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HYDROGENICS CORPORATION - and - STUART ENERGY SYSTEMS CORPORATION SUPPORT AGREEMENT November 10, 2004 Osler, Hoskin & Harcourt LLP 1 First Canadian Place
 Toronto, Ontario
 M5X 1B8




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TABLE OF CONTENTS PageARTICLE 1
    
    INTERPRETATION
    
    
    11.1
    
    Definitions
    
    
    11.2
    
    Interpretation Not Affected by Headings
    
    
    81.3
    
    Number and Gender
    
    
    81.4
    
    Date for Any Action
    
    
    91.5
    
    Time References
    
    
    91.6
    
    Currency
    
    
    91.7
    
    Accounting Matters
    
    
    91.8
    
    Schedules
    
    
    9ARTICLE 2
    
    THE OFFER
    
    
    92.1
    
    Actions by Hydrogenics
    
    
    92.2
    
    Preparation of Filings
    
    
    122.3
    
    Shareholder Communications
    
    
    132.4
    
    Company Approval of the Offer
    
    
    132.5
    
    Outstanding Stock Options
    
    
    142.6
    
    Company Directors
    
    
    152.7
    
    Hydrogenics Directors
    
    
    152.8
    
    Subsequent Acquisition Transaction
    
    
    15ARTICLE 3
    
    REPRESENTATIONS AND WARRANTIES OF HYDROGENICS
    
    
    163.1
    
    Organization and Qualification
    
    
    163.2
    
    Authority Relative to this Agreement
    
    
    163.3
    
    No Conflict; Required Filings and Consent
    
    
    163.4
    
    Subsidiaries
    
    
    173.5
    
    Compliance with Laws
    
    
    173.6
    
    Capitalization and Listing
    
    
    183.7
    
    Shareholder and Similar Agreements
    
    
    183.8
    
    Reports
    
    
    183.9
    
    Financial Statements
    
    
    193.10
    
    Hydrogenics Common Shares
    
    
    203.11
    
    Undisclosed Liabilities
    
    
    203.12
    
    Interest in Properties
    
    
    203.13
    
    Employment Matters
    
    
    203.14
    
    Intellectual Property Rights
    
    
    213.15
    
    Non-Compliance
    
    
    233.16
    
    Absence of Certain Changes or Events
    
    
    233.17
    
    Litigation
    
    
    243.18
    
    Taxes
    
    
    243.19
    
    Books and Records
    
    
    253.20
    
    Non-Arms Length Transactions
    
    
    253.21
    
    Pension and Employee Benefits
    
    
    253.22
    
    Relationships with Customers, Suppliers, Distributors and Sales Representatives
    
    
    263.23
    
    Product Recalls
    
    
    26
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TABLE OF CONTENTS(continued) Page3.24
    
    Insurance
    
    
    263.25
    
    Environmental
    
    
    263.26
    
    Restrictions on Business Activities
    
    
    273.27
    
    Material Contracts
    
    
    273.28
    
    Brokers
    
    
    283.29
    
    Survival of Representations and Warranties
    
    
    28ARTICLE 4
    
    REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    
    
    284.1
    
    Organization and Qualification
    
    
    284.2
    
    Authority Relative to this Agreement
    
    
    284.3
    
    No Conflict; Required Filings and Consent
    
    
    294.4
    
    Subsidiaries
    
    
    294.5
    
    Compliance with Laws
    
    
    304.6
    
    Capitalization and Listing
    
    
    304.7
    
    Shareholder and Similar Agreements
    
    
    314.8
    
    U.S. Securities Law Matters
    
    
    314.9
    
    Reports
    
    
    314.10
    
    Financial Statements
    
    
    324.11
    
    Undisclosed Liabilities
    
    
    334.12
    
    Interest in Properties
    
    
    334.13
    
    Employment Matters
    
    
    334.14
    
    Intellectual Property Rights
    
    
    344.15
    
    Non-Compliance
    
    
    364.16
    
    Absence of Certain Changes or Events
    
    
    364.17
    
    Litigation
    
    
    374.18
    
    Taxes
    
    
    374.19
    
    Books and Records
    
    
    384.20
    
    Insurance
    
    
    384.21
    
    Non-Arm's Length Transactions
    
    
    384.22
    
    Pension and Employee Benefits
    
    
    384.23
    
    Environmental
    
    
    394.24
    
    Restrictions on Business Activities
    
    
    404.25
    
    Material Contracts
    
    
    404.26
    
    Relationships with Customers, Suppliers, Distributors and Sales Representatives
    
    
    404.27
    
    Product Recalls
    
    
    414.28
    
    Brokers
    
    
    414.29
    
    Rights Plan
    
    
    414.30
    
    Survival of Representations and Warranties
    
    
    41ARTICLE 5
    
    COVENANTS
    
    
    415.1
    
    Conduct of Business by the Company
    
    
    415.2
    
    Covenants of Hydrogenics
    
    
    455.3
    
    Extension of the Offer
    
    
    47
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TABLE OF CONTENTS(continued) PageARTICLE 6
    
    TERMINATION, AMENDMENT AND WAIVER
    
    
    476.1
    
    Termination
    
    
    476.2
    
    Amendment
    
    
    496.3
    
    Waiver
    
    
    496.4
    
    Effect of Termination
    
    
    49ARTICLE 7
    
    NON-SOLICITATION
    
    
    507.1
    
    Non-Solicitation
    
    
    507.2
    
    Break Fee Provision
    
    
    52ARTICLE 8
    
    GENERAL PROVISIONS
    
    
    538.1
    
    Further Assurances
    
    
    538.2
    
    Notification of Certain Matters
    
    
    538.3
    
    Access to Information
    
    
    538.4
    
    Confidentiality
    
    
    548.5
    
    Officers and Directors Insurance
    
    
    548.6
    
    Employment Contracts
    
    
    548.7
    
    Expenses
    
    
    548.8
    
    Notices
    
    
    548.9
    
    Severability
    
    
    568.10
    
    Entire Agreement, Assignment and Governing Law
    
    
    568.11
    
    Attornment
    
    
    568.12
    
    Third Party Beneficiaries
    
    
    578.13
    
    Counterparts
    
    
    57
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SUPPORT AGREEMENT THIS SUPPORT AGREEMENTis made the 10th day of November, 2004 (the Agreement) B E T W E E N: HYDROGENICS CORPORATION,a corporation incorporated under the federal laws of Canada(Hydrogenics),- and -STUART ENERGY SYSTEMS CORPORATION,a corporation continued under the federal laws of Canada,(the Company)
 RECITALS:  A.
    
    Hydrogenics wishes to make an offer, either directly or through a
wholly-owned subsidiary, by way of take-over bid to the shareholders of
the Company to purchase all of the outstanding common shares of the
Company (including common shares issuable upon the exercise of outstanding
options) (the Common Shares).B.
    
    The board of directors of the Company wishes to support and facilitate
the offer on the terms set out in this Agreement and has concluded that it
is in the best interests of the Company to enter into this Agreement.C.
    
    Contemporaneously herewith, Hydrogenics has entered into a lock-up
agreement (the Lock-up Agreement) with Dr. Hugo Vandenborre, Samuel C.
Johnson 1996 Trust, Samuel C. Johnson 1988 Trust I, Newstar Technology
Limited, Mercator Verzekeringen N.V., Robert S. Torokvei, Douglas S.
Alexander, Barrie Cook, Kelly T. Grindle, Peter C. Johnson, Jon Slangerup,
Andrew T.B. Stuart, Robert W. Campbell, George P. Kempff, R. Randall
MacEwen, Bart Van Ouytsel and Peter Wressell (collectively, the Locked-up
Shareholders) pursuant to which the Locked-up Shareholders have agreed to
tender to the Offer all Common Shares owned by the Locked-up Shareholders. THEREFORE, in consideration of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto covenant and
agree as follows: ARTICLE 1 INTERPRETATION
  1.1
    
    Definitions In this Agreement, unless the context otherwise requires:




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Acquisition Proposalshall have the meaning ascribed thereto in
Subsection 7.1(a);affiliatehas the meaning ascribed thereto in the CBCA;Agreementmeans this support agreement dated November 10, 2004 entered
into between Hydrogenics and the Company;Appropriate Regulatory Approvalsmeans those sanctions, rulings,
consents, orders, exemptions, permits and other approvals (including the
lapse, without objection, of a prescribed time under a statute or
regulation that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice without an
objection being made) of Governmental Entities required in connection
with the commencement of the Offer or the consummation of the Offer;associatehas the meaning ascribed thereto in the CBCA;Board of Directorsmeans the board of directors of the Company;business daymeans any day of the week, other than a Saturday, a Sunday
or a statutory or civic holiday observed in Toronto, Ontario;Canadian GAAPmeans Canadian generally accepted accounting principles
as defined by the Accounting Standards Board of the Canadian Institute of
Chartered Accountants in the Handbook of the Canadian Institute of
Chartered Accountants applied on a consistent basis;CBCAmeans the Canada Business Corporations Act, R.S.C. 1985, c. C-44,
as amended;Common Sharesmeans the common shares of the Company (including common
 shares issuable upon the exercise of outstanding options);Companymeans Stuart Energy Systems Corporation, a corporation
continued under the federal laws of Canada;Company Balance Sheethas the meaning ascribed thereto in Section 4.11;Company Benefit Plansmeans any pension or retirement income plans or
other employee compensation or benefit plans, agreements, policies,
programs, arrangements or practices, whether written or oral, which are
maintained by or binding upon the Company or any of its Material
Subsidiaries;Company Disclosure Statementmeans the disclosure statement of the
Company delivered to Hydrogenics in confidence contemporaneously with the
execution and delivery of this Agreement;Company Intellectual Propertyhas the meaning ascribed thereto in
Subsection 4.14(a); -2-




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Company Material Adverse Effectmeans any change, effect, event,
occurrence or state of facts that is, or would reasonably be expected to
be, material and adverse to the assets, business, operations or financial
condition (including cash resources) of the Company and its Material
Subsidiaries taken as a whole other than effects relating to (i) any
change, effect, event, occurrence or state of facts relating to the North
American economy or securities markets in general, (ii) changes affecting
generally the industries in which the Company or any of its Subsidiaries
conducts business, (iii) any natural disaster or any acts of terrorism,
sabotage, military action or war (whether or not declared) or any
escalation or worsening thereof, or (iv) any change in the market price
or trading volume of the common shares of the Company;Company Product Authorizationsmeans approvals, licences, permits,
consents, authorizations or registrations required or issued by any
Governmental Entity, any other regulatory authority of competent
jurisdiction or any third party test house, registrar or certification
body, relating to the investigation, manufacture, import, export, sale,
distribution and/or marketing of the Company Products;Company Productsmeans all of the products that are developed,
manufactured or sold by the Company and/or its Material Subsidiaries or
for which the Company or its Material Subsidiaries are entitled to
receive royalties or other payments;Company Public Documentsmeans all forms, reports, schedules,
statements and other documents required to be filed by the Company since
January 1, 2003, with all applicable securities regulatory authorities,
the TSX and all other applicable self-regulatory organizations;Confidentiality Agreementmeans the confidentiality agreement dated
September 12, 2002 between Hydrogenics and the Company;Directors Circularhas the meaning ascribed thereto in Subsection
2.1(g);Effective Datemeans the date on which Hydrogenics first pays for
Common Shares deposited to the Offer;Environmental Lawsmeans all applicable Laws, including applicable
common laws, relating to the protection of human health and safety or the
environment, or relating to hazardous or toxic substances or wastes,
pollutants or contaminants;Exchange Actmeans the U.S. Securities Exchange Act of 1934and the
rules and regulations of the SEC thereunder;Expiry Datemeans the 36th day after the date that the Offer is
commenced within the meaning of the Securities Act, or any subsequent
date set out in any notice of Hydrogenics extending the period during
which Common Shares may be deposited under the Offer; provided that, if
such day is not a business day, then the Expiry Date shall be the next
business day;Expiry Timemeans 12:01 a.m. on the Expiry Date; -3-




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Foreign Private Issuermeans an issuer incorporated or organized under
the laws of any jurisdiction other than the United States of America or
any state, territory or possession thereof other than an issuer meeting
both of the following conditions: (1) more than 50 percent of the
outstanding voting securities of such issuer are directly or indirectly
owned by residents of the United States; and (2) any of the following:
(A) the majority of the executive officers or directors are United States
citizens or residents; (B) more than 50 percent of the assets of the
issuer are located in the United States; or (C) the business of the
issuer is administered principally in the United States;Governmental Entitymeans (a) any multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitral body,
commission, board, bureau or agency, domestic or foreign; (b) any
subdivision, agent, commission, board, or authority of any of the
foregoing; (c) any self-regulatory authority; (d) the TSX and the NASDAQ;
or (e) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing;Hydrogenics Balance Sheethas the meaning ascribed thereto in Section
3.11;Hydrogenics Benefit Plansmeans any pension or retirement income plans
or other employee compensation or benefit plans, agreements, policies,
programs, arrangements or practices, whether written or oral, which are
maintained by or binding upon Hydrogenics or any of its Material
Subsidiaries;Hydrogenics Disclosure Statementmeans the disclosure statement of
Hydrogenics delivered to the Company in confidence contemporaneously
with the execution and delivery of this Agreement;Hydrogenics Intellectual Propertyhas the meaning ascribed thereto in
Subsection 3.14(a);Hydrogenics Material Adverse Effectmeans any change, effect, event,
occurrence or state of facts that is, or would reasonably be expected to
be, material and adverse to the assets, business, operations or financial
condition (including cash resources) of Hydrogenics and its Material
Subsidiaries taken as a whole, other than effects relating to (i) any
change, effect, event, occurrence or state of facts relating to the North
American economy or securities markets in general, (ii) changes affecting
generally the industries in which Hydrogenics or any of its Subsidiaries
conducts business, (iii) any natural disaster or any acts of terrorism,
sabotage, military action or war (whether or not declared) or any
escalation or worsening thereof, or (iv) any change in the market price
or trading volume of the common shares of Hydrogenics;Hydrogenics Product Authorizationsmeans approvals, licences, permits,
consents, authorizations or registrations required or issued by any
Governmental Entity, any other regulatory authority of competent
jurisdiction or any third party test house, registrar or certification
body, relating to the investigation, manufacture, import, export, sale,
distribution and/or marketing of the Hydrogenics Products; -4-




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Hydrogenics Productsmeans all of the products that are developed,
manufactured or sold by Hydrogenics and/or its Material Subsidiaries or
for which Hydrogenics or its Material Subsidiaries are entitled to
receive royalties or other payments;Hydrogenics Public Documentsmeans all forms, reports, schedules,
statements and other documents required to be filed by Hydrogenics since
January 1, 2003, with all applicable securities regulatory authorities,
the TSX, the NASDAQ and all applicable self-regulatory organizations;Inducement Optionmeans the grant of, among other things, the Slangerup
Inducement Options, as approved by Shareholders on September 25, 2001 and
described in Schedule 4.6 to the Company Disclosure Statement;Intellectual Propertymeans all:  (i)
    
    copyrights, whether registered or not, including,
without limitation, copyright in design elements, ordering of
content, graphic user interface, treatments, drafts or
fictitious characters;(ii)
    
    trade-marks, designs, logos, indicia,
distinguishing guises, trade dress, trade names, business
names, URLs, any other source or business identifiers, whether
registered or not, and all goodwill associated with the
foregoing;(iii)
    
    patents and inventions and applications therefor
and patents which may be issued from current applications
(including divisions, reissues, renewals, re-examinations,
continuations, continuations-in-part and extensions) applied
for or registered;(iv)
    
    trade secrets, confidential information and
know-how, ideas, concepts, innovations, processes, technology,
reports and studies, data, business information, research
designs, research results and notes, prototypes, drawings,
design and construction specifications, marketing strategies,
and current or proposed business opportunities; and(v)
    
    industrial designs;  knowledge of a Party or a Subsidiary of a Party means the actual
knowledge of the directors and officers of the Party or Subsidiary (as
the case may be), after due inquiry;Lawsmeans all laws (including common law), by-laws, statutes, rules,
regulations, principles of law, orders, ordinances, judgments, decrees or
other requirements and the terms and conditions of any grant of approval,
permission, authority or licence of any Governmental Entity, and the term
applicable with respect to such Laws and in a context that refers to
one or more Parties, means such Laws as are applicable to such Party or
its business, undertaking, property or securities and emanate from a
Person having jurisdiction over the Party or Parties or its or their
business, undertaking, property or securities; -5-




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Lock-up Agreementhas the meaning ascribed thereto in Recital C;Locked-up Shareholdershas the meaning ascribed thereto in Recital C;materialmeans, with respect to Hydrogenics or the Company (as the case
may be), a fact, liability, transaction or circumstance concerning the
business, assets, liabilities, operations or financial condition of
Hydrogenics or the Company (as the case may be) and their respective
Subsidiaries, taken as a whole, that would be reasonably likely to have a
significant effect on the value of the shares of Hydrogenics or the
Company (as the case may be) or that would prevent or materially delay
completion of the Offer in accordance with this Agreement;Material Contract means a contract, licence, lease, agreement,
obligation, promise, undertaking, understanding, arrangement, document,
commitment, entitlement or engagement to which a Person is a party or by
which a Person is bound or under which a Person has, or will have, any
liability or contingent liability (in each case, whether written or oral,
express or implied) (i) involving payments to or by such Person in excess
of $20,000 annually or $150,000 in aggregate over the term of the
contract, (ii) involving rights or obligations that may reasonably extend
beyond three years and which does not terminate or cannot be terminated
without penalty on less than three months notice, (iii) which is outside
the ordinary course of business, (iv) which restricts in any way the
business or activities of the Person, (v) which, in the case of the
Company, relates to Company Intellectual Property, or in the case of
Hydrogenics, relates to Hydrogenics Intellectual Property, or (vi) which,
if terminated without the consent of the Person, in the case of the
Company, would result in a Company Material Adverse Effect, or in the
case of Hydrogenics, would result in a Hydrogenics Material Adverse
Effect;Material Subsidiaries in respect of the Company means Vandenborre
Technologies N.V., Stuart Energy Europe N.V., and The Electrolyser
Corporation Ltd., and in respect of Hydrogenics means Greenlight Power
Technologies, Inc. and EnKat GmbH;Minimum Tender Conditionmeans that there shall have been validly
deposited under the Offer and not withdrawn at the Expiry Time that
number of Common Shares which, together with any Common Shares held by
Hydrogenics and its affiliates, constitutes at least 66 2/3% of the Common
Shares outstanding (on a fully diluted basis) at the Expiry Time;NASDAQmeans The NASDAQ Stock Market;1933 Act means the United States Securities Act of 1933, as amended;Offermeans the offer to be made by Hydrogenics, either directly or
through a wholly owned subsidiary, by way of a take-over bid for all of
the outstanding Common Shares for consideration of 0.74 common shares of
Hydrogenics for each Common Share, in accordance with Section 2.1(a);Offer Deadlinehas the meaning ascribed thereto in Subsection 2.1(a);Offer Documentshas the meaning ascribed thereto in Subsection 2.1(d); -6-




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Offered Considerationhas the meaning ascribed thereto in Subsection
2.1(a);Offering Circularmeans the offer to purchase and accompanying
take-over bid circular to be provided to the Shareholders in respect of
the Offer;Optionsmeans options to purchase Common Shares granted under the
Companys Share Option Plan;Partiesmeans the Company and Hydrogenics; and Partymeans either one
of them;Personincludes an individual, partnership, association, body
corporate, joint venture, business organization, trustee, executor,
administrator, legal representative, government (including any
Governmental Entity) or any other entity, whether or not having legal
status;Proposed Agreementhas the meaning ascribed thereto in Subsection
7.1(e);SECmeans the U.S. Securities and Exchange Commission;Securities Actmeans the Securities Act(Ontario), R.S.O. 1990, c. S-5
and the rules, regulations and published policies made thereunder, as now
in effect and as they may be amended from time to time prior to the
Effective Date;Securities Lawshas the meaning ascribed thereto in Subsection 2.1(d);Shareholdersmeans the holders of Common Shares;Share Option Planmeans the share option plan for directors, officers,
consultants and employees of the Company dated December 1999, as amended;Slangerup Inducement Optionsmeans the 815,000 share options at an
exercise price of $6.80 per Common Share granted to Mr. Slangerup
pursuant to the Inducement Option, of which 741,000 remain outstanding on
the date hereof;Subsequent Acquisition Transactionhas the meaning ascribed thereto in
Section 2.8;Subsidiary means, with respect to a specified body corporate, any body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the board of directors thereof (whether
or not shares of any other class or classes shall or might be entitled to
vote upon the happening of any event or contingency) are at the time
owned directly or indirectly by such specified body corporate and shall
include any body corporate, partnership, joint venture or other entity
over which such specified body corporate exercises direction or control
or which is in a like relation to a subsidiary;Superior Proposalhas the meaning ascribed thereto in Subsection
7.1(a);Tax Actmeans the Income Tax Act(Canada), R.S.C. 1985, c. 1, as
amended;Taxesincludes any taxes, duties, fees, premiums, assessments, imposts,
levies and other charges of any kind whatsoever imposed by any
Governmental Entity, including all -7-




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interest, penalties, fines, additions to tax or other additional amounts
imposed by any Governmental Entity in respect thereof, and including
those levied on, or measured by, or referred to as, income, gross
receipts, profits, capital, transfer, land transfer, sales, goods and
services, harmonized sales, use, value-added, excise, stamp, withholding,
business, franchising, property, development, occupancy, employer health,
payroll, employment, health, social services, education and social
security taxes, all surtaxes, all customs duties and import and export
taxes, countervail and anti-dumping, all licence, franchise and
registration fees and all employment insurance, health insurance and
Canada, Québec and other government pension plan premiums or
contributions;Tax Returnsincludes all returns, reports, declarations, elections,
notices, filings, forms, statements and other documents (whether in
tangible, electronic or other form) and including any amendments,
schedules, attachments, supplements, appendices and exhibits thereto,
made, prepared, filed or required to be made, prepared or filed by law in
respect of Taxes;Third Party Beneficiarieshas the meaning ascribed thereto in Section
8.12;Transition Datemeans the earlier of (i) the termination of this
Agreement, and (ii) the appointment or election to the Board of Directors
of Persons designated by Hydrogenics who represent a majority of the
directors of the Company;Trigger Eventshall be deemed to occur when, on any day up to the
second trading day immediately prior to the first date on which
Hydrogenics may take-up and pay for Common Shares pursuant to the Offer,
the ten day volume-weighted average trading price of a Hydrogenics common
share, based on trading on the NASDAQ, calculated on a rolling basis for
each consecutive trading day after the date this Agreement is executed,
is less than CDN$4.80 (with all trading prices on a given trading day
being converted to Canadian dollars at the noon spot U.S./Canadian dollar
exchange rate posted by the Bank of Canada for such trading day); andTSXmeans the Toronto Stock Exchange.  1.2
    
    Interpretation Not Affected by Headings The division of this Agreement into Articles, Sections, Subsections and
Paragraphs and the insertion of headings are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this
Agreement. Unless the contrary intention appears, references in this Agreement
to an Article, Section, Subsection, Paragraph or Schedule by number or letter
or both refer to the Article, Section, Subsection, Paragraph or Schedule,
respectively, bearing that designation in this Agreement.  1.3
    
    Number and Gender In this Agreement, unless the contrary intention appears, words importing the
singular include the plural and vice versa, and words importing gender include
all genders. -8-




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1.4
    
    Date for Any Action If the date on which any action is required to be taken hereunder by a Party is
not a business day, such action shall be required to be taken on the next
succeeding day which is a business day.  1.5
    
    Time References In this Agreement, any references to time are to local time, Toronto, Ontario.  1.6
    
    Currency Unless otherwise stated, all references in this Agreement to sums of money are
expressed in lawful money of Canada.  1.7
    
    Accounting Matters Unless otherwise stated, all accounting terms used in this Agreement shall have
the meanings attributable thereto under Canadian GAAP, and all determinations
of an accounting nature required to be made shall be made in a manner
consistent with Canadian GAAP and past practice.  1.8
    
    Schedules The following Schedule is annexed to this Agreement and is incorporated by
reference into this Agreement and forms part hereof:  Schedule A  Conditions of the Offer ARTICLE 2 THE OFFER
  2.1
    
    Actions by Hydrogenics  (a)
    
    Hydrogenics agrees to use commercially reasonable efforts to
make the Offer and to mail the Offer Documents to registered
Shareholders in Canada and such other jurisdictions as Hydrogenics
may determine as soon as possible after the date hereof and, in any
event, on or before December 8, 2004 (the Offer Deadline) for
consideration of 0.74 common shares of Hydrogenics for each Common
Share (the Offered Consideration). In the event that the
conditions to the Offer have been satisfied or waived by
Hydrogenics, Hydrogenics shall take up and pay for the Common Shares
deposited under the Offer as soon as possible, and in any event not
later than three business days, after Hydrogenics becomes obligated
by the terms of the Offer to take up the Common Shares deposited
under the Offer. Instead of receiving any fractional common shares
of Hydrogenics, Shareholders shall instead receive a cash payment in
Canadian dollars equal to such fraction multiplied by the closing
trading price on the NASDAQ for the common shares of Hydrogenics on
the second last trading day prior to the Effective Date, which is
then converted into Canadian dollars at the average noon spot
U.S./Canadian dollar exchange rate posted by the Bank of Canada on
such trading day. For the -9-




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purposes of determining any cash payment, the Common Shares
deposited by a registered Shareholder shall be aggregated.(b)
    
    The Hydrogenics common shares to be issued pursuant to the
Offer will be at the time of issue registered under the 1933 Act
pursuant to Form F-8 or Form F-80 or other applicable form, as
applicable, and will be listed for trading on the NASDAQ and the
TSX.(c)
    
    The Offer shall not be subject to any conditions, other than
the conditions set out in Schedule A.(d)
    
    Hydrogenics shall prepare the Offering Circular and the
related letter(s) of transmittal and notice(s) of guaranteed
delivery (collectively, the Offer Documents) with respect to the
Offer in both English and French in compliance with the Securities
Act and all other applicable provincial securities laws, rules and
regulations and published policies thereunder in Canada
(collectively, the Securities Laws). Prior to printing the Offer
Documents, Hydrogenics shall provide the Company and its counsel
with an opportunity to review and comment on the Offer Documents,
the Company recognizing that whether or not such comments shall be
reflected in the Offer Documents will be determined by Hydrogenics,
acting reasonably. Hydrogenics shall provide the Company with a
final copy of the Offer Documents to be mailed to registered
Shareholders (in Canada and in such other jurisdictions as permitted
or required by applicable Laws) prior to the mailing to registered
Shareholders.(e)
    
    The Offer shall expire at the Expiry Time, subject to
extension as contemplated in Section 5.3. If the conditions set out
in Schedule A have been satisfied or waived by Hydrogenics at or
prior to the Expiry Time, Hydrogenics shall within three business
days accept for payment and pay for all of the Common Shares validly
tendered (and not withdrawn) pursuant to the Offer. The terms of the
Offer shall comply with the terms of this Agreement. In making the
Offer, Hydrogenics shall comply with the provisions of applicable
Laws.(f)
    
    Hydrogenics may, in its sole discretion, modify or waive any
term or condition of the Offer, provided that Hydrogenics will not,
without the prior written consent of the Company, (i) modify or
waive the Minimum Tender Condition; (ii) decrease the Offered
Consideration (except in circumstances where, following the date
hereof, the Company has declared, set aside or paid any dividend or
distribution (whether in cash, stock, property or otherwise) with
respect to the Common Shares); (iii) change the form of the Offered
Consideration (other than to add additional consideration); (iv)
impose additional conditions to the Offer; or (v) otherwise modify
the Offer (or any terms or conditions thereof) in a manner that is
adverse to the Shareholders.(g)
    
    The obligation of Hydrogenics to make the Offer by mailing
the Offering Circular to Shareholders is conditional on the prior
satisfaction of the following conditions, all of which conditions
are included for the sole benefit of Hydrogenics and any or all of
which may be waived by Hydrogenics in whole or in part in its sole
discretion without prejudice to any other rights it may have under
this Agreement -10-




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##### 



or otherwise and which shall be deemed to have been waived by the
commencement of the Offer:  (i)
    
    the obligations of Hydrogenics hereunder shall
not have been terminated pursuant to Section 6.1;(ii)
    
    no circumstance, fact, change, event or
occurrence shall have occurred that would render it impossible
for one or more of the conditions set out on Schedule A to be
satisfied;(iii)
    
    the Board of Directors shall have prepared and
approved in final form, authorized for printing and
distribution to Shareholders and delivered to Hydrogenics for
mailing with the Offering Circular a directors circular (the
Directors Circular), which circular shall contain a
unanimous recommendation that Shareholders accept the Offer,
and the Board of Directors shall not have withdrawn or changed
its recommendation;(iv)
    
    no cease trade order, injunction or other
prohibition at Law shall exist against Hydrogenics making the
Offer or taking up or paying for Common Shares deposited under
the Offer;(v)
    
    Hydrogenics shall have received all waivers,
rulings or orders necessary for the making of the Offer or
necessary to mail to Shareholders the Offering Circular from
all applicable securities commissions or other securities or
stock exchange regulatory authorities;(vi)
    
    all representations and warranties of the
Locked-up Shareholders in the Lock-up Agreement: (A) that are
qualified by a reference to materiality shall be true and
correct in all respects; and (B) that are not qualified by a
reference to materiality shall be true and correct in all
material respects;(vii)
    
    the Lock-up Agreement shall have been entered
into by each Locked-up Shareholder and the Lock-up Agreement
shall not have been terminated;(viii)
    
    the Company shall have complied in all material respects
with its obligations under this Agreement;(ix)
    
    all representations and warranties of the
Company:  (A)
    
    that are qualified by a reference to
a Company Material Adverse Effect shall be true and
correct in all respects at the time of the making of the
Offer; and(B)
    
    that are not qualified by a reference
to a Company Material Adverse Effect shall be true and
correct in all material respects at the time of the
making of the Offer;  (x)
    
    there shall not have occurred or arisen (or there
shall not have been generally disclosed or discovered, if not
disclosed in writing to Hydrogenics) any change (or any
condition, event or development -11-




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involving a prospective change) in the business, operations,
affairs, assets, liabilities (including any contingent
liabilities that may arise through outstanding, pending or
threatened litigation or otherwise), capitalization,
financial condition, licences, permits, rights or privileges,
whether contractual or otherwise, of the Company or any of
its Subsidiaries considered on a consolidated basis which, in
the sole judgment of Hydrogenics, acting reasonably,
individually or in the aggregate, has or may have a Company
Material Adverse Effect;(xi)
    
    each of Rob Campbell, Randall MacEwen, Peter
Wressell, Bart Van Ouytsel and Hugo Vandenborre shall have
amended his or her existing employment agreement with the
Company or entered into a new employment agreement with the
Company in a form satisfactory to Hydrogenics;(xii)
    
    the Board of Directors shall have passed and not
revoked a resolution suspending the grant of further Options
under the Share Option Plan;(xiii)
    
    the Company shall have obtained, in a form satisfactory to
Hydrogenics acting reasonably, all consents from the third
parties identified in Schedule 4.3 to the Company Disclosure
Schedule;(xiv)
    
    each of Messrs Slangerup, MacEwen, Campbell,
Kempff, Wressell, Van Ouytsel and Vandenborre shall have
delivered to Hydrogenics an acknowledgement, in a form
satisfactory to Hydrogenics acting reasonably, that the
employment or consulting arrangement entered into by such
executive (or his or her holding company or trust) with the
Company provides for alternative severance provisions in the
event of (i) the officers termination without cause, and (ii)
a Change of Control (as defined therein) of the Company, but
that in no event will the executive be entitled to a severance
payment under both (i) and (ii); and(xv)
    
    Mr. Slangerup shall have delivered to Hydrogenics
an acknowledgement, in a form satisfactory to Hydrogenics
acting reasonably, that his compensation package (including
his entitlement to Common Shares and options to purchase
Common Shares (whether or not under the Share Option Plan)) is
described in the management proxy circular of the Company
dated July 31, 2001 and such arrangements supersede in all
respects the compensation package set out in the employment
agreement entered into by him and the Company dated July 19,
2001.  2.2
    
    Preparation of Filings  (a)
    
    Hydrogenics and the Company shall cooperate in the
preparation of any application for orders, registrations, consents,
filings, circulars and approvals and the preparation of any required
documents reasonably deemed by the Parties to be necessary to
discharge their respective obligations under applicable Laws in
connection with this Agreement or the Offer. -12-




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(b)
    
    Each of the Company and Hydrogenics shall promptly notify the
other if at any time before the Effective Date it becomes aware that
the Offering Circular, the Directors Circular, an application for
an order, any registration, consent, circular or approval,
registration statement or any other filing under companies,
corporations or securities Laws contains an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained therein
not misleading in the light of the circumstances in which they are
made, or that otherwise requires an amendment or supplement to the
Offering Circular, the Directors Circular, such application,
registration statement or filing, and the Parties shall cooperate in
the preparation of any amendment or supplement to the Offering
Circular, the Directors Circular, application, registration
statement or filing, as required.(c)
    
    Nothing in this Agreement shall prevent the Board of
Directors from responding through a directors circular or otherwise
as required by applicable securities Laws to an Acquisition Proposal
that it determines is not a Superior Proposal.  2.3
    
    Shareholder Communications  (a)
    
    The Company and Hydrogenics agree to cooperate in the
preparation of presentations to investors, if any, regarding the
Offer prior to the making of such presentations and to promptly
consult with each other in issuing any press releases or otherwise
making public statements with respect to this Agreement or the Offer
and in making any filing with any Governmental Entity with respect
thereto, except in respect of an Acquisition Proposal. Each Party
shall use all commercially reasonable efforts to enable the other
Party to review and comment on all such press releases, except in
respect of Acquisition Proposals, prior to the release thereof and
shall enable the other Party to review and comment on such filings,
except in respect of Acquisition Proposals, prior to the filing
thereof; provided, however, that the foregoing shall be subject to
each Partys overriding obligation to make disclosure in accordance
with applicable Laws, and if such disclosure is required and the
other Party has not reviewed or commented on the disclosure, the
Party making such disclosure shall use all commercially reasonable
efforts to give prior oral or written notice to the other Party, and
if such prior notice is not possible, to give such notice
immediately following the making of such disclosure or filing.(b)
    
    Each of Hydrogenics and the Company agrees that, promptly
after the entering into of this Agreement, a joint press release
shall be issued announcing the entering into of this Agreement and
Hydrogenics intention to make the Offer, which press release shall
be satisfactory in form and substance to each of Hydrogenics and the
Company, acting reasonably.  2.4
    
    Company Approval of the Offer  (a)
    
    The Company represents and warrants to and in favour of
Hydrogenics, and acknowledges that Hydrogenics is relying upon such
representations and warranties in entering into this Agreement,
that, as of the date of this Agreement: -13-




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(i)
    
    the Board of Directors has: (A) unanimously
determined that the Offer is fair to the Shareholders and it
is in the best interests of the Company for the Offer to be
made and the Board of Directors to support it on the terms of
this Agreement, and (B) approved the entering into of this
Agreement and the making of a recommendation that Shareholders
accept the Offer; and(ii)
    
    after reasonable inquiry, each of the Company and
the Board of Directors believes that all of the directors and
officers of the Company intend to tender their Common Shares,
including the Common Shares issued on the exercise of all
Options and Slangerup Inducement Options held by them, to the
Offer.  (b)
    
    The Company shall prepare and make available for distribution
contemporaneously with the Offering Circular, in both English and
French and in compliance with Securities Laws, sufficient copies of
the Directors Circular. Provided the Board of Directors has not
changed or withdrawn its recommendation set out in Paragraph (i) of
Subsection 2.4(a) above, the Directors Circular shall reflect the
determinations and recommendations set forth in paragraph (i) of
Subsection 2.4(a) above, and the Company shall take all reasonable
action to support the Offer on the terms of this Agreement. Prior
to printing the Directors Circular, the Company shall provide
Hydrogenics and its counsel with an opportunity to review and
comment on it, Hydrogenics recognizing that whether or not such
comments shall be reflected in the Directors Circular will be
determined by the Company, acting reasonably.(c)
    
    The Company shall provide Hydrogenics, as soon as practicable
and in any event within three business days following the execution
and delivery of this Agreement, with a list (in both written and
electronic form) of the registered Shareholders, together with their
addresses and respective holdings of Common Shares. The Company
shall concurrently provide Hydrogenics with a list of the names,
addresses and holdings of all Persons having rights issued by the
Company to acquire Common Shares (including holders of Options and
Slangerup Inducement Options). The Company shall from time to time
request that its registrar and transfer agent promptly furnish
Hydrogenics with such additional information, including updated or
additional lists of Shareholders, a list of participants in
book-based nominee registered shareholders such as CDS & Co. and
CEDE & Co., mailing labels and lists of securities positions and
other assistance as Hydrogenics may reasonably request in order to
be able to communicate the Offer to the Shareholders and to such
other Persons as are entitled to receive the Offer under applicable
Laws.  2.5
    
    Outstanding Stock Options Subject to the receipt of all Appropriate Regulatory Approvals, the Board of
Directors will make such amendments to the Share Option Plan and take all such
other steps as may be necessary or desirable to allow all Persons holding
Options pursuant to the Share Option Plan and the Slangerup Inducement Options,
who may do so under applicable Laws: (i) to exercise their Options and
Slangerup Inducement Options on an accelerated vesting basis solely for the -14-




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##### 



purpose of tendering under the Offer all Common Shares issued in connection
with such exercise, conditional upon Hydrogenics agreeing to take up and pay
for such Common Shares; and (ii) to effect a cashless exercise of their Options
and Slangerup Inducement Options for the purpose of tendering under the Offer
all Common Shares issued in connection with such cashless exercise, conditional
upon Hydrogenics agreeing to take up such Common Shares, on terms and in a
manner acceptable to Hydrogenics. In addition, following the Subsequent
Acquisition Transaction contemplated in section 2.8, Hydrogenics shall amend
the Share Option Plan such that each Option and Slangerup Inducement Option
will be exercisable at its existing exercise price for 0.74 common shares of
Hydrogenics.  2.6
    
    Company Directors Promptly following the Effective Date, provided that Hydrogenics has taken-up
and paid for at least 66 2/3% of the outstanding Common Shares (on a fully diluted
basis), and from time to time thereafter, Hydrogenics shall be entitled to
designate the directors of the Board of Directors, and any committees thereof,
and, subject to obtaining a release in favour of each resigning member of the
Board of Directors who is being replaced by a Hydrogenics designee and
confirmation that insurance coverage is maintained as contemplated in Section
8.5, the Company shall not frustrate Hydrogenics attempts to do so, and
covenants to cooperate with Hydrogenics, subject to applicable Laws, to obtain
the resignation of any then incumbent directors effective on the date specified
by Hydrogenics and facilitate Hydrogenics designees to be elected or appointed
to the Board of Directors (including, without limitation, at the request of
Hydrogenics, by using all commercially reasonable efforts to secure the
resignations of the incumbent directors to enable Hydrogenics designees to be
elected or appointed to the Board of Directors).  2.7
    
    Hydrogenics Directors Immediately upon the appointment of Hydrogenics designees to the Board of
Directors of the Company as contemplated in Section 2.6, Hydrogenics shall
reorganize its board of directors to permit the appointment of Andrew Stuart,
Peter Johnson and Hugo Vandenborre to its nine person board of directors.  2.8
    
    Subsequent Acquisition Transaction If, within 120 days after the date of the Offer, the Offer has been accepted by
holders of not less than 90% of the outstanding Common Shares (on a fully
diluted basis), Hydrogenics shall, to the extent possible, acquire the
remainder of the Common Shares from those Shareholders who have not accepted
the Offer pursuant to section 206 of the CBCA and otherwise in accordance with
applicable Laws. If such statutory right of acquisition is not available,
Hydrogenics shall pursue other lawful means of acquiring the remaining Common
Shares not tendered to the Offer. Upon Hydrogenics taking up and paying for
more than 66 2/3% of the outstanding Common Shares (on a fully diluted basis)
under the Offer, the Company will assist Hydrogenics in connection with any
compulsory acquisition, proposed amalgamation, statutory arrangement, capital
reorganization or other transaction of the Company and Hydrogenics or an
affiliate of Hydrogenics to acquire the remaining Common Shares (a Subsequent
Acquisition Transaction) for consideration per Common Share at least equal in
value to the Offered Consideration paid by Hydrogenics under the Offer. -15-




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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HYDROGENICS Hydrogenics hereby represents and warrants to the Company as set forth below,
and acknowledges that the Company is relying upon these representations and
warranties in connection with the entering into of this Agreement.  3.1
    
    Organization and Qualification Hydrogenics is a company duly incorporated and validly existing under the CBCA
and has full corporate power and authority to own its assets and conduct its
business as now owned and conducted. Hydrogenics is duly qualified to carry on
business and is in good standing in each jurisdiction in which the character of
its property or the nature of its activity makes such qualification necessary,
except where the failure to be so qualified will not, individually or in the
aggregate, have a Hydrogenics Material Adverse Effect. True and complete
copies of the articles and by-laws of Hydrogenics have been delivered to the
Company, and Hydrogenics has not taken any action to amend or supersede such
documents.  3.2
    
    Authority Relative to this Agreement Hydrogenics has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, including the issuance of
Hydrogenics common shares in consideration for the Common Shares. The
execution and delivery of this Agreement by Hydrogenics and the consummation of
the Offer have been duly authorized by the board of directors of Hydrogenics
(or any authorized committee thereof), and no other corporate proceedings
(other than board meetings to approve the Offer Documents, the issuance of the
common shares of Hydrogenics pursuant to the offer, and the listing on the
NASDAQ and the TSX of the Hydrogenics common shares that will be issued in
consideration for the Common Shares) on the part of Hydrogenics are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Hydrogenics and constitutes a
valid and binding obligation of Hydrogenics, enforceable by the Company against
Hydrogenics in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency and other laws affecting the enforcement
of creditors rights generally and subject to the qualification that equitable
remedies may be granted only in the discretion of a court of competent
jurisdiction.  3.3
    
    No Conflict; Required Filings and Consent The execution and delivery by Hydrogenics of this Agreement and the performance
by it of its obligations hereunder and the completion of the Offer will not:
(a) violate, conflict with or result in a breach of any provision of: (i) the
constating documents of Hydrogenics or those of any of its Material
Subsidiaries; (ii) any agreement, contract, indenture, deed of trust, mortgage,
bond, instrument, licence or permit to which Hydrogenics or any of its Material
Subsidiaries is a party or by which Hydrogenics or any of its Material
Subsidiaries is bound; or (iii) any Law to which Hydrogenics or any of its
Material Subsidiaries is subject or by which Hydrogenics or any of its Material
Subsidiaries is bound; (b) give rise to any right of termination, or the
acceleration of any indebtedness, under any such agreement, contract,
indenture, deed of trust, mortgage, bond, instrument, licence or permit; or (c)
give rise to any rights of first refusal, trigger any change in control or
influence provisions or any restriction or limitation under any such agreement, -16-




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##### 



contract, indenture, deed of trust, mortgage, bond, instrument, licence or
permit, or result in the imposition of any encumbrance, charge or lien upon any
of Hydrogenics assets or the assets of any of its Material Subsidiaries,
except as disclosed in Schedule 3.3 to the Hydrogenics Disclosure Statement or
as would not, individually or in the aggregate, have a Hydrogenics Material
Adverse Effect. In addition, other than in connection with or in compliance
with Appropriate Regulatory Approvals, applicable Laws and policies, no other
authorization, consent or approval of, or filing with, any public body, court
or authority is necessary on the part of Hydrogenics for the consummation of
the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make would not, individually or in the aggregate, prevent or
materially delay consummation of the transactions contemplated by this
Agreement.  3.4
    
    Subsidiaries Hydrogenics does not have Subsidiaries or any interests in any Person, other
than those listed on Schedule 3.4 to the Hydrogenics Disclosure Statement.
Each Material Subsidiary of Hydrogenics is duly organized and is validly
existing under the laws of its jurisdiction of incorporation or organization,
has full corporate power and authority to own its assets and conduct its
business as now owned and conducted by it and is duly qualified to carry on
business in each jurisdiction in which the character of its properties or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a Hydrogenics Material Adverse
Effect. Except as set out on Schedule 3.4 to the Hydrogenics Disclosure
Statement, Hydrogenics beneficially owns, directly or indirectly, all of the
issued and outstanding securities of each of its Subsidiaries. Except as set
out in Schedule 3.4 to the Hydrogenics Disclosure Statement, all of the
outstanding shares in the capital of each of the Subsidiaries that is a
corporation are: (i) validly issued, fully-paid and non-assessable and all such
shares are owned free and clear of all pledges, security interests, liens,
claims or encumbrances of any kind or nature whatsoever and (ii) are free of
any other restrictions including any restriction on the right to vote, sell or
otherwise dispose of the shares. In aggregate, the assets and revenues of the
Subsidiaries of Hydrogenics other than Hydrogenics Material Subsidiaries
represent less than 5% of the consolidated assets and consolidated revenues of
Hydrogenics.  3.5
    
    Compliance with Laws Hydrogenics and each of its Material Subsidiaries has complied and is in
compliance with all applicable Laws, and each of Hydrogenics and its Material
Subsidiaries has all licences, permits, orders or approvals of, and has made
all required registrations with, any Governmental Entity that is required, in
connection with the ownership of their respective assets or the conduct of
their respective operations as presently carried on and each of them has fully
complied with and is in compliance with all such licences, permits, orders,
approvals and registrations, except, in each case, for failures which,
individually or in the aggregate, would not have a Hydrogenics Material Adverse
Effect. None of Hydrogenics or any of its Material Subsidiaries has received
any notice, whether written or oral, of revocation or non-renewal of any such
licences, permits, orders, approvals or registrations, or of any intention of
any Governmental Entity to revoke or refuse to renew any of such licences,
permits, orders, approvals or registrations except in each case, for
revocations or non-renewals which, individually or in the aggregate, would not
have a Hydrogenics Material Adverse Effect and, to the knowledge of
Hydrogenics, all such licences, permits, orders, approvals and registrations
shall continue to be effective in order for -17-




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Hydrogenics and its Material Subsidiaries to continue to conduct their
respective businesses as they are currently being conducted. None of
Hydrogenics or any of its Material Subsidiaries is in conflict with, or in
default (including cross defaults) under or in violation of: (i) its articles
or by-laws or equivalent organizational documents, or (ii) any agreement or
understanding to which it or by which any of its properties or assets is bound
or affected, except for failures which, individually or in the aggregate, would
not have a Hydrogenics Material Adverse Effect. No Person other than
Hydrogenics or a Material Subsidiary thereof owns or has any proprietary,
financial or other interest (direct or indirect) in any of the licences,
permits, orders, approvals or registrations referred to above.  3.6
    
    Capitalization and Listing The authorized share capital of Hydrogenics consists of an unlimited number of
common shares and an unlimited number of preferred shares, issuable in series.
As at the date of this Agreement: (i) there are no preferred shares issued and
outstanding; (ii) there are 64,617,349 common shares validly issued and
outstanding as fully paid and non-assessable shares in the capital of the
Company; (iii) there are outstanding options to purchase common shares issued
under a stock option plan providing for the issuance of 3,930,244 common shares
upon the exercise thereof; and (iv) there are outstanding warrants to purchase
common shares providing for the issuance of 2,470,436 common shares upon the
exercise thereof. Except for the options and warrants referred to in the
immediately preceding sentence, there are no options, warrants, conversion
privileges, calls or other rights, agreements, arrangements, commitments or
obligations of Hydrogenics to sell any shares of Hydrogenics or securities or
obligations of any kind convertible into, exchangeable for or otherwise
carrying the right or obligation to acquire any shares of Hydrogenics. Except
as disclosed in Schedule 3.6 to the Hydrogenics Disclosure Statement, there are
no stock appreciation rights, phantom equity or similar rights, agreements
arrangements or commitments of Hydrogenics or any of its Subsidiaries based
upon the book value, income or any other attribute of Hydrogenics or any of its
Subsidiaries. Except as otherwise disclosed in Schedule 3.6 to the Hydrogenics
Disclosure Statement, no shareholder of Hydrogenics is entitled to any
preemptive or other similar right. The common shares of Hydrogenics are not
listed or quoted on any market other than the TSX and the NASDAQ.  3.7
    
    Shareholder and Similar Agreements Other than as disclosed in Section 3.7 to the Hydrogenics Disclosure Schedule,
Hydrogenics is not party to any shareholder, pooling, voting trust or other
agreement relating to the issued and outstanding shares of Hydrogenics or any
of its Material Subsidiaries which are not directly or indirectly wholly owned
by Hydrogenics.  3.8
    
    Reports Hydrogenics has filed with all applicable securities regulatory authorities,
the TSX, NASDAQ and all applicable self-regulatory organizations true and
complete copies of the Hydrogenics Public Documents that Hydrogenics is
required to file therewith. The Hydrogenics Public Documents at the time
filed: (i) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii) complied in all material respects with the
requirements of applicable securities laws. Hydrogenics has not filed any
confidential material change report with the Ontario Securities Commission or
any other -18-




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securities authority or regulator or any stock exchange or other
self-regulatory authority which at the date hereof remains confidential.  3.9
    
    Financial Statements  (a)
    
    The audited consolidated financial statements for Hydrogenics
as at and for each of the fiscal years ended on December 31, 2003,
December 31, 2002, and December 31, 2001, including the notes
thereto and the report by Hydrogenics auditors thereon, have been,
and all financial statements of Hydrogenics which are publicly
disseminated by Hydrogenics in respect of any subsequent periods
prior to the Effective Date will be, prepared in accordance with
Canadian GAAP applied on a basis consistent with prior periods and
present fairly, in all material respects, the consolidated financial
position and results of operations of Hydrogenics and its
Subsidiaries, taken as a whole, as of the respective dates thereof
and for the respective periods covered thereby. Except as disclosed
in Schedule 3.9(a) to the Hydrogenics Disclosure Statement, there
are no outstanding loans made by Hydrogenics or any of its
Subsidiaries to any executive officer or director of Hydrogenics.(b)
    
    The management of Hydrogenics has: (i) implemented disclosure
controls and procedures to ensure that material information relating
to Hydrogenics, including its Subsidiaries, is made known to the
management of Hydrogenics by others within those entities, which
disclosure controls and procedures are, given the size of
Hydrogenics and the nature of its business, effective at the
reasonable assurance level in timely alerting Hydrogenics principal
executive officer and its principal financial officer to material
information required to be included in the Hydrogenics Public
Documents, and (ii) has disclosed, based on its most recent
evaluation, to Hydrogenics outside auditors and the audit committee
of the board of directors of Hydrogenics (A) all significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect Hydrogenics ability to record, process,
summarize and report financial data and (B) any fraud, whether or
not material, that involves management or other employees who have a
significant role in Hydrogenics internal control over financial
reporting. A summary of any of those disclosures made by management
to Hydrogenics auditors and audit committee is set forth in
Schedule 3.9(b) to the Hydrogenics Disclosure Statement.(c)
    
    Since January 1, 2000: (i) neither Hydrogenics nor any of its
Subsidiaries nor, to Hydrogenics knowledge, any director, officer,
employee, auditor, accountant or representative of Hydrogenics or
any of its Subsidiaries has received or otherwise had or obtained
knowledge of any material complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing
practices, procedures, methodologies or methods of Hydrogenics or
any of its Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion, or claim
that Hydrogenics or any of its Subsidiaries has engaged in
questionable accounting or auditing practices, and (ii) no attorney
representing Hydrogenics or any of its Subsidiaries, whether or not
employed by Hydrogenics or any of its Subsidiaries, has reported
evidence of a material -19-




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violation of securities Laws, breach of fiduciary duty or similar
violation by Hydrogenics, any of its Subsidiaries or any of their
respective officers, director, employees or agents to the board of
directors or any committee thereof or to any director or officer of
Hydrogenics.  3.10
    
    Hydrogenics Common Shares The Hydrogenics common shares (other than Hydrogenics common shares held by
Persons who are affiliates (as defined in Rule 144(a) of the 1933 Act) of
Hydrogenics) issuable by Hydrogenics pursuant to the Offer will, upon their
issue, be freely tradeable securities and not subject to any statutory or other
regulatory hold period or trading or volume limitations under applicable
securities Laws of Canada and the United States.  3.11
    
    Undisclosed Liabilities Neither Hydrogenics nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
except for: (i) liabilities and obligations that are specifically disclosed on
the audited balance sheet of Hydrogenics as of December 31, 2003 (the
Hydrogenics Balance Sheet) or in the notes thereto, and (ii) liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since December 31, 2003, that are not and would not, individually or
in the aggregate with all other liabilities and obligations of Hydrogenics and
its Subsidiaries (other than those disclosed on the Hydrogenics Balance Sheet),
reasonably be expected to have a Hydrogenics Material Adverse Effect. Without
limiting the foregoing, the Hydrogenics Balance Sheet reflects reasonable
reserves in accordance with Canadian GAAP for contingent liabilities relating
to pending litigation and other contingent obligations of Hydrogenics and its
Subsidiaries.  3.12
    
    Interest in Properties Except as disclosed in Schedule 3.12 to the Hydrogenics Disclosure Statement,
Hydrogenics and its Material Subsidiaries have title to all of their material
properties and assets (including, without limitation, the Hydrogenics
Intellectual Property (as defined below), but excluding the Hydrogenics
Intellectual Property licensed to Hydrogenics or its Subsidiaries), free and
clear of any material claims or encumbrances, and Hydrogenics and its Material
Subsidiaries properties and assets are sufficient for the conduct of
Hydrogenics business as now carried on or as contemplated by Hydrogenics to be
carried on.  3.13
    
    Employment Matters  (a)
    
    Except as disclosed in Schedule 3.13 to the Hydrogenics
Disclosure Statement, neither Hydrogenics nor any of its
Subsidiaries has entered into any written or oral agreement or
understanding providing for severance or termination payments to any
director, officer or employee in connection with the termination of
their position or their employment as a direct result of a change in
control of Hydrogenics. For purposes of the agreements disclosed in
Schedule 3.13, a majority of the Incumbent Directors (as defined in
such agreements) has not determined that a Change of Control (as
defined in such agreements) has or is about to occur, if applicable. -20-




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##### 



(b)
    
    Neither Hydrogenics nor any of its Material Subsidiaries (i)
is a party to any collective -bargaining agreement, or (ii) is
subject to any application for certification or, to the knowledge of
Hydrogenics, threatened or apparent union-organizing campaigns for
employees not covered under a collective bargaining agreement. To
the knowledge of Hydrogenics, no fact or event exists that is likely
to give rise to a violation of this Subsection on or before the
Effective Date.(c)
    
    Neither Hydrogenics nor any of its Material Subsidiaries is
subject to any claim for wrongful dismissal, constructive dismissal
or any other tort claim, actual or, to the knowledge of Hydrogenics,
threatened, or any litigation actual, or to the knowledge of
Hydrogenics, threatened, relating to employment or termination of
employment of employees or independent contractors. To the knowledge
of Hydrogenics, no labour strike, lock-out, slowdown or work
stoppage is pending or threatened against or directly affecting
Hydrogenics.(d)
    
    Hydrogenics and its Material Subsidiaries have operated in
accordance with all applicable Laws with respect to employment and
labour, including, but not limited to, employment and labour
standards, occupational health and safety, employment equity, pay
equity, workers compensation, human rights, labour relations and
privacy and there are no current, pending, or to the knowledge of
Hydrogenics, threatened proceedings before any board or tribunal
with respect to any of the areas listed herein, except where the
failure to so operate would not have a Hydrogenics Material Adverse
Effect.  3.14
    
    Intellectual Property Rights  (a)
    
    To the knowledge of Hydrogenics, Schedule 3.14(a) to the
Hydrogenics Disclosure Statement contains a list of all applications
and registrations for Intellectual Property that is material to the
business of Hydrogenics (the Hydrogenics Intellectual Property),
all of which is owned by or licensed to Hydrogenics or its Material
Subsidiaries as indicated on such Schedule. To the extent that
rights to Hydrogenics Intellectual Property are not currently
reflected in a contract or other documentation maintained by
Hydrogenics, Hydrogenics has provided the Company with a complete
and accurate written description of the source of the rights of
Hydrogenics or its Subsidiaries in such Hydrogenics Intellectual
Property and any payment obligations of Hydrogenics or its
Subsidiaries with respect to such Hydrogenics Intellectual Property.(b)
    
    Schedule 3.14(b) to the Hydrogenics Disclosure Statement
contains a list of all of the Material Contracts by which
Hydrogenics has granted licences in respect of Hydrogenics
Intellectual Property. Except as otherwise disclosed in Schedule
3.14(b), Hydrogenics has not licensed, conveyed or assigned any
Hydrogenics Intellectual Property.(c)
    
    The Hydrogenics Intellectual Property has not been used or
enforced, or failed to be used or enforced, in a manner that would
result in the abandonment, cancellation or unenforceability of the
Hydrogenics Intellectual Property except as would not have a
Hydrogenics Material Adverse Effect. Hydrogenics has not taken any
action it is prohibited from taking, or failed to take any action it
is -21-




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##### 



required to take, that would result in or provide any basis for a
material default by, or a material reduction or dilution of the
rights of, Hydrogenics pursuant to any of the agreements or
licences entered into by Hydrogenics in respect of any of the
Hydrogenics Intellectual Property and all such agreements and
licences are in full force and effect and the proposed transaction
will not require the consent or payment to any other parties to
such agreements or licences except as would not have a Hydrogenics
Material Adverse Effect.(d)
    
    Hydrogenics does not have knowledge of any violations or
infringements of the Hydrogenics Intellectual Property or challenges
to the enforceability of the Hydrogenics Intellectual Property
except as would not have a Hydrogenics Material Adverse Effect.(e)
    
    The Hydrogenics Intellectual Property constitutes all the
Intellectual Property necessary or appropriate to conduct the
businesses of Hydrogenics and its Subsidiaries as presently
conducted in all material respects, and upon consummation of the
transactions contemplated by this Agreement, Hydrogenics and its
Subsidiaries shall: (i) have good, valid and unencumbered title to
all owned Hydrogenics Intellectual Property and (ii) have the valid
right to use all licensed Hydrogenics Intellectual Property to the
same extent such licensed Hydrogenics Intellectual Property and
owned Hydrogenics Intellectual Property are currently used in the
businesses of Hydrogenics and its Subsidiaries.(f)
    
    No material claim has been asserted or, to the knowledge of
Hydrogenics, is threatened by any Person nor does Hydrogenics have
knowledge of any valid ground for any bona fideclaims (i) to the
effect that the manufacture, sale, offer for sale, importation or
use of any Hydrogenics Intellectual Property as used (currently or
in the past) or offered or proposed for manufacture, use, offer for
sale, importation or sale by Hydrogenics infringes, misappropriates,
violates, dilutes or constitutes the unauthorized use of any
copyright, trade secret, patent, trade-mark, tradename or other
intellectual property right of any Person, except where such
assertion or threat would not reasonably be expected to have,
individually or in the aggregate, a Hydrogenics Material Adverse
Effect, against Hydrogenics relating to the use of any Hydrogenics
Intellectual Property, or (ii) challenging the ownership, scope,
validity or enforceability of any Hydrogenics Intellectual Property.(g)
    
    (i) Hydrogenics and each of its Subsidiaries has the right to
use all trade secrets, customer lists, hardware designs, programming
processes, databases, software and other information required for
its products, services or its business as presently conducted or
contemplated; (ii) Hydrogenics and each of its Subsidiaries has
taken all reasonable measures to protect and preserve the security
and confidentiality of its trade secrets and other confidential
information; (iii) all employees and consultants of Hydrogenics or
its Subsidiaries involved in the design, review, evaluation,
development, implementation or support of services or products of
Hydrogenics or any of its Subsidiaries or the creation or
development of any Intellectual Property have executed nondisclosure
and assignment of inventions agreements to protect the
confidentiality of Hydrogenics or its Subsidiaries trade secrets
and other confidential information and to vest in -22-




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##### 



Hydrogenics or its Subsidiaries exclusive ownership of such
Intellectual Property; (iv) all trade secrets and other
confidential information of Hydrogenics or its Subsidiaries are not
part of the public domain or knowledge, nor have they been
misappropriated by any Person having an obligation to maintain such
trade secrets or other confidential information in confidence for
Hydrogenics or its Subsidiaries; and (v) no employee or consultant
of Hydrogenics or any of its Subsidiaries has used any trade
secrets or other confidential information of any other Person in
the course of their work for Hydrogenics or any such Subsidiary;
and (vi) no university, government agency (whether federal, state,
provincial or municipal) or other organization sponsored research
and development conducted by Hydrogenics or any of its Subsidiaries
or has any claim of right to or ownership of or other encumbrance
upon any of the Hydrogenics Intellectual Property.(h)
    
    Hydrogenics has provided to the Company accurate and complete
copies of all contracts and other documentation maintained by
Hydrogenics that relate to the Hydrogenics Intellectual Property in
respect of which Hydrogenics or any of its Subsidiaries are entitled
to receive royalties or other payments including, without
limitation, (i) contracts relating to the licensing, sublicensing or
assignment of such Hydrogenics Intellectual Property; and (ii)
contracts and other documentation relating to the assignment of
royalties or other payments arising out of the contracts referred to
in (i).  3.15
    
    Non-Compliance Except as disclosed in Schedule 3.15 to the Hydrogenics Disclosure Statement,
there are no complaints, investigations, proceedings or actions, to the
knowledge of Hydrogenics, pending or threatened by regulatory authorities of
competent jurisdiction which involve allegations of non-compliance with
applicable Laws or the Hydrogenics Product Authorizations or the rules,
policies or guidelines of such Governmental Entities or other regulatory
authorities relating to the Hydrogenics Products or the development,
manufacture, sale or distribution of the Hydrogenics Products (and Hydrogenics
has no knowledge of any facts that would lead to such complaints,
investigations, proceedings or actions) other than those which would not,
individually or in the aggregate, have a Hydrogenics Material Adverse Effect.
Hydrogenics and its Subsidiaries have filed all required submissions, notices
and reports required by such laws or regulatory rules, policies or guidelines
for which the failure to file would have a Hydrogenics Material Adverse Effect.  3.16
    
    Absence of Certain Changes or Events Except as disclosed or reflected in the Hydrogenics Public Documents publicly
available on SEDAR or EDGAR or in Schedule 3.16 to the Hydrogenics Disclosure
Statement, since December 31, 2003: (a) Hydrogenics and its Material
Subsidiaries have conducted their respective businesses only in the ordinary
course of business and consistent with past practice; (b) no liability or
obligation of any nature (whether absolute, accrued, contingent or otherwise)
which has had or is reasonably likely to have a Hydrogenics Material Adverse
Effect has been incurred; (c) there has not been any event, circumstance or
occurrence which has had or is reasonably likely to give rise to a Hydrogenics
Material Adverse Effect; (d) there has not been any change in the accounting
practices used by Hydrogenics and its Subsidiaries; (e) except for -23-




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##### 



ordinary course adjustments to non-executive employees, there has not been any
increase in the salary, bonus, or other remuneration payable to any
non-executive employees of any of Hydrogenics or its Subsidiaries; (f) there
has not been any redemption, repurchase or other acquisition of Hydrogenics
common shares by Hydrogenics, or any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, shares or property) with
respect to such common shares; (g) there has not been a material change in the
level of accounts receivable or payable, inventories or employees; (h) there
has not been any entering into, or an amendment of, any Material Contract other
than in the ordinary course of business consistent with past practice; (i)
there has not been any satisfaction or settlement or any claims or liabilities
that were not reflected in Hydrogenics financial statements, other than the
settlement of liabilities incurred in the ordinary course of business with
affiliates consistent with past practice; and (j) there has not been any
increase in the salary, bonus, or other remuneration payable to any officers or
senior or executive officers of Hydrogenics or its Subsidiaries.  3.17
    
    Litigation Except as disclosed in Schedule 3.17 to the Hydrogenics Disclosure Statement,
there is no claim, action, proceeding or investigation pending or, to the
knowledge of Hydrogenics, threatened against or relating to Hydrogenics or any
of its Subsidiaries, the business of Hydrogenics or any of its Subsidiaries or
affecting any of their properties, assets or Hydrogenics Products, including
claims of adverse ownership, invalidity or opposition to or conflict with the
Hydrogenics Intellectual Property or that the use of the Hydrogenics
Intellectual Property in the business of Hydrogenics or its Subsidiaries or in
any Hydrogenics Product violates or infringes the Intellectual Property rights
or other proprietary rights of any third party, before or by any court or
governmental or regulatory authority or body which, if adversely determined,
would have, or reasonably could be expected to have, a Hydrogenics Material
Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement, nor to Hydrogenics knowledge are
there any events or circumstances which could reasonably be expected to give
rise to any such claim, action, proceeding or investigation (provided that the
representation in this Section 3.17 shall not apply to claims, actions,
proceedings, or investigations which may arise after the date of this Agreement
which do not have a reasonable prospect of succeeding or, if successful, would
not give rise to, nor reasonably be expected to give rise to, a Hydrogenics
Material Adverse Effect). Neither Hydrogenics nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction or decree which has had or
is reasonably likely to have a Hydrogenics Material Adverse Effect or which
would prevent or materially delay consummation of the transactions contemplated
by this Agreement.  3.18
    
    Taxes Hydrogenics and each of its Subsidiaries has duly and in a timely manner filed
all Tax Returns required to be filed by it, those Tax Returns were complete and
correct in all respects and Hydrogenics and each of its Subsidiaries has paid,
collected, withheld or remitted all Taxes which are due and payable by it on or
before the date hereof and Hydrogenics has provided adequate accruals in
accordance with Canadian GAAP in the most recently published financial
statements of Hydrogenics for any Taxes for the period covered by such
financial statements that have not been paid whether or not shown as being due
on any Tax Returns. Since such publication date, no liability in respect of
Taxes not reflected in such statements or otherwise provided for has been
assessed, proposed to be assessed, incurred or accrued, other than in the
ordinary course of business. Except as disclosed or reflected in the
Hydrogenics Public -24-




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##### 



Documents, there are no actions, suits, proceedings, investigations or claims
threatened against Hydrogenics or any of its Subsidiaries in respect of Taxes,
or any matters under discussion with any Governmental Entity relating to Taxes
asserted by any such authority which are reasonably likely to have a
Hydrogenics Material Adverse Effect, individually or in the aggregate. No
waivers of statutes of limitations have been given or requested with respect to
Hydrogenics or any Subsidiary.  3.19
    
    Books and Records The corporate records and minute books of Hydrogenics and its Material
Subsidiaries have been maintained in accordance with all applicable Laws, and
the minute books of Hydrogenics are complete and accurate in all material
respects. Financial books and records and accounts of Hydrogenics and its
Material Subsidiaries in all material respects: (i) have been maintained in
accordance with good business practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and, in the case of its Material
Subsidiaries, during the period of time when owned by Hydrogenics, accurately
and fairly reflect the transactions and dispositions of assets of Hydrogenics
and its Material Subsidiaries; and (iii) in the case of the Material
Subsidiaries, during the period of time when owned by Hydrogenics, accurately
and fairly reflect the basis for Hydrogenics consolidated financial
statements.  3.20
    
    Non-Arms Length Transactions Except as set forth in Schedule 3.20 to the Hydrogenics Disclosure Statement,
there are no current contracts, commitments, agreements, arrangements or other
transactions between Hydrogenics or any of its Subsidiaries on the one hand,
and any (i) officer or director of Hydrogenics or any of its Subsidiaries, (ii)
any holder of record or, to Hydrogenics knowledge, beneficial owner of five
percent or more of the voting securities of Hydrogenics, or (iii) any affiliate
or associate of any officer, director or beneficial owner, on the other hand.  3.21
    
    Pension and Employee Benefits  (a)
    
    Schedule 3.21(a) to the Hydrogenics Disclosure Statement
includes a complete list of all Hydrogenics Benefit Plans.(b)
    
    Hydrogenics has complied in all material respects with all
the terms of, and all applicable Laws in respect of, the pension and
other employee compensation and benefit obligations of Hydrogenics
and its Material Subsidiaries, including the terms of any funding
and investment contracts or obligations applicable thereto, arising
under or relating to any and all Hydrogenics Benefit Plans.(c)
    
    No step has been taken, no event has occurred and no
condition or circumstance exists that has resulted in or could
reasonably be expected to result in any Hydrogenics Benefit Plan
being ordered or required to be terminated or wound up in whole or
in part or having its registration under applicable legislation
refused or revoked, or being placed under the administration of any
trustee or receiver or regulatory authority or being required to pay
any material Taxes, fees, penalties or levies under applicable Laws.
There are no actions, suits, claims (other than routine claims for
payment of benefits in the ordinary course), trials, demands,
investigations, arbitrations or other proceedings which are pending
or, to the -25-




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##### 



knowledge of Hydrogenics, threatened in respect of any of the
Hydrogenics Benefit Plans or their assets which would have a
Hydrogenics Material Adverse Effect.(d)
    
    Hydrogenics and its Subsidiaries have no liability for life,
health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, and there has been no
communication to employees by Hydrogenics or any of its Subsidiaries
which could reasonably be interpreted to promise or guarantee such
employees retiree health or life insurance or other retiree death
benefits on a permanent basis, except in each case as would not have
a Hydrogenics Material Adverse Effect.  3.22
    
    Relationships with Customers, Suppliers, Distributors and Sales
Representatives Hydrogenics has not received any written (or to the knowledge of Hydrogenics
other) notice that any customer, supplier, distributor or sales representative
intends to cancel, terminate or otherwise modify or not renew its relationship
with Hydrogenics or any Subsidiary, and, to the knowledge of Hydrogenics, no
such action has been threatened, which, in either case, individually or in the
aggregate, would reasonably be expected to have a Hydrogenics Material Adverse
Effect.  3.23
    
    Product Recalls Hydrogenics is not aware of any pattern or series of claims against Hydrogenics
or any of its Material Subsidiaries which reasonably could be expected to
result in a generalized product recall relating to products sold by Hydrogenics
or any of its Material Subsidiaries, including the Hydrogenics Products,
regardless of whether such product recall is formal, informal, voluntary or
involuntary.  3.24
    
    Insurance  (a)
    
    True and correct copies of all policies of insurance in force
as of the date hereof naming Hydrogenics or any of its Material
Subsidiaries as an insured have been provided to the Company. All
premiums payable prior to the date hereof under such policies of
insurance have been paid and neither Hydrogenics nor any of its
Material Subsidiaries has failed to make a claim thereunder on a
timely basis.(b)
    
    Each of such policies and other forms of insurance is in full
force and effect on the date hereof and shall (or comparable
replacement or substitutions therefor shall) be kept in full force
and effect by Hydrogenics through the Effective Date. No written
(or to the knowledge of Hydrogenics other) notice of cancellation or
termination has been received by Hydrogenics or any Material
Subsidiary with respect to any such policy.  3.25
    
    Environmental  (a)
    
    Except for any matters that, individually or in the
aggregate, would not have a Hydrogenics Material Adverse Effect,
neither Hydrogenics nor any of its Material Subsidiaries is subject
to: -26-




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##### 



(i)
    
    any Environmental Law which requires or may
require that Hydrogenics or any Material Subsidiary undertake
or become liable for any material work, repairs, construction,
change in business practices and operations, or expenditures;
or(ii)
    
    any written demand or written notice with respect
to a breach of or liability under any Environmental Laws
applicable to Hydrogenics or any of its Material Subsidiaries,
including, without limitation, any regulations respecting the
use, storage, treatment, transportation, or disposition of any
pollutants, contaminant, waste of any nature, hazardous
material, toxic substance, dangerous substance or dangerous
good as defined in any applicable Environmental Laws.  (b)
    
    To the knowledge of Hydrogenics, there is not now on or in
any property presently owned, leased or operated by Hydrogenics or
any of its Subsidiaries, any polychlorinated biphenyls (PCB) used in
Hydrogenics operations in pigments, hydraulic oils, electrical
transformers or other equipment except as would not have,
individually or in the aggregate, a Hydrogenics Material Adverse
Effect.(c)
    
    To the knowledge of Hydrogenics, any asbestos-containing
material or presumed asbestos-containing material which is on or
part of any property presently owned, leased or operated by
Hydrogenics or any of its Subsidiaries, as currently configured and
operated, is in good repair according to the current standards and
practices governing such material, and its presence or condition
does not violate any currently applicable Law, other than such
violations that would not reasonably be expected to have,
individually or in the aggregate, a Hydrogenics Material Adverse
Effect.  3.26
    
    Restrictions on Business Activities Except as set forth in Schedule 3.26 of the Hydrogenics Disclosure Schedule,
there is no agreement, judgement, injunction, order or decree binding upon
Hydrogenics or any Material Subsidiary that has or could reasonably be expected
to have the effect of prohibiting, restricting or materially impairing any
business practice of Hydrogenics or any Material Subsidiary, any acquisition of
property by Hydrogenics or any Material Subsidiary or the conduct of business
by Hydrogenics or any Material Subsidiary as currently conducted (including
following the transaction contemplated by this Agreement) other than such
agreements, judgements, injunctions, orders or decrees which would not,
individually or in the aggregate, reasonably be expected to have a Hydrogenics
Material Adverse Effect.  3.27
    
    Material Contracts Neither Hydrogenics nor any of its Material Subsidiaries is in breach or
default under any Material Contract to which it is a party or bound, nor does
Hydrogenics have knowledge of any condition that with the passage of time or
the giving of notice or both would result in such a breach or default, except
in each case where any such breaches or defaults would not, individually or in
the aggregate, reasonably be expected to result in a Hydrogenics Material
Adverse Effect. Neither Hydrogenics nor any Material Subsidiary of Hydrogenics
knows of, or -27-




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##### 



has received written notice of, any breach or default under (nor, to the
knowledge of Hydrogenics, does there exist any condition which with the passage
of time or the giving of notice or both would result in such a breach or
default under) any such Material Contract by any other party thereto except
where any such violation or default would not, individually or in the
aggregate, reasonably be expected to result in a Hydrogenics Material Adverse
Effect. Prior to the date hereof, Hydrogenics has made available to the
Company true and complete copies of all Material Contracts to which it or any
of its Material Subsidiaries are a party or bound. There is no Subsidiary of
Hydrogenics, other than a Material Subsidiary, which is a party to or bound by
a Material Contract.  3.28
    
    Brokers None of Hydrogenics, any of its Subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this Agreement.  3.29
    
    Survival of Representations and Warranties Subject to Section 6.4, the representations and warranties of Hydrogenics
contained in this Agreement shall not survive the completion of the Offer and
shall expire and be terminated on the earlier of the Effective Date and the
date on which this Agreement is terminated in accordance with its terms. ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Hydrogenics as set forth below,
and acknowledges that Hydrogenics is relying upon these representations and
warranties in connection with the entering into of this Agreement and the
making of the Offer.  4.1
    
    Organization and Qualification The Company is duly incorporated and validly existing under the CBCA and has
full corporate power and authority to own its assets and conduct its business
as now owned and conducted. The Company is duly qualified to carry on business
and is in good standing in each jurisdiction in which the character of its
properties or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified will not, individually or in the
aggregate, have a Company Material Adverse Effect. True and complete copies of
the articles and by-laws of the Company have been delivered to Hydrogenics, and
the Company has not taken any action to amend or supersede such documents.  4.2
    
    Authority Relative to this Agreement The Company has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement (other than any Subsequent
Acquisition Transaction) have been duly authorized by the Board of Directors
and no other corporate proceedings on the part of the Company are -28-




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##### 



necessary to authorize this Agreement. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable by Hydrogenics against the Company in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency and other applicable Laws affecting the enforcement of creditors
rights generally and subject to the qualification that equitable remedies may
be granted only in the discretion of a court of competent jurisdiction.  4.3
    
    No Conflict; Required Filings and Consent The execution and delivery by the Company of this Agreement and the performance
by it of its obligations hereunder and the completion of the Offer will not:
(a) violate, conflict with or result in a breach of any provision of: (i) the
constating documents of the Company or those of any of its Material
Subsidiaries; (ii) any agreement, contract, indenture, deed of trust, mortgage,
bond, instrument, licence or permit to which the Company or any of its Material
Subsidiaries is a party or by which the Company or any of its Material
Subsidiaries is bound; or (iii) any Law to which the Company or any of its
Material Subsidiaries is subject or by which the Company or any of its Material
Subsidiaries is bound; (b) give rise to any right of termination, or the
acceleration of any indebtedness, under any such agreement, contract,
indenture, deed of trust, mortgage, bond, instrument, licence or permit; or (c)
give rise to any rights of first refusal, trigger any change in control or
influence provisions or any restriction or limitation under any such agreement,
contract, indenture, deed of trust, mortgage, bond, instrument, licence or
permit, or result in the imposition of any encumbrance, charge or lien upon any
of the Companys assets or the assets of any of its Material Subsidiaries,
except as disclosed in Schedule 4.3 to the Company Disclosure Statement or as
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Other than in connection with or in compliance with applicable Laws and
policies, no authorization, consent or approval of, or filing with, any
Governmental Entity or any court or other authority is necessary for the
consummation by the Company of its obligations under this Agreement or for the
completion of the Offer not to cause or result in any loss of any rights or
assets or any interest therein held by the Company or any of its Material
Subsidiaries, except for such rights or assets or interest therein the loss of
which would not, individually or in the aggregate, have a Company Material
Adverse Effect. 4.4 Subsidiaries The Company does not have Subsidiaries or any interests in any Person, other
than those listed on Schedule 4.4 to the Company Disclosure Statement. Each
Material Subsidiary of the Company is duly organized and is validly existing
under the laws of its jurisdiction of incorporation or organization, has full
corporate power and authority to own its assets and conduct its business as now
owned and conducted by it and is duly qualified to carry on business in each
jurisdiction in which the character of its properties or the nature of its
activities makes such qualification necessary, except where the failure to be
so qualified would not have a Company Material Adverse Effect. Except as set
out on Schedule 4.4 to the Company Disclosure Statement, the Company
beneficially owns, directly or indirectly, all of the issued and outstanding
securities of each of its Subsidiaries. Except as set out in Schedule 4.4 to
the Company Disclosure Statement, all of the outstanding shares in the capital
of each of the Subsidiaries that is a corporation are: (i) validly issued,
fully-paid and non-assessable and all such shares are owned free and clear of
all pledges, security interests, liens, claims or encumbrances of any kind or
nature whatsoever and (ii) are free of any other restrictions including any
restriction on the right to vote, sell or otherwise dispose of the shares. In -29-




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aggregate, the assets and revenues of the Subsidiaries of the Company other
than the Companys Material Subsidiaries represent less than 5% of the
consolidated assets and consolidated revenues of the Company.  4.5
    
    Compliance with Laws The Company and each of its Material Subsidiaries has complied and is in
compliance with all applicable Laws, and each of the Company and its Material
Subsidiaries has all licences, permits, orders or approvals of, and has made
all required registrations with, any Governmental Entity that is required, in
connection with the ownership of their respective assets or the conduct of
their respective operations as presently carried on and each of them has fully
complied with and is in compliance with all such licences, permits, orders,
approvals and registrations, except, in each case, for failures which,
individually or in the aggregate, would not have a Company Material Adverse
Effect. None of the Company or any of its Material Subsidiaries has received
any notice, whether written or oral, of revocation or non-renewal of any such
licences, permits, orders, approvals or registrations, or of any intention of
any Governmental Entity to revoke or refuse to renew any of such licences,
permits, orders, approvals or registrations except in each case, for
revocations or non-renewals which, individually or in the aggregate, would not
have a Company Material Adverse Effect and, to the knowledge of the Company,
except as disclosed in Schedule 4.5 to the Company Disclosure Statement, all
such licences, permits, orders, approvals and registrations shall continue to
be effective in order for the Company and its Material Subsidiaries to continue
to conduct their respective businesses as they are currently being conducted.
None of the Company or any of its Material Subsidiaries is in conflict with, or
in default (including cross defaults) under or in violation of: (i) its
articles or by-laws or equivalent organizational documents, or (ii) any
agreement or understanding to which it or by which any of its properties or
assets is bound or affected, except for failures which, individually or in the
aggregate, would not have a Company Material Adverse Effect. No Person other
than the Company or a Material Subsidiary thereof owns or has any proprietary,
financial or other interest (direct or indirect) in any of the licences,
permits, orders, approvals or registrations referred to above.  4.6
    
    Capitalization and Listing  (a)
    
    The authorized share capital of the Company consists of an
unlimited number of Common Shares and an unlimited number of
preference shares. As at the date of this Agreement: (i) there are
no preference shares issued and outstanding; (ii) there are
36,268,699 Common Shares validly issued and outstanding as fully
paid and non-assessable shares in the capital of the Company; (iii)
there are outstanding Options to purchase Common Shares issued under
the Share Option Plan providing for the issuance of 2,504,000 Common
Shares upon the exercise thereof; and (iv) there are outstanding
Slangerup Inducement Options to purchase Common Shares issued under
the Inducement Option providing for the issuance of 741,000 Common
Shares upon the exercise thereof.. The terms of the Options granted
pursuant to the Share Option Plan (including exercise price) and of
the Slangerup Inducement Options granted pursuant to the Inducement
Option (including exercise price) are disclosed in Schedule 4.6 to
the Company Disclosure Statement. Except for the Options and
Slangerup Inducement Options referred to in the immediately
preceding sentence, there are no options, warrants, conversion
privileges, calls or other rights, shareholder rights plans,
agreements, -30-




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##### 



arrangements, commitments, or obligations of the Company or any of
its Subsidiaries to issue or sell any shares of the Company or of
any of its Subsidiaries or securities or obligations of any kind
convertible into, exchangeable for or otherwise carrying the right
or obligation to acquire any shares of the Company or any of its
Subsidiaries, nor are there outstanding any stock appreciation
rights, phantom equity or similar rights, agreements, arrangements
or commitments of the Company or any of its Subsidiaries based upon
the book value, income or any other attribute of the Company or any
of its Subsidiaries. No Shareholder is entitled to any pre-emptive
or other similar right granted by the Company or any of its
Subsidiaries. The Common Shares are not listed or quoted on any
market other than the TSX. The Company does not have any securities
registered pursuant to the Exchange Act nor is the Company required
to file reports pursuant to Sections 12 and 15(d) of the Exchange
Act.(b)
    
    Schedule 4.6 to the Company Disclosure Statement sets forth,
as of the date hereof, the holders of all outstanding Options and
Slangerup Inducement Options and the number, exercise prices and
expiration dates of each grant to such holders. All Common Shares
that may be issued pursuant to the exercise of outstanding Options
and Slangerup Inducement Options will, when issued in accordance
with the terms of the Options or Slangerup Inducement Options, as
the case may be, be duly authorized, validly issued, fully paid and
non-assessable and are not and will not be subject to or issued in
violation of, any pre-emptive rights.(c)
    
    There are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Common Shares or any shares in the share
capital of any of its Subsidiaries. No Subsidiary of the Company
owns any Common Shares.  4.7
    
    Shareholder and Similar Agreements Other than the Options, the Company is not party to any shareholder, pooling,
voting trust or other agreement relating to the issued and outstanding shares
of the Company or any of its Material Subsidiaries which are not directly or
indirectly wholly owned by the Company.  4.8
    
    U.S. Securities Law Matters The Company is a Foreign Private Issuer and is not an investment company
registered or required to be registered under the U.S. Investment Company Act
of 1940. The Common Shares are not registered, or required to be registered,
pursuant to Section 12 of the Exchange Act. Less than twenty-five percent of
the Common Shares are held by U.S. holders as determined pursuant to Rule
14d-1(b) under the Exchange Act. The Company has not made an offering of
securities registered under the 1933 Act.  4.9
    
    Reports The Company has filed with all applicable securities regulatory authorities,
the TSX and all applicable self-regulatory organizations true and complete
copies of the Company Public Documents that the Company is required to file
therewith. The Company Public Documents at the time filed: (i) did not contain
any untrue statement of a material fact or omit to state a -31-




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##### 



material fact required to be stated therein necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (ii) complied in all material respects with the requirements of
applicable Securities Laws. The Company has not filed any confidential
material change report with the Ontario Securities Commission or any other
securities authority or regulator or any stock exchange or other
self-regulatory authority which at the date hereof remains confidential.  4.10
    
    Financial Statements  (a)
    
    The audited consolidated financial statements for the Company
as at and for each of the fiscal years ended on March 31, 2004,
March 31, 2003, and March 31, 2002 including the notes thereto and
the report by the Companys auditors thereon, have been, and all
financial statements of the Company which are publicly disseminated
by the Company in respect of any subsequent periods prior to the
Effective Date will be, prepared in accordance with Canadian GAAP
applied on a basis consistent with prior periods and present fairly,
in all material respects, the consolidated financial position and
results of operations of the Company and its Subsidiaries, taken as
a whole, as of the respective dates thereof and for the respective
periods covered thereby. Except as disclosed in Schedule 4.10(a) to
the Company Disclosure Statement, there are no outstanding loans
made by the Company or any of its Subsidiaries to any executive
officer or director of the Company.(b)
    
    The management of the Company has: (i) implemented disclosure
controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the
management of the Company by others within those entities, which
disclosure controls and procedures are, given the size of the
Company and the nature of its business, effective at the reasonable
assurance level in timely alerting the Companys principal executive
officer and its principal financial officer to material information
required to be included in the Company Public Documents, and (ii)
has disclosed, based on its most recent evaluation, to the Companys
outside auditors and the audit committee of the Board of Directors
(A) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Companys
ability to record, process, summarize and report financial data and
(B) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Companys
internal control over financial reporting. A summary of any of
those disclosures made by management to the Companys auditors and
audit committee is set forth in Schedule 4.10(b) to the Company
Disclosure Statement.(c)
    
    Since January 1, 2000: (i) neither the Company nor any of its
Subsidiaries nor, to the Companys knowledge, any director, officer,
employee, auditor, accountant or representative of the Company or
any of its Subsidiaries has received or otherwise had or obtained
knowledge of any material complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing
practices, procedures, methodologies or methods of the Company or
any of its Subsidiaries or their respective internal accounting
controls, including any complaint, allegation, assertion, or claim
that the Company or any of its Subsidiaries has -32-




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##### 



engaged in questionable accounting or auditing practices, and (ii)
no attorney representing the Company or any of its Subsidiaries,
whether or not employed by the Company or any of its Subsidiaries,
has reported evidence of a material violation of securities Laws,
breach of fiduciary duty or similar violation by the Company, any
of its Subsidiaries or any of their respective officers, director,
employees or agents to the Board of Directors or any committee
thereof or to any director or officer of the Company.  4.11
    
    Undisclosed Liabilities Neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
except for: (i) liabilities and obligations that are specifically disclosed on
the audited balance sheet of the Company as of March 31, 2004 (the Company
Balance Sheet) or in the notes thereto, and (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
March 31, 2004, that are not and would not, individually or in the aggregate
with all other liabilities and obligations of the Company and its Subsidiaries
(other than those disclosed on the Company Balance Sheet), reasonably be
expected to have a Company Material Adverse Effect. Without limiting the
foregoing, the Company Balance Sheet reflects reasonable reserves in accordance
with Canadian GAAP for contingent liabilities relating to pending litigation
and other contingent obligations of the Company and its Subsidiaries.  4.12
    
    Interest in Properties Except as disclosed in Schedule 4.12 to the Company Disclosure Statement, the
Company and its Material Subsidiaries have title to all of their material
properties and assets (including, without limitation, the Company Intellectual
Property (as defined below), but excluding the Company Intellectual Property
licensed to the Company and its Subsidiaries), free and clear of any material
claims or encumbrances, and the Companys and its Material Subsidiaries
properties and assets are sufficient for the conduct of the Companys business
as now carried on or as contemplated by the Company to be carried on.  4.13
    
    Employment Matters  (a)
    
    Except as disclosed in Schedule 4.13 to the Company
Disclosure Statement, neither the Company nor any of its
Subsidiaries has entered into any written or oral agreement or
understanding providing for severance or termination payments to any
director, officer or employee in connection with the termination of
their position or their employment as a direct result of a change in
control of the Company.(b)
    
    Neither the Company nor any of its Material Subsidiaries (i)
is a party to any collective -bargaining agreement, or (ii) is
subject to any application for certification or, to the knowledge of
the Company, threatened or apparent union-organizing campaigns for
employees not covered under a collective bargaining agreement. To
the knowledge of the Company, no fact or event exists that is likely
to give rise to a violation of this Subsection on or before the
Effective Date. -33-




---



##### 



(c)
    
    Neither the Company nor any of its Material Subsidiaries is
subject to any claim for wrongful dismissal, constructive dismissal
or any other tort claim, actual or, to the knowledge of the Company,
threatened, or any litigation actual, or to the knowledge of the
Company, threatened, relating to employment or termination of
employment of employees or independent contractors. To the knowledge
of the Company, no labour strike, lock-out, slowdown or work
stoppage is pending or threatened against or directly affecting the
Company.(d)
    
    The Company and its Material Subsidiaries have operated in
accordance with all applicable Laws with respect to employment and
labour, including, but not limited to, employment and labour
standards, occupational health and safety, employment equity, pay
equity, workers compensation, human rights, labour relations and
privacy and there are no current, pending, or to the knowledge of
the Company, threatened proceedings before any board or tribunal
with respect to any of the areas listed herein, except where the
failure to so operate would not have a Company Material Adverse
Effect.(e)
    
    The loan which is outstanding in favour of Mr. Slangerup in
the amount of $1,151,188 was made to him on September 28, 2001 and
the amount and terms of such loan have not been modified or renewed
in any way since that date.  4.14
    
    Intellectual Property Rights  (a)
    
    To the knowledge of the Company, Schedule 4.14(a) to the
Company Disclosure Statement contains a list of all applications and
registrations for Intellectual Property that is material to the
business of the Company (the Company Intellectual Property), all
of which is owned by or licensed to the Company or its Material
Subsidiaries as indicated on such Schedule. To the extent that
rights to the Company Intellectual Property are not currently
reflected in a contract or other documentation maintained by the
Company, the Company has provided Hydrogenics with a complete and
accurate written description of the source of the rights of the
Company or its Subsidiaries in such Company Intellectual Property
and any payment obligations of the Company or its Subsidiaries with
respect to such Company Intellectual Property.(b)
    
    Schedule 4.14(b) to the Company Disclosure Statement contains
a list of all of the Material Contracts by which the Company has
granted licences in respect of the Company Intellectual Property.
Except as otherwise disclosed in Schedule 4.14(b), the Company has
not licensed, conveyed or assigned any Company Intellectual
Property.(c)
    
    The Company Intellectual Property has not been used or
enforced, or failed to be used or enforced, in a manner that would
result in the abandonment, cancellation or unenforceability of the
Company Intellectual Property except as would not have a Company
Material Adverse Effect. The Company has not taken any action it is
prohibited from taking, or failed to take any action it is required
to take, that would result in or provide any basis for a material
default by, or a material reduction or dilution of the rights of,
the Company pursuant to any of the agreements or licences entered
into by the Company in respect of any of the -34-




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##### 



Company Intellectual Property and all such agreements and licences
are in full force and effect and the proposed transaction will not
require the consent or payment to any other parties to such
agreements or licences except as would not have a Company Material
Adverse Effect.(d)
    
    The Company does not have knowledge of any violations or
infringements of the Company Intellectual Property or challenges to
the enforceability of the Company Intellectual Property except as
would not have a Company Material Adverse Effect.(e)
    
    The Company Intellectual Property constitutes all the
Intellectual Property necessary or appropriate to conduct the
businesses of the Company and its Subsidiaries as presently
conducted in all material respects, and upon consummation of the
transactions contemplated by this Agreement, Hydrogenics and its
Subsidiaries shall: (i) have good, valid and unencumbered title to
all owned Company Intellectual Property and (ii) have the valid
right to use all licensed Company Intellectual Property to the same
extent such licensed Company Intellectual Property and owned Company
Intellectual Property are currently used in the businesses of the
Company and its Subsidiaries.(f)
    
    Except as disclosed in Schedule 4.14(f), no material claim
has been asserted or, to the knowledge of the Company, is threatened
by any Person nor does the Company have knowledge of any valid
ground for any bona fideclaims (i) to the effect that the
manufacture, sale, offer for sale, importation or use of any Company
Intellectual Property as used (currently or in the past) or offered
or proposed for manufacture, use, offer for sale, importation or
sale by the Company infringes, misappropriates, violates, dilutes or
constitutes the unauthorized use of any copyright, trade secret,
patent, trade-mark, tradename or other intellectual property right
of any Person, except where such assertion or threat would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, against the Company relating to the
use of any Company Intellectual Property, or (ii) challenging the
ownership, scope, validity or enforceability of any Company
Intellectual Property.(g)
    
    (i) The Company and each of its Subsidiaries has the right to
use all trade secrets, customer lists, hardware designs, programming
processes, databases, software and other information required for
its products, services or its business as presently conducted or
contemplated; (ii) the Company and each of its Subsidiaries has
taken all reasonable measures to protect and preserve the security
and confidentiality of its trade secrets and other confidential
information; (iii) all employees and consultants of the Company or
its Subsidiaries involved in the design, review, evaluation,
development, implementation or support of services or products of
the Company or any of its Subsidiaries or the creation or
development of any Intellectual Property have executed nondisclosure
and assignment of inventions agreements to protect the
confidentiality of the Companys or its Subsidiaries trade secrets
and other confidential information and to vest in the Company or its
Subsidiaries exclusive ownership of such Intellectual Property; (iv)
all trade secrets and other confidential information of the Company
or its Subsidiaries are not part of the public domain or knowledge,
nor have they been -35-




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##### 



misappropriated by any Person having an obligation to maintain such
trade secrets or other confidential information in confidence for
the Company or its Subsidiaries; and (v) no employee or consultant
of the Company or any of its Subsidiaries has used any trade
secrets or other confidential information of any other Person in
the course of their work for the Company or any such Subsidiary;
and (vi) no university, government agency (whether federal, state,
provincial or municipal) or other organization sponsored research
and development conducted by the Company or any of its Subsidiaries
or has any claim of right to or ownership of or other encumbrance
upon any of the Company Intellectual Property.(h)
    
    The Company has provided to Hydrogenics accurate and complete
copies of all contracts and other documentation maintained by the
Company that relate to the Company Intellectual Property in respect
of which the Company or any of its Subsidiaries are entitled to
receive royalties or other payments including, without limitation,
(i) contracts relating to the licensing, sublicensing or assignment
of such Company Intellectual Property; and (ii) contracts and other
documentation relating to the assignment of royalties or other
payments arising out of the contracts referred to in (i).  4.15
    
    Non-Compliance Except as disclosed in Schedule 4.15 to the Company Disclosure Statement, there
are no complaints, investigations, proceedings or actions, to the knowledge of
the Company, pending or threatened by regulatory authorities of competent
jurisdiction which involve allegations of non-compliance with applicable Laws
or the Company Product Authorizations or the rules, policies or guidelines of
such Governmental Entities or other regulatory authorities relating to the
Company Products or the development, manufacture, sale or distribution of the
Company Products (and the Company has no knowledge of any facts that would lead
to such complaints, investigations, proceedings or actions) other than those
which would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company and its Material Subsidiaries have filed all
required submissions, notices and reports required by such laws or regulatory
rules, policies or guidelines for which the failure to file would have a
Company Material Adverse Effect.  4.16
    
    Absence of Certain Changes or Events Except as disclosed or reflected in the Companys Public Documents publicly
available on SEDAR or in Schedule 4.16 to the Company Disclosure Statement,
since March 31, 2004: (a) the Company and its Material Subsidiaries have
conducted their respective businesses only in the ordinary course of business
and consistent with past practice; (b) no liability or obligation of any nature
(whether absolute, accrued, contingent or otherwise) which has had or is
reasonably likely to have a Company Material Adverse Effect has been incurred;
(c) there has not been any event, circumstance or occurrence which has had or
is reasonably likely to give rise to a Company Material Adverse Effect; (d)
there has not been any change in the accounting practices used by the Company
and its Subsidiaries; (e) except for ordinary course adjustments to
non-executive employees, there has not been any increase in the salary, bonus,
or other remuneration payable to any non-executive employees of any of the
Company or its Subsidiaries; (f) there has not been any redemption, repurchase
or other acquisition of Common Shares by the Company, or any -36-




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##### 



declaration, setting aside or payment of any dividend or other distribution
(whether in cash, shares or property) with respect to the Common Shares; (g)
there has not been a material change in the level of accounts receivable or
payable, inventories or employees; (h) there has not been any entering into, or
an amendment of, any Material Contract other than in the ordinary course of
business consistent with past practice; (i) there has not been any satisfaction
or settlement or any claims or liabilities that were not reflected in the
Companys financial statements, other than the settlement of liabilities
incurred in the ordinary course of business with affiliates consistent with
past practice; and (j) there has not been any increase in the salary, bonus, or
other remuneration payable to any officers or senior or executive officers of
the Company or its Subsidiaries.  4.17
    
    Litigation Except as disclosed in Schedule 4.17 to the Company Disclosure Statement, there
is no claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened against or relating to the Company or any of its
Subsidiaries, the business of the Company or any of its Subsidiaries or
affecting any of their properties, assets or Company Products, including claims
of adverse ownership, invalidity or opposition to or conflict with the Company
Intellectual Property or that the use of the Company Intellectual Property in
the business of the Company or its Subsidiaries or in any Company Product
violates or infringes the Intellectual Property rights or other proprietary
rights of any third party, before or by any court or governmental or regulatory
authority or body which, if adversely determined, would have, or reasonably
could be expected to have, a Company Material Adverse Effect or prevent or
materially delay the consummation of the transactions contemplated by this
Agreement, nor to the Companys knowledge are there any events or circumstances
which could reasonably be expected to give rise to any such claim, action,
proceeding or investigation (provided that the representation in this Section
4.17 shall not apply to claims, actions, proceedings, or investigations which
may arise after the date of this Agreement which do not have a reasonable
prospect of succeeding or, if successful, would not give rise to, nor
reasonably be expected to give rise to, a Company Material Adverse Effect).
Neither the Company nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which has had or is reasonably likely to have
a Company Material Adverse Effect or which would prevent or materially delay
consummation of the transactions contemplated by this Agreement.  4.18
    
    Taxes The Company and each of its Subsidiaries has duly and in a timely manner filed
all Tax Returns required to be filed by it, those Tax Returns were complete and
correct in all respects and the Company and each of its Subsidiaries has paid,
collected, withheld or remitted all Taxes which are due and payable by it on or
before the date hereof and the Company has provided adequate accruals in
accordance with Canadian GAAP in the most recently published financial
statements of the Company for any Taxes for the period covered by such
financial statements that have not been paid whether or not shown as being due
on any Tax Returns. Since such publication date, no liability in respect of
Taxes not reflected in such statements or otherwise provided for has been
assessed, proposed to be assessed, incurred or accrued, other than in the
ordinary course of business. Except as disclosed or reflected in the Companys
Public Documents, there are no actions, suits, proceedings, investigations or
claims threatened against the Company or any of its Subsidiaries in respect of
Taxes, or any matters under discussion with any Governmental Entity relating to
Taxes asserted by any such authority which are reasonably likely to have a
Company -37-




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##### 



Material Adverse Effect, individually or in the aggregate. No waivers of
statutes of limitations have been given or requested with respect to the
Company or any Subsidiary.  4.19
    
    Books and Records The corporate records and minute books of the Company and its Material
Subsidiaries have been maintained in accordance with all applicable Laws, and
the minute books of the Company are complete and accurate in all material
respects. Financial books and records and accounts of the Company and its
Material Subsidiaries in all material respects: (i) have been maintained in
accordance with good business practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and, in the case of its Material
Subsidiaries, during the period of time when owned by the Company, accurately
and fairly reflect the transactions and dispositions of assets of the Company
and its Material Subsidiaries; and (iii) in the case of the Material
Subsidiaries, during the period of time when owned by the Company, accurately
and fairly reflect the basis for the Companys consolidated financial
statements.  4.20
    
    Insurance  (a)
    
    True and correct copies of all policies of insurance in force
as of the date hereof naming the Company or any of its Material
Subsidiaries as an insured have been provided to Hydrogenics. All
premiums payable prior to the date hereof under such policies of
insurance have been paid and neither the Company nor any of its
Material Subsidiaries has failed to make a claim thereunder on a
timely basis.(b)
    
    Each of such policies and other forms of insurance is in full
force and effect on the date hereof and shall (or comparable
replacement or substitutions therefor shall) be kept in full force
and effect by the Company through the Effective Date. No written
(or to the knowledge of the Company other) notice of cancellation or
termination has been received by the Company or any Material
Subsidiary with respect to any such policy.  4.21
    
    Non-Arms Length Transactions Except as set forth in Schedule 4.21 to the Company Disclosure Statement, there
are no current contracts, commitments, agreements, arrangements or other
transactions between the Company or any of its Subsidiaries on the one hand,
and any (i) officer or director of the Company or any of its Subsidiaries, (ii)
any holder of record or, to the Companys knowledge, beneficial owner of five
percent or more of the voting securities of the Company, or (iii) any affiliate
or associate of any officer, director or beneficial owner, on the other hand.  4.22
    
    Pension and Employee Benefits  (a)
    
    Schedule 4.22(a) to the Company Disclosure Statement includes
a complete list of all Company Benefit Plans.(b)
    
    The Company has complied in all material respects with all
the terms of, and all applicable Laws in respect of, the pension and
other employee compensation and benefit obligations of the Company
and its Material Subsidiaries, including the -38-




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##### 



terms of any funding and investment contracts or obligations
applicable thereto, arising under or relating to any and all
Company Benefit Plans.(c)
    
    No step has been taken, no event has occurred and no
condition or circumstance exists that has resulted in or could
reasonably be expected to result in any Company Benefit Plan being
ordered or required to be terminated or wound up in whole or in part
or having its registration under applicable legislation refused or
revoked, or being placed under the administration of any trustee or
receiver or regulatory authority or being required to pay any
material Taxes, fees, penalties or levies under applicable Laws.
There are no actions, suits, claims (other than routine claims for
payment of benefits in the ordinary course), trials, demands,
investigations, arbitrations or other proceedings which are pending
or, to the knowledge of the Company, threatened in respect of any of
the Company Benefit Plans or their assets which would have a Company
Material Adverse Effect.(d)
    
    The Company and its Subsidiaries have no liability for life,
health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, and there has been no
communication to employees by the Company or any of its Subsidiaries
which could reasonably be interpreted to promise or guarantee such
employees retiree health or life insurance or other retiree death
benefits on a permanent basis, except in each case as would not have
a Company Material Adverse Effect.  4.23
    
    Environmental  (a)
    
    Except for any matters that, individually or in the
aggregate, would not have a Company Material Adverse Effect, neither
the Company nor any of its Material Subsidiaries is subject to:  (i)

    
    any Environmental Law which requires or may
require that the Company or any Material Subsidiary undertake
or become liable for any material work, repairs, construction,
change in business practices and operations, or expenditures;
or(ii)
    
    any written demand or written notice with respect
to a breach of or liability under any Environmental Laws
applicable to the Company or any of its Material Subsidiaries,
including, without limitation, any regulations respecting the
use, storage, treatment, transportation, or disposition of any
pollutants, contaminant, waste of any nature, hazardous
material, toxic substance, dangerous substance or dangerous
good as defined in any applicable Environmental Laws.  (b)
    
    To the knowledge of the Company, there is not now on or in
any property presently owned, leased or operated by the Company or
any of its Subsidiaries, any polychlorinated biphenyls (PCB) used in
the Companys operations in pigments, hydraulic oils, electrical
transformers or other equipment except as would not have,
individually or in the aggregate, a Company Material Adverse Effect. -39-




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##### 



(c)
    
    To the knowledge of the Company, any asbestos-containing
material or presumed asbestos-containing material which is on or
part of any property presently owned, leased or operated by the
Company or any of its Subsidiaries, as currently configured and
operated, is in good repair according to the current standards and
practices governing such material, and its presence or condition
does not violate any currently applicable Law, other than such
violations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.  4.24
    
    Restrictions on Business Activities Except as set forth in Schedule 4.24 of the Company Disclosure Schedule, there
is no agreement, judgement, injunction, order or decree binding upon the
Company or any Material Subsidiary that has or could reasonably be expected to
have the effect of prohibiting, restricting or materially impairing any
business practice of the Company or any Material Subsidiary, any acquisition of
property by the Company or any Material Subsidiary or the conduct of business
by the Company or any Material Subsidiary as currently conducted (including
following the transaction contemplated by this Agreement) other than such
agreements, judgements, injunctions, orders or decrees which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.  4.25
    
    Material Contracts Neither the Company nor any of its Material Subsidiaries is in breach or
default under any Material Contract to which it is a party or bound, nor does
the Company have knowledge of any condition that with the passage of time or
the giving of notice or both would result in such a breach or default, except
in each case where any such breaches or defaults would not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Neither the Company nor any Material Subsidiary of the Company knows
of, or has received written notice of, any breach or default under (nor, to the
knowledge of the Company, does there exist any condition which with the passage
of time or the giving of notice or both would result in such a breach or
default under) any such Material Contract by any other party thereto except
where any such violation or default would not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Prior to the date hereof, the Company has made available to
Hydrogenics true and complete copies of all Material Contracts to which it or
any of its Material Subsidiaries are a party or bound. No Subsidiary of the
Company other than a Material Subsidiary is a party to or bound by a Material
Contract.  4.26
    
    Relationships with Customers, Suppliers, Distributors and Sales
Representatives The Company has not received any written (or to the knowledge of the Company
other) notice that any customer, supplier, distributor or sales representative
intends to cancel, terminate or otherwise modify or not renew its relationship
with the Company or any Subsidiary, and, to the knowledge of the Company, no
such action has been threatened, which, in either case, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect. -40-




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4.27
    
    Product Recalls The Company is not aware of any pattern or series of claims against the Company
or any of its Material Subsidiaries which reasonably could be expected to
result in a generalized product recall relating to products sold by the Company
or any of its Material Subsidiaries, including the Company Products, regardless
of whether such product recall is formal, informal, voluntary or involuntary.  4.28
    
    Brokers None of the Company, any of its Subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this Agreement.  4.29
    
    Rights Plan The Company has no shareholder rights plan or similar plan contemplated to be
put in place by the Company.  4.30
    
    Survival of Representations and Warranties Subject to Section 6.4, the representations and warranties of the Company
contained in this Agreement shall not survive the completion of the Offer and
shall expire and be terminated on the earlier of the Effective Date and the
date on which this Agreement is terminated in accordance with its terms. ARTICLE 5 COVENANTS
  5.1
    
    Conduct of Business by the Company The Company covenants and agrees that, prior to the earliest of: (i) the
Effective Date and (ii) the Transition Date, unless Hydrogenics shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement:  (a)
    
    the Company shall, and shall cause each of its Material
Subsidiaries to, conduct its and their respective businesses only
in, not take any action except in, and maintain their respective
facilities, in the ordinary course of business consistent with past
practice;(b)
    
    without limiting the generality of Subsection (a) above, and
except as otherwise expressly required by this Agreement, and with
respect to those matters disclosed in writing to Hydrogenics and
with respect to the completion of which Hydrogenics has consented to
(which consent shall not be unreasonably withheld), for transactions
involving the Company and one or more wholly-owned Subsidiaries or
between wholly-owned Subsidiaries and except for transactions
involving amounts which, individually or in the aggregate, do not
exceed $100,000, except with the consent of Hydrogenics, the Company
shall not directly or indirectly do, and shall cause each of its
Material Subsidiaries not to: -41-




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(i)
    
    issue, sell, award, pledge, dispose of, encumber
or agree to issue, sell, award, pledge, dispose of or encumber
any Common Shares, or any Options or Slangerup Inducement
Options, calls, conversion privileges or rights of any kind to
acquire any Common Shares or other securities or any shares of
its Subsidiaries (other than pursuant to the exercise of
Options issued under the Share Option Plan or Slangerup
Inducement Options);(ii)
    
    sell, pledge, lease, dispose of, encumber or
agree to sell, pledge, dispose of or encumber any assets of
the Company or any of its Subsidiaries or any interest in any
asset of the Company or any of its Subsidiaries that has a
value greater than $100,000, except in the ordinary course of
business consistent with past practice;(iii)
    
    amend or propose to amend the articles, by-laws
or other constating documents of the Company or any of its
Material Subsidiaries;(iv)
    
    split, combine or reclassify any outstanding
Common Shares;(v)
    
    redeem, purchase or offer to purchase any Common
Shares or other securities of the Company or any shares or
other securities of its Material Subsidiaries;(vi)
    
    declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any
combination thereof) in respect of any Common Shares except
for dividends by any wholly-owned Subsidiary of the Company to
the Company or another wholly-owned Subsidiary of the Company;(vii)
    
    reorganize, amalgamate or merge the Company or
any of its Subsidiaries with any other Person;(viii)
    
    reduce the stated capital of the shares of the Company or of
any of its Material Subsidiaries;(ix)
    
    acquire or agree to acquire (by merger,
amalgamation, acquisition of stock or assets or otherwise) any
Person, or make any investment either by purchase of shares or
securities, contributions of capital (other than to
wholly-owned Subsidiaries), property transfer or purchase of
any property or assets of any other Person, that has a value
greater than $100,000;(x)
    
    enter into, directly or indirectly, an investment
in or acquisition of, whether individually or with any other
Person, any asset or an interest in any asset that has a value
greater than $100,000, provided however that the Company may
make such investments in short-term government grade
instruments consistent with past practice;(xi)
    
    incur or commit to incur any indebtedness for
borrowed money or any other material liability or obligation
or issue any debt securities, except for -42-




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##### 



the borrowing of working capital in the ordinary course of
business and consistent with past practice, or guarantee,
endorse or otherwise as an accommodation become responsible
for, the obligations of any other Person or make any loans or
advances, except in the ordinary course of business
consistent with past practice;(xii)
    
    adopt a plan of liquidation or resolutions
providing for the liquidation or dissolution of the Company or
any of its Material Subsidiaries;(xiii)
    
    pay, discharge, settle or satisfy any claims, liabilities or
obligations other than the payment, discharge or satisfaction,
in the ordinary course of business consistent with past
practice, of liabilities reflected or reserved against in the
Companys financial statements or incurred in the ordinary
course of business consistent with past practice;(xiv)
    
    authorize, recommend or propose any release or
relinquishment of any contractual right, except in the
ordinary course of business consistent with past practice;(xv)
    
    waive, release, grant or transfer any rights of
value or modify or change in any material respect any existing
licence, lease, contract or other document, other than in the
ordinary course of business consistent with past practice;(xvi)
    
    increase the benefits payable or to become
payable to its directors or officers (whether from the Company
or any of its Subsidiaries), enter into or modify any
employment, severance, or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or
termination pay to, any officer of the Company or member of
the Board of Directors other than pursuant to agreements
already entered into as disclosed in the Company Public
Documents publicly available on SEDAR or in Schedule 4.13 to
the Company Disclosure Statement; or(xvii)
    
    in the case of employees who are not officers of the Company
or members of the Board of Directors, take any action other
than in the ordinary course of business and consistent with
past practice (none of which actions shall be unreasonable or
unusual) with respect to the grant of any bonuses, salary
increases, severance or termination pay or with respect to any
increase of benefits payable in effect on the date hereof;  (c)
    
    subject to Section 2.5, the Company shall not, and shall
cause each of its Subsidiaries not to, establish, adopt, enter into,
amend or waive any performance or vesting criteria or accelerate
vesting, exercisability or funding under any bonus, profit sharing,
thrift, incentive, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, savings, welfare,
employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers, current or former employees of
the Company or its Subsidiaries; -43-




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(d)
    
    the Company shall use all reasonable commercial efforts to
cause its current insurance (or re-insurance) policies not to be
cancelled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance
companies of nationally recognized standing providing coverage equal
to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force
and effect;(e)
    
    the Company shall:  (i)
    
    use all reasonable commercial efforts, and cause
each of its Material Subsidiaries to use all reasonable
commercial efforts, to preserve intact their respective
business organizations and goodwill, to keep available the
services of its and their officers and employees as a group
and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business
relationships with them;(ii)
    
    not take any action, or permit any of its
Subsidiaries to take any action, which would render, or which
reasonably may be expected to render, any representation or
warranty made by it in this Agreement untrue in any material
respect;(iii)
    
    provide Hydrogenics with prompt written notice
of any change (or any condition, event or development
involving a prospective change) in the business, operations,
assets, condition (financial or otherwise), prospects,
licences, permits, rights, privileges or liabilities, whether
contractual or otherwise, of the Company or any of its
Subsidiaries, taken as a whole, which, when considered either
individually or in the aggregate, would have a Company
Material Adverse Effect;(iv)
    
    not enter into or renew any agreement, contract,
lease, licence or other binding obligation of the Company or
its Material Subsidiaries: (i) containing (A) any limitation
or restriction on the ability of the Company or its Material
Subsidiaries or, following completion of the transactions
contemplated hereby, the ability of Hydrogenics or its
Material Subsidiaries, to engage in any type of activity or
business, (B) any limitation or restriction on the manner in
which, or the localities in which, all or any portion of the
business of the Company or its Material Subsidiaries or,
following consummation of the transactions contemplated
hereby, all or any portion of the business of Hydrogenics or
its Material Subsidiaries, is or would be conducted, or (C)
any limit or restriction on the ability of the Company or its
Material Subsidiaries or, following completion of the
transactions contemplated hereby, the ability of Hydrogenics
or its Material Subsidiaries, to solicit customers or
employees; (ii) that would reasonably be expected to
materially delay or prevent the consummation of the
transactions contemplated by this Agreement; or (iii) that
involves or would reasonably be expected to involve payments
in excess of $20,000 annually or $150,000 in the aggregate
over the term of the contract and that is not terminable
within 30 -44-




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##### 



days of the Effective Date without payment by Hydrogenics or
its Subsidiaries; and(v)
    
    except with the consent of Hydrogenics (such
consent not to be unreasonably withheld) or except as may be
set forth in (i) its capital budget approved as of the date
hereof, or (ii) any resolutions approved by its board of
directors prior to the date hereof, copies of which budget and
resolutions have been made available to Hydrogenics, not incur
any capital expenditures or enter into any agreement
obligating the Company or its Subsidiaries to provide for
future capital expenditures involving payments in excess of
$20,000 individually or $150,000 in the aggregate;  (f)
    
    the Company and each of its Subsidiaries shall:  (i)
    
    duly and timely file all Tax Returns required to
be filed by it on or after the date hereof and all such Tax
Returns will be true, complete and correct in all respects;(ii)
    
    timely withhold, collect, remit and pay all Taxes
which are to be withheld, collected, remitted or paid by it to
the extent due and payable;(iii)
    
    not make or rescind any material express or
deemed election relating to Taxes;(iv)
    
    not make a request for a Tax ruling or enter into
any agreement with any taxing authorities or consent to any
extension or waiver of any limitation period with respect to
Taxes;(v)
    
    not settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes; and(vi)
    
    not change any of its methods of reporting
income, deductions or accounting for income Tax purposes from
those employed in the preparation of its income Tax Return for
the tax year ended March 31, 2004, except as may required by
applicable Laws; and  (g)
    
    the Company shall not authorize or propose, or enter into or
modify any contract, agreement, commitment or arrangement, to do any
of the matters prohibited by the other paragraphs of this Section
5.1. Notwithstanding the foregoing in this Section 5.1, with respect to any
expenditures which have a monetary threshold expressed in this Section 5.1, the
Company may exceed such expenditure threshold with the prior written consent of
Hydrogenics, such consent not to be unreasonably withheld or delayed taking
into account the Companys past practices.  5.2
    
    Covenants of Hydrogenics Hydrogenics covenants and agrees that, except as contemplated in this
Agreement, until the Transition Date or the day upon which this Agreement is
terminated, whichever is earlier: -45-




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(a)
    
    it shall comply with all necessary prospectus, registration
and other requirements of the applicable securities laws of Canada
and applicable Federal securities laws of the United States for the
issue by Hydrogenics of Hydrogenics common shares pursuant to the
Offer;(b)
    
    it shall use all reasonable commercial efforts to cause the
listing on the NASDAQ and the TSX of the Hydrogenics common shares
to be issued pursuant to the Offer prior to, or as at, the Effective
Date;(c)
    
    it shall use all reasonable commercial efforts to satisfy (or
cause the satisfaction of) the conditions of the Offer set forth in
Schedule A to this Agreement, to the extent the same is within its
control, and take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or
advisable under all applicable Laws to complete the Offer in
accordance with the terms thereof;(d)
    
    it shall make or cooperate as necessary in the making of all
necessary filings and applications under all applicable Laws
required in connection with the transactions contemplated herein and
take all reasonable action necessary to be in compliance with such
Laws;(e)
    
    it shall use all reasonable commercial efforts, and cause
each of its Material Subsidiaries, to use all reasonable commercial
efforts, to preserve intact their respective business organizations
and goodwill, to keep available the services of its and their
officers and employees as a group and to maintain satisfactory
relationships with suppliers, distributors, customers and others
having business relationships with them;(f)
    
    it shall not take any action, or permit any of its
Subsidiaries to take any action, which would render, or which
reasonably may be expected to render, any representation or warranty
made by it in this Agreement untrue in any material respect;(g)
    
    it shall not subdivide, re-divide or change the Hydrogenics
common shares into a greater number of Hydrogenics common shares, or
reduce, combine, consolidate or change the outstanding Hydrogenics
common shares, or reclassify or otherwise change the rights,
privileges and conditions of the Hydrogenics common shares, or
effect an amalgamation, merger or reorganization or other
transaction affecting the Hydrogenics common shares without taking
all necessary action to ensure that the Offered Consideration is
adjusted accordingly to reflect any such change;(h)
    
    it shall not declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any
combination thereof) in respect of any Hydrogenics common shares
except for dividends by any wholly-owned Subsidiary of Hydrogenics
to Hydrogenics or another wholly-owned Subsidiary of Hydrogenics;(i)
    
    it shall provide the Company with prompt written notice of
any change (or any condition, event or development involving a
prospective change) in the business, -46-




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##### 



operations, assets, condition (financial or otherwise), prospects,
licences, permits, rights, privileges or liabilities, whether
contractual or otherwise, of Hydrogenics or any of its
Subsidiaries, taken as a whole, which, when considered either
individually or in the aggregate, would have a Hydrogenics Material
Adverse Effect.  5.3
    
    Extension of the Offer Hydrogenics covenants and agrees that if prior to the Expiry Date it becomes
aware that any condition set out in Schedule A is unlikely to be satisfied or
performed prior to the Expiry Date, it may, prior to such date, in accordance
with applicable Laws, extend the period during which Common Shares may be
deposited under the Offer. ARTICLE 6 TERMINATION, AMENDMENT AND WAIVER
  6.1
    
    Termination This Agreement may be terminated by notice in writing:  (a)
    
    at any time prior to the Effective Date by mutual consent of
Hydrogenics and the Company;(b)
    
    by Hydrogenics, if any condition to making the Offer is not
satisfied or waived by the Offer Deadline (other than as a result of
Hydrogenics default hereunder);(c)
    
    by Hydrogenics, if any condition of the Offer set forth in
Schedule A is not satisfied or waived by the Expiry Date (other than
as a result of Hydrogenics default hereunder);(d)
    
    by Hydrogenics at any time if:  (i)
    
    the Company shall have breached any of its
representations and warranties that are qualified by a
reference to a Company Material Adverse Effect, or if any such
representations or warranties shall have become untrue or
incorrect after the date hereof; or(ii)
    
    the Company shall have breached in any material
respect any of its representations and warranties, covenants
or other agreements contained in this Agreement, or if any
such representations or warranties shall in any material
respect have become untrue or incorrect after the date hereof;  and such breach is not curable, or if such breach is curable, it is
not cured by the earlier of (i) one business day prior to the
Effective Date, or (ii) by the end of the third business day after
notice thereof to the Company from Hydrogenics and, for greater
certainty, such representations and warranties are to be given
continuously until the Effective Date or termination of the
Agreement;(e)
    
    by Hydrogenics at any time if the Company is in default of
any covenant or obligation under this Agreement and such default is
reasonably likely to prevent -47-




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##### 



or materially delay consummation of the transactions contemplated
by this Agreement;(f)
    
    by the Company at any time if:  (i)
    
    Hydrogenics shall have breached any of its
representations and warranties that are qualified by a
reference to a Hydrogenics Material Adverse Effect, or if any
such representations or warranties shall have become untrue or
incorrect after the date hereof; or(ii)
    
    Hydrogenics shall have breached in any material
respect any of its representations and warranties, covenants
or other agreements contained in this Agreement, or if any
such representations or warranties shall in any material
respect have become untrue or incorrect after the date hereof;  and such breach is not curable, or if such breach is curable, it is
not cured by the earlier of (i) one business day prior to the
Effective Date, or (ii) by the end of the third business day after
notice thereof to Hydrogenics from the Company and, for greater
certainty, such representations and warranties are to be given
continuously until the Effective Date or termination of the
Agreement;(g)
    
    by the Company at any time if Hydrogenics is in default of
any covenant or obligation under this Agreement and such default is
reasonably likely to prevent or materially delay consummation of the
transactions contemplated by this Agreement;(h)
    
    by the Company if Hydrogenics has not taken up and paid for
at least 66 2/3% of the outstanding Common Shares (on a fully diluted
basis) under the Offer within 75 days after the Offer is commenced,
otherwise than as a result of the breach by the Company of any
covenant or obligation under this Agreement or as a result of any
representation or warranty of the Company in this Agreement being
untrue or incorrect in any material respect; provided, however, that
if Hydrogenics take-up and payment for Common Shares deposited
under the Offer is delayed by (i) an injunction or order made by a
court or regulatory authority of competent jurisdiction, or (ii)
Hydrogenics not having obtained any regulatory waiver, consent or
approval which is necessary to permit Hydrogenics to take up and pay
for Common Shares deposited under the Offer (other than as a result
of Hydrogenics default hereunder), then, provided that such
injunction or order is being contested or appealed or such
regulatory waiver, consent or approval is being actively sought, as
applicable, this Agreement shall not be terminated by the Company
pursuant to this Subsection 6.1(h) until the earlier of (i) 120 days
after the Offer is commenced and (ii) the fifth business day
following the date on which such injunction or order ceases to be in
effect or such waiver, consent or approval is obtained, as
applicable;(i)
    
    by Hydrogenics if: (i) the Board of Directors withdraws,
modifies or changes its recommendation in favour of the Offer; (ii)
the Board of Directors approves or recommends acceptance of an
Acquisition Proposal; or (iii) the Board of Directors does not
reaffirm its recommendation in favour of the Offer to the -48-




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##### 



Shareholders in a press release or Directors Circular within ten
days after the public announcement or commencement of an
Acquisition Proposal;(j)
    
    by either Hydrogenics or the Company, if Hydrogenics has been
notified in writing by the Company of a Proposed Agreement in
accordance with Subsection 7.1(e) and: (i) Hydrogenics does not
deliver an amended Offer within three business days of delivery of
the Proposed Agreement to Hydrogenics; or (ii) Hydrogenics delivers
an amended Offer but the Board of Directors determines, acting in
good faith and in the proper discharge of its fiduciary duties, that
the Acquisition Proposal provided in the Proposed Agreement
continues to be a Superior Proposal in comparison to the amended
Offer of Hydrogenics;(k)
    
    by the Company, if Hydrogenics does not commence the Offer
and mail the Offer Documents by the Offer Deadline;(l)
    
    by the Company where, upon the occurrence of a Trigger Event,
the Board of Directors has, within three business days following the
final date of the period comprising the Trigger Event, provided
notice in writing to Hydrogenics of the Board of Directors
intention to withdraw its support for the Offer and the Companys
intention to terminate this Agreement provided however that where
the Company fails to provide such notice within the allotted time
period, the Company will be deemed to have waived its right to
terminate this Agreement for that occurrence of a Trigger Event, but
not with respect to any subsequent Trigger Events that may occur;(m)
    
    by the Company or Hydrogenics if Hydrogenics is required by
NASDAQ or the TSX to obtain approval of the issuance of common
 shares pursuant to the Offer from its shareholders prior to
completing the Offer; and(n)
    
    by the Company if it has made a payment of $3.5 million
pursuant to Section 7.2 of this Agreement.  6.2
    
    Amendment This Agreement may not be amended except by written instrument signed by each
of the Parties hereto.  6.3
    
    Waiver At any time prior to the Effective Date, either Hydrogenics or the Company may:
(a) extend the time for the performance of any of the obligations or other acts
of the other Party; or (b) waive compliance with any of the agreements of the
other Party or with any conditions to its own obligations, in each case only to
the extent such obligations, agreements or conditions are intended for its
benefit.  6.4
    
    Effect of Termination If this Agreement is terminated as provided in Section 6.1 (other than pursuant
to Subsection 6.1(d), 6.1(e), 6.1(f) or 6.1(g)), there shall be no liability or
further obligation on the part of any -49-




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Party or any of their respective shareholders, officers or directors, except
(i) as provided in Section 7.2, and (ii) for liability arising from a wilful
breach of any covenant, representation or warranty in this Agreement or common
law fraud, and any action with respect thereto must be commenced within six
months of the date of termination. For greater certainty, if this Agreement is
terminated pursuant to Subsections 6.1(d), 6.1(e), 6.1(f) or 6.1(g), this
Subsection 6.4 shall not operate to limit or restrict the rights of a Party
with respect to claims based upon the breach of the covenant, representation or
warranty that resulted in the termination. In addition, where the Company
elects to terminate this Agreement as a result of a Trigger Event as
contemplated under Subsection 6.1(l), the Company will reimburse Hydrogenics
for all out of pocket costs incurred directly or indirectly in respect of the
Offer, including without limitation legal, accounting, printing and other third
part costs relating to the negotiation and execution of this Agreement and the
Lock-Up Agreement, performance of due diligence, seeking of Appropriate
Regulatory Approvals and drafting, finalizing and mailing the Offering
Circular, up to a maximum amount of $750,000, upon presentation of satisfactory
evidence of such expenses. ARTICLE 7 NON-SOLICITATION
  7.1
    
    Non-Solicitation  (a)
    
    On and after the date of this Agreement, the Company and its
Subsidiaries shall not, directly or indirectly, through any officer,
director, employee, advisor, representative, agent or otherwise,
solicit, initiate or encourage inquiries from or submissions of
proposals or offers from any other Person (including any of its
officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, amalgamation, arrangement, acquisition or
purchase of all or a material portion of the assets of, or any
equity interest (including Common Shares) in, the Company or any of
its Subsidiaries or other similar transaction or business
combination (any of such foregoing inquiries or proposals being
referred to herein as an Acquisition Proposal), or participate in
any discussions or negotiations regarding, or furnish to any Person
any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other Person to do or seek to do any of the
foregoing. However, this Subsection 7.1(a) shall not prevent the
Board of Directors or the Company, in respect of a bona fidewritten
Acquisition Proposal which the Board of Directors has determined in
good faith (after determining, after consultation with advisors,
that the Board of Directors is required to do so in order to
discharge properly its fiduciary duties) is likely to, if
consummated in accordance with its terms, result in a transaction
which is more favourable to Shareholders than the Offer (any such
offer or proposal being referred to herein as a Superior
Proposal), from considering, participating in any discussions,
releasing any Person from any standstill agreement, negotiating,
approving, cooperating in any way with (including, subject to
Subsection 7.1(d), furnishing information), or assisting or
facilitating any such Superior Proposal, or recommending to
Shareholders or, subject to compliance with Subsection 7.1(e),
entering into an agreement in respect of any Superior Proposal in
each case made by a Person after the date hereof (and that was not
solicited after such date in contravention of this Section 7.1). -50-




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##### 



(b)
    
    The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any Person
(other than Hydrogenics) with respect to any potential Acquisition
Proposal and request the return or destruction of all confidential
information provided in connection therewith. The Company agrees not
to release any third party from any confidentiality or standstill
agreement except as permitted by Subsection 7.1(a).(c)
    
    The Company shall immediately provide notice to Hydrogenics
of any bona fideAcquisition Proposal or any inquiry that could lead
to an Acquisition Proposal or any amendments to the foregoing or any
request for non-public information relating to the Company or any of
its Subsidiaries in connection with such an Acquisition Proposal or
for access to the properties, books or records of the Company or any
Subsidiary by any Person that informs the Company, any member of the
Board of Directors or such Subsidiary that it is considering making,
or has made, an Acquisition Proposal. Such notice to Hydrogenics
shall be made, from time to time, in writing and shall indicate the
identity of the Person making such proposal, inquiry or contact, all
material terms thereof and such other details of the proposal,
inquiry or contact known to the Company. The Company shall keep
Hydrogenics informed of the status including any change to the
material terms of any such Acquisition Proposal or inquiry.(d)
    
    If the Board of Directors receives a request for material
non-public information from a Person who proposes to the Company a
bona fidewritten Acquisition Proposal and the Board of Directors
determines, in the manner contemplated by Subsection 7.1(a) of this
Agreement, that such Acquisition Proposal is likely to, if
consummated in accordance with its terms, result in a Superior
Proposal then, and only in such case, the Company may provide such
Person with access to information regarding the Company, subject to
the execution of a confidentiality and standstill agreement which is
customary in such situations and which, in any event and taken as a
whole, is no less favourable to the Company than the Confidentiality
Agreement; provided that the Company sends a copy of any such
confidentiality and standstill agreement to Hydrogenics promptly
upon its execution and Hydrogenics is provided with a list of or
copies of the information provided to such Person and immediately
provided with access to similar information to which such Person was
provided.(e)
    
    The Company agrees that it will not enter into any agreement
(a Proposed Agreement), other than a confidentiality and
standstill agreement as contemplated by Subsection 7.1(d), with any
Person providing for or to facilitate any Acquisition Proposal
unless the Board of Directors determines that such proposal is
likely to, if consummated in accordance with its terms, constitute a
Superior Proposal and then will not do so without providing
Hydrogenics with an opportunity to amend this Agreement and the
Offer to provide for at least equivalent financial terms to those
included in the Proposed Agreement as determined by the Board of
Directors, acting in good faith and in accordance with its fiduciary
duties. In particular, the Company agrees to provide Hydrogenics
with a copy of any Proposed Agreement relating to such Superior
Proposal, such documents to be so provided to Hydrogenics not less
than three full business days -51-




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prior to the proposed execution of the Proposed Agreement by the
Company. The Board of Directors shall review any written offer
delivered by Hydrogenics to amend the terms of this Agreement,
provided that it is delivered to the Company within three business
days of delivery of the Proposed Agreement to Hydrogenics, to
determine, acting in good faith and in accordance with its
fiduciary duties, whether Hydrogenics amended Offer would be at
least as favourable to Shareholders as the Acquisition Proposal
provided in the Proposed Agreement. If the Board of Directors so
determines, the Company and Hydrogenics will enter into an amended
agreement reflecting the amended Offer. If the Board of Directors
continues to believe, acting in good faith and in the proper
discharge of its fiduciary duties that the Acquisition Proposal
provided in the Proposed Agreement continues to be a Superior
Proposal with respect to the amended Offer, or does not receive an
amended Offer within such three business day period, the Company
shall be entitled to enter into the Proposed Agreement. The
Company acknowledges and agrees that each successive material
modification of any Acquisition Proposal shall constitute a new
Acquisition Proposal for purposes of the requirement of this
Subsection 7.1(e) to initiate an additional three business day
notice period.(f)
    
    The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any investment
bankers or other advisors or representatives retained by the Company
or its Subsidiaries in connection with the transactions contemplated
by this Agreement are aware of the provisions of this Section, and
the Company shall be responsible for any breach of this Section 7.1
by such officers, directors, employees, investment bankers, advisors
or representatives.  7.2
    
    Break Fee Provision If Hydrogenics does not make the Offer or withdraws the Offer or elects not to
take up and pay for any Common Shares deposited under the Offer as a result of
any one of the following:  (a)
    
    prior to the Transition Date, the Board of Directors
withdraws, modifies or changes any of its recommendations or
determinations regarding the Offer in a manner adverse to
Hydrogenics or resolves to do so, other than in accordance with
Subsection 6.1(l) of this Agreement; or(b)
    
    an Acquisition Proposal is publicly announced, the Offer is
not completed as a result of the Minimum Tender Condition not being
satisfied, and any Common Shares are acquired under such alternative
Acquisition Proposal or an Acquisition Proposal is otherwise
completed within twelve months of the date of termination of this
Agreement; or(c)
    
    the Agreement is terminated by Hydrogenics pursuant to
Subsection 6.1(d) or 6.1(e); or(d)
    
    the Agreement is terminated as a result of Hydrogenics
failing to exercise its right to make an amended Offer pursuant to
Subsection 7.1(e); -52-




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then the Company shall, forthwith after such event, pay to Hydrogenics, by way
of certified cheque or wire transfer of immediately available funds, the sum of
$3.5 million. For greater certainty, the Company shall not be obligated to
make more than one payment under this Section 7.2 if one or more of the events
specified therein occurs. Each Party acknowledges and agrees that,
notwithstanding any other provision herein, upon payment of the amount of $3.5
million under this Section 7.2, Hydrogenics shall not be entitled to pursue any
other remedy to which Hydrogenics may otherwise be entitled, and payment of the
$3.5 million under this Section 7.2 shall be in lieu of any damages under any
such other remedies and shall constitute payment of liquidated damages which
are a genuine estimate of the damages which Hydrogenics would suffer or incur
as a result of the event giving rise to such damages and resultant termination
of this Agreement, and are not penalties. ARTICLE 8 GENERAL PROVISIONS
  8.1
    
    Further Assurances Subject to the conditions herein provided and to the fiduciary duties of the
Board of Directors and the board of directors of Hydrogenics, each Party agrees
to use all reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as is practicable the transactions
contemplated by the Offer and this Agreement, including (i) the execution and
delivery of such documents as the other Party may reasonably require and (ii)
obtaining such information, documents including financial statements and
reports of auditors, or consents required in connection with the preparation of
the Offering Circular and the Directors Circular, and using reasonable
commercial efforts to obtain all necessary waivers, consents and approvals,
including without limitation those contemplated by Sections 3.2 and 4.2 and to
effect all necessary registrations and filings, including, but not limited to,
filings under applicable Laws and submissions of information requested by
Governmental Entities. Each Party shall cooperate in all reasonable respects
with the other Party in taking such actions.  8.2
    
    Notification of Certain Matters Each Party shall give prompt notice to the others of: (a) the occurrence or
failure to occur of any event, which occurrence or failure would cause or may
cause any representation or warranty on its part contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the earlier of the Effective Date and the termination of this
Agreement; and (b) any failure of such Party, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.  8.3
    
    Access to Information Subject to the Confidentiality Agreement and applicable Laws, upon reasonable
notice, each Party agrees to provide the other Party and its representatives
with access during normal business hours from the date hereof and until the
earlier of the Effective Date and the termination of this Agreement, to all
books, records, information and files in its possession and control and access
to its personnel on an as requested basis as well as access to its properties
to the extent such information has been requested prior to the date of this
Agreement and has not been provided (or -53-




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relates to such information), or is otherwise relevant to the Agreement and is
reasonably necessary for the purposes of securing all necessary regulatory
approvals, integrating the businesses of the Parties and their Subsidiaries,
the preparation and settlement of definitive documents, and/or the advancement
of the Offer. Nothing in the foregoing shall require the Company or
Hydrogenics or any of their respective Subsidiaries, to disclose information
subject to a written confidentiality agreement, or competitively sensitive
information. Any investigation by a Party hereto and its representatives shall
not mitigate, diminish or affect the representations and warranties of the
other Party contained in this Agreement or any document or certificate given
pursuant hereto.  8.4
    
    Confidentiality The provisions of the Confidentiality Agreement shall continue to apply
notwithstanding the execution of this Agreement by the Parties or the
announcement commencing the Offer.  8.5
    
    Officers and Directors Insurance Hydrogenics agrees that for the period from the Effective Date until six years
after the Effective Date, Hydrogenics will cause the Company or any successor
to the Company (including the successor resulting from the winding-up or
liquidation or dissolution of the Company) to maintain the Companys current
directors and officers insurance policy or an equivalent policy subject in
either case to terms and conditions no less advantageous to the directors and
officers of the Company and its Subsidiaries than those contained in the policy
in effect on the date hereof, for all present and former directors and officers
of the Company, and its Subsidiaries, covering claims made prior to or within
two years after the Effective Date. Hydrogenics also agrees that after the
expiration of such six-year period it will use all commercially reasonable
efforts to cause such directors and officers to be covered under Hydrogenics
then existing directors and officers insurance policy, if any. Hydrogenics
shall, and shall cause the Company (or its successor) to, indemnify the
directors and officers of the Company and its Subsidiaries to the fullest
extent to which Hydrogenics and the Company and its Subsidiaries are permitted
to indemnify such officers and directors under their respective charter,
by-laws, applicable Laws and contracts of indemnity.  8.6
    
    Employment Contracts Hydrogenics shall honour and comply in all material respects with the terms of
the employment contracts listed on Schedule 4.13 to the Company Disclosure
Statement.  8.7
    
    Expenses Except as otherwise expressly provided in this Agreement, each Party shall pay
its own expenses incurred in connection with this Agreement, the completion of
the transactions contemplated hereby and/or the termination of this Agreement,
irrespective of the completion of the transactions contemplated hereby.  8.8
    
    Notices All notices, requests, demands and other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the Party for -54-




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whom it is intended or delivered, or if sent by facsimile transmission, upon
confirmation that such transmission has been properly effected, to the Person
at the address set forth below, or such other address as may be designated in
writing hereafter, in the same manner, by such Person. The date of receipt of
any such notice or other communication if delivered personally shall be deemed
to be the date of delivery thereof, or if sent by facsimile transmission the
date of such transmission if sent on a business day, failing which it shall be
deemed to have been received on the next business day. If to Hydrogenics:Hydrogenics Corporation5985 McLaughlin RoadMississauga, ON L5R 1B8Phone No.:
    
    (905) 361-3660Fax No.:
    
    (905) 361-3626Attention:
    
    Pierre Rivard,President and Chief Executive Officerwith a copy to:Osler, Hoskin & Harcourt LLP1 First Canadian PlaceSuite 6600Toronto, ON M5X 1B8Phone No.:
    
    (416) 862-4749Fax No.:
    
    (416) 862-6666Attention:
    
    Mark TrachukIf to the Company:Stuart Energy Systems Corporation5101 Orbitor DriveMississauga, ON L4W 4V1Phone No.:
    
    (905) 282-7700Fax No.:
    
    (905) 282-7701Attention:
    
    Jon Slangerup,
President and Chief Executive OfficerWith a copy to:Torys LLPSuite 300079 Wellington Street WestBox 270, TD CentreToronto, ON M5K 1N2
 -55-




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Phone No.:
    
    (416) 865-8238Fax No.:
    
    (416) 865-7380Attention:
    
    Philip J. Brown
 Any Party may at any time change its address for service from time to time by
giving notice to the other Parties in accordance with this Section 8.8.  8.9
    
    Severability If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.  8.10
    
    Entire Agreement, Assignment and Governing Law  (a)
    
    This Agreement and the Confidentiality Agreement constitute
the entire agreement and supersede all other prior agreements and
undertakings, both written and oral, between the Parties with
respect to the subject matter hereof. Other than as set forth in
such agreements, no representation or warranty has been given by any
Party to the others. In the event of conflict between this
Agreement and the Confidentiality Agreement, this Agreement shall
prevail.(b)
    
    This Agreement: (i) is not intended to confer upon any other
Person any rights or remedies hereunder, except as contemplated
under Section 8.12; (ii) shall not be assigned by operation of law
or otherwise, except that Hydrogenics may assign all or any portion
of its rights under this Agreement to any affiliate (as such term is
defined in the Securities Act) upon three business days prior
written notice to the Company and provided such affiliate executes
and delivers a counterpart of this Agreement pursuant to which it
agrees to be bound by the terms of this Agreement as Hydrogenics,
but no such assignment shall relieve Hydrogenics of its obligations
hereunder; and (iii) shall be governed in all respects, including
validity, interpretation and effect, exclusively by the Laws of the
Province of Ontario and the Laws of Canada applicable therein,
without giving effect to the principles of conflict of laws thereof.  8.11
    
    Attornment The Parties hereby irrevocably and unconditionally consent to and submit to the
courts of the Province of Ontario for any actions, suits or proceedings arising
out of or relating to this Agreement or the matters contemplated hereby (and
agree not to commence any action, suit or proceeding relating thereto except in
such courts) and further agree that service of any process, summons, notice or
document by registered mail to the addresses of the Parties set forth in this
Agreement shall be effective service of process for any action, suit or
proceeding brought against -56-




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any Party in such court. The Parties hereby irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the matters contemplated hereby in the courts
of the Province of Ontario and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such action,
suit or proceeding so brought has been brought in an inconvenient forum.  8.12
    
    Third Party Beneficiaries The provisions of Sections 8.5 and 8.6 are (i) intended for the benefit of all
present and former directors, officers and employees of the Company and its
Subsidiaries, as and to the extent applicable in accordance with their terms,
and shall be enforceable by each of such persons and his or her heirs,
executors, administrators and other legal representatives (collectively, the
Third Party Beneficiaries) and the Company shall hold the rights and benefits
of Sections 8.5 and 8.6 in trust for and on behalf of the Third Party
Beneficiaries and the Company hereby accepts such trust and agrees to hold the
benefit of and enforce performance of such covenants on behalf of the Third
Party Beneficiaries, and (ii) are in addition to, and not in substitution for,
any other rights that the Third Party Beneficiaries may have by contract or
otherwise.  8.13
    
    Counterparts This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce more than one counterpart. [The remainder of this page is intentionally left blank.] -57-




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IN WITNESS WHEREOF the Parties have executed this Agreement. HYDROGENICS CORPORATIONBy:
    Pierre RivardName:
    Pierre RivardTitle:
    President and Chief Executive Officer STUART ENERGY SYSTEMS CORPORATIONBy:
    Jon SlangerupName:
    Jon SlangerupTitle:
    President and Chief Executive Officer By:
    R. Randall MacEwenName:
    R. Randall MacEwenTitle:
    Vice President, Corporate Development, General Counsel
and Corporate Secretary [Signature page to Support Agreement dated November 10, 2004] -58-




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SCHEDULE A CONDITIONS OF THE OFFER Subject to the provisions of the Agreement, Hydrogenics shall have the right to
withdraw the Offer and shall not be required to take up, purchase or pay for,
and shall have the right to extend the period of time during which the Offer is
open and postpone taking up and paying for, any Common Shares deposited under
the Offer unless all of the following conditions are satisfied or waived by
Hydrogenics at or prior to the Expiry Time:  (a)
    
    the Minimum Tender Condition;(b)
    
    all government or regulatory consents or approvals required
by law, policy or practice (other than as referred to in paragraph
(c) below), including, without limitation, those of any provincial
securities authorities, stock exchanges or other securities
regulatory authorities, shall have been obtained or waived on terms
satisfactory to Hydrogenics, acting reasonably;(c)
    
    any applicable waiting periods under the Competition Act
(Canada) and the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976shall have expired or been earlier
terminated;(d)
    
    no act, action, suit or proceeding shall have been taken
before or by any Governmental Entity (including, without limitation,
by any individual, company, firm, group or other entity) in Canada
or elsewhere, whether or not having the force of Law, and no Law
shall have been proposed, enacted, promulgated or applied, in either
case:  (i)
    
    to cease trade, enjoin, prohibit or impose
material limitations, damages or conditions on the purchase by
or the sale to Hydrogenics of the Common Shares or the right
of Hydrogenics to own or exercise full rights of ownership of
the Common Shares; or(ii)
    
    which, if the Offer were consummated, would
reasonably be expected to have a Company Material Adverse
Effect; or(iii)
    
    which would adversely affect the ability of
Hydrogenics to effect a Subsequent Acquisition Transaction;  (e)
    
    there shall not exist any prohibition at Law against
Hydrogenics making the Offer or taking up and paying for any Common
Shares deposited under the Offer or completing any Subsequent
Acquisition Transaction;(f)
    
    Hydrogenics shall have determined in its sole discretion,
acting reasonably, that there shall not exist or have occurred a
Company Material Adverse Effect;(g)
    
    Hydrogenics shall not have become aware of any untrue
statement of a material fact, or an omission to state a material
fact that is required to be stated or that is necessary to make a
statement not misleading in the light of the circumstances in which
it was made and at the date it was made (after giving effect to all




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subsequent filings in relation to all matters covered in earlier
filings), in any Company Public Document;(h)
    
    the Board of Directors shall not have withdrawn any
recommendation made by it that Shareholders accept the Offer or
issued a recommendation in a manner that has substantially the same
effect;(i)
    
    at the Expiry Time:  (i)
    
    all representations and warranties of the Company
in this Agreement: (A) that are qualified by a reference to
Company Material Adverse Effect shall be true and correct in
all respects; and (B) that are not qualified by a reference to
a Company Material Adverse Effect shall be true and correct in
all material respects;(ii)
    
    the Company shall have observed and performed its
covenants in the Agreement in all material respects to the
extent that such covenants were to have been observed or
performed by the Company at or prior to the Expiry Time; and(iii)
    
    Hydrogenics shall have received, not more than
seven hours before the Expiry Time, a certificate of the
Company, signed by two senior officers (without personal
liability) satisfactory to Hydrogenics acting reasonably
certifying the foregoing after due inquiry; and  (j)
    
    the Support Agreement shall not have been terminated. The foregoing conditions are for the exclusive benefit of Hydrogenics and may
be asserted by Hydrogenics regardless of the circumstances giving rise to any
such condition. Hydrogenics may, in Hydrogenics sole discretion, waive any of
the foregoing conditions, in whole or in part, at any time and from time to
time, both before and after the Expiry Time, without prejudice to any other
rights which Hydrogenics may have, provided that Hydrogenics may not waive the
Minimum Tender Condition without the prior written consent of the Company. The
failure by Hydrogenics at any time to exercise any of the foregoing rights will
not be deemed to be a waiver of any such right and each such right shall be
deemed to be an ongoing right which may be asserted at any time and from time
to time. -2-