vest title to the parties' inventions with the team members in a fashion enabling them to expediently commercialize the various technologies. Accordingly, DOE will waive the Government's title to subject inventions under such topic, other than inventions made by Bayh-Dole participants pursuant to P.L. 96-517, as amended, or National Laboratories, to the respective prime contractor or other entities as may be designated by the parties agreeing to the terms of this waiver in each team. Since the IFCS Program obligates the prime contractor for each team to provide at least 25 percent cost sharing, it is expected that patent rights will be allocated among the participants on the basis of cost sharing as well as the other equities among the various team members. This advance class waiver of the Government's rights in inventions is subject to the usual advance patent waiver and background data licensing provisions. The terms of the advance patent waiver include the usual Government license, march-in rights, and preference for U.S. industry provisions comparable to those set out in 35 U.S.C. 202-204. The advance patent waiver also includes the attached U.S. Competitiveness clause, (paragraph t), which requires that products embodying any waived invention or produced through the use of any waived invention be manufactured substantially in the United States unless the participant can show to the satisfaction of DOE that it is not commercially feasible to do so. The Contractor further agrees to make the above condition binding on any assignee or licensee or any entity otherwise acquiring rights to any waived invention, including subsequent assignees or licensees. Should the Contractor or other such entity receiving rights in any waived invention undergo a change in ownership amounting to a controlling interest, then the waiver, assignment, license, or other transfer of rights in the waived invention is suspended until approved in writing by DOE. The grant of this class waiver is not expected to result in adverse effects on competition or market concentration. Rather the waiver should enhance competition and growth of the fuel cell industry in the United States, and in particular, broaden the base of U.S. manufacturers as contemplated by the IFCS Program. DOE has the right to require reports of the utilization or the efforts at utilization that are being made for the waived inventions. If a participant which has obtained title is not making reasonable efforts to utilize a waived invention, DOE can exercise its march-in rights and require licensing of the background inventions and data. This advance class waiver shall apply to each of the respective teaming arrangements upon the Contracting Officer's written notice to Field Patent Counsel that the prime contractor is obligated to provide at least 25 percent cost sharing, and shall remain in effect for so long as such cost sharing is maintained, in aggregate, over the term of the agreement. In addition to the above, all participants under the IFCS Program, other than participants which are domestic small businesses or non-profit organizations under P.L. 96-517, as amended, or National Laboratories, shall give DOE written notice of their acceptance of the terms and conditions of this class waiver prior to entering into any agreement incorporating the terms of this waiver under the IFCS Program. Except as otherwise specifically approved by Field Patent Counsel, a participant's acceptance of an agreement under the IFCS Program, at any tier, shall constitute that participant's notice to DOE and acceptance of the terms and conditions of this class waiver. In this connection, it should be noted that compliance with the terms of this advanced class 2 waiver fully meets the requirements of the "Adequate Recognition" clause in the Additional Special Provisions of the participants' agreement. In the event a participant does not participate in subsequent phases of an IFCS Topic, the prime contractor or other entity, as the remaining participants in such Topic may determine, shall retain as a minimum a royalty-free, non- exclusive license throughout the world, with the right to grant sublicenses in each subject invention held by such participant pursuant to this class waiver, except as otherwise approved by Field Patent Counsel. Considering the foregoing, and in view of the statutory objectives to be obtained and the factors to be considered under DOE's statutory waiver policy, all of which have been considered, it has been determined that this class waiver as set forth above will best serve the interest of the United States and the general public. It is recommended that the waiver be granted. /s/ Thomas G. Anderson /s/ Joy Alwan - ----------------------------- ---------------------------- Thomas G. Anderson Joy Alwan Assistant Chief Counsel Patent Attorney Intellectual Property Law Intellectual Property Law Date: 1/8/98 Date: 1/8/98 ------------------------ ----------------------- Based upon the foregoing Statement of Considerations, it is determined that the interests of the United States and the general public will best served by a waiver of United States and foreign patent rights as set forth herein and, therefore, the waiver is granted. This waiver shall not affect any waiver previously granted. CONCURRENCE: APPROVAL: /s/ Pandit G. Patil /s/ Paul A. Gottlieb - ---------------------- ---------------------------- Pandit G. Patil Paul A. Gottlieb Director, Office of Assistant General Counsel Advanced Automotive for Technology and Technologies Intellectual Property EE-32-FORS 3 Date: 3/16/98 Date: 3/24/98 ----------------- ----------------------- 4 [LETTERHEAD OF INTERNATIONAL FUEL CELLS] January 7, 1998 Ms. Judith Blinn VIA OVERNIGHT MAIL Contracting Officer ------------------ Arthur D. Little Acorn Park Cambridge, MA 02140-2390 SUBJECT: Subaward under DOE Financial Assistance Agreement DE-FC02-97EE50571 Dear Ms. Blinn: Enclosed is a fully executed copy of the subject Subaward. I took the liberty of inserting the clean copy of page 4 that I had originally faxed to you and the updated Milestone Schedule that was agreed upon yesterday between our technical people. Thank you very much for your assistance. Should you have any questions, please call me at (860) 727-2242. Very truly yours, INTERNATIONAL FUEL CELLS CORPORATION /s/ Curt Curtis M. Zimmer Contract Administrator Enclosure cc: V.M. Callaghan (ADLDOC) EX-10.31 18 0018.txt PURCHASE ORDER DATED MARCH 29, 2000 EXHIBIT 10.31 PURCHASE ORDER No. 418577 INVOICE TO: DATE OF ORDER: Arthur D. Little, Inc. 3/29/00 20 Acorn Park Cambridge, MA USA 02140-2390 Telephone: 617-498-5000 Telefax: 617-498-7030 DeNora Fuel Cells S.p.A. Via Bistolfi, 25 20134 Milan, Italy Attn: Michelle Tettamanti - -------------------------------------------------------------------------- Item No. Quantity Catalog No. Description Price - -------------------------------------------------------------------------- 1 1 5KW PEM Fuel Cell This Purchase Order is issued to transfer above equipment from DeNora Fuel Cells S.p.A. to ADL/Epyx. Transfer of fuel cell unit will be at no cost to ADL/Epyx and said equipment will be returned by ADL/Epyx to DeNora Fuel Cells at completion of project. Air Freight charges/transportation via DLH to be paid for by DeNora Fuel Cells. Value of above equipment: $45,000.00 - -------------------------------------------------------------------------- TOTAL - -------------------------------------------------------------------------- "Durantes Vincunt" DE NORA FUEL CELLS - ------------------ Nuvera Group Via Bistolfi, 35 - 20134 Milano Tel. +39 02 2191 Fax +39 02 21292403 E-mail: FuelCells@denora.it ------------------- www.nuverafuelcells.com ----------------------- Messrs ARTHUR D. LITTLE Inc. 20 Acorn Park, Cambridge MA USA 02140-2390 Invoice n.13 of 4 May 2000 SALE N.1 STACK rated 5 kw MODEL D.080.00.C.G.2.2.W.I.1 Serial Number 61 Goods are of Italian origin Customer purchase order Nr. 418577 of 29 March 2000 Total amount US$ 45.000.= Operation not subject to tax pursuant to art. 8 par. 1 letter A. Package n(degree) 1 case: 60 x 40 x 26cm Net weight Kg. 34 Gross weight Kg. 40 Marks "ADDRESS" Shipped: By De Nora Fuel Cells S.p.a. Delivery Terms: by DHL; DDP Cambridge MA USA Terms of payment T/T 30 days invoice date C/o Banca Popolare di Bergamo Milan Headquarters Account n.86257 ABI 05428 cab 01602 DE NORA FUEL CELLS S.P.A. ________________________________________________________________________________ 2 Societa per Azioni - Capitale Sociale L 400,000,000 - Iscritta Nel Registro delle Imprese Sezione Ordinaria al N 208344/1999 R.E.A N. 1595544 Presso C.C.I.A.A. Milano Codice Escale e Partita Iva No 12910180152 3 ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 4 - ---------------------- ---------------------------------- ------------------- 1.2 doc. PSA/CGF/02 REV. 1 - GENERAL CONDITIONS FOR SUPPLYING SYSTEMS, EQUIPMENT, MACHINERY AND ASSOCIATED BUSINESS .2 For any disagreements between the documents listed above, the interpretation of same must be agreed by ARI and DNR in reasonable terms. .3 The content of this order shall take precedence over the aforementioned documents. .4 Departures from the contract documents must be approved by ANSALDO in writing under penalty of nullification. ART. 3 - TERMS OF CONTRACT .1 The date on which work begins is set down in the order acceptance date. .2 Supply shall be delivered to the delivery point within 24 working weeks of the signing date of the order. ART. 4 - CRATING The price includes crating. ART. 5 - DELIVERY The supply shall be delivered CIF ANSALDO - Genoa (ref. INCOTERMS 1990). ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 5 - ---------------------- ---------------------------------- ------------------- ART. 6 - TRANSFER OF OWNERSHIP N/A ART. 7 - PENALTIES 1 Delivery dates are final and no delay is permitted without prior written authorization by ANSALDO. 2 In the event of delays in the contract supply delivery date, after a grace period of 5 calendar days a penalty of 0.5% of the total order amount shall be applied for every week or portion thereof of delay. .2.1 The maximum amount of delay penalties shall be 10% of the final order amount. ART. 8 - GUARANTIES N/A ART. 9 - INSTALLATION AND TEST ASSISTANCE The above are included in the services as per Art. 1. ART. 10 - PRICE Total flat rate price as indicated in Art. 1. 320,000,000 lire ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 6 - ---------------------- ---------------------------------- ------------------- ART. 11 - INVOICING AND PAYMENT METHOD 1.1 The amount as per Art. 4 may be invoiced as incurred, though not prior to the dates on which the work associated therewith is completed, defined in Table 1A in the annex. 1.2 Every invoice must contain the following information: - running/consecutive number - Community Order number 5074-92-11 ELISP PC - order number - name, address, and account number of DNP's reference bank ART. 12 - PAYMENT Payments shall be made by direct remittance to the Bank selected by ANSALDO, within 90 days, end of month, of the receipt of invoice, provided the conditions to which the installments are subject have actually been met. ART. 13 - ACCEPTANCE As indication of unconditional acceptance, supplier will send to ANSALDO a letter which complies with the fax specified in the contract documents, by and no later than 20 days from receipt of this order. Should the referenced acceptance not be received within the above term, ANSALDO shall as a precautionary measure stop processing any invoices received, reserving the right to take action against Supplier for compensation for any damages incurred. ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 7 - ---------------------- ---------------------------------- ------------------- ART. 14 - DECLARATION BY THE CONTRACTING PARTIES ANSALDO and Supplier declare that the terms ratified in this order correspond to the agreements concluded in their negotiations. Therefore, all previous correspondence must be considered superceded. [stamp] ANSALDO Ansaldo Ricerche S.r.l. /s/ Giuseppe Ferrari Giuseppe Ferrari Managing Director
ANSALDO RICERCHE - ------------------------------------------------------------------------------------------------------------------------------------ order no. N 02486 00 of FEB. 13, 1997 page no. 8 - ------------------------------------------------------------------------------------------------------------------------------------ TABLE 1A BILL AND PAYMENT CONDITIONS DIARY - ------------------------------------------------------------------------------------------------------------------------------------ SUBORDER: N 02486/00 R ORDER / CDR: TI1000 SUPPLIER CODE: 064411 RDA DESCRIPTION: 45 KW FUEL CELL STACKS REF.: - ------------------------------------------------------------------------------------------------------------------------------------ QUALITY LEVEL: 1 CURRENCY CODE: ITALIAN LIRE INITIAL DATE 12/05/96 TYPE OF GOODS: OAB AMOUNT OF SUBORDER PAYMENT COND.: 90 DAYS AFTER INVOICE REF. -- AMOUNT ISSUE OF SERVICE: 320,000,000 ORDERS -- TOTAL AMOUNT: 320,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ DESTINATION: Corso Perrone, 25 DELIVERY: Free Genoa TRANSPORT: CRATING: INCLUDED (OPTIONAL) DOCS. ATTACHED: - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ EVENT EVENT SCHEDULE DESCRIPTION OF EVENTS TO BE INVOICED PERCENT AMOUNT COMMENTS - ------------------------------------------------------------------------------------------------------------------------------------ BEGINNING END - ------------------------------------------------------------------------------------------------------------------------------------ 1 A 02/01/97 ACCEPTANCE OF ORDER 0.2500 80,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ 2 C 07/31/97 DELIVERY OF STACKS (24 WORKING WEEKS FROM ACCEPTANCE 0.2500 80,000,000 OF ORDER) - ------------------------------------------------------------------------------------------------------------------------------------ 3 C 01/31/98 SIX MONTHS AFTER DELIVERY OF SUPPLY 0.2500 80,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ 4 C 06/30/99 AT END OF DEMONSTRATION CAMPAIGN, BY ISSUE OF THE 0.2500 80,000,000 ACTIVITY COMPLETION REPORT, AND, IN ANY CASE, NO LATER THAN 06/10/99 - ------------------------------------------------------------------------------------------------------------------------------------
EX-10.32 19 0019.txt PURCHASE ORDER DATED MAY 30, 2000 EXHIBIT 10.32 PURCHASE ORDER No. 505924-00 INVOICE TO: DATE OF ORDER: Arthur D. Little, Inc. May 30, 2000 20 Acorn Park Cambridge, MA USA 02140-2390 Telephone: 617-498-5000 Telefax: 617-498-7030 Nuvera Fuel Cells Via Bistolfi, 35 20134 Milan, Italy Attn: Alessandro Delfrate - -------------------------------------------------------------------------- Item No. Quantity Catalog No. Description Price - -------------------------------------------------------------------------- 1 1KW Fuel Cell - valued at US$16,000 Dimensions (approx.): 18cm x 25 cm x 30cm; Net weight: 15Kg. This purchase order is issued to cover the transfer of the unit above to Nuvera, USA at no cost. The unit being transferred will be returned to Nuvera, Italy. Ship via DHL. Air Freight and transportation charges to be paid by shipper. Copy faxed on 5/30/00 - Do not duplicate - - -------------------------------------------------------------------------- TOTAL - -------------------------------------------------------------------------- Messrs ARTHUR D. LITTLE Inc. 20 Acorn Park, Cambridge MA USA 02140-2390 Invoice n.14 of 1/st/ June 2000 SALE of Nr.1 PEM FUEL CELL STACK rated 1 kw (Static device for the generation of electric power, made of aluminum hardware, carbon electrodes and plastic gasket) MODEL D.030.00.C.G.2.2.W.I.1 Serial Number 64 Goods are of Italian origin Customer order 505924-00 dated May 30, 2000 Total amount US$ 16.000.= Operation not subject to tax pursuant to art. 8 par. 1 letter A. Package n(degree) 1 case dimensions: 60 x 40 x 55cm Net weight Kg. 16 Gross weight Kg. 26 Marks "ADDRESS" Shipped: By Nuvera Fuel Cells Europe S.p.A. Delivery Terms: by DHL; DDP Cambridge MA USA Terms of payment T/T 30 days invoice date C/o Banca Popolare di Bergamo Milan Headquarters Account n. 86257 ABI 05428 cab 01602 NUVERA FUEL CELLS EUROPE S.P.A. 2 EX-10.33 20 0020.txt LETTER AGREEMENT EXHIBIT 10.33 DE NORA PERMELEC S.p.A. - -------------------------------------------------------------------------------- Gruppo Oronzio De Nora 21/st/ November 1994 RENAULT /at - 2124 Direction de la Recherche 9-11 Avenue du 18 Juin 1940 92500 Rueil-Malmaison To the attention of Mr. Jean Claude Griesmann Re: QUOTATION for the RENTAL of FUEL CELL STACKS in the --------------------------------------------------- FEVER Project (Contract JOU2-CT93-0301 with the Commission ---------------------------------------------------------- the European Communities, dated 33/12/09) ----------------------------------------- Dear Sirs: With reference to your fax of August 24/th/ 1994, we report here below our quotation for the rental of the fuel cell stacks for the project in reference. 1- CONDITIONS 1.1 DE NORA PERMELEC S.p.A. (DNP) will supply, FCA (free carrier) DNP workshop according to ICC Incoterms 1990, to RENAULT: - One Fuel Cell composed of three 10 kW prototype stacks, electrically connected, each one made of several cells connected in electrical series and mechanically assembled by means of tie-rods and two end- plates. Each stack will comprise also two gas inlet connectors, two gas outlet connectors, two connections for an external cooling water circuit, integrated humidification of reactant gases and two electrical connectors. The Fuel Cell characteristics, operating conditions and performances will meet the specifications of the hereafter attached 'HYDROGEN/AIR FUEL CELL SPECIFICATIONS FEVER PROJECT' (RENAULT Fuel Cell Specifications - 13rd of June 1994) as far as allowed by the experimental nature of the prototype Fuel Cell. - instructions for installing and operating the same. Divisione Implanti Elettrochimici e Divisione S.E.R.E. via Bistolfl, 35-20134 Milano - Tel. (02) 21291 - Telex 310.552 - 322.231 Odenor 1 - Fax (02) 2154953 Divisione Elettrodi: Via del Canzi, 1 - 20154 Milano - Tel. (02) 21781 - Telex 310552 - Perspa 1 - Fax (02) 2154872 2 1.2 DNP will make available to RENAULT the services of DNP specialists to realise installation and start-up of the Fuel Cell in cooperation with the personnel committed by RENAULT, and to train personnel in charge of the Fuel Cell to carry out a satisfactory test, for a maximum of 15 (fifteen) man-days. All travel and living expenses connected with the services of DNP specialists, as specified at point 1.2 will be borne by DNP. 1.3 DNP will make its best efforts to deliver the Fuel Cell the 15/th/ of September 1995 or at the latest within December 1995 subject to the on-site availability of the necessary fluids and material. The dates of the above-mentioned delivery and start-up are firmly agreed upon between DNP and RENAULT. In case of delays due to DNP fault, RENAULT will decide whether to continue the cooperation with DNP without any claim. The place where the Fuel Cell will be delivered and started will be defined by RENAULT at least 2 (two) months before the delivery. 2- RENAULT OBLIGATIONS 2.1 RENAULT will provide all personnel, equipments and/or materials necessary to permit operation of the Fuel Cell. 2.2 RENAULT will make available to DNP data and information, as defined at the supply of the Fuel Cell, which are necessary to DNP to analyze the results of the test and to provide for the technical assistance as defined at point 2.1. 2.3 RENAULT will be fully responsible for any damage caused during the test to RENAULT, DNP and/or third parties' personnel and/or properties, except if said damages are due to DNP's fault and particularly if the damage is due to DNP's construction material or if DNP's personnel have not observed the safety regulations. 2.4 RENAULT will return the Fuel Cell to DNP upon completion of the TEST. The Fuel Cell has to be returned to DNP in the same conditions as shipped by DNP, except for normal wear and tear. 2.5 RENAULT in return for the right of use of the Fuel Cell as well as for the technical assistance will pay to DNP a lump-sum rental fee of 500,000 ECU (five hundred thousand European Currency Units). Said rental fee shall be due and payable as follows: - 100,000 ECU at the signature of the rental agreement - 100,000 ECU at the supply of the Fuel Cell - 100,000 ECU starting from the date of the supply of the Fuel Cell by means of three semi-annual installments for a total of 300,000 ECU 3 by means of telegraphic transfer to BANCA POPOLARE DI BERGAMO CREDITO VARESINO Via Manzoni, 7-Milan Account no. A/C 040/18854 2.6 Custom fees and taxes will be in charge to RENAULT. 3- DURATION The rental term will be two years after the supply of the Fuel Cell. After this period the Fuel Cell will be returned to DNP in the same conditions as supplied, except for the normal wear and tear. This period can be extended, subject to agreement between both parties. Here attached : 'HYDROGEN/AIR FUEL CELL SPECIFICATIONS FEVER PROJECT' (RENAULT Fuel Cell Specifications - 13rd of June 1994). Should you need any further information, please do not hesitate and contact us. Yours sincerely, DE NORA PERMELEC S.p.A. Giuseppe Faita /s/ Giuseppe Faita EX-10.34 21 0021.txt PURCHASE ORDER & CONTRACT DATED FEB 13, 1997 EXHIBIT 10.34
ANSALDO RICERCHE - ------------------------------------------------------------------------------------------------------------------------------------ Ansaldo Ricerche S.r.l. Order no. M 0286/00 The correspondence regarding the present Corso Perrone, 25 document must refer to the complete 16161 Genoa ITALY particulars referred to alongside hereof Te. 010 6551, Telex 271274 ANSAR 1, Fax 010 444666 and be addressed as specified below. ANSALDO RICERCHE shall not be liable for the consequences of any possible forwarding of the correspondence carried out contrary to what is specified. - ------------------------------------------------------------------------------------------------------------------------------------ Tax ID no., VAT no. 03285280107 Date FEB. 13, 1997 to: C.C.I.A.A. 331606 Genoa DE NORA S.p.A. - ----------------------------------------------------------------------------------------- Registered office: Genoa 55815 Project ARI ANSALDO RICERCHE VIA BISTOLFI, 35 - ----------------------------------------------------------------------------------------- Capital 19,320,000,000 lire Supplier code D6441T 350-9001 20134 MILAN - ----------------------------------------------------------------------------------------- IPN FINMECCANICA - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ You are granted this order on the conditions contained herein, which nullify and For business correspondence: replace any other condition contained in the terms of sale. The validity of this order is contingent on the receipt, within 30 days of date contained herein, of Ansaldo Nuclear Division your letter of unconditional acceptance as per the attached fax. Corso Perrone, 25 - ----------------------------------------------------------------------------------------- Ref. 45 KW FUEL CELL STACKS 16161 Genoa ITALY Fax 010 6553532 Unit DNU/PNI - ------------------------------------------------------------------------------------------------------------------------------------ Detailed information For correspondence of a strictly ORDER NO. DESCRIPTION ISSUE AMOUNT CURRENCY administrative nature, such as invoices, R TI1000 PEM 45 KW FUEL CELL STACKS 320,000,000 LIRE price revisions, account statements: Ansaldo PC Divison Via D'Annunzio, 105 16126 Genoa, Italy - ------------------------------------------------------------------------------------------------------------------------------------ For test & inspection telexes and telegrams THE FOLLOWING ARE AN INTEGRAL PART OF THE ORDER: - TEXT OF THE ORDER Ansaldo Nuclear Division - BILL DIARY Corso Perrone, 25 - ATTACHMENTS REFERENCED IN THE TEXT Unit OUA ------------------------------------------- SPECIAL CONDITIONS: PAYMENT: 90 DAYS FROM INVOICE DATE For all other correspondence: DESTINATION: Corso Perrone, 25 TRANSPORT: DELIVERY: Free Genoa Ansaldo Ricerche Srl CRATING: INCL. (OPTIONAL) Corso Perrone, 25 16161 Genoa ITALY Information for Requesting party: Issued by: ANSALDO only DNT B. AMCHERO G. PAOLO ------------------------------------------- Total amount MERCENARO BARTOLOMEO 320,000,000 LIRE Order manager -------------------------------------------
ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 2 - ---------------------- ---------------------------------- ------------------- PREAMBLE The European Economic Community (hereinafter COMMUNITY in the contract documents), represented by the Commission of the European Communities (hereinafter COMMISSION in the contract documents) and - ANSALDO RICERCHE S.r.l. (COORDINATOR) - ANSALDO INDUSTRIA S.p.A. - MESSER GRIESHEIM GmbH - REGISTRO NAVALE ITALIANO (RINA) (hereinafter CONTRACTING PARTIES), signed CONTRACT no. 5074-92-11 EL ISP PC (hereinafter the CONTRACT) concerning "EOHHPP Phase III O-3: Demonstration Prototype of a Fuel Cell Boat used for Inland Navigation (hereinafter the PROJECT), in which CONTRACTING PARTIES undertake to perform the work for the PROJECT. COORDINATOR has selected the Subcontractor who will supply DE NORA S.p.A. (hereinafter DNR) fuel cells; said company, with whom [COORINDATOR] engages in joint business governed by two agreements dated 05/13/92, has developed a new technology for solid fuel electrolytic cells. ART. 1 -- SUBJECT OF THE ORDER 1.1 ANSALDO RICERCHE S.r.l. (ARI) grants DE NORA S.p.A. (DNR) the order to supply: 1.1.1 Fuel cell stacks defined in the annexed document "PURCHASE SPECIFICATION FOR FUEL CELL GENERATION SYSTEM FOR VESSEL EQHHPP" 1.1.2 Installation, start-up, testing & inspection, and operation of the stacks for a maximum period of 15 working days. Intervention time to be agreed with reasonable notice. 1.1.3 Replacement parts for regular maintenance during the test period. ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 3 - ---------------------- ---------------------------------- ------------------- 1.2 GA stacks remain the property of DNR, which will make repairs and/or replace all parts at its own expense due to construction defects during the demonstration period (though up to and not later than 06/30/99) and where said malfunctions are not due to operation of same in a way other than that set down by DNR in the respective testing & inspection, maintenance and care manuals. DNR undertakes to provide technical assistance to ARI for the entire demonstration period (up to and not later than 06/30/99) at terms and conditions to be agreed upon between ARI and DNR on a case by case basis. 1.3 ARI undertakes not to analyze the components of the stacks and not to permit third parties to inspect and/or analyze the components of the stacks. 1.4 Once the tests are concluded, ARI and DNR shall agree on returning the stacks to DNR. The stacks will be returned in their current condition and ARI shall not be responsible for wear and/or deterioration due to the use of the stacks, unless said wear and deterioration is due to operating the stacks out of conformity with DNR's instructions in its testing & inspection, maintenance and care manuals, without prejudice to the terms of 1.3. 1.5 Any publication of the results, beyond that which is provided in the CONTRACT, shall be agreed between ARI and DNR. ART. 2 - CONTRACT DOCUMENTS 2.1 The contract documents are as follows: 2.1.1 PURCHASE SPECIFICATION -- FOR FUEL CELL GENERATION SYSTEM FOR VESSEL EQHHPP" ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 4 - ---------------------- ---------------------------------- ------------------- 1.2 doc. PSA/CGF/02 REV. 1 - GENERAL CONDITIONS FOR SUPPLYING SYSTEMS, EQUIPMENT, MACHINERY AND ASSOCIATED BUSINESS .2 For any disagreements between the documents listed above, the interpretation of same must be agreed by ARI and DNR in reasonable terms. .3 The content of this order shall take precedence over the aforementioned documents. .4 Departures from the contract documents must be approved by ANSALDO in writing under penalty of nullification. ART. 3 - TERMS OF CONTRACT .1 The date on which work begins is set down in the order acceptance date. .2 Supply shall be delivered to the delivery point within 24 working weeks of the signing date of the order. ART. 4 - CRATING The price includes crating. ART. 5 - DELIVERY The supply shall be delivered CIF ANSALDO - Genoa (ref. INCOTERMS 1990). ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 5 - ---------------------- ---------------------------------- ------------------- ART. 6 - TRANSFER OF OWNERSHIP N/A ART. 7 - PENALTIES 1 Delivery dates are final and no delay is permitted without prior written authorization by ANSALDO. 2 In the event of delays in the contract supply delivery date, after a grace period of 5 calendar days a penalty of 0.5% of the total order amount shall be applied for every week or portion thereof of delay. .2.1 The maximum amount of delay penalties shall be 10% of the final order amount. ART. 8 - GUARANTIES N/A ART. 9 - INSTALLATION AND TEST ASSISTANCE The above are included in the services as per Art. 1. ART. 10 - PRICE Total flat rate price as indicated in Art. 1. 320,000,000 lire ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 6 - ---------------------- ---------------------------------- ------------------- ART. 11 - INVOICING AND PAYMENT METHOD 1.1 The amount as per Art. 4 may be invoiced as incurred, though not prior to the dates on which the work associated therewith is completed, defined in Table 1A in the annex. 1.2 Every invoice must contain the following information: - running/consecutive number - Community Order number 5074-92-11 ELISP PC - order number - name, address, and account number of DNP's reference bank ART. 12 - PAYMENT Payments shall be made by direct remittance to the Bank selected by ANSALDO, within 90 days, end of month, of the receipt of invoice, provided the conditions to which the installments are subject have actually been met. ART. 13 - ACCEPTANCE As indication of unconditional acceptance, supplier will send to ANSALDO a letter which complies with the fax specified in the contract documents, by and no later than 20 days from receipt of this order. Should the referenced acceptance not be received within the above term, ANSALDO shall as a precautionary measure stop processing any invoices received, reserving the right to take action against Supplier for compensation for any damages incurred. ANSALDO RICERCHE - ---------------------- ---------------------------------- ------------------- order no. N 02486 00 of FEB. 13, 1997 page no. 7 - ---------------------- ---------------------------------- ------------------- ART. 14 - DECLARATION BY THE CONTRACTING PARTIES ANSALDO and Supplier declare that the terms ratified in this order correspond to the agreements concluded in their negotiations. Therefore, all previous correspondence must be considered superceded. [stamp] ANSALDO Ansaldo Ricerche S.r.l. /s/ Giuseppe Ferrari Managing Director
ANSALDO RICERCHE - ------------------------------------------------------------------------------------------------------------------------------------ order no. N 02486 00 of FEB. 13, 1997 page no. 8 - ------------------------------------------------------------------------------------------------------------------------------------ TABLE 1A BILL AND PAYMENT CONDITIONS DIARY - ------------------------------------------------------------------------------------------------------------------------------------ SUBORDER: N 02486/00 R ORDER / CDR: TI1000 SUPPLIER CODE: 064411 RDA DESCRIPTION: 45 KW FUEL CELL STACKS REF.: - ------------------------------------------------------------------------------------------------------------------------------------ QUALITY LEVEL: 1 CURRENCY CODE: ITALIAN LIRE INITIAL DATE 12/05/96 TYPE OF GOODS: OAB AMOUNT OF SUBORDER PAYMENT COND.: 90 DAYS AFTER INVOICE REF. [ILLEG.] -- AMOUNT ISSUE OF SERVICE: 320,000,000 ORDERS -- TOTAL AMOUNT: 320,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ DESTINATION: Corso Perrone, 25 DELIVERY: Free Genoa TRANSPORT: CRATING: INCLUDED (OPTIONAL) DOCS. ATTACHED: - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ EVENT EVENT SCHEDULE DESCRIPTION OF EVENTS TO BE INVOICED PERCENT AMOUNT COMMENTS - ------------------------------------------------------------------------------------------------------------------------------------ BEGINNING END - ------------------------------------------------------------------------------------------------------------------------------------ 1 A 02/01/97 ACCEPTANCE OF ORDER 0.2500 80,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ 2 C 07/31/97 DELIVERY OF STACKS (24 WORKING WEEKS FROM ACCEPTANCE 0.2500 80,000,000 OF ORDER) - ------------------------------------------------------------------------------------------------------------------------------------ 3 C 01/31/98 SIX MONTHS AFTER DELIVERY OF SUPPLY 0.2500 80,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ 4 C 06/30/99 AT END OF DEMONSTRATION CAMPAIGN, BY ISSUE OF THE 0.2500 80,000,000 ACTIVITY COMPLETION REPORT, AND, IN ANY CASE, NO LATER THAN 06/10/99 - ------------------------------------------------------------------------------------------------------------------------------------
EX-10.35 22 0022.txt LETTER AGREEMENT DATED JULY 27, 2000 Exhibit 10.35 [LOGO] NUVERA FUEL CELLS July 27, 2000 J. Barclay Collins, II, Esq. Amerada Hess Corporation 1185 Avenue of the Americas New York, New York 10036 Dear Barclay: This letter sets forth the Agreement of Nuvera Fuel Cells, Inc. ("Nuvera") and Amerada Hess Corporation ("Hess") with respect to a transaction pursuant to which Hess will invest $15,000,000 in Nuvera, representing 67,416 newly-issued shares of the common stock of Nuvera (the "Transaction'"). The total number of shares of common stock outstanding after the closing under this Transaction, taking into account the 6% to be sold to Hess pursuant to this Transaction, will be 1,067,416 shares. The following are the details of the Transaction: 1. The funds will be used as determined by the Nuvera Board of Directors. 2. At closing, Hess will pay $15,000,000 in cash to Nuvera in exchange for the 67,416 shares of stock of Nuvera as stated above. 3. In view of Hess's role on the Nuvera Board of Directors, Hess represents that there are no conditions to closing, other than as in Articles 7.1(a) and (b) of the Investment Agreement dated March 30, 2000 among Hess, Arthur D. Little, Inc. ("ADL") and Nuvera (formerly known as Epyx Corporation) (the "Agreement"), and no due diligence is required by Hess to conclude this Transaction. J. Barclay Collins, II, Esq. Page 2 July 27, 2000 4. The representations and warranties made by Nuvera and ADL in Article IV of the Agreement, of ADL made in Article V of the Agreement and of Hess contained in Article VI of the Agreement will apply to this Letter Agreement as if made today and at the date of the closing of this Transaction, as applicable. Other than Sections 4.1, 4.2 and 4.4, such representations and warranties are made to the best knowledge of the parties. 5. The conditions precedent to closing as contained in Article VII of the Agreement will apply to this Letter Agreement as if made today and at the date of the closing of this Transaction, as applicable. 6. This Letter Agreement will not affect Hess's rights under Article IX of the Agreement. 7. Any provisions of the Agreement which by their nature would be applicable to this Transaction and the shares to be issued, will apply giving due effect to the intent of the parties in entering into this Letter Agreement. 8. Hess will transfer $15,000,000 to Nuvera no later that 12:00 p.m. on July 31, 2000, and Nuvera will deliver a share certificate to Hess representing the 67,416 shares in Nuvera no later than 5:00 p.m. on July 31, 2000. All times are Eastern Daylight Savings Time. If the share certificate is not delivered to Hess for any reason, Nuvera will return the $15,000,000 to Hess. 9. Hess represents that there are no further approvals of Hess required to consummate the Transaction. 10. All approvals required by the Stockholders' Agreement dated April 4, 2000, among DeNora Fuel Cells, S.p.A., ADL and Hess will be obtained prior to closing under this Letter Agreement. 11. Article II, Section 2.1 of the Stockholders' Agreement will be amended so that Stockholders will take such action as is necessary to fix the number of Directors at nine (9) and Hess will have the right to designate two (2) Directors. This Letter Agreement will not otherwise affect any rights of the parties under the Stockholders' Agreement. 12. Each Party will bear its own fees and expenses incurred in connection with the Transaction including fees for disbursements of attorneys and other advisors. J. Barclay Collins Page 3 July 27, 2000 13. Neither Hess nor Nuvera will issue a press release or public announcement with respect to the contents of this letter or the negotiations relating to this letter or any definitive documentation without the written consent of the other party. 14. This letter will be governed by and construed in accordance with the laws of the State of Delaware. 15. This letter is a legal and binding obligation of the parties. Please confirm your agreement to the above by signing and returning one copy of this letter to me. Very truly yours, /s/ Lorenzo C. Lamadrid Lorenzo C. Lamadrid AMERADA HESS CORPORATION By: /s/ John A. Gartman ------------------------------------ John A. Gartman for Barclay Collins, II NUVERA FUEL CELLS INCORPORATED By: /s/ Federico DeNora ------------------------------------ Federico DeNora NUVERA FUEL CELLS INCORPORATED By: /s/ Mark A. Brodsky ------------------------------------- Mark A. Brodsky EX-10.37 23 0023.txt SHAREHOLDER AGREEMENT Exhibit 10.37 SHAREHOLDER AGREEMENT THIS AGREEMENT is made and entered into as of the December 21, 2000, by and between: NUVERA FUEL CELLS Inc., a corporation duly existing under the laws of Delaware, having offices at Via Bistolfi 35, 20134 Milano, Italy, represented by Mr. Franco LADAVAS duly authorized (hereinafter referred to as "NUVERA"), and L'AIR LIQUIDE S.A., a corporation duly existing under the laws of France, having its principal office at 75 quai d'Orsay 75321 Paris Cedex 07, France, represented by Mr. Michel MOULINEY duly authorized (hereinafter referred to as "AL"). NUVERA and AL being referred herein to individually as a "Party" and collectively as the "Parties". WITNESSETH THAT: WHEREAS, NUVERA is involved, inter alia, in the business of fuel cells stacks and fuel processors for small power applications for the residential market; WHEREAS, AL is involved in the business of hydrogen including the production, transportation and distribution, storage, marketing and sales and any related R&D activity; WHEREAS, AL is involved, inter alia, through its department "DTA", in the business of fuel cells systems for the hydrogen and the industrial market; and WHEREAS, NUVERA and AL, based on their respective expertise and technologies, have decided to establish a joint-venture company to develop, manufacture and commercialize complete energy supply systems utilizing hydrogen, fuel processors and fuel cells pursuant to the following terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants, promises and agreements contained herein, the Parties hereby agree as follows: ARTICLE 1 - DEFINITIONS - ----------------------- "Affiliate" shall mean, with respect to any Party, any entity which directly or indirectly controls, or is controlled by, or is under common control with, such Party, "control" meaning ownership, directly or indirectly through one or more intermediaries, of more than 50% of the shareholder voting rights of a company. "AL Competitor" shall mean any company in the business of producing and/or selling industrial gases (in gas or liquid form) and related application and services and/or industrial gas production equipment. "NUVERA Competitor" shall mean any company in the business of developing, producing and selling fuel cell systems, power modules and related components, below 200kW. 2 "Board" or "Board of Directors" has the meaning ascribed to it in Article 9 hereto. "Closing" has the meaning ascribed to it in Article 18 hereto. "Director(s)" has the meaning ascribed to it in Article 9 hereto. "Fair Market Price" shall mean the per share value of NEWCO's Shares determined by an international public accounting firm selected jointly by the Parties, in accordance with the methods and standards of evaluation generally accepted in international transactions, based on the assumption that NEWCO is and shall continue to carry on business as a going concern. "PEM Fuel Cell Technology" or "FC Technology" shall mean a set of complete energy supply systems utilizing fuel cells and hydrogen or fuel processors as more fully described in EXHIBIT 1. "Chairman and CEO" has the meaning ascribed to it in Article 11 hereto. "Initial Capital" has the meaning ascribed to it in Article 5 hereto. "NEWCO" shall mean the dedicated company to be established by the Parties as provided in Article 2 below. "Offered Shares" has the meaning ascribed to it in Article 6 hereto. "Phase 1" and "Phase 2" have the meaning ascribed to them in Article 3.2 hereto. "Preemptive Right Offer" has the meaning ascribed to it in Article 6 hereto. "Related Agreements" has the meaning ascribed to it in Article 15 hereto. "Remaining Party" has the meaning ascribed to it in Article 6 hereto. "Seller" has the meaning ascribed to it in Article 6 hereto. "Share(s)" or "Share Capital" has the meaning ascribed to it in Article 5 hereto. "Shareholders" has the meaning ascribed to it in Article 5 hereto. "Third Party Buyer" has the meaning ascribed to it in Article 6 hereto. ARTICLE 2 - ESTABLISHMENT OF NEWCO - ----------------------------------- 2.1 In accordance with the provisions of French Laws together with the terms and conditions stated hereunder, the Parties hereby agree to establish a limited liability company (in French, "societe anonyme"), "NEWCO", which shall be governed by its By-laws, to undertake on an exclusive basis the scope of activity defined in Article 3-1 below in a manner to achieve satisfactory profits. 3 2.2 The Parties will use their best efforts to agree upon the name of NEWCO and the logo before the Closing. Any use of the NUVERA or AL trademarks or logos shall be approved by the respective Parties. Any property rights in other names or logos other than NUVERA and AL's trade marks or logos used by NEWCO shall accrue to NEWCO. 2.3 The legal address of NEWCO shall be at route de Clemencieres - BP 15, 38360 Sassenage, France. ARTICLE 3 - PURPOSE AND SCOPE OF NEWCO - -------------------------------------- 3.1 Scope of Newco: . The development of complete energy supply systems ranging from 50 kW to 1 MW and multiples, utilizing fuel cells and fuel processors or directly fed with industrial H2 for stationary applications, . The development of complete energy supply systems ranging from 50 kW to 250 kW and multiples, utilizing fuel cells directly fed with H2, and H2 range extenders for transport applications . The development of regenerative fuel cell for renewable energy applications The development of portable "Fuel Cell System" (up to 100 kW) systems fed with H2 . The introduction of the above systems for space, aeronautics and submarine and other anaerobic of confined applications . The manufacturing of such systems and parts of . The world-wide commercialization of such systems and parts of The business objectives of NEWCO are detailed in EXHIBIT 5 + 2bis 3.2 Purpose of Newco: As to the development of the activity of NEWCO, it is foreseen that there will be a first period of a three year duration, that will be modified as necessary upon the mutual agreement of the Parties, from the coming into effect hereof ("Phase 1") mainly dedicated to the development and market investigations of the FC Technology and, with the success of Phase 1, a second period following Phase 1 and lasting up to the term of this Agreement ("Phase 2") mainly dedicated to the production, commercialization and sale of FC Technology Phase 1 will include but will not be limited to: . FC Technology research and development; . Engineering and project management; . Sales of development studies and projects; . Manufacturing management and production; and . Transversal actions : Communication, Market investigations, Definition of a business strategy and preparation of Phase 2 . A detailed description of Phase 1 scope is set forth in EXHIBIT 2. 4 Phase 2 will include but will not be limited to: . Industrialization; and . Commercialization and Sale 3.3 Details on the contents and goals of Phase 1 and expected technical development plan related thereto are attached as EXHIBIT 2. 3.4 The cost and the planning of expenses of development program are detailed in EXHIBIT 6 hereto and expected business plan attached in EXHIBIT 8 hereto. 3.5 At the end of Phase 1, the Parties will decide how to proceed with Phase 2 based upon the outcomes of Phase 1. It is reminded that AL and NUVERA are each entitled to terminate the present Agreement for convenience at the end of Phase 1 as per Article 21.1 hereinafter without payment of any indemnification whatsoever to the other Party. ARTICLE 4 - GEOGRAPHICAL TERRITORY OF NEWCO - -------------------------------------------- NEWCO shall perform its activity on a worldwide basis, with the particular markets addressed on a geographic basis per Exhibit 2Bis. ARTICLE 5 - CAPITAL OF NEWCO - ----------------------------- 5.1 The respective contribution in cash of the Parties at the creation of NEWCO shall be the following: AL: 19 200 Euro NUVERA: 19 200 Euro 5.2 At the creation of NEWCO, NEWCO shall have an initial capital of EURO 38 400 (the "Initial Capital"), which shall be divided into 3 200 shares, each having a par value of EURO twelve (12) (all such shares, as well as subsequently issued shares, being herein referred to collectively as the "Shares" or "Share Capital" and individually as a "Share"). No double voting right shall accrue to any share. 5.3 The Shares initially allocated to the Parties during Phase 1 shall be as follows: AL: 50% NUVERA: 50% 5.4 During Phase 1, NEWCO shall order some studies and work to the Parties as provided for in the agreements referred to in Articles 13.1 and 15 hereinafter and as outlined in Exhibit 6. It is agreed between the Parties that such studies and work made by both Parties shall be carefully documented by them and transferred thereafter to NEWCO in order to enable NEWCO to convert in capital the payments due to the Parties pursuant to such agreements. For the conversion in capital of such payments which shall not exceed four (4) million EURO with approximately (two (2) million for AL and two (2) million for NUVERA), the new Shares shall have the same value stipulated in Article 5.1 above. 5 5.5 During Phase 1, at the appropriate time as determined by the Board, AL will lend to NEWCO additional amount of money necessary to cover NEWCO' s cash expenses up to a maximum of 3 million EURO altogether, being understood that, at the beginning of Phase 2, a part of the above money (one (1) million EURO) lent to NEWCO by AL shall be converted in capital (the new Shares having for the purposes of this operation the same value as stipulated in Article 5.1 above) without any additional charge for AL, which NUVERA hereby agrees expressly, so that the split of Shares become: AL: 60% NUVERA: 40% ARTICLE 6 - TRANSFER OF SHARES - ------------------------------ 6.1 The Parties hereby undertake not to sell, transfer, assign, mortgage, pledge, or otherwise encumber or transfer title or rights to any or all of the Shares except as set forth in this Article. 6.2 Each Party may transfer all of the Shares held by it to an Affiliate of such Party provided that prior to such transfer (a) such Affiliate undertakes in writing to become a party to this Agreement, to be bound by the terms hereof and to fulfill the obligations of the transferring Party arising hereunder, and (b) such Affiliate irrevocably undertakes in writing to assign such Shares back to the transferring Party, and the transferring Party irrevocably undertakes to repurchase such Shares, if at any time such Affiliate ceases to be an Affiliate of the transferring Party. 6.3 Subject to the provisions of 6.4 below, but after the conclusion of Phase 1, each Party (the "Seller") may sell all or a part of its Shares (the "Offered Shares") to an unaffiliated party (the "Third Party Buyer") provided that such transaction is bona fide and at arm's length, that such Third Party Buyer undertakes in writing to become a party to this Agreement, to be bound by all the terms hereof and to fulfill the obligations of the Seller arising hereunder, and that, prior to such sale, the Seller offers the Offered Shares to the other Party (the "Remaining Party"), in accordance with the following procedure: (a) the Seller shall transmit to the Remaining Party a copy of the Third Party's written offer, together with a written offer to sell to the Remaining Party the Offered Shares at the price offered by the Third Party Buyer and on the same terms and conditions as offered by the Third Party Buyer (the "Preemptive Right Offer"); (b) within thirty (30) days of receipt of such written offer, the Remaining Party shall notify the Seller in writing whether it wishes to purchase from the Seller; (c) if, pursuant to the procedure and within the time limits set forth in (a) and (b) above, the Seller's offer is accepted as to all of the Offered Shares, then the Seller shall sell to the Remaining Party, and the Remaining Party shall purchase, the Offered Shares in accordance with such offers and acceptance. The transfer of the Offered Shares and payment of the purchase price therefor shall be made within ten (10) days from the date of the said notification; and (d) if the Remaining Party fails to accept the Seller's offer as to all of the Offered Shares, then the Seller shall be free, during a period of six months thereafter, to sell the Offered Shares to the Third Party Buyer upon the terms and conditions set forth in the Third Party Buyer's offer. 6 6.4 Notwithstanding the above, NUVERA agrees not to sell all or any part of its Shares to a AL Competitor and AL agree not to sell all or any part of its Shares to a NUVERA Competitor. 6.5 The Directors of NEWCO shall be obligated to approve, and the Shareholders shall cause the Directors elected by them to approve, any transfer of Shares made in accordance with this Article. ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF PARTIES - ----------------------------------------------------- 7.1 Representations and warranties of NUVERA: NUVERA represents and warrants to AL as follows: . NUVERA is a company duly organized, validly existing and in good standing as a legal person under the laws of Delaware. NUVERA has full legal right, power and authority to execute and deliver this Agreement and all the contracts and documents referred to in this Agreement to which it is a party and to observe and perform its obligations hereunder and thereunder. . NUVERA has taken all appropriate and necessary corporate action to authorize the execution and delivery of this Agreement and all of the contracts and documents referred to in this Agreement to which it is a party and to authorize the performance and observance of the terms and conditions hereof and thereof. . NUVERA has obtained all consents, approvals and authorizations, in particular with respect to intellectual property law, necessary for the valid execution and delivery of this Agreement and all of the contracts and documents referred to in this Agreement to which it is a party and to observe and perform its obligations hereunder and thereunder. . All information supplied to AL by NUVERA in relation to this Agreement, including the information concerning the business and financial status of NUVERA, is true and correct whether such information has been verified or audited by an independent third party or not. . To the best of NUVERA's knowledge, there is no litigation, arbitration or administrative proceeding which is currently taking place or pending or threatened against NUVERA which would prevent NUVERA from performing its obligations hereunder and NUVERA is not in default under any law, regulation, government directive, judgment, order, authorization, contract or obligation applicable to the business or assets of NUVERA. 7.2 Representations and warranties of AL: . AL represents and warrants to NUVERA as follows: . AL is a company duly organized, validly existing and in good standing as a legal person under the laws of France. . AL has full right, power and authority to execute and deliver this Agreement and all the contracts and documents referred to in this Agreement to which it is a party and to observe and perform its obligations hereunder and thereunder. . AL has taken all appropriate and necessary corporate action to authorize the execution and delivery of this Agreement and all the contracts and documents referred to in this Agreement to which it is a party and to authorize the performance and observance of the terms and conditions hereof and thereof. 7 . AL has obtained all consents, approvals and authorizations, in particular with respect to intellectual property law, necessary for the valid execution and delivery of this Agreement and all of the contracts and documents referred to in this Agreement to which it is a party and to observe and perform its obligations hereunder and thereunder. . All information supplied to NUVERA by AL in relation to this Agreement, including the information concerning the business and financial status of AL, is true and correct whether such information has been verified or audited by an independent third party or not. . To the best of AL's knowledge, there is no litigation, arbitration or administrative proceeding which is currently taking place or pending or threatened against AL which would prevent AL from performing its obligations hereunder and AL is not in default under any law, regulation, government directive, judgment, order, authorization, contract or obligation applicable to the business or assets of AL. ARTICLE 8 - RESPONSIBILITIES OF THE PARTIES - --------------------------------------------- In addition to its responsibilities under this Agreement, each Party expressly agrees upon the following commitments: . to establish and help to establish NEWCO in accordance with the French laws and regulations; . to enter into and perform certain Related Contracts referred to in Article 15 herein; . to assist NEWCO, if requested by it, to procure from abroad, equipment, machinery, and logistic equipment which are not available in France or which NEWCO considers should be imported; . to assist NEWCO, if necessary, in contracting for and obtaining all necessary utilities required by NEWCO; . to use its best efforts to help NEWCO secure adequate financing, subject to the provisions of Article 12.2 hereof; . to assist NEWCO, if decided by the Board of Directors or the Chairman and CEO as the case may be, with the recruitment of qualified management personnel, technical personnel, workers or detach such personnel; . to assist NEWCO in its relations with governmental authorities; . to do all reasonable efforts to finalize the transaction contemplated hereby, in particular to make the conditions precedent of Article 17 hereinafter fulfilled and to prepare and carry out whatever action is necessary to properly handle the Closing; and . to assist NEWCO in other matters, as reasonably requested by NEWCO. In particular, AL and NUVERA will do all their reasonable efforts to support NEWCO by providing if available the necessary material, equipment and resources for performing the activities of NEWCO in accordance with the schedule of the development program of Phase 1 and in the framework of the agreements between NEWCO and the Parties for covering the activities of the dedicated teams. 8 Notwithstanding the above, neither AL nor NUVERA shall have any obligation to provide to third parties any financial guarantee or technical guarantee relating to the activities of NEWCO. AL agrees to give access to its world-wide industrial customer portfolio, its expertise in on-site and energy services as well as the potential fuel cell market for systems connected to the AL hydrogen grid. In addition, at creation of NEWCO, AL and NUVERA will have the option to assign their existing development and commercial contracts at the date hereof which relate to NEWCO's activity, provided nothing contained in such contracts prevents from assigning them. ARTICLE 9 - BOARD OF DIRECTORS OF COMPANY - ----------------------------------------- 9.1 NUVERA and AL will exercise their respective voting rights in NEWCO and take such other steps as are necessary to ensure that the participation of AL and NUVERA in NEWCO be reflected at the Board of Directors level and the Management Committee (if any): . during Phase 1, the Board of Directors consists of four (4) members; during Phase 2, the Board of Directors consists of five (5) members; . of such four members of the Board during Phase 1, two (2) shall be selected and nominated by AL and two (2) shall be selected end nominated by NUVERA; of such five members of the Board during Phase 2, three (3) shall be selected and nominated by AL and two (2) shall be selected and nominated by NUVERA; . NUVERA and AL shall each vote their respective shares in NEWCO to procure the nomination and election of the members of the Board nominated by the other Party; . the initial nominees of NUVERA to the Board shall be M. BRODSKY and M. RUSSO or his designee; . the initial nominees of AL to the Board shall be M. MOULINEY and P. SANGLAN; . during the term of this Agreement, and unless otherwise agreed upon between the Parties, the office of Chairman and CEO (counted within the 2 or 3 Directors nominated by AL) shall be held by a representative of AL approved by NUVERA, which approval shall not be unreasonably withheld; . if either Party wishes to change or dismiss its nominated Directors with or without cause, the other Party will vote accordingly; provided, however, that if such change or dismissal is without cause, the Party proposing it shall indemnify and hold NEWCO and the other Party harmless from any and all damages and other expenses that may arise from such action; and . the Directors shall each be elected and renewable for terms of three years. 9.2 Ordinary Meetings of the Board of Directors shall be held in accordance with the By-laws of NEWCO and French law, and at least three times a year. Upon the request of any one Director, NEWCO shall convene additional meetings of the Board upon due notice as required by the By-laws and French law. 9 9.3 A quorum of at least 3 or 4 depending on the Board size of the Directors must be present or represented in order to hold a validly constituted meeting of the Board; at least one of whom shall be a Director nominated by NUVERA and one of whom shall be a Director nominated by AL. If at a properly notified meeting a quorum is not present or represented the meeting shall be adjourned for seven (7) days to the same place and at the same time. In case at such adjourned meeting the quorum is again not present or represented, then another Board meeting shall be held on the fourteenth (14th) day from the last adjourned meeting and the presence of 50% of the total number of Directors shall be sufficient to constitute a quorum at such third meeting. 9.4 Board meetings shall be convened and presided over by the Chairman and CEO or as otherwise provided herein or in the By-laws. Further, it shall be stipulated in the By-laws of NEWCO that the CEO will have casting vote during Phase 1. 9.5 The Board of Directors shall conduct the general policy of NEWCO. 9.6 During Phase 1, the matters listed below shall require the affirmative vote of a majority of the Directors present or represented and voting, which majority shall include at least one Director nominated by AL and one Director nominated by NUVERA: . with the exception of the Related Agreements referred to in Article 15 hereof, entering into of any contract, agreement, or arrangement or amendment thereto with any Shareholder of NEWCO or Affiliate thereof; . approval of contracts with clients of NEWCO in an amount greater than 1 million [_]. . approval of contracts involving payment or investment, with the exception of purchasing contracts related to contracts with clients; . approval of insurance policies referred to in Article 16 hereinafter; . borrowing money or related series of borrowings or obtain any long term loan; . creation of any mortgage, charge, lien or other encumbrance affecting NEWCO's property or assets; . approval of purchase, sale, exchange or other disposal of any property or assets of NEWCO; . entering into lease or sublease of any property or assets owned by NEWCO; . guarantee of obligations of third parties; . loan to third parties; . proposal to the Shareholders to appoint or reappoint auditors; . proposal to the Shareholders as to declaration of dividends subject to the provisions of Article 12.2 hereof; . approval of any new business or substantial expansion of the business contemplated herein as referred to in Article 4 hereof; . creation or acquisition of control, directly or indirectly, of any subsidiary or making any substantial investment in any other company or venture by NEWCO; . proposal to the Shareholders of scheme of merger or amalgamation with any other company or entity; . approval of any significant reduction or discontinuance of the operations of NEWCO; . proposal to the Shareholders to dissolve or liquidate NEWCO; . acquisition from or grant to third parties of licenses and rights with respect to patents, manufacturing technology and other industrial property; . proposal to the Shareholders of any change in the Share Capital and capital structure; 10 . proposal to the Shareholders of capitalization of profits or issuance of convertible debentures; . settlement or compromise of any claim, or dispute above 200 000 [_] or its equivalent in a foreign currency; . appointment and remuneration of officers of NEWCO and authority delegated to them; . proposal to the shareholders relating to alteration of the By-laws of NEWCO; and . approval of the annual budget and the business, finance and investment plans. 9.7 During Phase 2, the matters listed below shall require the affirmative vote of all the Directors present or represented and voting: . with the exception of the Related Agreements referred to in Article 15 hereof, entering into of any contract, agreement, or arrangement or amendment thereto with any Shareholder of NEWCO or Affiliate thereof; . borrowing money or related series of borrowings or obtain any long term loan in an amount grater than 1 million [_]; . creation of any mortgage, charge, lien or other encumbrance affecting NEWCO's property or assets; . approval of purchase, sale, exchange or other disposal of any material property or material assets of NEWCO; . entering into lease or sublease of any property or assets owned by NEWCO; . guarantee of obligations of third parties; . loan to third parties; . proposal to the Shareholders as to declaration of dividends subject to the provisions of Article 12.3 hereof; . approval of any new business or substantial expansion of the business contemplated herein as referred to in Article 4 hereof; . creation or acquisition of control, directly or indirectly, of any subsidiary or making any substantial investment in any other company or venture by NEWCO; . proposal to the Shareholders of scheme of merger or amalgamation with any other company or entity; . approval of any significant reduction or discontinuance of the operations of NEWCO; . proposal to the Shareholders to dissolve or liquidate NEWCO; . acquisition from or grant to third parties of licenses and rights with respect to patents, manufacturing technology and other industrial property; . proposal to the Shareholders of any change in the Share Capital and capital structure; . proposal to the Shareholders of capitalization of profits or issuance of convertible debentures; . settlement or compromise of any claim, or dispute above 200 000 [_] or its equivalent in a foreign currency; . appointment and remuneration of officers of NEWCO and authority delegated to them; . proposal to the shareholders relating to alteration of the By-laws of NEWCO; and . approval of the annual budget and the business, finance and investment plans. 9.8 Any resolution with respect to all other matters (except where French law requires otherwise) shall be passed by affirmative votes of a simple majority of the Directors present or represented and voting. 11 ARTICLE 10 - GENERAL MEETING OF SHAREHOLDERS - -------------------------------------------- 10.1 NEWCO shall hold (i) an annual meeting of the shareholders at least once during each calendar year and not later than fifteen months after the preceding annual general meeting in order to approve the annual accounts and elect, as necessary, NEWCO's Directors and auditors, and (ii) extraordinary general meetings of the shareholders from time to time as may be convened by the Board of Directors on its own initiative or at the request of the holders of at least 40% of the outstanding voting Shares. 10.2 General meetings of the shareholders shall be conducted in accordance with the By-laws of NEWCO. A quorum for general meetings of the shareholders shall exist if at least 55 % of the outstanding voting shares and at least two Shareholders are present or represented; provided that, if at a properly notified general meeting a quorum is not present the meeting shall be adjourned without further notice for seven (7) days to the same place and at the same time, at which adjourned meeting a quorum will be constituted if at least 50% of the outstanding voting shares are present or represented. 10.3 No resolution shall be passed at a general meeting with less than a majority vote of the outstanding voting shares of NEWCO present or represented at such meeting unless otherwise stipulated by French laws. ARTICLE 11 - ADMINISTRATION OF NEWCO - ------------------------------------ Except as otherwise agreed upon between the Parties, the Parties and NEWCO will follow the principles set forth below: 11.1 Officer: The Chairman and CEO shall conduct the business of NEWCO under the control of the Board of Directors. The Chairman and CEO shall be appointed by the Board of Directors for a terms of three years. 11.2 Executive Committee: An executive committee ("Executive Committee") may be set up at the beginning of Phase 2 or prior to Phase 2 should the activity of NEWCO require so. The composition, responsibilities and functioning of the Executive Committee will be mutually decided by the Parties on the creation thereof. 12 ARTICLE 12 - FINANCIAL POLICY - ----------------------------- 12.1 ACCOUNTING OF COMPANY The accounting period and fiscal year of NEWCO shall run from January 1/st/ to December 31/st/ of each year. . NEWCO shall keep complete and accurate books of accounts of all business transacted by NEWCO in accordance with generally accepted international accounting principles and AL and NUVERA' s accounting standards as well. . NEWCO will cause to be prepared and distributed to the Shareholders as promptly as possible following of the fiscal year annual audited financial statements. The Shareholders will be entitled to audit during business hours NEWCO's books of accounts upon reasonable notice to the Chairman and CEO of NEWCO and AL. . NEWCO's books of accounts and other records shall be kept in the French language. 12.2 PROFITABILITY, DIVIDENDS The amount of the dividends distributed to each Shareholder shall be proportional to such Shareholder's interest in the Share Capital. The Parties shall discuss in good faith the payment of dividends or other disposition of profits that NEWCO earns in any year, taking into account the current and future requirements of NEWCO, requirements of the annual budgets and future growth of NEWCO. Dividends shall be proposed by the Board and approved by the Shareholders. ARTICLE 13 - OTHER SUPPORTS FROM AL AND NUVERA TO NEWCO - ------------------------------------------------------- 13.1 PERSONNEL 13.1.1 Subject to the other provisions of this article 13.1, AL and NUVERA agree to put at the disposal of NEWCO the personnel necessary to perform its activity and in particular the personnel listed in EXHIBIT 3 and 7 attached hereto. Such personnel shall work under the responsibility of NEWCO and shall be managed by NEWCO. AL and NUVERA will charge to NEWCO the wages, social and other expenses related to such personnel according to conditions to be determined between the Parties and NEWCO and any applicable French laws. 13.1.2 A team clearly identified at NUVERA's facilities in Milan will carry out for NEWCO the fuel cell stack development related work pursuant to a specific contract between NEWCO and NUVERA. 13.1.3 A team clearly identified at AL's CRCD facilities in Les Loges near Paris will carry out for NEWCO the fuel processor development related work pursuant to a specific contract between NEWCO and AL. 13.1.4 A team clearly identified at AL's facility in Sassenage (France) will carry out for NEWCO the fuel cell system, test and qualification related work pursuant to a specific contract between NEWCO and AL. 13 13.1.5 Administration, marketing and other functions will be carried out by the NEWCO personnel physically located at NEWCO's headquarters in Sassenage. 13.2 EQUIPMENT The Parties agree to make available to NEWCO any available equipment necessary to the NEWCO's activity, more fully described in EXHIBIT 2 Bis which will not be subcontracted to the Parties, pursuant to the terms and conditions of the Development Agreements set forth in Article 15 hereof. . During Phase 1, NEWCO will purchase exclusively from NUVERA the stack provided it guarantees satisfactory performance as well as associated industrialization, under sale terms and conditions to be described in the related agreement (see Article 15) . This is to be reconsidered for Phase 2 on a better price/performance basis if NEWCO will not decide to manufacture directly fuel processor or stacks. . During Phase 1, NEWCO will purchase exclusively from NUVERA the fuel processor provided it guarantees satisfactory performance as well as associated industrialization under sale terms and conditions to be described in the related agreement (see Article 15) In the event NUVERA declines to supply the fuel processors, NEWCO will purchase exclusively from AL the fuel processors. . This is to be reconsidered for Phase 2 on a better price/performance basis if NEWCO will not decide to manufacture directly fuel processor or stacks. ARTICLE 14 - INTELLECTUAL PROPERTY RIGHTS 14.1 AL AND NUVERA' S INTELLECTUAL PROPERTY RIGHTS 14.1.1 Each Party will grant to NEWCO for the only purpose of the performance of its scope of activities as described in Article 3 above, a worldwide and non- transferable right to use its patents, its know-how and/or any other of its intellectual property rights (hereinafter called "IPR") when necessary and as far as said Party is allowed to grant such a right. Each Party's respective IPR which may be used by NEWCO are (I) IPR existing at the Closing Date as identified in EXHIBIT 4 and (ii) IPR which will be acquired during Phase 1 and which will be necessary for NEWCO to perform its activities as defined in Article 3.1 above. It is anticipated that AL will contribute patents in the field of stack technology, power modules, H2 Storage, and H2 Production. Nuvera will contribute patents in the field of stack technology. 14.1.2 Each Party shall remain the owner of the IPR of which a right to use has been granted to NEWCO in accordance with article 14.1.1 herein above. 14.1.3 Said right granted to NEWCO by each Party to use its IPR shall be exclusive to NEWCO within its scope of activity as defined in Article 3 above. Each Party therefore commits not to use, or not to grant to any third party a right to use said IPR in a manner which may be detrimental to NEWCO. 14 14.1.4 Said rights granted to NEWCO by each Party to use its IPR shall: . be free of charge,)when NEWCO uses them for R&D activities, ( Phase 1). . generate royalties for the benefit of such Party when its IPR rights are used by NEWCO for industrial and/or commercial purposes. (Phase 2) The royalties to be paid by NEWCO to each Party shall be determined later on being understood that they will be reasonable and comparable to what it is practiced in similar cases between independent companies. 14.2 NEWCO'S INTELLECTUAL PROPERTY RIGHTS 14.2.1 NEWCO shall be the sole owner of any technology, information, invention, and software programs resulting from development works decided, and founded, by NEWCO only. In case the development works would be co-founded by NEWCO and one Party, any technology, information, invention and software program resulting from said development works, shall be co-owned by NEWCO and said Party in accordance with the terms of the Development Agreements to be signed between NEWCO and each Party (see Article 15 hereunder). 14.2.2 In case a patentable invention, resulting from said development works founded by NEWCO, is made, NEWCO shall be entitled to file under its name, and at its expenses, (a) patent application(s) for such an invention. NEWCO shall be the sole owner of any patent issued from said application(s). 14.2.3 If, for any reason, NEWCO decides not to file a patent application relating to an invention owned by NEWCO, each Party of NEWCO may be entitled by NEWCO, at reasonable conditions to be agreed upon, to file under the name of said Party, and at its own expenses, a patent application. 14.2.4 Upon request of each Party, NEWCO will grant to such Party a right to use on a non-exclusive basis the NEWCO patent(s), or any other IPR owned by NEWCO outside the scope of activity of NEWCO, as defined in Article 3 above, at reasonable conditions to be agreed upon. It is however understood that such Party commits not to compete, in any manner, with NEWCO when using said patent(s). 14.2.5 If for any reason NEWCO is dissolved, and as further set forth in Article 20, both Parties shall become co-owners of the patent(s), as well as any other IPR, owned by NEWCO at the date of winding up and, as such, shall be entitled to use freely said patent(s), provided that, however, each Party acknowledge said patents and IPR will not be used in manner to compete with the other Party. ARTICLE 15 - RELATED AGREEMENTS Within two (2) months from the Closing, the Parties shall cause NEWCO to enter into the following agreements ("Related Agreements") : . License Agreement between NEWCO and AL (see Article 14) . License Agreement between NEWCO and NUVERA (see Article 14) . Equipment (Reformer) Purchase Agreement between NEWCO and AL (see Article 13) 15 . Equipment (Stack + fuel processor) Purchase Agreement between NEWCO and NUVERA (see Article 13) . Development Agreement between NEWCO and AL (see EXHIBIT 2 and 3) . Development Agreement between NEWCO and NUVERA (see EXHIBIT 2 and 3) . Agreement between NEWCO and AL (see Article 13) . Agreement between NEWCO and NUVERA (see Article 13) . List of Patents as per Exhibit 4 ARTICLE 16 - LIABILITY, INSURANCE - --------------------------------- 16.1 The Parties agree that NEWCO only shall be liable for all damages caused to third parties by its activity. The Parties shall cause NEWCO to waive its rights of recourse against the Parties for such damages. 16.2 The Parties shall cause NEWCO to take out and maintain a legal liability insurance covering bodily injury and/or death and/or property damages to third parties in a reasonable and appropriate amount mutually agreed upon between the Parties, per claim. The Parties shall be co-insured as well under the above insurance. 16.3 The Parties will cause NEWCO to take up and maintain appropriate insurance for the Parties` personnel seconded to NEWCO. ARTICLE 17 - CONDITIONS PRECEDENT, DURATION OF SHAREHOLDER AGREEMENT - -------------------------------------------------------------------- 17.1 The consummation of the transaction contemplated herein is subject to the fulfillment, or waiver by all the Parties, of the following conditions precedent: . The negotiation and agreement between the Parties upon the By-laws of NEWCO, . The establishment of NEWCO and payment of their contributions by AL and NUVERA pursuant to Article 5 herein above, . The approval of relevant competent national and/or European Union authorities as well as the approval of any third parties concerned by the present transaction. 17.2 This Agreement shall be binding upon the Parties and shall come into force as of the date of its signature. It shall have an initial duration of three (3) years, automatically renewable thereafter for an unlimited period of time. The Party who after the initial duration wishes to terminate this Agreement shall send one (1) year prior written notice to the others before expiration date. ARTICLE 18 - CLOSING At the closing of the transaction contemplated herein (the "Closing"), the Parties shall record that the conditions precedent set forth in Article 17 herein above are fulfilled and that the transaction is successfully completed. The Parties shall use their best efforts to effect the Closing not later than 31 January 2001 or another date mutually agreed upon among the Parties. 16 ARTICLE 19 - SECRECY OBLIGATIONS For the purpose of this Agreement and unless the context clearly indicates otherwise, "Confidential Information", used with a capital letter shall mean: Any kind of information which is presented, by any means, by one Party to the other Party and identified in writing as confidential, and if it is disclosed orally by one Party to the other party and outlined and identified as confidential in writing to the other Party within (30) days of the disclosure. Each Party shall keep Confidential Information strictly secret and confidential, and shall refrain from disclosing it to anybody but to its employees and only to the extent necessary for the purpose of this Agreement. This shall not apply to information: (i) which the receiving Party can evidence was known to it prior to its disclosure by the other Party, or (ii) which is, or later becomes, public knowledge without breach of this Agreement by the receiving Party, or (iii) which was received by the receiving Party from a third party without obligation of secrecy to the other Party, or (iv) which is developed by the receiving Party, or its Affiliate or subcontractors, independently from Confidential Information received from the other Party. Each Party shall have the possibility to inform a third party after written consent from the other Party. In such a case, and before displaying any Confidential Information, this third party shall have to sign a secrecy agreement with all Parties. It is understood that all the Confidential Information shall remain the exclusive property of the Party from which they were originated. Either Party shall use the Confidential Information solely for purposes of performing its obligations arising under this Agreement or the Related Agreements and nothing herein shall be construed to give either Party any additional right of use, or any title or interest, in the other Party Confidential Information. Neither Party shall make any patent or copyright application, or file any patent or copyright, based on the other Party Confidential Information. ARTICLE 20 - EXCLUSIVITY - ------------------------ 20.1 Each Party undertakes to refrain from any action or practice with a view to hiring personnel of the other Party during the term of this Agreement. 20.2 Both Parties will use their best efforts to cooperate in good faith and not to take any action, directly or indirectly, which could be detrimental to the implementation of the present Agreement and Related Agreements. The Parties undertake to cooperate on an exclusive basis for the supply of the FC Technology unless otherwise agreed upon in writing by the Parties. 20.3 Unless otherwise agreed upon between the Parties, in case of (i) termination of this Agreement for convenience as per the terms 17 of Articles 17.2, and 21.1.c, or (ii) for event of default as per the terms of Articles 21.2 hereof, or (iii) for the events referred to in Articles 21.1a), 21.1b) and 21.3 hereof, or (iv) for the events referred to in article 21.1d) then the terminating Party in (i) , the defaulting party in (ii), both parties in (iii) and the Party of which the shares are purchased by the other Party in (iv), shall not, for a period starting from the effective date of termination until the expiration of a three (3) years period following the sale of its shares to the other Party or following the liquidation of NEWCO, as the case may be, be entitled to compete with NEWCO and / or the other Party for the provision of FC Technology either directly or through a cooperation agreement with a third party. ARTICLE 21 - TERMINATION OF SHAREHOLDER AGREEMENT - ------------------------------------------------- 21.1 This Agreement shall be automatically terminated, upon occurrence of any of the following events: a) all the conditions precedent set forth in Article 17.1 are not fulfilled or waived at the Closing Date or by another date to be mutually agreed upon between the Parties; or b) on the last day of Phase 1 or at a later date mutually agreed upon between the Parties, the Parties are not able to agree upon how to proceed with Phase 2; or c) each of AL or NUVERA is entitled to terminate for convenience the present Agreement at the end of Phase 1 upon giving ninety (90) days written notice to the other Party; or d) a Party's purchase of all (but not part) of the Shares held by the other Party; and NEWCO shall be automatically liquidated and dissolved should the event in a) above occur. 21.2 Either Party may terminate this Agreement upon giving written notice to the other Party within ninety (90) days from the date it becomes aware of an Event of Default by the other Party, any such Event of Default arising when: a) a Party fails to remedy a material breach of this Agreement or of any Related Agreement as listed in Article 15 within sixty (60) days of receipt of written notice of such material breach from the non-breaching Party, or in the case where such notified material breach cannot be remedied; b) a Party takes measures to dissolve or liquidate itself or to cease to function as a going concern; c) a Party is adjudged in any legal proceeding to be insolvent or a voluntary or involuntary bankrupt, or consents to or suffers the appointment of a receiver or trustee to administer or conduct its business; d) a Party makes an assignment of its equity interest in NEWCO for the benefit of creditors; or e) a Party undergoes a change in control whereby its principal shareholder disposes of 50% or more of the Party's Share Capital to a third Party which is not an Affiliate of such principal shareholder. 21.3 In the event any of the following events occurs and is continuing, any Party who is materially adversely affected by any such event may give notice to the other Party of its intention to terminate this Agreement: 18 a) failure of NEWCO, after Phase 1, to meet the financial objectives imposed by the Shareholders during at least two consecutive years for a reason other that one of the Party's fault. b) an event of Force Majeure prevents NEWCO from carrying on business for a continuous period of six (6) months. ARTICLE 22 - EFFECT OF TERMINATION - ---------------------------------- 22.1 In the event that either AL on the one hand or NUVERA on the other hand elects to terminate this Agreement pursuant to Article 21.2 hereof, such terminating Party shall have the option, by giving written notice thereof to the other Party within thirty (30) days from the date of the notice of termination, of either: a) requiring the other Party to sell and deliver to the terminating Party all of its shares at the Fair Market Price minus fifteen (15%) % as of the date of the notice of termination; or b) requiring the other Party to purchase from the terminating Party all of its shares at the Fair Market Price plus fifteen (15 %) as of the date of the notice of termination. If the terminating Party fails to exercise either such option, NEWCO shall be dissolved and liquidated pursuant to Article 23 hereof. This Article will also apply at the request of either Party in case the situation referred to in Articles 21.1 b) or 2.1.1 c) above occurs, save that in these cases the applicable transfer price of the shares will be the Fair Market Price. 22.2 In the event that any Party elects to terminate this Agreement pursuant to Articles 17.2 or 21.3 hereof, the remaining Party shall have the option, by giving notice thereof to the terminating Party within thirty (30) days from the date of notice of termination, of requiring the terminating Party to sell to the remaining Party all of the terminating Party's Shares at the Fair Market Price as of the date of notice of termination. If the remaining Party fail to exercise such options within thirty (30) days of receipt of the aforesaid notification of termination, NEWCO shall be dissolved and liquidated pursuant to Article 23. 22.3 Neither expiration nor termination of this Agreement pursuant to Article 17.2 or Article 21 hereof, nor exercise of any option provided for in this Article 22, shall (i) relieve any Party from any liability for any failure to perform or comply with the terms of this Agreement or (ii) terminate any right or obligation set forth herein which in accordance with the terms hereof survives such expiration or termination, or which must necessarily survive such expiration or termination in order to give effect to any rights granted hereunder. 19 ARTICLE 23 - LIQUIDATION - ------------------------ 23.1 In the event of liquidation of NEWCO, NEWCO shall cease to undertake any new activities or investments. The Parties shall institute and shall cause NEWCO to institute all appropriate procedures for the prompt and orderly dissolution and liquidation of NEWCO in accordance with its By-laws and French law, and shall execute suitable agreements or other instruments canceling all of the other agreements, undertakings or understandings reached by the Parties and/or NEWCO pertaining to NEWCO or to any of the arrangements provided for or contemplated by this Agreement. 23.2 The proceeds of liquidation and all other assets and properties of NEWCO shall be applied and distributed as follows and in the following order of priority: a) to the payment of the debts and liabilities of NEWCO (other than to the shareholders); b) to establishing any reserves that, in accordance with sound business judgment, are reasonably necessary for any contingent or unforeseen liabilities or obligations; c) to the payment of all indebtedness to the Shareholders; d) any balance to the Shareholders according to their respective stockholdings. ARTICLE 24 - FORCE MAJEURE - --------------------------- Neither Party shall be considered in default of performance of its obligations under this Agreement, if such performance is prevented or delayed by a Force Majeure. Force Majeure shall be understood to be any cause which is beyond the reasonable control of either Party, such as but not limited to strikes, acts of God or the public enemy, riots, incendiaries, breakage of equipment or machinery not resulting from negligence or a lack of maintenance, interference by civil or military authorities, fire, explosion, flood or any other circumstances or circumstances beyond its reasonable control. Any instance of Force Majeure shall release the Party concerned from its contractual obligations for the duration and to the extent of its effect. The Party who claims Force Majeure shall immediately notify the other Party in writing of its occurrence and provide all necessary particulars thereof. While conditions of Force Majeure prevail, the Parties shall use all reasonable means to avoid or mitigate the consequences of any such Force Majeure including the reasonable allocation by the Party claiming force Majeure of remaining resources and supplies during the term of any such restriction. The Party claiming Force Majeure shall take all reasonable steps to ensure as rapidly as possible the normal resumption of the performance of its contractual obligations which are affected by the event of Force Majeure. ARTICLE 25 - [reserved] 20 ARTICLE 26 - DISCLAIMER OF AGENCY AND PARTNERSHIP - ------------------------------------------------- Nothing in this Agreement is not intended to constitute, nor shall be construed to constitute, the Parties as partners of each other. Nothing contained herein will constitute any Party or NEWCO an agent of any other Party or NEWCO. Except as may otherwise be explicitly agreed in writing, no Party will have the authority to act on behalf of any other Party or NEWCO, nor will NEWCO have the authority to act on behalf of any Party. No Party nor NEWCO will incur or accept any liability or enter into commitments or contracts on behalf of any Party or NEWCO without the express prior written approval of the Party to be bound. The employees of each Party will remain the employees solely of such Party, except to the extent that NEWCO may agree in writing with a Party that a specified employee is to be an employee of NEWCO for a specified period of time. ARTICLE 27 - ASSIGNMENT OF SHAREHOLDER AGREEMENT - ------------------------------------------------ Neither Party has the right to assign or transfer any or all of its rights and obligations under this Agreement to any third party without the prior written consent of the other Party, except as expressly provided for in connection with a transfer referred to in Article 6 hereof. This Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns. ARTICLE 28 - EXCLUSIVE AGREEMENT, AMENDMENT - ------------------------------------------- This Agreement including its Exhibits (which constitute an integral part of this Agreement) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, negotiations, correspondence and undertakings, whether oral or written, express or implied. This Agreement cannot be changed, amended, modified or terminated except by a written instrument executed by the Parties. ARTICLE 29 - WAIVER - ------------------- Except where time limitations are specifically provided, no failure or delay by either Party (i) to exercise any right hereunder or (ii) to insist upon the strict and punctual performance of any term hereof shall operate as a waiver thereof; nor shall any single or partial exercise of any right preclude an additional or further exercise thereof or the exercise of any other right. To be effective, each waiver may be made subject to any conditions specified therein. ARTICLE 30 - HEADINGS - --------------------- The articles headings contained in this Agreement are solely for the purpose of reference and shall not in any way affect the meaning or interpretation of this Agreement. 21 ARTICLE 31 - PARTIAL INVALIDITY, CONFLICT - ----------------------------------------- In the event that any term of this Agreement is declared by a judicial or government authority to be legally invalid, non-binding or unenforceable, such term shall be deemed deleted herefrom and shall not affect the Agreement in other respects nor the validity and enforceability of those remaining terms. In such an event, the Parties agree to replace the affected term with terms which will nearly and fairly approach such deleted term. In the event of a conflict, inconsistency or discrepancy between the terms of this Agreement and those of its Exhibits attached hereto, the terms of this Agreement shall prevail. ARTICLE 32 - NOTICE - ------------------- Notices, consents and other communications hereunder shall be in writing, signed by the Party giving notice, and shall be deemed delivered and received (i) if sent by fax confirmed by registered mail, two (2) days after transmission (ii) if personally delivered, upon receipt and (iii) if mailed, five (5) days after being sent by registered or certified mail (return receipt requested) and properly addressed to the other Party at the beginning of this Agreement or at such other address as a Party may direct by notice in accordance with this Article. Any written communications between the Parties regarding this Agreement, the Related Agreements involving NUVERA, or NEWCO, shall be conducted in English unless otherwise provided for by French laws. ARTICLE 33 - GOVERNING LAW - -------------------------- This Agreement shall be governed and construed in accordance with the laws of France. ARTICLE 34 - ARBITRATION - ------------------------ All disputes arising in connection with this Agreement, the Related Agreements or NEWCO shall, to the extent possible be settled amicably by prompt good faith negotiations between the representatives of the Parties. In default of such amicable settlement within sixty days of the commencement of discussions, the dispute shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators, one to be appointed by each Party with the third to be appointed by the two others. Failing agreement regarding the appointment of the third arbitrator, either Party may make application to the ICC for a list of five neutral arbitrators considered suitable for this matter. The Parties will be entitled to strike any name for cause (bias, prejudice, conflict of interest, or lack of relevant experience) and be entitled to strike one name from the list without cause. Each Party shall rank the remaining names, with the individual receiving the highest combined rank being selected as the third arbitrator. Each of the persons serving on the arbitration panel shall be fluent in English and shall be familiar with the commercial and operations practices in the industrial use of hydrogen and in the energy sector. The arbitration award shall be final and binding upon the Parties without any right of Appeal. 22 Any such arbitration proceeding shall be held in Paris, France, in the English language. Judgment on the award rendered may be entered and enforced in any court having jurisdiction. All of the arbitrators shall be neutral with there being no ex parte contact by the Parties. The arbitration panel shall have the authority to sanction a Party due to its conduct in the arbitration proceedings. This provision shall survive the termination of this Agreement and the Related Agreements. ARTICLE 35 - LIST OF EXHIBITS - ----------------------------- EXHIBIT 1: Description of the PEM Fuel Cell Technology or FC Technology (as defined in Article 1 above) EXHIBIT 2: Description of the development program/Program/Objectives EXHIBIT 2 Bis: Scope of NEWCO during Phase 1 EXHIBIT 3: AL and DENORA' s personnel put at the disposal of NEWCO EXHIBIT 4: AL and DENORA' s respective Intellectual Property Rights at the disposal of NEWCO EXHIBIT 5: NEWCO market targets and products EXHIBIT 6: Cost of development program EXHIBIT 7: NEWCO Organisation Chart EXHIBIT 8: NEWCO Business Plan IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized representatives to sign this Agreement in three original copies as of the date first set forth above. L'AIR LIQUIDE S.A. NUVERA Fuel Cells, Inc. By Air Liquide By: /s/ Franco Ladavas Division Techniques Avancees Le Directeur: Michel Mouliney /s/ M. Mouliney December 21st 2000 Name: Name: Franco Ladavas EXHIBIT 1 DESCRIPTION OF PEM Fuel Cell technology or FC technology The PEM Fuel Cell Technology to be developed in the program of development of NEWCO shall mean a set of equipment integrated into a Power Module, including one or several PEM fuel cell stacks, the auxiliaries equipment for operating the stacks , such as but not limited to the air compression circuit, the hydrogen circuit including the pressure control and recirculation device, the water loop for both humidification and cooling down of the stacks, the safety system, the control command, the packaging. Power of the technology to be developed are ranging from a few kW to 250 kW and multiples for portable, public transport, stationary power applications and others niches applications using hydrogen as a main fuel Said PEM Fuel Cell Technology is also including the mean for storing the hydrogen and any circuits required for feeding the Power Module. For stationary applications starting from 50kW, when the primary fuel is not hydrogen, the PEM Fuel Cell Technology is also including a fuel processor and all equipment to be installed downstream the fuel processor for feeding the fuel cell such as but not limited to a hydrogen buffer tank.. The technology of the fuel cell is to be adapted to fit with the grade of hydrogen produced by the fuel processor Said PEM Fuel Cell Technology may also include some niches applications such as a regenerative fuel cell max 1W to be used as a fuel cell or an electrolyser including a Power Module consisting in a regenerative PEM fuel cell stacks and all the auxiliaries equipment for operating the stacks , such as but not limited to the air compression circuit, the hydrogen circuit including the pressure control and recirculation device, the water loop for both humidification and cooling down of the stacks, the safety system, the control command, the packaging. 2 EXHIBIT 2 DESCRIPTION OF THE DEVELOPMENT PROGRAM / PROGRAM / OBJECTIVES PHASE 1 AIR LIQUIDE / NUVERA DEVELOPMENT PROGRAM OBJECTIVES OF THE DEVELOPMENT PROGRAM During Phase 1, the activities of NEWCO are devoted to implement the Development Program of the Products that will be marketed in the future by NEWCO according to what described in EXHIBIT 1. This program is the results of the experience gained by ALDTA and NUVERA through several projects for portable, stationary and vehicle applications and the results of the preliminary market investigations whose conclusions will be confirmed during Phase 1. The Development programming is including 6 main Work Packages, and 12 transversal Tasks. . WP1/ Hydrogen power module and/or Battery charger for portable -------------------------------------------------------------- applications below 10kW ----------------------- Development of a line of portable generators for domestic and professional applications. Market targets are all applications that are today fulfilled with small IC generators, the main advantages of the fuel cell systems being the noise reduction, no pollution , a light weight, and an aptitude to load variations. Referring to this market segment, DTA is presently developing one system 0,4kW for military applications, one system 5kW to be used as a battery charger for a small utility vehicle and one system 10 kW for peak- shaving a PV cells station in Australia. The main features of the system to be developed are: - Nominal power ranging from 0,4 kW up to 10kW - The system is fed with H2 high pressure cylinders - The power density of the complete system should not exceed 10kg/kW - Used as a battery charger, the selected powers are 0,4 and 1kW and the system is capable of recharging 12 and 24 Volts battery. - Used as a generator, the system is capable of delivering DC and AC currents. - Lifetime to be 1000 hrs - Serial Price is 1000 to 1500 Euro/kW . WP2/ Hydrogen power module for 50-100 kW output ----------------------------------------------- (See FCBUSS Program) Development of a 50kW-100 kW Power Module for public transport (busses, tramways) and stationary applications using industrial hydrogen defined as hydrogen available from pipelines, industrial chemical processes or by delivery in trucks, tanks and cylinders. Those systems are as an 3 example the engines of the next generation of hybrid city busses or tramways, for which emission requirements will become more and more stringent. Three projects are under development at DTA, a 30kW Power Module for PEUGEOT, a 60kW Power Module for SCANIA and a 120 kW for MAN. The main features of the system to be developed are: - hydrogen fuel - Lowest operating pressure < 1,3 bara - Stack assembly technology enabling stack voltage up 250 Volts - Lifetime to be 40 000 hrs - Weight 4-5 kg/kW Max - System efficiency not to be less than 0.55 % - Stack design should include maintainability of stack and electrochemical package - expected target serial price is 300 Euro/kW (Stack 200 Euro/kW + Bop 100 Euro/kW) . WP3 Same as WP2 but fed with H2 Reformate ----------------------------------------- When hydrogen is not available, the Power module is fed with hydrogen produced from the reforming of an hydrocarbons, natural gas when the grid exists, LPG or diesel for remote applications. The development mainly focus at designing the Power Module and in particular the fuel cell stack compatible with an hydrogen stream containing other gases that could contaminate the cells, in particular CO. DTA is presently working at the program aiming at specifying exhaustively the specification of the hydrogen stream acceptable by the fuel cell stack, that should provide the specifications of the hydrogen produced by the reformer and in particular of the purifier. The main features of the system to be developed are: - Same features as the direct hydrogen power module but when fed with reformate hydrogen - CO tolerance highest as possible (up to 100 ppm ?) - Exhaustive Specification of the hydrogen stream compatible with the stack tolerance to pollutants . WP4/ Hydrogen reformer for LPG / NG Power module ------------------------------------------------ In order to feed the Power Module in the range 200 kW, no industrial fuel processor is existing today. To produce an hydrogen stream compatible for feeding a Power module in the range of 200kW kW , the fuel processor must have the following performances: - Hydrogen stream range between 30 to 100 Nm3/hr - The architecture of the complete system including the fuel processor and the power module is emphasized for an electrical efficiency of 40% min. - The outlet pressure of the hydrogen stream should not be lower than 2 atm and the temperature not higher than 60(degree)C - Typical composition of the hydrogen stream produced by the fuel processor is 5 to 50 ppm CO, 100 ppm CH4 and the remaining hydrogen and inerts - Serial price is 400 Euro/kW 4 During these program, synergies are developed with CRCD and the ongoing developments of the H2/On-site. All aspects related to the definition of the process are carried by the ALCRCD and then engineered ny ALDTA. . WP5/ Reversible fuel cell for renewable applications (1kW max) -------------------------------------------------------------- PEM fuel cell technology can reversibly used as an electroliser. DTA is presently working at the development of a high pressure membrane electroliser for military applications, and AL America recently purchased 6 PEM electrolysers from PROTON. In this development, we are targeting an operating pressure of 40 Bars compatible with advanced technology hydrogen storages. The system is capable to produce and store high purity gases and reversibly to produce power. The main features of the system to be developed are: - Fuel cell electrical power Max 1 kW - Operating pressure up to 40 bar ( for recharging a hydrogen hydride storage) - Serial targeted prices 5000-6000 Euro/kW . WP6/ Safety and Regulations --------------------------- The dissemination of fuel cell technology will be possible upon acceptance of hydrogen. Special efforts have to be made in order to assess the safety of fuel cell systems and discuss with the relevant authorities the regulations required for fuel cell technology. Presently, DTA is a partner of the EIHP program aiming at specifying a draft of regulations for the use of hydrogen onboard vehicle. A safety analysis of our power module has been carried out with the help of an independent expert, which recommendations have considered in the design. In our bus project, the approval of our Power module by the TUV is under discussion. Soit is for the fuel cell stack at NUVERA's. In this program of the development, no general negotiations with the relevant authorities about hydrogen technology are foreseen, our investigations will be limited to the safety aspects of the stack and the power module. 5 Transversally, the activities for carrying out the development of the 6 Work Packages are organized in 11 Transversal Tasks. The actors of NEWCO Phase 1 are the AL CRCD, AL DTA and NUVERA Europe. - -------------------------------------------------------------------------------- AIRLIQUIDE NUVERA - -------------------------------------------------------------------------------- Task DESCRIPTION CRCD DTA - -------------------------------------------------------------------------------- 1 Fuel strategy and storage X X - -------------------------------------------------------------------------------- 2 Fuel processors X X - -------------------------------------------------------------------------------- Power module architecture and simulation X X - -------------------------------------------------------------------------------- Stack 3 . 100 kW and above for transport and X X 4 stationary X X 5 . Hydrogen portable a few kW X X . Reversible 1kW for renewable - -------------------------------------------------------------------------------- 6 Balance of Plant X - -------------------------------------------------------------------------------- 7 System integration and qualification program X X - -------------------------------------------------------------------------------- 8 Safety and regulation X - -------------------------------------------------------------------------------- 9 Cost analysis and industrialisation X X - -------------------------------------------------------------------------------- 10 Technology transfer / Preparation of Phase 2 X X - -------------------------------------------------------------------------------- 11 Market analysis / Communication/ Business X X strategy - -------------------------------------------------------------------------------- EXHIBIT 2 bis SCOPE OF AL/NUVERA NEWCO : PHASE 1 (3 years starting Jan 1, 2001)
- ------------------------------------------------------------------------------------------------------------------------------------ MARKET SEGMENT POWER RANGE RIGHTS (develop, produce sell) NOTES Proton Exchange Membrane (Single Module) Fuel cell systems and Components (kW) - ------------------------------------------------------------------------------------------------------------------------------------ PREMIUM PORTABLE - ------------------------------------------------------------------------------------------------------------------------------------ Hydrogen *10kW Exclusive (Europe) NUVERA do not compete in sales of systems and Non exclusive, R.O.W. components for 2 years ROW may become exclusive upon definition of market stratergy - ------------------------------------------------------------------------------------------------------------------------------------ . Step 1: NEWCO to purchase no 5, 1 kW propane/NG US Standard systems for demo in 2001 and test them. Reformate *10kW Non exclusive marketing rights . Step 2: NEWCO to help qualifying the 1kW on potential applications propane/NG US system according to EU codes and standards and validate the products. Target is to qualify the unit by Q3 2001 providing that NUVERA delivers it in due time. . Step 3: identify a potential market capable of systems sales for cumulative 100kWe in 2002 and upon achievement of this selling target,then NEWCO to be granted rights on this specific market. - ------------------------------------------------------------------------------------------------------------------------------------ STATIONARY POWER - ------------------------------------------------------------------------------------------------------------------------------------ Industrial Hydrogen **10kW Exclusive, WW Definition of industrial hydrogen: hydrogen available from pipelines, industrial chemical process or by delivery (tanks, trucks, cylinders) - ------------------------------------------------------------------------------------------------------------------------------------ Reformate 10-50kW None but see comments Explore possible synergies in industrial market - ------------------------------------------------------------------------------------------------------------------------------------ Reformate 50-200 kW Non exclusive. NUVERA will supply reformate stacks. NUVERA ((first right to supply)) fuel processing technologies to NEWCO NUVERA to consult NEWCO before giving any exclusivity - ------------------------------------------------------------------------------------------------------------------------------------ Reformate **200kW Exclusive WW NUVERA may grant licence for both Fuel Processor and PROX technology rights for systems above 200kW and for ON-site production for merchant hydrogen - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORT - ------------------------------------------------------------------------------------------------------------------------------------ Busses and tram operating on Hydrogen Typically Exclusive (Europe) ROW: NUVERA do not compete in sales of systems 100-200 kW Non exclusive, R.O.W. and components for 2 years. ROW may become exclusive upon performances and definition of clear market strategy. US may become exclusive upon an acceptable NEWCO market plan. In any case NUVERA plans to launch a marketing effort in US as soon as possible. So it is for NEWCO. Synergies to be developed - ------------------------------------------------------------------------------------------------------------------------------------ Reformate - None - ------------------------------------------------------------------------------------------------------------------------------------ City Vehicles Range extenders For components, Non exclusive, WW NUVERA do not compete in sales of systems for Hydrogen fueled only 3-10kW For power Module exclusive Europe, 2 years ROW may become exclusive upon Non exclusive ROW definition of market strategy
* denotes less than ** denoted greater than - ------------------------------------------------------------------------------------------------------------------------------------ NICHES MARKETS To be discussed on a case by case basis Merchant HYDROGEN 50-200 Nm3/Hr Exclusivity WW NEWCO and NUVERA to agree on Terms and Conditions Fuel Processor - ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT 3 AL AND DENORA'S PERSONNEL PUT AT THE DISPOSAL OF NEWCO NEWCO PERSONAL DURING Phase 1 During Phase 1, the activities of NEWCO are shared between the activities for implementing the program of development and the commercial contracts. The repartition between the commercial contracts and the program of development are split as following : - ---------------------------------------------------------------------- (MEURO) 2001 2002 2003 - ---------------------------------------------------------------------- Cost (12,5) (5) (4) (3,5) - ---------------------------------------------------------------------- Contracts 5,5 1 2 2,5 - ---------------------------------------------------------------------- Contribution AL 5 3 1 1 - ---------------------------------------------------------------------- Contribution NUVERA 2 1 0,5 0,5 - ---------------------------------------------------------------------- BALANCE 0 0 0 0 - ---------------------------------------------------------------------- DEVELOPMENT PROGRAM Herebelow are detailed the breakdown of the cost of the development program between personal and materials. AIR LIQUIDE --------------------------------------------------- AIR LIQUIDE Personal Material Total (Meuro) (Meuro) (Meuro) --------------------------------------------------- DTA 3.87 4.02 7,89 --------------------------------------------------- CRCD 0.97 0.54 1,51 --------------------------------------------------- TOTAL 4.84 4.56 9,4 --------------------------------------------------- The personal costs amounts 51 % of the total AIR LIQUIDE expenses NUVERA --------------------------------------------------- Nuvera Personal Material Total (Meuro) (Meuro) (Meuro) --------------------------------------------------- 1,017 2,083 3,1 --------------------------------------------------- TOTAL 1,017 2,083 3,1 --------------------------------------------------- The personal costs amounts 33 % of the total NUVERA expenses The personal costs amounts 47 % of the total consolidated costs of the devpt. Program. PERSONNAL REQUIRED 10 - - ALDTA (Man-hour rate Avg 89.925 Euro/hr) 43080 hrs x 89,925 Euro/hr = 3,87 Meuro or 27 man.year about - - ALCRCD (Man-hour rate Avg 103.658 Euro/hr) 9357 hrs x 103,658 Euro/hr = 0,97 Meuro or 6 man.year about. - - NUVERA (Manhour rate Avg (58 Euro/hr) 17534 hrs x 58 Euro/hr = 1,017 Meuro or 11 man.year about COMMERCIAL CONTRACTS The 5.5 MEuro contribution from the commercial contracts to the NEWCO Dvpt program is coming from the profit from the commercial contracts and from common R&D activities with European / National R&D funded projects. Some potential projects are already identified. - -------------------------------------------------------------------------------- (MEURO) Personal Material Total Available for ------- NEWCO - -------------------------------------------------------------------------------- Funded projects --------------- - -------------------------------------------------------------------------------- FEBUSS 1,350 1,4 2,75 2,75 - -------------------------------------------------------------------------------- CARBUPAC 0,2 0,05 0,25 0,25 - -------------------------------------------------------------------------------- HYPAC 0,2 0,105 0,305 0,305 - -------------------------------------------------------------------------------- PLUSPAC 0,126 0,2 0,326 0,126 - -------------------------------------------------------------------------------- IRIBUS 0,3 0,2 0,5 0,225 - -------------------------------------------------------------------------------- MILAN Boat 0,2 0,145 0,345 0,15 - -------------------------------------------------------------------------------- COMEX 0,35 0,3 0,65 0,15 - -------------------------------------------------------------------------------- Others. French 0,5 0,2 0,7 0,5 Network - -------------------------------------------------------------------------------- Others EU 0,35 0,2 0,55 0,35 - -------------------------------------------------------------------------------- Sub-Total 3,57 2,8 6,37 4,8 - -------------------------------------------------------------------------------- Commercial - ---------- projects - -------- - -------------------------------------------------------------------------------- DGA 0,38 0,38 0,76 0,5 - -------------------------------------------------------------------------------- Portable 0,2 0,6 1 0,2 - -------------------------------------------------------------------------------- Sub-Total2 0,58 0,98 1,56 0,7 - -------------------------------------------------------------------------------- TOTAL 4,15 3,78 7,93 5,5 - -------------------------------------------------------------------------------- 11 PERSONAL REQUIRED - - ALDTA (Man-hour rate Avg 89.925 Euro/hr) 7500 hrs x 89,925 Euro/hr = 0,675 Meuro or 4,5 man.year about. NEWCO PERSONAL DURING Phase 1 In order to complete the activities of NEWCO during the 3 years of the Phase 1, the following personal are required: - - ALDTA : 31,6 man.year or 10 persons full time during the 3 years period - - AL CRCD : 5,85 man.year or 2 persons full time during the 3 years period - - NUVERA : 10,96 man.year or 4 persons full time during the 3 years period the activities of these Personal are detailed in Exhibit7: Organization Chart NEWCO ORGANISATION AND RELATIONSHIPS WITH THE MOTHER COMPANIES - - PERSONAL : Basically, there will be 6 persons in NEWCO put at the disposal by the Mother Companies, 1 from NUVERA and 5 from AIR LIQUIDE. All other resources identified in the Development program are remaining in the Mother Companies. - - CONTRACTUAL RELATIONSHIPS Development programs: All activities included in the 12,5 MEURO DEVELOPMENT -------------------- PROGRAM carried out by the Mother Companies for NEWCO will be done on a subcontracting basis at a rate of AD COST + FEE . This will include but not exclusively activities of development, engineering, procurement, manufacturing, Test and QI, etc.... Commercial contracts: For commercial contracts, the mother companies are -------------------- committed to support NEWCO for bidding by offering quotations with a favorable rate to NEWCO versus specs, performances and guarantees. Providing the contract is obtained, then NEWCO will issue subcontracts to the mother companies. Funded Projects: For funded projects , NEWCO and the Mother Companies will --------------- get organized as partners or co-contractors or subcontractors. The organization strategy will be defined on a case by case basis taking in to account that the Mother Co will do their best efforts to support NEWCO becoming the visible arms of their fuel cell strategy 12 EXHIBIT 4 AL AND DENORA'S RESPECTIVE INTELLECTUAL PROPERTY RIGHTS AT THE DISPOSAL OF NEWCO This exhibit to be incorporated in Article 15 and will be supplied together with the Agreements listed in Article 15 and in accordance with the principles of Article 14 13 EXHIBIT 5 NEWCO MARKET TARGETS AND PRODUCTS The business plan of NEWCO has been built on a two Phase programs , namely PHASE 1 and PHASE 2. PHASE 1 is scheduled to last 3 years and will mainly be devoted to the development of the technology and the validation of the market strategy. Phase 2 will be focused on the commercialization of the products developed in Phase 1. The business plan has been establish over a ten years period from 2001 to 2010. In order to achieve the objectives in 2010, some prerequisites are highlighted as key issues for the development of NEWCO and the transition to market: echnology is available at the end of Phase 1 The safety and regulations of hydrogen are existing Hydrogen can be marketed as an energy. Lobbying actions should be done in order to define a specific status for fuel cells, similar to cogen or renewables. Resulting incentives would help for the transition to market. Deregulations of the market of energy is effective. Four markets have been identified : Market N(degree)1 : PORTABLE GENERATOR - ------------------ Market targets are all applications that are today fulfilled with small IC generators, the main advantages of the fuel cell systems being the noise reduction, no pollution , a light weight, and an aptitude to load variations. The market volume for these portable generators is estimated to 20 000 Unit / year with an average market cost of 1000 $/kW. Lifetime is 1000 hrs. Fuel is hydrogen. Assuming that NEWCO will get 20% of this market, then the yearly production for NEWCO could amounts 4000 units per year .With an average size of 2kW and a market cost of 1500 $/kW this market could represent for NEWCO a turnover of 12 M$ in 2010. Apart from the sales of equipment, there is also a market for the maintenance of the equipment sold by NEWCO and also a gas and services market for AL for refueling and servicing these generators, estimated to 3,5 M$ or 1200 000 Nm3 (1Nm3/hr*2h/J*150j/an*20Fr/Nm3) Market N(degree)2 : PUBLIC TRANSPORT. - ------------------ The emission constraints becoming more and more stringent for urban transports and in particular for public transport, fuel cells are predicted to become the engines of the next generation of hybrid vehicles because when feed with hydrogen they are emissions free, their efficiency is higher than IC engines especially during transients, 14 etc...Powering a tramway, fuel cells can reduce drastically the investment costs by saving the costs of wire infrastructure (typically 60% of the total investment). Lifetime is 20 to 40 000 hrs. The bus market amounts in EUROPE 10 000 units/year and 5000 units/year in USA. Assuming that in 2010, 50 % of the bus market in Europe and in the USA will be clean vehicles and that NEWCO will get 1/3 of this market, then the yearly production for NEWCO could amounts 2500 units per year . Typical unit size is 150 kW and market cost is 300 $/kW meaning for NEWCO a turnover of 112 M$ in 2010. Apart from the sales of equipment, there is also a market for the maintenance of the equipment sold by NEWCO and also a gas and services market for AL for refueling and servicing these vehicles, requiring H2 On-site , refueling infrastructure and services. Typically, a urban bus in Paris burns 50 liters of diesel daily at 4 Fr/liters, meaning 60 kF/bus.year, equivalent to 50 000 Nm3/year.bus of hydrogen at a price of 1,2 Fr/Nm3 (considering tax incentives like it is today for NGV). The refueling of the NEWCO powered vehicles could represent a volume of 125 000 000 Nm3 H2/year and a turnover of 20 M$ for AL in 2010. Other revenues also expected from the services at the bus depot To refill these vehicles, the hydrogen is produced locally at the bus depot by a NG or LPG reformer of 400 to 800 Nm3/hr. This could represent a potential of 100 units for the FLOXAL team Market N(degree) 3 : STATIONARY/ Cogen - ------------------ In Europe, the COMMISSION is requiring from the Member states that, in 2010, at least 10% of their energy should come from cogeneration plants. This means that new cogen plants for a total of 50 GW should be installed in this period, shared between big units (typically 500 Mw) and small decentralised plants based on IC engines, microturbines and fuel cells. The interest of fuel cells for this appplication lies mainly in the synergies between the TRANSPORT and STATIONARY sectors in order to increase the production number for reducing the costs, as it is already the case for generators based on truck engines, and as it won't never be the case for microturbines. It is assumed that to meet the target from the Commission, 5GW/year will installed, half being small decentralized units. Assume that NEWCO will get 6% of this market representing 150MW or 600 units of 250kW. The market cost for such units is 800 $/kW meaning for NEWCO a turnover of 120 M$ in 2010. These units are fed directly from the hydrogen grid or the hydrogen is produced locally from a reformer. Then, the cost of the complete system is shared between 300 $/kW for the Power module (stack 200$/kW + Bop 100$/Kw), 400 $/kw for the reformer and 200 $/kW for the converter. For this applications, specific developments have to be made for the reformer. Apart from the sales of equipment, there is also a market for the maintenance of the equipment sold by NEWCO and also a gas and services market for AL servicing these installations. Typically, a 250 kWe fuel cell unit is fed with 152 Nm3/hr of H2 eqvlt to 460 kWth unit will consume 615 kWth of NG. Assuming 5000 hrs of operation per year, this unit will consume 320kF of Natural gas or 760 000 Nm3/ year of H2 (meaning 0.43 Fr/ Nm3 H2 for the same cost of feed gas) and will produce 1,25Gwh/year of electricity eqvlt to 625 KF and 1,25 GW of heat eqvlt to 150 kF for a total of 775 KF/unit.year. Lifetime is 20 to 40 000 hrs The refueling of the NEWCO cogen plants could represent a volume of 456 000 000 Nm3 H2/year and a turnover of 66 M$ for AL in 2010. Other revenues are also expected from the services. 15 Other potential applications are also foreseen for fuel cells, such as back-up systems, generators for DC applications, load following generators, etc...and all applications were the emissions and the noise are important. Market N(degree)4 : NICHES + RENEWABLE - ------------------- Niches applications mainly concerns the Space and Army market and Renewables. DTA is about to deliver a small 0,4 kW fuel cell battery charger for the French Army; another project is investigating the interest of fuel cells for submarine applications. PEM fuel cell technology can reversibly be used as an electrolyser. DTA is presently working at the development of a high pressure membrane electrolyser 400Nl/hr H2 and 150 Bars. Based on those developments, the French Navy is now requesting AL to apply for supplying the complete air conditioning system for the next generation of nuclear submarine BARACCUDA, including the O2 production with an electroliser and the CO2 removal. AL America recently purchased 6 PEM electrolysers from PROTON. The connection with Renewables is based on a requirement from the Commission stating that within 2010, another 10 % of the energy supply in Europe should come from Renewables. Most part of this renewable will come from hydraulics and wind, and solar to be reserved for decentralized applications. The development of Renewables is extensively supported and the KWh from Renewables are purchased at a rate of 1EURO/kWh from the utility companies. Fuel cell or reversible fuel cells are of interest when coupled with PV panels. At day time, the systems is used as an electrolyser for feeding a H2 storage and at night time the system is used as a fuel cell to produce energy. A project is under development with ALCATEL for powering a telecommunication antennas in a isolated areas. Such a system is also capable to produce high purity gases (O2 for medical applications. 16 EXHIBIT 6 COST OF DEVELOPMENT PROGRAM The cost of the 6 Work packages are as following: - ------------------------------------------------ - ------------------------------------------------------------------------- WP DEVELOPMENT COSTS (MEURO) TOTAL - ------------------------------------------------------------------------- 1 Hydrogen power for portable application (Max 5kW) 0.9 - ------------------------------------------------------------------------- 2 Hydrogen power module for 50-100 kW output 3.3 - ------------------------------------------------------------------------- 3 LPG / NG power module for 50-100 kW output 1.6 - ------------------------------------------------------------------------- 4 Hydrogen reformer for LPG / NG Power module 2.4 - ------------------------------------------------------------------------- 5 Reversible fuel cell for renewable applications (1kW max) 0.6 - ------------------------------------------------------------------------- 6 Safety and regulations 0.7 - ------------------------------------------------------------------------- 7 Marketing / Communication 3 - ------------------------------------------------------------------------- TOTAL 12.5 - ------------------------------------------------------------------------- Transversally, the activities for carrying out the development of the 6 Work Packages are organized in 12 Main Transversal Tasks identified as following
- ----------------------------------------------------------------------------------------------------------------- Task TOTAL COST BREAKDOWN (Meuro) AIR LIQUIDE NUVERA (Meuro) (Meuro) - ----------------------------------------------------------------------------------------------------------------- 1 Fuel strategy and storage 0.22 0 - ------------------------------------------------------------------------------------------------------------ 2 Fuel processors 1.3 0.113 - ------------------------------------------------------------------------------------------------------------ 3 Power module architecture and simulation 0.45 0.193 - ------------------------------------------------------------------------------------------------------------ Stack 4 . 100 kW and above for transport and stationary 0.47 1.066 5 . Hydrogen portable a few Kw 0.09 0.243 6 . Reversible 1kW for renewable 0.04 0.123 - ------------------------------------------------------------------------------------------------------------ 7 Balance of Plant 1.56 0 - ------------------------------------------------------------------------------------------------------------ 8 System integration and qualification program 1.29 1.29 - ------------------------------------------------------------------------------------------------------------ 9 Safety and regulation 0.19 0 - ------------------------------------------------------------------------------------------------------------ 10 Cost analysis and industrialization 0.46 0 - ------------------------------------------------------------------------------------------------------------ 11 Technology transfer / Preparation of Phase 2/ Invest 0.33 0 - ------------------------------------------------------------------------------------------------------------ 12 Market analysis / Communication/ Business strategy 3 0.0716 - ------------------------------------------------------------------------------------------------------------ 9.4 3.1 TOTAL - ------------------------------------------------------------------------------------------------------------
17 The expenses of the development program are scheduled according to the following Table - ---------------------------------------------------------------------------- (MEUROS) 2001 2002 2003 - ---------------------------------------------------------------------------- Cost (12,5) (5) (4) (3,5) - ---------------------------------------------------------------------------- Contracts 5,5 1 2 2,5 - ---------------------------------------------------------------------------- Contribution AL 5 3 1 1 - ---------------------------------------------------------------------------- Contribution NUVERA 2 1 0,5 0,5 - ---------------------------------------------------------------------------- BALANCE 0 0 0 0 - ---------------------------------------------------------------------------- AT the beginning of Phase 1, The development program is detailed, specifying the timeframe, resources , budget allocations and investment. This will serve as a guideline during the program in order to record any deviation in the work progress. This will also serve as a reference for the synergy committee in order to point out all possible synergies between NEWCO, NUVERA and AIR LIQUIDE. EXHIBIT 7 NEWCO ORGANISATION CHART ================================================================= -------------- CEO NEWCO -------------- ---------------- --------------- ADMINISTRATION ____ COMMUNICATION ---------------- --------------- - ------------- NUVERASynergy ----------------- Committe ---------------------------- MARKET/SALES ------------ - ------------- ----------------- PROJECT/ AL Synergy ------------------------------------------------------ PLANNING Committe ----------- - ------------- ___________________________________ -------------- -------------- -------------- Team Manager Team manager Team Manager _______ AL CRCD NUVERA AL/DTA -------------- -------------- -------------- ================================================================= _______________________________________________ ___________________________________________________________ - ------------ --------- -------------------- ------------------ ------------------- ------------ H2 Storage Stack System Integration Control Commande Manufacturing Test/Qua +Production +Saftey Coupling Industrialisation lification - ------------ --------- -------------------- ------------------ Cost Analysis Start-up CRCD DTA DTA DTA ------------------- ------------ - ------------ NUVERA -------------------- ------------------ DTA DTA --------- ------------------- ------------
19 EXHIBIT 7 NEWCO ORGANISATION CHART Principles: At the beginning of PHASE 1, two Synergy Committees will be created, the first one involving one member of NEWCO and one member of NUVERA, and the second one involving a member of NEWCO and a member of AIR LIQUIDE. The role of these Committees is to explore all possible synergies that could be developed and the technical work and development that could be merged in order to save time and efforts. As a basic principles, the common activities will be merged an the results of any shared activities, patentable or not will be shared between NEWCO and the teaming Party . Proposal: The organizational details of the steering committees will be discuss at the first board meeting 20 EXHIBIT 8 NEWCO BUSINESS PLAN See Separate EXCEL file
PHASE 1 Unit size (j) (kW) 2001 2002 2003 2004 2005 2006 Portable 2 30 100 300 Unit price (Euro/kW) 1,200 1,200 1,200 ---------------------------------------- Total 72,000 240,000 720,000 ---------------------------------------- Transportation (Busses) 150 3 10 30 Unit price (Euro/kW) 700 700 700 ---------------------------------------- Total Busses 315,000 1,050,000 3,150,000 ---------------------------------------- Stationary (H2/reformate) 250 5 7 10 Unit price (Euro/kW) 1800 1800 1600 ---------------------------------------- Total Stationary 2 ,250,000 3,150,000 4,000,000 ---------------------------------------- TOTAL MW (stationary+busses) 1.70 3.25 7.00 Others (CEE+ Niches) Unit price (Euro/kW) 10,000 10,000 10,000 ------------------------------------------------------------------------------------ Total 1,000,000 2,000,000 2,500,000 555,000 1,000,000 1,000,000 ------------------------------------------------------------------------------------ (Renewables) 1 5 15 30 Unit price (Euro/kW) 5,000 5,000 5,000 ---------------------------------------- Total 25,000 75,000 150,000 ---------------------------------------- Total Units sold/year 43 132 370 - -------------------------------------------------------------------------------------------------------------------------- Total SALES (Euro) 1,000,000 2,000,000 2,500,000 3,217,000 5,515,000 9,020,000 - -------------------------------------------------------------------------------------------------------------------------- PHASE 2 (k) NEW PRODUCTION FACILITY 2007 2008 2009 2010 2011 2012 2013 2014 (a) Portable 600 2,500 3,000 4,000 Unit price (Euro/kW) 1,200 1,200 1,200 1,200 ------------------------------------------------------------------------------------------------ Total 1,440,000 6,000,000 7,200,000 9,600,000 9,792,000 9,988,000 10,188,000 10,392,000 ------------------------------------------------------------------------------------------------- (b) Transportation (Busses) 40 500 1,000 2,500 Unit price (Euro/kW) 600 300 300 300 ------------------------------------------------------------------------------------------------- Total Busses 3,600,000 22,500,000 45,000,000 112,500,000 114,750,000 117,045,000 119,386,000 121,774,000 ------------------------------------------------------------------------------------------------- (c) Stationary (H2/reformate) 20 300 500 600 Unit price (Euro/kW) 1600 800 800 800 ------------------------------------------------------------------------------------------------- Total Stationary 8,000,000 60,000,000 100,000,000 120,000,000 122,400,000 124,850,000 127,345,000 129,892,000 ------------------------------------------------------------------------------------------------- TOTAL MW (stationary+busses) 11.00 150.00 275.00 525.00 Others (CEE+ Niches) Unit price (Euro/kW) 10,000 10,000 10,000 10,000 ------------------------------------------------------------------------------------------------- Total 1,500,000 1,500,000 2,000,000 2,500,000 2,550,000 2,601,000 2,653,000 2,706,000 ------------------------------------------------------------------------------------------------- (Renewables) 40 40 100 200 Unit price (Euro/KW) 5,000 5,000 5,000 5,000 ------------------------------------------------------------------------------------------------- Total 200,000 200,000 500,000 1,000,000 1,020,000 1,040,000 1,060,000 1,080,000 ------------------------------------------------------------------------------------------------- Total Units sold/year 700 3,340 4,600 7,300 (d) - --------------------------------------------------------------------------------------------------------------------------------- Total SALES (Euro) 14,740,000 90,200,000 154,700,000 245,600,000 250,512,000 255,524,000 260,632,000 265,844,000 - --------------------------------------------------------------------------------------------------------------------------------- Forecast Target GAS ENERGY NEWCO price H2 GWh elec 2015 2010 (l) Euro/kW Nm3/year Portable 1,200,000 Unit price (Euro/kW) 1,200 ------------- Total 10,599,000 9,600,000 ------------- (e) Transportation (Busses) 125,000,000 (h) Unit price (Euro/kW) 300 ------------- Total Busses 124,209,000 112,500,000 ------------- (f)(g) Stationary (H2/reformate) 456,000,000 750 (i) Unit price (Euro/kW) 800 ------------- Total Stationary 132,490,000 ------------- TOTAL MW (stationary+busses) Others (CEE+ Niches) Unit price (Euro/kW) 10,000 ------------- Total 2,760,000 2,500,000 ------------- (Renewables) Unit price (Euro/KW) 5,000 ------------- Total 1,100,000 1,000,000 ------------- Total Units sold/year - ------------------------------------------------------------------------------------------------------------------- Total SALES (Euro) 271,158,000 125,600,000 - -------------------------------------------------------------------------------------------------------------------
Remarks Portable (a) 20% US+European Market (d) CA + 2% par an Transport (b) 25% of the US+European Market (e) 1Nm3=1,20 FF + 500-1000 Nm3/hr H2 On-site Stationary (c) 6% of the US+European Market (f) 1Nm3=0,50 FF; 1kWh=0,50FF; 1kWhTh=0,12FF (configuration actuelle - rachat Kwh EDF) (i) 800 Euro/kW = Stack+BOP300 Euro/kW + Fuel Processor 400 Euro/kW + Converter 100 Euro/kW (h) 300 Euro/Kw= Stack 200 Euro/kW+BOP 100Euro/kW (g) if 100% H2 feeding eqvlt 1850 GWh GN if fuel processor (l) Forecast in 2010 is conservatively excluding the stationary because we believe that stationary will be successfull only if transport is successfull
EX-10.39 24 0024.txt DEVELOPMENT AND SUPPLY AGREEMENT Exhibit 10.39 DEVELOPMENT AND SUPPLY AGREEMENT DEVELOPMENT AND SUPPLY AGREEMENT (the "Agreement"), is made and entered into as of this 21/st/ day of November, 2000, by and between De Nora Elettrodi SpA. an Italian Company with its principal place of business at Milano, Italy, Via dei Canzi 1 and its subsidiaries as specified in Exhibit A (all hereinafter referred to as "DNE"), and Nuvera Fuel Cells, Inc., a Delaware corporation having its principal place of business located at 35 Acorn Park, Cambridge, MA 02140, United States of America ("Nuvera") and Nuvera Fuel Cells Europe, S.r.l., a wholly-owned subsidiary of Nuvera and an Italian company having its principal place of business located at via Bistolfi 35, Milan, Italy ("Nuvera Europe") (together, the "BUYER"). WITNESSETH: WHEREAS, DNE and its subsidiaries, inter-alia De Nora North America Inc. E-Tek Division, as specified in Exhibit A, have the capabilities of performing Research and Development Programs in the field of Fuel Cells ("R&D"), namely in the field of catalyzed gas diffusion electrodes ("Electrodes"), catalysts ("Catalysts"), gas diffusion or backings ("Diffusers") for use in proton exchange membrane ("PEM") fuel cell stacks and shift catalysts ("Shift Catalyst") for use in reformers for fuel cells systems, (collectively, "DN Products"), WHEREAS, DNE desires to grant exclusive access to BUYER to ongoing and future R&D on DN Products for Fuel Cell application at no cost for BUYER, in exchange for the validation of the new DN products resulting from R&D and DNE desires to offer the BUYER the right to purchase exclusively ("Option") DN products resulting from R&D (excluding Shift Catalysts), for which DNE will be the exclusive supplier for an agreed period provided BUYER ensures reasonable minimum purchases during that agreed period, WHEREAS, BUYER and DNE will mutually define a validation protocol ("Protocol") that shall be followed for the validation of DN Products and for the annual updating of the improvement of the Specifications. WHEREAS, DNE produces and manufactures DN Products and desires to supply BUYER with DN Products as described in Exhibit B, meeting the specifications ("Specifications") set forth in Exhibit C, on terms no less favorable than those under which DNE supplies or shall supply DN products to any other customer of DNE, and DNE is willing to grant BUYER the required volumes and quantities, and, in addition, DNE wishes to manufacture on behalf of BUYER Shift Catalyst based on proprietary formulation of BUYER, NOW THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, DNE and BUYER, intending to be legally bound, hereby agree as follows: 1 RESEARCH AND DEVELOPMENT ACTIVITIES. 1.1 DNE will grant exclusive access to BUYER for the ongoing and future research and development ("R&D") activities related to "Electrodes", "Catalysts" and "Diffusers" for the use in Proton Exchange membrane (P.E.M.) fuel cells and "Shift Catalysts" (DN Products). For products resulting from R&D, once validated according to the "Protocol", the exclusivity provisions of this agreement as per 2.2 and 2.3 may apply, with the exception of Shift Catalysts for fuel processors. The purchase of Shift Catalysts is governed by Section 4.4. of this Agreement. 1.2 DNE will discuss with BUYER the BUYER's needs for the "PEM" improvement and corresponding programs. 1.3 BUYER will exclusively have access to and exclusively purchase R&D on DN Products from DNE. All the costs of R&D will be borne by DNE. BUYER will validate the DN Products resulting from R&D as per "Protocol". The associated costs linked to the validation activities to be conducted in BUYER facilities will be borne by BUYER. For the purposes of this Agreement, validation shall mean the product meets the specifications and or requirements of BUYER. 1.5 DNE and BUYER will have no restrictions preventing either DNE or BUYER from conducting independent research and development on catalyzed membranes or catalyzed membrane/diffuser assemblies (MEAs), nor will the terms of exclusivity apply to these products. DNE and BUYER agree, however, to use best efforts to maximize reciprocal involvement in such independent R&D programs. Sale or purchase of these products are not covered by this Agreement. 2 PURCHASE AND SALE OF DN PRODUCTS; QUALITY. 2.1 BUYER will purchase DN products and DNE will sell DN products as per DNE catalogue on a non exclusive basis. It is intended that membranes, catalysed membranes and catalysed membranes/diffuser assemblies (MEA's ) are explicitly excluded. 2.2 When BUYER validates a "DN Product" resulting from R&D, BUYER will have the right ("Option" to purchase exclusively such DN products resulting from R&D. 2.3 In case BUYER decides to exercise the "Option" for DN Products resulting from "R&D", after validation as per "Protocol", DNE and BUYER will negotiate in good faith a reasonable purchase commitment, and the exact terms and conditions. Should an agreement not be reached, then DNE will be entitled to sell that specific product to any third parties. BUYER waives any right to exclusivity. 2.4 Should BUYER not validate a product generated by R&D, DNE will be entitled to sell that specific product to any third parties. BUYER waives any right to exclusivity. In the future should Buyer wish to purchase the non- validated product, BUYER shall be granted a price determined as per Article 4.1. 2.5 Notwithstanding 2.3, DNE agrees to sell and deliver to BUYER on a non- exclusive basis and BUYER agrees to purchase and receive from DNE on a non-exclusive basis DN Products resulting from R&D at the lowest prices offered to its most favored customers, which in any event will be the DNE current market prices minus at least ten percent (10%) 2.6 In addition to the obligations of DNE set forth elsewhere in this Agreement, DNE's obligations are to: (a) Obtain all raw materials and other components and unload handle and store all raw materials and other components at DNE's manufacturing facilities at which the DN Products are manufactured; (b) Manufacture the DN Products; (c) Package the DN Products; (d) Prepare the DN Products for shipment; (e) Obtain and maintain any export license or licenses required for delivery of the DN Products to BUYER under this Agreement, and keep records, available upon request of BUYER; (f) Keep records available upon request of BUYER and applicable governmental agencies, including, without limitation, maintain records, concerning safety, health and environmental practices of DNE. 2.7 The DN Products supplied by DNE to BUYER under this Agreement shall conform at the time of shipment to the Specifications. (a) DNE shall test each batch of each of the DN Products after manufacturing and submit to the BUYER at the time of shipment of the DN Products a Certificate of Analysis demonstrating that the DN Products conform to the Specifications. Non-conforming DN Products shall be replaced by DNE at its own expense (including transportation costs). DNE shall notify BUYER of any changes in the process necessary to manufacture the DN Products to meet the Specifications. DNE acknowledges that BUYER may require DNE to produce samples of the DN Products manufactured using the changed process, in sufficient quantities to enable the BUYER to determine the effect of the change in process upon BUYER. (b) For the purposes of assuring BUYER the quality of the DN Products required under this Agreement, DNE shall permit the duly authorized representatives of BUYER, at any time during normal business hours and on reasonable time prior notice, to inspect any premises of DNE or any third party, including subsidiaries, contractors, partners or suppliers, where the DN Products, or packing of them, are manufactured or stored by or for DNE. In the event that such an inspection does not meet with DNE Specifications as per Exhibit C, DNE shall, without delay or cost to BUYER, take the appropriate remedial measures in order to meet the specifications. 2.8 DNE will produce the DN Products in compliance with all applicable laws and regulations, with reasonable due care and in accordance with the best practice standards of safety. BUYER agrees that it shall comply with all applicable laws and regulations regarding the DN Product formulation, packaging, sales, use, storage, handling, disposal, labeling and transporation as incorporated into BUYER's Products, and any wastes related thereto. BUYER shall formulate, sell, use, store, handle, dispose, label and transport DN Products as incorporated in Nuvera Products with due care, in compliance with all applicable laws, and in accordance with good industry standards. At its option, at any time during the Term (the "Term), defined in Article 3, DNE upon reasonable, prior written notice shall be permitted, but not obligated, to enter and inspect those sections of BUYER's packaging and warehousing facilities used in the packaging, storage, testing, shipping or receiving of the Nuvera Products (hereinafter the "Facilities") for the purpose of ensuring Buyer's compliance with the provisions hereof. 2.9 DNE agrees to use its best efforts to improve the Specifications during the Term of the Agreement. The Specifications listed in Annex C shall be updated on annual basis starting from the effective date of the Contracts. 2.10 BUYER may have the right to use any DN trademark or trade name in connection with the Nuvera Products. 3 TERM, TERMINATION. 3.1 Unless earlier terminated as provided herein, the term of this Agreement shall be for an initial period commencing on the date hereof and ending on December 31, 2004 (the "Term"). The Agreement shall automatically renew for a one year period unless and until terminated by either party upon at least six months prior written notice thereof. 3.2 In the event that either party materially breaches any term of this Agreement and fails to cure such default within sixty (60) days after the date of written notice of such breach from the non-breaching party to the non-breaching party's reasonable satisfaction, the non-breaching party may thereafter immediately terminate this Agreement by written notice to the breaching party. 3.3 Either party shall have the right to terminate this Agreement immediately by giving the other party prior written notice if the other party is the object of a bankruptcy petition which has not been vacated within thirty (30) days. 4 PRICE; QUANTITIES 4.1 DN Products: BUYER will receive the lowest pricing for DN Products DNE ----------- gives to its most preferred customers. In addition, DNE agrees to discount its catalog prices by at least ten percent (10%). The actual discount will be determined by the market conditions for the products, availability of materials, and difficulty of manufacture. At the beginning of every year, BUYER will communicate its annual purchases forecast to DNE. The actual quantities will be fixed on quarterly basis. 4.2 Minimum Purchase. For any DN product resulting from R&D for which BUYER ---------------- is granted exclusivity, BUYER agrees to commit to purchase minimum quantities of the DN Products. The final quantities available to BUYER, however, will be subject to mutual agreement by BUYER and DNE, along with the relevant delivery terms. BUYER shall exclusively purchase the DN Product from DNE at the agreed upon unit prices, quantities and schedule and for agreed upon periods that could exceed the duration of this Agreement. BUYER agrees to purchase from DNE additional quantities of DN products provided that DNE product performances, terms and conditions are equivalent to those of competing suppliers for equivalent products. 4.3 Right of first refusal BUYER agrees not to purchase from third parties ---------------------- products that are equivalent and/or comparable to DN products, provided that DN products performances and DNE terms and conditions, including price, meet or exceed those of competing suppliers. 4.4 Shift Catalyst: Prices shall be mutually agreed upon, taking into -------------- consideration BUYER's requirements; the final price shall be based on the cost plus concept based on the following criteria: . Raw material cost . Direct manpower . Outsourcing cost . In-house production machinery . Annual requirements . Quality control and shop tests . Manufacturing overhead . Packing and transportation 4.5 In the event that BUYER requests an increased supply of the DN Product, BUYER and DNE shall determine any price adjustment that may be warranted given the scope and size of the proposed increased purchase of the DN Products. BUYER and DNE agree to negotiate in good faith any price adjustment. 4.6 All taxes and charges imposed by governmental authorities, after BUYER acquires title to the DN Products, on the selling, transporting, handling, storing and disposing of DN Products and wastes related thereto, (except income taxes based on DNE's gross income) shall be at BUYER's expense. 5 PAYMENT Payment for the DN Products purchased by BUYER under this Agreement will be within thirty (30) days of the date of invoice or unless otherwise agreed between DNE and the BUYER (the "Net Due Date"). Payment shall be made in the local currency of DN Products' manufacturer, unless otherwise agreed between DNE and the BUYER. In the event BUYER fails to pay in full the balance due in accordance with the invoice on or before the Net Due Date, DNE at its option after thirty days prior written notice of BUYER's failure to pay may suspend further deliveries under this Agreement and may charge BUYER an interest fee equal to the Prime Lending Rate on the outstanding balance. 6 FORECASTS; PURCHASE ORDERS Except as may be mutually agreed by the parties, DNE shall not be required to supply in any calendar quarter more than one hundred fifty percent (150%) of the final forecast for any such calendar quarter nor less than seventy five percent (75%) of the final forecast for any such calendar quarter. 7 HEALTH AND SAFETY INFORMATION. Each party shall make available to the other summaries of all technical, toxicological, environmental, health and safety information and data, and information and data relating to customer complaints and governmental action, inquiry or investigation relating to its products of which it has knowledge. Each party shall hold all such information and data in confidence in accordance with the terms and conditions of Section 10 of this Agreement. 8 WARRANTIES AND LIMITATION OF LIABILITY. 8.1 DNE warrants that any of the DN Products sold hereunder shall meet the "Specifications" in Exhibit C at the time such DN Products are delivered to BUYER. DNE makes no other representation or warranty of any kind, express or implied, as to merchantability, fitness for a particular purpose, or any other matter whatsoever. Extension of such a warranty terms can be agreed on a case by and between BUYER and DNE 8.2 All claims for damage, shortage, non-delivery and obvious defects shall be deemed waived unless made in writing and received by DNE within - one hundred twenty (120) days after BUYER's receipt of any of the DN Products in respect to which such claim is made, or if the claim is for non- delivery within sixty (60) days after such DN Product was to have been delivered. All other claims for any cause whatsoever (whether such cause is based in contract, negligence, strict liability, other tort or otherwise) shall be deemed waived unless made in writing and received by DNE within one hundred eighty (180) days after BUYER's receipt of any of the DN Products. Failure of DNE to receive written notice of any such claim within the applicable time period shall be deemed an absolute and unconditional waiver by BUYER of such claim, known or unknown. 8.3 BUYER's exclusive remedy for its damages based on DNE's breach of the Agreement (including breach of warranty) shall be for direct damages. 8.4 In no event shall either party be liable for special, incidental or consequential damages. 9 EXCUSE OF PERFORMANCE. Neither party shall be subject to any liability for delay in performance or nonperformance as a result of fire, flood, natural catastrophe, strike, labor trouble, accident, riot, act of governmental authority or compliance with government request, act of God, or other contingencies and circumstances beyond its reasonable control interfering with the production, supply, transportation, or consumption of any of the DN Products, or with the supply of any raw materials (including energy sources) used in connection therewith. Each party shall give the other party prompt notice of such occurrence, the nature thereof and the extent to which the affected party will be unable fully to perform its obligations hereunder. Each party further agrees to use all reasonable efforts to correct the condition as quickly as possible. Notwithstanding any other provision of this Agreement to the contrary, if this Agreement is terminated by either party because of any of the above mentioned causes, DNE agrees to sell to BUYER and BUYER agrees to buy from DNE at the date of such termination existing inventory of the applicable, undamaged, commercial quality DN Products at DNE's plant as of the termination date of this Agreement at the agreed price in an amount not to exceed the quantity of BUYER's existing order in place on the date of such termination. 10 CONFIDENTIALITY. 10.1 Any technical, health, environmental and safety, manufacturing, market or customer information, or price or cost related information communicated to one party by the other, under any provision of this Agreement, whether (a) in writing, (b) verbally, or (c) visually observed (if the latter two are confirmed in writing as being confidential within one (1) month thereafter) (hereinafter "Confidential Information") shall be considered confidential at the time of communication and shall not be disclosed to any third party, nor used by the recipient party other than as provided in this Agreement, during the Term of the Agreement and for the period of seven (7) years following the date of termination of this Agreement. The recipient shall use the same degree of care protecting this Confidential Information as it applies to its own confidential information. This Section 10 shall not apply to: i) Confidential Information already in the public domain, or released to the public through no fault of the recipient; ii) Confidential Information already known to the recipient except through prior disclosure by DNE or which is developed by the recipient independently of its relationship to the other party hereunder, as both can be documented in writing; iii) Confidential Information acquired by the recipient from a third party entitled to disclose it; and iv) Confidential Information the recipient is legally required to disclose. 10.2 BUYER, its subsidiaries, contractors, partners and suppliers agrees not to analyze or disclose any material supplied by DNE or third Party under this Agreement. 10.3 DNE, its subsidiaries, contractors, partners and suppliers agrees not to analyze or disclose any material supplied by BUYER under this Agreement. 11 INTELLECTUAL PROPERTY RIGHTS. 11.1 DNE shall retain, on behalf of itself or the original owner, title to any intellectual property rights, including but not limited to patents, industrial designs, copyrights and trademarks, in the DN Products. 11.2 BUYER shall in any country of the world under its own name and trademarks or under DNE's trade marks, have the right to distribute directly or indirectly, sell or otherwise dispose of the DN Products as incorporated into or merged with Nuvera Products. 11.3 DNE shall not assert any intellectual property rights or applications thereof (including but not limited to patents, industrial designs, copyrights and trademarks) against the BUYER for the use, sale, distribution or other disposal of any of the DN Products as incorporated or merged with Nuvera Products. 12 INDEMNIFICATION. 12.1 Except to the extent provided in Section 12.3 or elsewhere under this Agreement, BUYER shall indemnify, defend and hold harmless DNE and its direct and indirect affiliates from and against any and all losses, damages, claims, liability, and related costs and expenses (including reasonable attorneys' fees) based upon or arising out of (a) BUYER's negligent acts or omissions, (b) Third Party losses that directly result from BUYER's willful tampering with or modification to DN Products; (c) BUYER's breach of the terms of this Agreement. 12.2 Except to the extent provided in Section 12.3 or elsewhere under this Agreement, DNE shall indemnify, defend and hold harmless BUYER and its direct and indirect affiliates from and against any and all losses, damages, claims, liability, and related costs and expenses (including reasonable attorneys' fees) based upon or arising out of (a) DNE's negligent acts or omissions, (b) DNE's packaging, selling, using, storing, handling, labeling, transporting or disposing of the DN Products and any wastes resulting therefrom, and (c) DNE's breach of the terms of this Agreement. 12.3 Notwithstanding the provisions of Sections 12.1 and 12.2, if the conduct of both parties has contributed to the loss, damage, claim, liability, cost or expense for which one party hereunder (the "Indemnitee") seeks indemnification from the other party hereunder (the "Indemnitor") under Section 12.1 or Section 12.2, as the case may be, then Indemnitor's liability to Indemnitee hereunder shall be reduced in proportion and to the extent to which Indemnitee's conduct contributed to such liability. 12.4 In the case of a claim made against a party subject to indemnification hereunder, the Indemnitor shall have the right to manage and control the defense or settlement of such claim. The parties shall cooperate in defending such claims and the Indemnitee shall have the right to participate in the defense of such claims at its own cost. The Indemnitee shall not settle or compromise any claim subject to indemnification hereunder without the prior written consent of the Indemnitor. 12.5 DNE agrees to defined and indemnify and hold BUYER harmless from liability for costs and damages awarded against BUYER for infringement of any patent claims covering the DN Products in the form in which it is furnished hereunder, provided that said liability results from BUYER's use or sale of the DN Products furnished and provided that BUYER has given DNE prompt notice of any suit for infringement brought against BUYER and has permitted DNE to defend such suit. 13 ASSIGNMENT Neither party may assign its rights or delegate its performance hereunder, whether by operation of law or otherwise, without the prior written consent of the other party, which consent will not be unreasonably withheld or delayed, except, however, DNE and BUYER may assign their respective rights or delegate their respective performance hereunder to any affiliate or to any purchaser of all or substantially all of the assets of the business to which this Agreement relates without the consent of the other party, and any attempted assignment or delegation without such consent when required, except as otherwise provided herein, shall be void. In the event that such consent is withheld, the party desiring to assign this Agreement may terminate this Agreement upon thirty (30) days' written notice. 14 MISCELLANEOUS. 14.1 This Agreement contains all the terms and conditions of sale and purchase of DN Products for use in Nuvera Products and embodies and integrates the entire understanding of the parties with respect thereto. All prior agreements relating to the same matter are hereby terminated. No modification, extension or release from any provision hereof shall be effected by mutual agreement, acknowledgment, acceptance or purchase order, invoice or shipping instructions forms, or otherwise, unless the same shall be in writing, signed by the party to be bound and specifically described as an amendment or extension of this Agreement. 14.2 No waiver by either DNE or BUYER with respect to any breach or default or of any right or remedy, and no course of dealing shall be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such waiver be expressed in writing signed by the party to be bound. Except as otherwise expressly limited herein, all remedies shall be cumulative and shall be in addition to any remedy available at law, in equity or by statute. 14.3 This Agreement and any rights and obligations therein and performance hereunder shall take effect and be construed and governed by the laws of the State of Delaware without regard to its principles of conflicts of laws. 14.4 In the performance of this Agreement, BUYER and DNE will be considered an independent contractor, and nothing herein shall be construed to the contrary. Neither party shall exercise control over any of the other party's employees. Nothing in this Agreement shall make the other party the partner, agent or representative of the other. Neither party shall assume or create any obligations or responsibility, express or implied, on behalf of or in the name of the other party, or bind the other party in any manner or thing whatsoever. 14.5 Notices hereunder shall be in writing and either delivered personally or sent by documented overnight delivery service or registered or certified mail, postage prepaid, to the party at the address set forth in the preamble to this Agreement or at such other address as may be specified in writing by such party. Any such notice shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation of delivery therefor, in all other cases. 14.6 The headings and titles of this Agreement are inserted for convenience only and shall not be deemed a part hereof or effect the construction or interpretation of any provision hereof. IN WITNESS WHEREOF, DNE and BUYER have caused their duly authorized representatives to execute this Agreement as of the day and year first above written. DE NORA ELETTRODI SpA. By: /s/ R. Gazzaniga ------------------------------ Name: R. GAZZANIGA Title: MANAGING DIRECTOR NUVERA FUEL CELLS, INC. By: ______________________________ Name: Title: NUVERA FUEL CELLS EUROPE, s.r.L By: /s/ Michele Tettamanti ------------------------------ Name: Michele Tettamanti Title: SENIOR VICE PRESIDENT EXHIBIT A - DNE and SUBSIDIARIES EXHIBIT B - DN Products as of November 30, 2000 EXHIBIT C - Specifications for DN Products, as of November 30, 2000 Exhibit A DE NORA ELETTRODI S.p.A. WORLD WIDE SUBSIDIARIES E-TEK - U.S.A. (a division of De Nora North America) - 39 Veronica Avenue - SOMERSET, N.J. 08873 - U.S.A. Tel. +1 732 5455100 - Fax +1 732 5455170 E-Mail: technical.etek@denora.com sales.etek@denora.com --------------------- Website: www.etek-inc.com DE NORA NORTH AMERICA, Inc. 39 Veronica Avenue - SOMERSET, N.J. 08873 - U.S.A. Tel. +1 732 5455100 - Fax +1 732 5455170 E-Mail: denora.northamerica@denora.com DE NORA DO BRASIL LTDA. Av. das Nacoes Unidas, 12.551- 18(degrees) andar - conjunto 1812 Brooklin - CEP 04578-903 - Sao Paulo - SP - BRASIL Tel. +55 11 30437611 - Fax +55 11 30437618 E-Mail: denorabrasil@denora.com.br Factory: Avenida Jerome Case n(degrees) 1959 Eden - CEP 18087 - 370 - Sorocaba/SP - Brasil Tel. +55 15 225 2165 - Fax +55 15 225 1033 E-Mail: denorabrasil.fabrica@denora.com.br TITANOR COMPONENTS LTD. Plot Nos. 184, 185 & 189 - Kundaim Industrial Estate, Kundaim - 403115 GOA - INDIA Tel. +91 832 395340/41/42/43; 395634 / 35 - Fax +91 832 395003 / 395009 / 423197 E-Mail: titanor@goal.dot.net.in Website: www.titanor.com DE NORA FAR EAST PTE LTD. 491B River Valley Road, #20-01 Valley Point Office Tower - SINGAPORE 248373 Tel. +65 8349561 - Fax +65 8875025 / 8875026 E-Mail: denorafe@pacific.net.sg JIANGYIN DE NORA TIAN LI Electrochemical Technology Co. Ltd. Ligang Town, Jiangyin City, JIANGSU PROVINCE 21444, P.R. CHINA Tel. +86 510 6631369 - Fax +86 510 6631315 E-Mail: DN.jvc@public1.wx.js.cn DE NORA DEUTSCHLAND GmbH Industriestrasse 17, D-63517 Rodenbach - DEUTSCHLAND Tel. +49 6184 5980 - Fax +49 6184 598183 E-Mail: denora@t-online.de ------------------ Exhibit B - -------------------------------------------------------------------------------- DN Products as of November 30, 2000 Commercial Products A. V3 ELAT(R) anodes and cathodes containing supported platinum catalyst B. V3 ELAT(R) anodes containing supported platinum:ruthenium alloy catalyst C. V3 ELAT without catalyst ("diffuser" for Membrane Electrode Assemblies) D. Supported Catalysts for anode or cathode: 20%, 30%, and 40% platinum on Vulcan XC-72 E. Supported Catalysts for anode in presence of carbon monoxide: an alloy of Pt:Ru on Vulcan XC-72 at 20%, 30%, and 40% metal on carbon. F. Other DN Products as per catalogue available at the Web site: www.etek-inc.com as of the date of signature of this contract ---------------- DN Products resulting from R&D May be derived but not limited to: Pt-Mo catalyst (US Patent Serial No.09/271,664) 2Shift Catalyst (Nuvera formulation) Exhibit C - -------------------------------------------------------------------------------- Specifications 1) ELECTRODES - --------------- Pt GAS DIFFUSION ELECTRODE as covered by US Pat 6,103,077 . Commercial single sided ELAT V3 . Minimum Specific Performance Certification: 3.92 kW/m/2/ (@ 6 kA/m/2/, 1.5 bar a), 2.16 kW/m/2/ (@ 3 kA/m/2/, 1,5 bar), based on membrane area. . Performance Criteria: as per document QCPt-16 revision 1, dated October 12, 2000 as a modification of QC-60 revision 2, dated Sept. 16, 1999. Subsequent revisions to be approved in writing by DNE and BUYER . OPTIONS: 1) Coated with Nafion(R) ionomer, according to document SPR-NAF-01, dated May 19, 2000; 2) as a precut component; or 3) as a rolled good available for further processing Pt-Ru GAS DIFFUSION ELECTRODE as covered by US Pat 6,103,077 . Commercial single sided ELAT V3 Anode . Minimum Specific Performance Certification (Pure Hydrogen): 3.92 kW/m/2/ (@ 6 kA/m/2/, 1,5 bar a), 2.16 Kw/m/2/ (@ 3 kA/m/2/, 1,5 bar a), based on membrane area . Performance criteria: as per document QCPtRu-16 revision 1, agreed September 20, 2000 as a modification of QC-60 revision 2, dated Sept 16, 1999. Subsequent revisions to be approved in writing by DNE and BUYER . OPTIONS: 1) Coated with Nafion(R) ionomer, according to document SPR-NAF-01, dated May 19, 2000; 2) as a precut component; or 3) as a rolled good available for further processing 2) DIFFUSERS - -------------- . Commercial single sided ELAT V3C, un-catalysed (acceptance criteria and standard catalyzed membrane configuration under discussion) 3. Other COMMERCIAL PRODUCTS - ------------------------------ specifications s per catalogue available at WEB site: www.etek-inc.com as of the ---------------- date of signature of this contract NOTE: Specifications to be updated on a yearly basis EX-23.1 25 0025.txt INDEPENDENT AUDITORS CONSENT EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No.1 to Registration Statement No. 333- 49500 of Nuvera Fuel Cells, Inc. (a development stage Company) of our report dated November 3, 2000 (___, 2001 as to the last paragraph of Note 12) (which report expresses an unqualified opinion and includes an explanatory paragraph relating to Nuvera Fuel Cells, Inc. as a development stage enterprise) appearing in the prospectus, which is a part of such Registration Statement and to the reference to us under the heading "Experts" in such prospectus. Boston, Massachusetts The foregoing consent is in the form that will be signed upon the occurrence of the stock split described in Note 12 to the consolidated financial statements of the Company and assuming that from January 26, 2001 to the date of such completion no other material events have occurred that would affect the consolidated financial statements of the Company . If the share exchange ratio changes, all references to number of shares, per share amounts and stock opinion data included within the consolidated financial statements will also change. /s/ Deloitte & Touche LLP Boston, Massachusetts February 2, 2001 EX-23.2 26 0026.txt INDEPENDENT AUDITORS CONSENT Exhibit 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Amendment No. 1 to Registration Statement No. 333-49500 of Nuvera Fuel Cells, Inc. (a development stage company) on Form S-1 of our report dated November 3, 2000 relating to the financial statements of Epyx Corporation (a development stage company) (which report expresses an unqualified opinion and includes explanatory paragraphs relating to Epyx Corporation as a development stage enterprise and to the merger of Epyx Corporation with De Nora Fuel Cells S.p.A.) appearing in the prospectus, which is a part of this Registration Statement and to the reference to us under the heading "Experts" in such Prospectus. /s/ Deloitte & Touche LLP February 2, 2001 Boston, Massachusetts -----END PRIVACY-ENHANCED MESSAGE-----