Document:

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                                                                   EXHIBIT 10.12

                   EFFICIENCY AND ALTERNATIVE ENERGY PROGRAM
              AMENDMENT NO. 1 TO THE CONTRIBUTION AGREEMENT BETWEEN
                  CANADA AND THE HYDROGENICS CORPORATION INC.

                  THIS AMENDING AGREEMENT is made in duplicate
BETWEEN:

       HER MAJESTY THE QUEEN IN RIGHT OF CANADA ("CANADA"), represented by the
       Minister of Natural Resources Canada,

AND:   HYDROGENICS CORPORATION INC., incorporated under the laws in force in
       the province of Ontario ,(THE "PROPONENT").

       WHEREAS Canada wishes to encourage the adoption of energy efficiency and
renewable energy technologies in all sectors of the Canadian economy and has
established the Efficiency and Alternative Energy Program for this purpose;

       WHEREAS Canada and the Proponent entered into an Agreement on June 9,
1998

       AND WHEREAS Canada and the Proponent wish to amend this Agreement;

       NOW, THEREFORE, Canada and the Proponent agree as follows:

1.     To change the ALLOCATION OF FUNDS IN SCHEDULE B of the Agreement as
       follows:
       CANADA'S CONTRIBUTION WILL BE $225,000 IN FY 1999/00 ($100,000
       FROM NRCAN AND $125,000 FROM DND).

2.     SCHEDULE A shall be changed as follows:

       OBJECTIVE / PURPOSE: IN ADDITION TO THE ORIGINAL OPERATIONAL
CHARACTERISTICS OF THE PROTOTYPE, THE FOLLOWING CHARACTERISTICS SHOULD BE ADDED:

       - WITH AN INTEGRATED FUEL STORAGE SYSTEM BASED ON METAL HYDRIDES;
       - WITH A COMBINED STACK COOLING AND HUMIDIFYING ASSEMBLY;
       - WITH A PROPRIETARY FUEL DELIVERY AND WATER RECOVERY/RECYCLING SYSTEM
       BETWEEN THE HYDRIDE VESSEL AND THE FUEL CELL STACK.

       DESCRIPTION / SCOPE: SHOULD BE CHANGED TO READ:

BY THE END OF THE HYTEF 1998/00 PROGRAM, HYDROGENICS WILL DELIVER:

- DESIGN AND ASSEMBLY OF A 2 kW ADVANCED DEVELOPMENTAL MODEL OF AN AIR BREATHING
PEM SYSTEM INCLUDING
       - A FUEL CELL STACK THAT CAN OPERATE WITHOUT PRESSURIZATION;
       - A PROTECTIVE SYSTEM ENCLOSURE;
       - MODULAR AND MANIFOLDED HYDRIDE PACKS ALLOWING ENERGY UPSCALE IN
INCREMENTS OF 2kWh (ELECTRICAL EQUIVALENT), WITH MANUALLY LOADABLE PACKS THAT
CAN BE READILY INTEGRATED WITH THE FUEL CELL GENERATOR FOR DIFFERENT MISSION
PROFILES AND WITH A BALANCED CENTER OF GRAVITY FOR ROAD TRANSPORTATION;
       - A PORTABLE ENCLOSURE ALLOWING TWO MEN TO INSTALL/REMOVE THE FUEL CELL
UNIT INTO A ROAD DEPLOYABLE (WHEEL-MOUNTED) CARRIAGE;
       - A CONTROLLER PROVIDING SELF-ATTENDED SUPERVISORY CONTROL AND DATA
ACQUISITION (SCADA).

- DEMONSTRATION OF THE SYSTEM COUPLED TO A RENEWABLE FUEL SUPPLY.

                                       1
<PAGE>   2

3.     All other terms and conditions of the Agreement remain in full force and
       effect.

IN WITNESS WHEREOF this Amending Agreement has been executed on behalf of HER
MAJESTY THE QUEEN IN RIGHT OF CANADA by an officer duly authorized by the
Minister of Natural Resources and by the PROPONENT, by an officer duly
authorized in that behalf.

                                HER MAJESTY THE QUEEN IN RIGHT OF CANADA

March 13/00                             [SIG]
--------------                  ------------------------------------------
     Date                       for N. R. Beck, Chief
                                Transportation Energy Technology
                                CETC/Energy Technology Branch
                                Department of Natural Resources

                                HYDROGENICS CORPORATION INCORPORATED

March 10/00                             [SIG]
--------------                  ------------------------------------------
     Date                       for Boyd Josef Taylor, Principal and Director
                                Hydrogenics Corporation Incorporated

                                       2<PAGE>   1
                                                                   EXHIBIT 10.13

                        DEPARTMENT OF NATURAL RESOURCES

                   EFFICIENCY AND ALTERNATIVE ENERGY PROGRAM
                             CONTRIBUTION AGREEMENT

                      THIS AGREEMENT is made in duplicate

BETWEEN:

           HER MAJESTY THE QUEEN IN RIGHT OF CANADA ("Canada"),
           represented by the Minister of Natural Resources,

AND:

           HYDROGENICS CORPORATION INC., incorporated under the laws in
           force in the Province of Ontario,
           (the "Proponent").

           WHEREAS Canada wishes to encourage the adoption of energy efficiency
and renewable energy technologies in all sectors of the Canadian economy and has
established the Efficiency and Alternative Energy Program for this purpose.

           WHEREAS Canada and the Proponent agree that for the Proponent to
develop and implement the Project as described in Schedule A, the Proponent
will require financial assistance from Canada;

           AND WHEREAS Canada is willing to provide financial assistance towards
the total Eligible Costs of the Project in the manner and upon the terms and
conditions hereinafter set forth;

           NOW, THEREFORE, Canada and the Proponent agree as follows:

1.    INTERPRETATION

1.1   In this Agreement:

      "Agreement" means the Agreement and the attached Schedules A, B and C;

      "Completion Date" means the date specified in Article 3.2;

      "Eligible Costs" means any cost incurred by the Proponent in the period
      between April 1, 1999 and March 31, 2001 in relation to the Project and
      which is listed in Schedule B;

      "Fiscal Year" means the period beginning on April 1 of any year and
      ending on March 31 in the next year.

      "Intellectual Property" means any information developed by the Proponent
      in performance of the Project including, without limitation, data,
      techniques, methods, processes, know-how, inventions, designs, formulas,
      photographs, drawings, plans, specifications, reports, studies, technical
      and procedural manuals, programs, including computer hardware and software
      and source code, whether susceptible to copyright or not, and all patents,
      copyrights, trademarks, and industrial designs arising therefrom;

      "Minister" means the Minister of Natural Resources and includes any duly
      authorized officers or representatives;

      "Project" means the Project described in Schedule A;

      "Proposal" means a written proposal including at least a background,
      purpose, work description, results expected and a budget, which is
      accepted by the Minister for a specific Project; and

      "Revenue" means all considerations received by the Proponent from any
      person or party in respect of the licensing, selling, marketing or
      commercialization of the Intellectual Property, less returns actually
      credited and any applicable sales taxes.

                                      -1-

<PAGE>   2

2.    REPRESENTATIONS AND WARRANTIES

2.1   The Proponent represents and warrants that all factual matters
      contained in the Proposal and all material submitted in support
      are true and accurate, and that all estimates, forecasts and other related
      matters involving judgement were prepared in good faith and to the best
      of its ability, skill and judgement.

3.    CONDUCT OF PROJECT

3.1   The Proponent shall carry out the Project promptly, diligently and in a
      professional manner and in accordance with the terms and conditions of
      this Agreement.

3.2   The Proponent shall complete the Project by March 31, 2001.

3.3   The Proponent shall comply with all federal, provincial and municipal
      laws in relation to the Project.

4.    CONTRIBUTIONS

4.1   Notwithstanding any other provision of this Agreement, Canada's liability
      under this Agreement shall not in any circumstances exceed $300,000.

4.2   Subject to the terms and conditions of this Agreement, Canada shall make a
      contribution to the Proponent towards the Eligible Costs of the Project in
      accordance with Article 5 and Schedule B.

4.3   In order to be eligible to receive a full contribution as described
      herein, the Proponent must submit its final claim for payment on or before
      April 10, 2001.

4.4   Canada may reduce its contribution by such an amount as the Minister may
      decide if the Proponent receives contributions or payments in respect of
      the Project covered by this Agreement in addition to, or from sources
      other than, those named in its Proposal.

5.    METHOD OF PAYMENT

5.1   Subject to Article 5.2 following receipt of a claim, acceptable to the
      Minister, for payment of Eligible Costs paid by the Proponent, accompanied
      by copies of invoices, vouchers, and any other documents that the Minister
      may require, Canada shall pay its contribution towards the Eligible Costs
      of the Project.

5.2   Canada shall withold 10% from any payment under Article 5.1 until:

     (a)   the Project has been completed to the satisfaction of the Minister;

     (b)   a final report documenting the completion of the Project has been
           received and approved by the Minister; and

     (c)   the Minister has approved a final statement of Eligible Costs paid
           in respect of the Project.

5.3   The Proponent shall submit claims for payment at least on a quarterly
      basis and not more frequently than on a monthly basis.

6.    REPAYMENT OF CONTRIBUTION

6.1   The Proponent shall pay to Canada two percent (2%) of the Revenue
      received by the Proponent.

6.2   Notwithstanding any other provision of this Agreement, Article 6.1 shall
      remain in effect for a period of 15 years or until Canada has received
      $300,000 from any Revenue received by the Proponent, whichever occurs
      first.

6.3   The Proponent shall submit Revenue reports and payments to Canada as
      described in Schedule C for the period set out in Article 6.2.

6.4   The Proponent agrees that all considerations to be received by the
      Proponent in respect of the licensing, selling, marketing or
      commercialization of the Intellectual Property shall be established
      in a bona fide arm's length transaction between parties.

                                      -2-
<PAGE>   3

7.    ACCOUNTS AND AUDIT

7.1   Prior to the Completion Date of the Project and for three years after the
      period described in Article 6.2, the Proponent shall;

     (a)   keep proper books, accounts and records of its Revenue and any
           contributions received and expense incurred and paid in connection
           with the Project and shall keep its invoices, receipts and vouchers
           relating thereto;

      (b)  keep proper and accurate records relating to the environmental impact
           (if any) of the Project; and

      (c)  on demand, make available to the Minister such books, accounts,
           records, invoices, receipts and vouchers referred to above and permit
           the Minister to examine and audit and take copies and extract from
           such documents.

7.2    If any discrepancy is identified between the amounts paid by Canada
       and the amounts actually payable under this Agreement, the
       appropriate adjustments shall be promptly made between the parties.
       If there has been an overpayment by Canada, the amount of the overpayment
       shall constitute a debt due to Canada and may be so recovered.

8.     INTELLECTUAL PROPERTY

8.1    Subject to Articles 8.2, 8.3 and 12.1, title to all Intellectual
       Property shall be vested in the Proponent.

8.2    The Proponent hereby grants to Canada a non-exclusive, royalty-free
       licence in perpetuity to use or sublicense the use of any Intellectual
       Property for any purpose, which licence Canada may not exercise until
       three years after the Completion Date and then only if in the Minister's
       sole opinion the Proponent has failed to take reasonable steps to develop
       and market in Canada the products, processes or services to which the
       Intellectual Property relates.

8.3    The Proponent shall supply to Canada copies of all reports,
       documents and publications arising out of the performance of the
       Project; and the right to the copyright in all such reports,
       documents and publications shall be vested in Canada which hereby
       grants to the Proponent a non-exclusive, royalty-free licence to
       copy and publish the material provided that Canada's financial
       support is prominently acknowledged in any publication.

8.4    The Proponent shall ensure that any moral rights in the reports,
       documents and publications arising out of the performance of the
       Project are irrevocably waived in favour of Canada.

8.5    Except with the written consent of the Minister, the Proponent shall
       not license the Intellectual Property to any government other than the
       Government of Canada or to any person, corporation, partnership or
       business for the purpose of manufacturing outside Canada the products or
       processes resulting from the Project, and shall place the same
       restrictions on any authorized licensee.

8.6    If the Proponent elects not to retain ownership of or use any
       Intellectual Property, the Proponent shall notify the Minister of the
       election and shall, if the Minister so requires, assign and transfer the
       Intellectual Property to Canada, whereupon Canada will grant the
       Proponent a non-exclusive, royalty-free licence to use the Intellectual
       Property solely for internal purposes, if so requested by the Proponent.

9.     INDEMINTY

9.1    The Proponent shall idemnify and save harmless Canada and its Ministers,
       officers, employees and agents from and against any and all claims,
       damages, loss, costs and expenses which they or any of them may at any
       time incur or suffer as a result of or arising out of any injury to
       persons (including injuries resulting in death) or loss of or damage to
       property which may be alleged to be caused by or suffered as a result of
       the carrying out of the Project or any part thereof, except to the extent
       caused by a breach of duty of Canada or its Ministers, officers,
       employees or agents.

9.2    The Proponent shall idemnify and save harmless Canada and its Ministers,
       officers, employees and agents from and against any and all claims,
       damages, loss, costs and expenses which they or any of them may at any
       time incur or suffer as a result arising out of any claim, demand or
       action for the infringement or alleged infringement of any patent,
       registered industrial design, copyright or other intangible property
       based upon the use thereof by the Proponent or upon the use of the
       Intellectual Property by Canada in accordance with the terms of this
       Agreement.

9.3    The Proponent shall indemnify and save harmless Canada and its Ministers,
       officers, employees and agents from and against any and all claims,
       damages, loss, costs and expenses which they or any of them

                                      -3-
<PAGE>   4

       may at any time incur or suffer as a result of or arising out
       of any claim, demand or action made by a third party against them
       or any of them based upon Canadas capacity as a provider of
       financial assistance under this Agreement, including without
       limitation, any claim in respect of materials or services provided
       by a third party to the Proponent or to a subcontractor of the
       Proponent.

10.    ACCESS

10.1   The Proponent shall ensure that the Minister has access during
       normal working hours to any premises or place where the Project is
       being carried out for the purposes of inspecting and assessing the
       progress of the Project and all matters pertaining thereto.

11.    REPORTS

11.1   The Proponent shall submit Project reports satisfactory to the
       Minister in accordance with the provisions of Schedule C or as
       otherwise requested by the Minister.

12.    DEFAULT

12.1   If, in the opinion of the Minister, there has been a
       misrepresentation or a breach of warranty under Article 2, or the
       Proponent fails to proceed diligently with the Project, or is
       otherwise in default in carrying out any of the terms, conditions,
       covenants, or obligations of this Agreement, or if the Proponent
       becomes bankrupt or insolvent, or has a receiving order made
       against it (either under the Bankruptcy and Insolvency Act or
       otherwise), or a receiver is appointed, or the Proponent makes an
       assignment for the benefit of creditors, or if an Order is made or
       a Resolution passed for the winding up of the Proponent, or if the
       Proponent takes the benefit of any statute for the time being in
       force relating to bankrupt or insolvent debtors, the Minister may,
       by giving notice in writing to the Proponent, exercise any or all
       of the following remedies:

       (a)    terminate the whole or any part of this Agreement;

       (b)    terminate the obligation on the part of Canada to pay any
              monies in respect of the Project, including monies due or
              accruing due;

       (c)    direct the Proponent to repay forthwith all or any part of
              monies paid by Canada pursuant to this Agreement and that
              amount is a debt due to Canada and may be so recovered;

       (d)    request the Proponent to assign all rights in the
              Intellectual Property and the Proponent shall, if so
              requested, do so; and

       (e)    request the Proponent to transfer to Canada title to all or
              any of the equipment and supplies purchased by the
              Proponent to carry out the Project and funded by Canada
              under this Agreement, and the Proponent shall, if so
              requested, do so.

12.2   In the event of a termination of this Agreement by the Minister
       under Article 12.1, Canada may, in the discretion of the Minister,
       pay to the Proponent Canada's share of the Eligible Costs of the
       Project completed to the date of termination.

13.    SALE OF PROPERTY

13.1   If, prior to the Completion Date of the Project, the Proponent
       sells, leases, or otherwise disposes of any property other than
       Intellectual Property, where the cost of the property is part of
       the Eligible Costs under the Project to which Canada has
       contributed under this Agreement, the Proponent shall immediately
       notify the Minister in writing of the disposition and, if the
       Minister so requires, the Proponent shall share with Canada the
       proceeds of the disposition in the same ratio as that of Canada's
       contribution to the purchase of the property, except that Canada's
       share shall not exceed its contribution under this Agreement.

                               - 4 -

<PAGE>   5

      14.    SUBCONTRACTS AND CANADIAN CONTENT

      14.1   Except as provided in the Proposal, the Proponent shall not
             subcontract all or any part of the Project funded by Canada unless
             the Proponent has obtained the prior written consent of the
             Minister. Every subcontract entered into by the Proponent shall
             provide that the subcontractor shall comply with the terms and
             conditions of this Agreement which are applicable to the
             subcontract.

      14.2   Canadian goods and services shall be used in carrying out the
             Project to the full extent to which they are procurable,
             competitive and allow for the expeditious performance of the
             Project.

      15.    ACKNOWLEDGEMENT

      15.1   The Proponent will acknowledge the financial support of Canada in
             all public information produced as part of the Project.

      16.    NOTICES

      16.1   The claims for payment, requests, notices, and information
             referred to in this Agreement shall be sent in writing or by any
             method of telecommunication and, unless notice to the contrary is
             given, shall be addressed to the party concerned at the following
             address:

               TO CANADA:

                      Natural Resources Canada
                      580 Booth Street, 13th Floor
                      Ottawa, Ontario
                      K1A 0E4

                      ATTENTION:    DR. VESNA SCEPANOVIC
                                    RESEARCH ADVISOR, HYDROGEN & FUEL CELLS

                      TELEPHONE:    (613)  996-6228
                      FACSIMILE:    (613)  996-9416
                      E-MAIL:       VScepan@NRCAN.gc.ca

               TO THE PROPONENT:

                      Hydrogenics Corporation
                      180 Geary Avenue
                      Toronto, Ontario
                      M6H 2B9

                      ATTENTION:    MR. JOE CARGNELLI
                                    DIRECTOR & VICE-PRESIDENT ENGINEERING

                      TELEPHONE:    (416)   535-8657
                      FACSIMILE:    (416)   535-2147
                      E-MAIL:       h2_genx@pathcom.com

      16.2   Notices, requests and documents are deemed to have been received,
             if sent by registered mail, when the postal receipt is
             acknowledged by the other party; by telegram, when transmitted by
             the carrier; by telex or facsimile, when transmitted and receipt
             is confirmed; and by messenger or specialized courier agency, when
             delivered.

      17.    LEGAL RELATIONSHIP

      17.1   Nothing contained in this Agreement shall create the relationship
             of principal and agent, employer and employee, partnership or
             joint venture between the parties.

      17.2   The Proponent shall not make any representation that the Proponent
             is an agent of Canada and shall ensure that the members of the
             Proponent do not make any representation that could reasonably
             lead any member of the public to believe that the Proponent or its
             members or contractors are agents of Canada.

      18.    TIME OF ESSENCE

      18.1   Time is of the essence of this Agreement.

                                     - 5 -
<PAGE>   6

      19.    MEMBERS OF THE HOUSE OF COMMONS

      19.1   No Member of the House of Commons shall be admitted to any share
             or part of this Agreement or to any benefit to arise therefrom.

      20.    CONFLICT OF INTEREST

      20.1   It is a term of this Agreement that no individual, for whom the
             post-employment provisions of the Conflict of Interest and
             Post-Employment Code for Public Office Holders or the Conflict of
             Interest and Post-Employment Code for the Public Service apply,
             shall derive a direct benefit from this Agreement unless that
             individual is in compliance with the applicable post-employment
             provisions.

      21.    FUNDS

      21.1   The Proponent shall not make any direct or indirect reference to
             this Agreement for the purpose of raising funds without the prior
             written approval of the Minister.

      22.    ASSIGNMENT

      22.1   This Agreement shall not be assigned in whole or in part by the
             Proponent without the prior written consent of the Minister and
             any assignment made without that consent is void and of no effect.

      22.2   Where an assignment of this Agreement is made pursuant to Article
             22.1, such assignment shall not relieve the Proponent of any
             obligation under this Agreement or impose any liability upon
             Canada.

      23.    DISPUTE RESOLUTION

      23.1   The parties agree to negotiate all disputes arising from this
             Agreement in good faith after receiving written notification of
             the existence of a dispute from any party.

      23.2   If a dispute arising out of this Agreement cannot be settled
             amicably through negotiation, then the parties agree that either
             party may submit the dispute to mediation as administered by the
             Arbitration and Mediation Institute of Canada Inc. upon written
             notice to the other party. The cost of mediation shall be borne
             equally by the parties.

      24.    GOVERNING LAW

      24.1   This Agreement shall be interpreted in accordance with the laws in
             force in the Province of Ontario.

      25.    AMENDMENTS

      25.1   No amendment of this Agreement nor waiver of any of the terms and
             provisions shall be deemed valid unless effected by a written
             amendment signed by the parties.

      26.    ENTIRE AGREEMENT

      26.1   This Agreement constitutes the entire Agreement between the
             parties with respect to the subject matter of this Agreement and
             supersedes all previous negotiations, communications, and other
             agreements, whether written or verbal, between the parties.

      27.    SUCCESSORS AND ASSIGNS

      27.1   This Agreement shall enure to the benefit of and be binding on the
             parties and their respective representatives, successors and
             assigns.

                                     - 6 -
<PAGE>   7

      IN WITNESS WHEREOF this Agreement has been executed on behalf of HER
MAJESTY THE QUEEN IN RIGHT OF CANADA by an officer duly authorized by the
Minister of Natural Resources and on behalf of the PROPONENT, by an officer
duly authorized in that behalf.

<TABLE>
<CAPTION>

                                        HER MAJESTY THE QUEEN IN RIGHT OF CANADA

<S>                                  <C>
June 9/99                                      [SIG]
------------------                      ----------------------------------------
   Date                                 for N.R. Beck, Chief
                                        Transportation Energy Technologies
                                        CETC/Energy Technology Branch
                                        Department of Natural Resources

                                        HYDROGENICS CORPORATION INCORPORATED

June 7/99                                      /s/ BOYD JOSEPH TAYLOR
------------------                      ----------------------------------------
  Date                                  Boyd Joseph Taylor, Principal and Director
                                        Hydrogenics Corporation Incorporated
</TABLE>

                                     - 7 -

<PAGE>   8
                                   SCHEDULE A

                               STATEMENT OF WORK

BACKGROUND

Although not commercially available, regenerative PEM Fuel Cells / Electrolysers
are increasingly attracting commercial and research interests because of the
weight and size reduction achievable when compared to two segregated systems. A
further cost reduction is expected when mass-produced, automotive grade MEA-s
(Membrane Electrode Assembly) becomes available by 2003, benefiting both the PEM
electrolyser and the fuel cell economics.

OBJECTIVE/PURPOSE:

The objective of this project is to develop a monolithic appliance capable of
acting reversibly as an electrolyser or a fuel cell, using Proton Exchange
Membrane PEM technology.

DESCRIPTION/SCOPE

Milestones and Deliverables

        FY 1999/00
1. Design and assembly of a 100W early development model of a monolithic PEM
electrolyser / fuel cell system, including:
        - a proof-of-concept fuel cell stack / electrolyser system with
reversible / regenerative capability;
        - a microprocessor-based controller, providing self-attended Supervisory
Control and Data Acquisition (SCADA).

        FY 2000/01
2. Demonstration of the system in both reversible modes for a total of 25
cycles.

Tasks

Task 1. Design, assemble and test a single-cell for testing / optimization

Task 2. Design a 100W Regenerative PEM fuel cell / electrolyser stack (REFC)

Task 3. Construct a working prototype of the regenerative power source which
        will include the following major components:

              a) one or two fuel cell stacks delivering a total of 12 volts and
              having a maximum current rating sufficient to achieve the power
              rating of at least 100W;

              b) a self-attending micro-controller for the generator which will:

                     - monitor the temperature, voltages and supply and delivery
                     pressure for the system and activate solenoids, relays or
                     valves accordingly to sustain and optimize operations;

                     - consume minimal parasitic power from the generator, or
                     from a battery (or a second stack) when one stack operates
                     in the electrolyser mode;

                     - be adaptable through the software changes.

Task 4. Test and demonstrate the REFC Advanced Development Model

                                     - 8 -
<PAGE>   9

                                   SCHEDULE B

                                 ELIGIBLE COSTS

The Proponent shall be reimbursed for Eligible Costs paid following successful
completion of Project requirements. Canada shall pay an amount equal to the
lesser of the dollar or percentage amount of the Eligible Costs of the Project
as indicated below. Eligible Costs shall be approved in accordance with Treasury
Board Guidelines associated with the execution of the various Tasks as described
in Schedule A. The reimbursable Provincial Sales Tax and the Goods and Services
Tax costs must be net of any tax rebate to which the Proponent is entitled.

TOTAL ELIGIBLE COSTS                            $680,565

<TABLE>
<CAPTION>
Contributors:                           $                       %
-------------

<S>                                    <C>                     <C>
CANADA*                                 300,000                 44.1

PROPONENT                               357,465                 52.5

VIKING TOOL CO.                          23,100                  3.4
</TABLE>

*Canada's contribution will be $150,000 in FY 1999/00 and $150,000 in FY
2000/01.

ELIGIBLE COSTS:

1.     Salaries at competitive rates.

2.     Materials for the project.

3.     Travel expenses under the Treasury Board Guidelines.

4.     Other expenses related to the Project with the Minister's approval.

NON-ELIGIBLE COSTS:

1) Property Taxes

2) Purchase of Land

                                     - 9 -
<PAGE>   10

                                   SCHEDULE C

                                    REPORTS

1.1    TECHNICAL REPORTS

       The Proponent shall prepare Quarterly Reports on the Tasks listed in
       Schedule A. In addition, the Proponent shall prepare a Draft Final Report
       of the Project which shall be delivered to Canada on or before April 1,
       2001. The Proponent shall make appropriate changes to the Draft Final
       Report as required and deliver the Final Report on or before May 30,
       2001. All reports shall be to the satisfaction of the Minister.

1.2    TECHNICAL MEETINGS

       The Proponent shall hold two Technical Review Meetings to discuss the
       progress on the Project. The dates for these meetings shall be chosen in
       consultation with the Minister's representative and shall be held on or
       before October 31, 1999 and on or before October 31, 2000.

1.3    REVENUE REPORTS AND PAYMENTS

       The Proponent shall provide to the Minister not later than 30 days after
       the end of September in each calendar year, for the period of the payment
       obligation described in Article 6.2 of this Agreement, a complete and
       accurate report (including nil reports) of any Revenue received by the
       Proponent and shall include any payments due to Canada. The reports
       shall:

       (a)    contain a statement of the Revenue received by the Proponent;

       (b)    include a computation of any share of the Revenue, if any, due
              and payable to Canada; and

       (c)    be certified as correct by the Treasurer or some other senior
              officer of the Proponent.

                                     - 10 -

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