Document:

<PAGE>   1

                                                                   EXHIBIT 10.16

                     INDUSTRIAL RESEARCH ASSISTANCE PROGRAM
                             CONTRIBUTION AGREEMENT

                                                             Project No.: 330430
THIS AGREEMENT IS MADE IN DUPLICATE -

BETWEEN:                        National Research Council Canada
                                Industrial Research Assistance Program
                                1101-200 Town Centre Court
                                Scarborough, Ontario
                                M1P 4X8

                                (herein called the NRC)

AND:                            HYDROGENICS CORPORATION
                                180 Geary Avenue
                                Toronto, Ontario
                                Canada
                                M6H 2B9

                                (herein called the Firm)

1.      This agreement comes into effect on the 1 st. of November 1998 and
        terminates on the 3 rd. of May, 1999.

2.      The NRC agrees to contribute up to a maximum of $39,375 for research and
        development undertaken by the Firm as described in the attached
        STATEMENT OF WORK (SW) and in accordance with the attached BASIS OF
        PAYMENT (BP) and CONDITIONS OF CONTRIBUTION (CC).

3.      The Firm agrees to undertake the work described in the STATEMENT OF WORK
        and understands and accepts all the CONDITIONS OF CONTRIBUTION.

4.      This agreement shall become null and void if not signed and returned to
        NRC within thirty (30) days of the signature date of the authorized
        officer of the NRC.

National Research Council Canada

[SIG]                                           98/11/17
----------------                        ----------------------------
P.C.M Simmons                            Date

HYDROGENICS CORPORATION

/s/ PIERRE RIVARD                               24 NOV 98
----------------                        ----------------------------
Pierre Rivard                            Date
President

<PAGE>   2

Statement of Work                                                       SW-1

                                                              Project No.:330430

Project Title

Development Of An Advanced, Modular Client / Server Fuel Cell Automated Test
Station Mainframe and Satellite

Objective(s)

-       A new means of measuring internal resistance of stacks or fuel cells in
real-time that can be developed and implemented in this new generation of test
benches. Setup time is expected to be reduced from five minutes to five seconds.
-       A level of redundancy that can be reasonably and safely achieved between
the satellite stations and the mainframe. The aim is for 40% redundancy be
reduced between the sateliite stations and the main frame.
-       Developing the mainframe/satellite umbilical connection to provide
sufficient bandwidth to achieve economical centralization of functions. The goal
is accommodate 30 channels per stack for up to six stacks, while still providing
safety reponses with a two second acquisition cycle.
-       Develop the speed of response to be within safe limits; To determine
what speed optimization will be required or is possible. The goal is that all
stacks and channels be attended within 3 seconds. i.e., data acquired and safety
reponses.

Plan of Work

Start, Nov. 1 st, 1998

1.      Conceptual Design-- Mechanical, $19,500 Ends on the Dec 2 nd, Design of
process and instrumentation diagram, Sizing of components, materials sourcing.
One mech., one elec., one chem. engineer.
2.      Conceptual Design-- Electrical, $16,000, Ends Dec. 8 th, Wiring Diagrams
and physical layout, Two elec., one mech., engineers.
3.      Conceptual Design-- Software, $43,000, Dec 22 nd. Coding and documenting
Bridgeview interface, Two elec., one mech., one Chem.engineers.
4.      Satellite Module Assembly, $39,000 Ends Jan 29 th. Assembly of piping
censors actuators, and wiring. Two elec., one mech., one Chem.engineers.
5.      Mainframe Assembly, $18,000 Ends Feb 19 th. Assembly of data actuation
box and umbilical code gateway, computer mounted. Two elec., one mech., one
Chem.engineers..
6.      System Integration, $12,000, Ends March 8 th, Link of assemblies
integration of assembly subcomponents, Two elec., one mech., one
Chem.engineers..
7.      Functional Testing, $7,000, Ends March 26 th Power up pressure and
electrical checks, and proofing of design. Two elec., one mech., one
Chem.engineers..
8.      Final Report/Design Iterations, $3,000, Ends April 16th. Documentation,
operating protocol, revisions, Two elec., one mech., one Chem.engineers.
<PAGE>   3

BASIS OF PAYMENT                                                     BP-1

--------------------------------------------------------------------------------

                                                             PROJECT NO.: 330430

(NOTE: THE GOODS AND SERVICES TAX (GST) WILL NOT BE REIMBURSED BY NRC AND THE
FIRM MUST DELETE ANY GST COSTS FROM INVOICES PRIOR TO SUBMISSION TO NRC FOR
PAYMENT.)

1.0   NRC agrees to reimburse the Firm for work performed on the project as
      follows:

      -      Thirty nine (39%) of actual salary costs (excluding benefits) paid
             for 4 senior engineers, estimated to be $39,375.(Maximum)

1.1   The Firm agrees to invoice NRC Monthly in arrears for costs incurred.

1.2   The Firm agrees to provide proof of costs incurred with each claim.

1.3   The Firm agrees to provide NRC the reports on the dates outlined below.
      The Firm acknowledges that failure to comply with these requests will
      cause the payments of current and subsequent claims to be delayed or
      stopped.

1.4   NRC may agree to the reallocation of funds between the above payment
      categories provided that the NRC is advised in advance of the reasons for
      the proposed changes and that the NRC is in agreement for the need of such
      changes.

1.5   Any changes to personnel supported by NRC or any changes to their
      salaries must be discussed and approved by the NRC prior to invoicing.

2.0   Sources of Funding

<TABLE>
<S>                   <C>
      NRC-IRAP          $39,375 Maximum (25%)
      Tax Credit        $41,344 Estimated (26%)
      Company           $76,781 Estimated (48%)

           Total        $157,500
</TABLE>

      THE FIRM ACKNOWLEDGES THAT ANY OTHER GOVERNMENT FUNDING IS ENTIRELY A
      MATTER BETWEEN ITSELF AND THE DIFFERENT LEVEL OF GOVERNMENT, AND NRC
      CANNOT GIVE ANY ASSURANCE ABOUT THE AMOUNT.

3.0   Summary of NRC's Support by Fiscal Year

      1998/99 and 1999/00 (Nov. 01,1998 to May 3, 1999

<TABLE>
<S>                   <C>
      98/99 IRAP -      $ 33,075 Max.
      99/00 IRAP -      $ 6,300 Max
      Total             $ 39,375
</TABLE>

      CLAIMS FOR ALLOWABLE PROJECT COSTS INCURRED IN A GIVEN FISCAL YEAR (APRIL
      1 TO MARCH 31) MUST BE SUBMITTED BY APRIL OF THE FOLLOWING FISCAL YEAR.
      THE MAXIMUM AMOUNT PER FISCAL YEAR CANNOT BE EXCEEDED WITHOUT PRIOR
      APPROVAL OF NRC.

4.0   Reports and Meetings Schedule

      Brief monthly progress reports are requested. Final report is due May 3rd,
      1999

<PAGE>   4

BASIS OF PAYMENT                                                     BP-2

--------------------------------------------------------------------------------

5.0   Special Conditions

      None

<PAGE>   5

NATIONAL RESEARCH COUNCIL     CONSEIL NATIONAL DE RECHERCHES         CC-1 of 2
CANADA                         CANADA

--------------------------------------------------------------------------------

                           CONDITIONS OF CONTRIBUTION

This Contribution Agreement is conditional upon the Firm's adherence to all
conditions set out below. A breach of any of the following conditions, or a
submission to NRC of false or misleading information, is grounds for suspension
or immediate termination of NRC's financial assistance to the project, in
addition to any other action permitted by law. NRC will notify the Firm, in
writing, of any such suspension or termination. Failure on the part of NRC to
act on any breach does not constitute a waiver of NRC'S right to act on that or
any other breach of the following conditions.

1.    The Firm must undertake the project as described in the Statement of Work.
      Any significant change proposed in relation to anything that is written in
      the Statement of Work or the Basis of Payment, requires an amendment to
      this agreement signed by both the Firm and NRC.

2.    The Firm must submit reports and claims to NRC as specified in the Basis
      of Payment. Payment of claims is contingent upon receipt of reports.

3.    The Firm must notify NRC in writing if it seeks or receives financial
      assistance for the project from a government at any level, beyond that
      disclosed in the Firm's proposal for the project. In such cases, NRC
      reserves the right to reduce the amount of its contribution to the
      project.

4.    The Firm must maintain adequate records of the research conducted for the
      project and of direct and indirect costs incurred on the project. Upon
      reasonable written notice by NRC, the Firm must make such records
      available to authorized representatives of NRC for inspection, auditing,
      or copying, and must permit authorized representatives of NRC to have
      access to the Firm's facilities and personnel for the purposes of
      inspection and interviewing. The Firm must obtain an audit of the project
      from an external auditor upon the request of NRC. The auditor is required
      to follow "Instructions for External Auditors" which will be supplied by
      NRC. This clause 4 remains in effect for two years after the termination
      of the project.

5.    The Firm must maintain data relating to the economic benefits traceable to
      the project for at least the first five years of their commercial
      significance to the Firm, and provide NRC with such data upon request.

6     The Firm must demonstrate, to the satisfaction of NRC, acceptable
      performance of the project, and the capability of continuing the project.
      The Firm must permit NRC to inspect the facilities used by the Firm in
      connection with the project, and to discuss the project with
      IRAP-supported personnel.

7.    The Firm must contribute its agreed portion of the total project costs. If
      the Firm has not contributed its share as agreed in the Basis of Payment,
      or if the funds were not spent as intended, NRC shall be entitled to claim
      a refund up to the percentage by which the Firm's contribution has fallen
      short of the agreed amount.

8.    The Firm must make reasonable efforts to protect intellectual property
      arising from the project. If a patent appears possible but the Firm does
      not want to apply for it, the Firm must offer to assign ownership of the
      invention to NRC, without charge. If information arising in the project
      has commercial utility and is protected by copyright or confidentiality,
      but will not be used by the Firm, the Firm must discuss with NRC the
      possibility of transferring it to NRC or to a third party.

<PAGE>   6

NATIONAL RESEARCH COUNCIL     CONSEIL NATIONAL DE RECHERCHES        CC-2 of 2
CANADA                         CANADA

--------------------------------------------------------------------------------

9.    The Firm must obtain prior written consent from NRC if, at any time during
      the project or within five years after the end of the project, the Firm
      intends:
      (a)    to enter into third party agreements that would limit the Firm's
             control of the results derived from the project,
      (b)    to do part of the project outside Canada,
      (c)    to manufacture using the results of the project outside Canada, or
      (d)    to sell, assign, transfer, or otherwise dispose of any rights to
             intellectual property arising out of the project to any person or
             organization outside Canada, or to any government other than the
             Government of Canada.

10.   The Firm must indicate in writing, or by a clear label, the
      confidentiality of any specific information which it wishes to be treated
      as confidential by NRC. Protection from third-party access to confidential
      business information supplied to NRC is provided by the federal Access to
      Information Act.

11.   No person will receive a direct benefit from this contract if that person
      is subject to, and not in compliance with, a Conflict of Interest and
      Post-Employment Code, either the one for Public Office Holders, for the
      Public Service, or for NRC Employees. (NOTE: post-employment rules mainly
      affect persons in the NRC "MG" category, the public service categories
      "Senior Manager" and above, ministerial staff, and Governor in Council
      appointees.)

12.   The Firm must maintain environmental protection measures in relation to
      the project that satisfy the requirement of all relevant regulatory
      bodies. The Firm must comply with protocols that have been established in
      relation to aspects of the project involving human subjects, animals, and
      biohazardous material.

13.   This agreement terminates immediately if the Firm ceases operations,
      assigns its rights under this agreement, enters into receivership, or
      becomes insolvent or bankrupt.

14.   The Firm must indemnify NRC in respect of any claim against NRC by a third
      party resulting directly or indirectly from the project. The Firm must
      not take action against NRC for failure or delay in performance caused by
      circumstances beyond NRC's reasonable control, nor for incorrectness of
      data supplied, advice given, or opinions expressed in relation to the
      project.

15.   Either party may terminate this agreement for any reason, by giving the
      other party notice in writing. A notice given by NRC must allow at least
      two months before the termination. The Firm shall have no obligation to
      NRC to work on the project after notice is given or received, and NRC
      shall not reimburse costs incurred subsequent to the termination date, nor
      any costs incurred at a rate greater than the typical rate before the
      notice was given. Any termination is without prejudice to the rights and
      obligations of the parties which have accrued before termination, and the
      obligations to protect intellectual property and submit reports continue.

9 May 1995                                                                 [END]
<PAGE>   7
[NRC-CNRC LETTERHEAD]

                                                                 [NRC-CNRC LOGO]
                                                                 AMENDMENT NO: 1

March 29, 1999

Mr. Pierre Rivard P.Eng.
Hydrogenics Corporation
180 Geary Ave
Toronto, On
Canada M6H 2B9

RDA Contribution Agreement # 330430:

Subject:

Replacement of designated emplyee by two additional persons due to departure of
one employee

The above-referenced Contribution Agreement is hereby amended as follows:

In regard to item 1.0, where the present wording is as follows;

"Thirty nine (39%) of actual salary costs (excluding benefits) paid for 4 senior
       engineers, estimated to be $39,375.(Maximum)";

shall be amended to the following "Thirty nine (39%) of actual salary costs
       (excluding benefits) paid for 4 senior engineers and one scientist,
       estimated to be $39,375.(Maximum)"

All other terms and conditions remain unchanged.

The amended version of the Contribution Agreement is in effect starting Jan 1,
1999.

Please have a duly authorized officer of your Firm sign both copies of this
amendment and return one copy to:

National Research Council Canada
200 Town Centre Court, Suite 1101
Scarborough, Ontario
M1P 4X8 Attn: P. Hendricks

[NRC-CNRC LETTERHEAD]                                            [NRC-CNRC LOGO]

<PAGE>   8

                                                                          Page 2

This amendment shall become null and void if not signed and returned to NRC
within thirty days of the date of this letter.

National Research Council

[SIG]                                                         March 29/99
-------------------------                               ------------------------
                                                           Date

HYDROGENICS CORPORATiON

/s/ PIERRE RIVARD                                             March 29/99
-------------------------                               ------------------------
Pierre Rivard                                              Date
P.Eng.<PAGE>   1

                                                                  EXHIBIT 10.17

                    Industrial Research Assistance Program
                       Repayable Contribution Agreement
                                                            Project No.: 367907

THIS AGREEMENT IS MADE IN DUPLICATE-

BETWEEN:                       National Research Council Canada
                               Industrial Research Assistance Program
                               1101- 200 Town Centre Court
                               Scarborough, Ontario
                               M1P 4X8
                               (herein called the NRC)

                               HYDROGENICS CORP.
                               100 CASTER AVENUE
                               WOODBRIDGE, ONTARIO
                               L4L 5Y9
                               (herein called the Firm)

1.    This Agreement comes into effect on December 01, 1999 and terminates on
      December 31, 2010 unless extended in accordance with the Basis of Payment
      and Repayment.

2.    The NRC agrees to contribute up to a maximum of $475,000 for the
      performance of work undertaken by the Firm as described in the attached
      Statement of Work (SW) (hereafter referred to as "the Work") and in
      accordance with the BASIS OF PAYMENT AND REPAYMENT (BP) and CONDITIONS OF
      CONTRIBUTION (CC).

3.    The Firm agrees to undertake the Work and understands and accepts all the
      CONDITIONS OF CONTRIBUTION.

4.    Subject to the CONDITIONS OF CONTRIBUTION (CC), the Firm agrees to pay to
      NRC the amounts required to be paid by the Firm under the BASIS OF
      PAYMENT AND REPAYMENT (BP) plus any applicable administrative costs and
      interest penalties specified therein.

5.    This Agreement shall become null and void if not signed and returned to
      NRC within thirty (30) days of the signature date of the authorized
      officer of the NRC.

      NATIONAL RESEARCH COUNCIL CANADA

      /s/ ROY J. CREW                               30/NOV 99
      --------------------------------           -------------------------------
      Roy J. Crew                                Date
      Regional Director Ontario

      HYDROGENICS CORPORATION

         /s/ P. RIVARD                             DEC 1/99
      --------------------------------           -------------------------------
      P. Rivard, President                       Date

<PAGE>   2

STATEMENT OF WORK                                                          SW-1

-------------------------------------------------------------------------------

                                                            PROJECT NO.: 367907

PROJECT TITLE: FUEL CELL AUTOMATED TEST STATION FOR RESIDENTIAL FUEL CELLS

DESCRIPTION OF THE WORK

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
ACTIVITY                      ESTIMATED                            WORK
--------                                                           -----
                              COMPLETION
-------------------------------------------------------------------------------------------------------------
<S>                         <C>              <C>
Start                           2 Dec 99      Milestone
-------------------------------------------------------------------------------------------------------------
Beta Conceptual                28 Jan 00      Process & Instrumentation Diagram P&ID, parameterization,
Design - Mechanical                           design of 3D bulk and clearance/positioning, cabinetry, specifying
                                              components, detailing
-------------------------------------------------------------------------------------------------------------
Beta Conceptual                 8 Mar 00      Design of electrical wiring diagram, physical wiring diagram,
Design - Electrical                           terminal box physical layout diagram
-------------------------------------------------------------------------------------------------------------
Beta Conceptual                31 Mar 00      Coding main and sub-routines in BridgeVIEW(TM), Man-Machine
Design - Software                             Interface.
-------------------------------------------------------------------------------------------------------------
Beta Satellite Cart             3 Jan 00      Assembly of piping, sensors, actuators, valves, relays, components
Assembly                                      and wiring
-------------------------------------------------------------------------------------------------------------
Beta Mainframe Assembly       12 July 00      Assembly of wiring to/from computer and data acquisition
                                              circuitry, mounting of terminal box, umbilical cord bulkheads and
                                              gateways, connectors, UPS
-------------------------------------------------------------------------------------------------------------
Beta System Integration       26 July 00      Linking of mainframe to satellite, and of satellite to fuel
                                              cell stack / balance of plant
-------------------------------------------------------------------------------------------------------------
Beta Functional Testing        10 Aug 00      Power up, troubleshooting, leak check, continuity check
-------------------------------------------------------------------------------------------------------------
Beta Delivery to OPT          15 Sept 00      Milestone
-------------------------------------------------------------------------------------------------------------
Beta On-Going                   1 Dec 01      Testing under dynamic load conditions, diurnal load cycles,
Testing at OPT                                seasonal load cycles, co-generation evaluations
-------------------------------------------------------------------------------------------------------------
Alpha Assembly                 20 Dec 00      Based on Beta model and on initial feedback from OPT testing
-------------------------------------------------------------------------------------------------------------
Alpha Design                   15 Jan 00      Continuous improvement of the pre-commercial design.
Iterations at
HYDROGENICS
-------------------------------------------------------------------------------------------------------------
Alpha On-Going                  1 Dec 01      Testing under dynamic load conditions, fuel cell and reformer
Testing at                                    evaluation, and durability/robustness issues.
HYDROGENICS
-------------------------------------------------------------------------------------------------------------
Final Report /                  3 Oct 01      Photographing, diagramming, charting, screen captures, operating
Documentation                                 protocol
-------------------------------------------------------------------------------------------------------------
End of Project                  1 Dec 01      Milestone
-------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   3

STATEMENT OF WORK                                                          SW-2
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SUMMARY OF TOTAL COST OF THE WORK
---------------------------------
<S>                                        <C>
 Salaries                                     $       612,280
 Services and Contracts                       $       155,200
 Material and Supplies                        $       621,500
 Consumed Value of Capital Items              $        60,000
 Overheads                                    $        51,000
                                              -------------
 Total                                        $     1,499,980
</TABLE>

<PAGE>   4

Basis of Payment and Repayment                                            BP-1
-------------------------------------------------------------------------------

PROJECT NO.: 367907

(NOTE: THE GOODS AND SERVICES TAX (GST), HARMONIZED SALES TAX (HST), OR QUEBEC
SALES TAX (QST) WILL NOT NORMALLY BE REIMBURSED BY NRC AND THE FIRM MUST DELETE
ANY GST, HST, OR OST COSTS FROM INVOICES PRIOR TO SUBMISSION TO NRC FOR
PAYMENT. HOWEVER, IF THE FIRM HAS PAID GST, HST, OR QST IN RELATION TO
ALLOWABLE COSTS INCURRED (AS DEFINED BELOW) AND CAN CLEARLY DEMONSTRATE TO
NRC'S SATISFACTION THAT IT IS NOT ENTITLED TO ANY INPUT TAX CREDITS OR OTHER
FORM OF REBATES FOR THESE TAXES, THEN NRC WILL CONSIDER THOSE TAXES PAID AS AN
ALLOWABLE COST. )

1.0     Terms of Payment

1.1  NRC AGREES TO REIMBURSE THE FIRM EIGHTY PERCENT (80%) OF THEIR TOTAL
     ALLOWABLE COSTS INCURRED IN THE DIRECT PERFORMANCE OF THE WORK UP TO A
     MAXIMUM OF $475,000. ALLOWABLE COSTS UNDER THIS AGREEMENT ARE: SALARIES
     (EXCLUDING BENEFITS).

Note:   Overhead costs exceeding 65% of the salary costs directly incurred by
        the Firm in the performance of the Work will not be considered by NRC
        as costs of the Work without its prior written consent.

Note:   NRC's maximum contribution will be the lesser of 33% of the total costs
        incurred in the performance of the Work or $ 475,000.

1.2     The Firm agrees to invoice NRC, MONTHLY, in arrears for costs incurred
        and as specified in clause 1.1 above.

1.3     The Firm agrees to provide NRC the reports on the dates outlined below.
        The Firm acknowledges that failure to comply with these requests will
        cause the payments of current and subsequent claims to be delayed or
        stopped.

        a)   A summary of the actual total costs incurred in the performance of
             the Work from the start of this Agreement and a summary of the
             total forecasted expenditures to complete the Work must be
             submitted on June 30, 2000, June 30, 2001 and June 30, 2002.

        b)   Firm's unaudited annual financial statements within one hundred
             and twenty (120) days of the Firm's fiscal year end until
             repayments commence. The first financial statements must be
             submitted on April 1, 2000. Audited revenue or financial
             statements should be submitted annually within one hundred and
             twenty (120) days of the Firm's fiscal year end, during the
             repayment period, and until the end of this agreement. The first
             audited revenue or financial statement is due on April 30, 2006.

        c)   A final technical report is to be submitted on or before November
             30, 2002.

<PAGE>   5

Basis of Payment and Repayment                                            BP-2
-------------------------------------------------------------------------------

2.0     Sources of Funding for the Work

2.1     The Firm agrees that the following table fairly represents the
        anticipated sources of funds for the Work.

<TABLE>
<S>                                     <C>            <C>
This contribution                         $  475,000      32%
Other government assistance               $  275,000      18%
Private sector funding                    $  749,980      50%
                                          ----------     ----
            Total Cost of the Work        $1,499,980     100%
</TABLE>

2.2     THE FIRM ACKNOWLEDGES THAT SECURING ANY OTHER FURIUING FOR THE WORK IS
        ENTIRELY A MATTER BETWEEN IT AND THE OTHER SOURCES OF FUNDS AND THAT
        NRC CANNOT GIVE ANY ASSURANCE ABOUT ELIGIBILITY, SUITABILITY, TERMS, OR
        AMOUNTS.

3.0     Summary of NRC's Support by Fiscal Year

        The following table summarizes the maximum contribution to be made by
        NRC in each given NRC fiscal year (April 01 to March 31).

<TABLE>
<S>                                                                  <C>
        Fiscal Year 1999/2000 (December 01, 1999 to March 31, 2000)   -- Up to: $139,700
        Fiscal Year 2000/2001 (April 01, 2000 to March 31, 2001)      -- Up to: $253,000
        Fiscal Year 2001/2002 (April 01, 2001 to March 31, 2002)      -- Up to: $ 72,300
        Fiscal Year 2002/2003 (April 01, 2002 to November 30, 2002)   -- Up to: $ 10,000
</TABLE>

        Claims for payment, in accordance with clause 1.1, for project costs
        incurred in a given fiscal year must be submitted by April 10 of the
        following fiscal year. The maximum amount per fiscal year cannot be
        exceeded without prior written approval of NRC.

        No unclaimed portion of these maximum annual amounts will be added to
        subsequent fiscal year limits without the express written consent of
        NRC.

4.0     Supporting Documentation

        a)      The Firm agrees to provide proofs of costs incurred when
                requested by NRC.
        b)      Each claim is to be accompanied by a brief report, in a
                manner specified by NRC, of the Work completed during the
                claim period.
        c)      Payment of claims for payment by NRC is contingent upon receipt
                of any required reports.

<PAGE>   6

Basis of Payment and Repayment                                             BP-3
-------------------------------------------------------------------------------

5.0    Repayment

5.1    Beginning on April 01, 2005 and at the beginning of every QUARTER
       thereafter up to and including January 01, 2008 the Firm shall pay to
       NRC:

       One point three percent (1.3%) of the Firm's gross revenues for the
       QUARTER, preceding the repayment. Gross revenues are defined as all
       revenues, receipts, monies and other considerations of whatever nature
       earned or received by the Firm, whether in cash, or by way of benefit,
       advantage, or concession, without deductions of any nature, net of any
       returns or discounts actually credited and any sales, excise, ad valorem
       or similar taxes paid but without deduction for bad debts or doubtful
       accounts, as determined in accordance with generally accepted accounting
       principles, applied on a consistent basis.

       If by January 01, 2008, the total amount paid to NRC is less than the NRC
       contribution to the Firm, the Firm will continue to make payments to NRC
       under the same terms until the earlier of the full repayment of the NRC
       contribution or ten years after the start of the repayment period. If at
       any time during the life of this Agreement the total amount paid to NRC
       pursuant to this article equals or exceeds $712,500 [150% of the
       contribution amount], the Firm shall cease to have any further obligation
       to make payments to NRC pursuant to this article.

5.2    The Firm agrees to provide to NRC a report of gross revenues for the
       repayment period defined in 5.1, above. This repayment and report are
       due within 60 days from the end of the applicable period.

5.3    The Firm agrees to provide to NRC within one hundred and twenty (120)
       days of the end of each Firm fiscal year, an audited report of gross
       revenues for that fiscal year, until the end of the contract.

5.4    The Firm agrees that in its revenue reports to NRC, all transactions with
       related persons (as that term is defined in the Income Tax Act) will be
       reported, treated and valued at the greater of the typical recent price
       for sales by the Firm, or by any company related to the Firm, of the
       product or service in question to unrelated third parties or of the fair
       market value (defined as the highest price obtained for a similar product
       in a preceding calendar year).

5.5    The Firm agrees that if it licenses the production and sale of any of its
       products or services to a third party, that it will pay to NRC an amount
       equal to the amount it would have paid to NRC had it made the sales
       itself in the repayment period in question.

5.6    Interest at one percent (1%) per month compounded monthly (annual rate of
       12.68%), must be paid on overdue amounts. An amount is overdue if unpaid
       30 days after the repayment is due according to article 5.0. NRC may
       revise that rate upon 2 months' notice. The Firm shall pay an
       administrative charge of $25 for any cheque that is refused payment by
       the Firm's bank or financial institutions.

<PAGE>   7

Basis of Payment and Repayment                                             BP-4
-------------------------------------------------------------------------------

5.7    The amount paid by the Firm to NRC pursuant to article 5.1 does not
       include interest charges or penalties or any other amounts paid or owed
       by the Firm to NRC whether related to this Agreement or not.

5.8    Payments must be made by cheque payable to "Receiver General - National
       Research Council of Canada" and addressed to:

                        Finance Branch,
                        National Research Council,
                        1200 Montreal Road,
                        Ottawa, Ontario, K1A OR6

6.0    Special Conditions

<PAGE>   8

[NATIONAL RESEARCH COUNCIL CANADA LOGO]

        NATIONAL RESEARCH       CONSELL NATIONAL DE
        COUNCIL CANADA          RECHERCHES CANADA                CC-1 of 3
-------------------------------------------------------------------------------

                           CONDITIONS OF CONTRIBUTION

This Agreement is conditional upon the Firm's adherence to all conditions set
out below. A breach of any of the following conditions, or a submission to NRC
of false or misleading information, is grounds for suspension or immediate
termination of NRC's financial assistance for the Work, in addition to any other
action permitted by law. NRC will notify the Firm, in writing, of any such
suspension or termination. Termination of this Agreement due to breach of any of
these conditions by the Firm will render the total amount of all contribution
payments made by NRC to the Firm pursuant to this Agreement immediately due and
payable to the Receiver General -- National Research Council of Canada. Failure
on the part of NRC to act on any breach does not constitute a waiver of NRC's
right to act on that or any other breach of the following conditions.

1.     The Firm must undertake the Work. Any significant change proposed in
       relation to anything that is written in the Statement of Work or the
       Basis of Payment and Repayment requires an amendment to this Agreement
       signed by both the Firm and NRC.

2.     The Firm must abide by all of the provisions of the Basis of Payment and
       Repayment and the Conditions of Contribution of this Agreement. Failure
       to do so constitutes a breach of the conditions of this Agreement.

3.     The Firm must notify NRC in writing if it seeks or receives financial
       assistance for the Work from any level of government, beyond that
       indicated in the Basis of Payment and Repayment. In such cases, NRC
       reserves the right to reduce the amount of its contribution.

4.     The Firm must maintain adequate records and accounts related to its
       performance of the Work, in accordance with generally accepted accounting
       practices. The Firm must make such records available to authorized
       representatives of NRC for inspection, auditing, or copying and must
       permit authorized representatives of NRC to have access to the Firm's
       facilities and personnel for the purpose of inspection and interviewing.
       This clause 4 remains in effect for three years after the end of the
       repayment period of this Agreement.

5.     The Firm must maintain data relating to the economic and job creation
       benefits traceable to this Agreement for its duration and must provide
       NRC with such data upon request.

6.     The Firm must demonstrate, to the satisfaction of NRC, acceptable
       performance of the Work, and the capability of continuing the Work. The
       Firm must permit NRC to inspect the facilities used by the Firm in the
       performance of the Work, and to discuss the Work with NRC
       representatives.

7.     The Firm must contribute its agreed portion of the total cost of the
       Work. If it is found upon the completion of the Work that the Firm has
       not contributed its agreed share of the total cost of the Work, as
       mentioned in the Basis of Payment and Repayment, NRC may require the Firm
       to repay NRC the overpayment of the of the contribution within 30 days.
       The remaining part of the contribution will be repaid to NRC in
       accordance with the Basis of Payment and Repayment.

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8.     The Firm must make reasonable efforts to protect and exploit the results
       arising from the Work supported under this Agreement in a manner
       appropriate to the achievement of the economic and job-creation benefits
       outlined in the Firm's proposal to NRC and must report to NRC on its
       efforts as requested by NRC. If, based on these reports, NRC is of the
       opinion that the Firm is not exploiting the results in a manner conducive
       to the achievement of the benefits in the Firm's proposal, NRC may
       require the Firm to license the technology developed under this Agreement
       to a third party of NRC's choosing upon reasonable commercial terms and
       conditions, failing which the Firm shall grant NRC a non-exclusive,
       perpetual, royalty-free license to use the results and associated
       intellectual property in Canada for any purpose, which license shall
       include the right to grant sublicenses.

9.     The Firm agrees to obtain prior written consent from NRC if, at any time
       during the life of this Agreement or within five years after the end of
       this Agreement, the Firm intends:

       (a)    to enter into third party agreements that would limit the Firm's
              control of the results derived from the Work,

       (b)    to do part of the Work outside Canada,

       (c)    to manufacture using the results of the Work outside Canada,

       (d)    to license, sell, assign, or otherwise grant any right in or
              transfer title to intellectual property arising out of the Work to
              any person or organization outside Canada, or to any government
              other than the Government of Canada

       (e)    to undertake any action that would adversely impact its ability to
              achieve the economic benefits and benefits to Canada outlined in
              its proposal to NRC or that would materially affect its ability to
              meet its repayment obligations described in the Basis of Payment
              and Repayment.

10.    The Firm must indicate in writing, or by a clear label, the
       confidentiality of any specific information which it wishes to be treated
       as confidential by NRC. Protection from third party access to
       confidential business information supplied to NRC is provided by the
       federal Access to Information Act.

11.    No Member of the House of Commons shall be admitted to any share or part
       of this Agreement or to any benefit to arise therefrom. No person will
       receive a direct benefit from this contract if that person is subject to,
       and not in compliance with, a Conflict of Interest and Post-Employment
       Code, either the one for Public Office Holders, for the Public Service,
       or for NRC Employees. (NOTE: post-employment rules mainly affect persons
       in the NRC "MG" category, the federal public service categories "Senior
       Manager" and above, ministerial staff, and Governor in Council
       appointees.)

12.    The Firm warrants that:

       a)     it has not, nor has any person on its behalf, offered or promised
              to any official or employee of Her Majesty the Queen in right of
              Canada any bribe, gift or other inducement for or with the view to
              obtaining this Agreement; and

       b)     it has not employed anyone on its behalf to solicit or secure this
              Agreement for a commission, contingency fee or other
              consideration.

13.    Nothing in this Agreement shall be construed as creating a partnership,
       joint venture or agency relationship between NRC and the Firm.

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14.    In its performance of the Work, the Firm must maintain adequate
       environmental protection measures, including those for biohazardous
       materials, to satisfy the requirement of all relevant regulatory bodies.
       If the Work directly involves human subjects or animals, the Firm must
       meet the conditions set, by one of NRC's Research Ethics Boards or by a
       Local Animal Care Committee (ACC) operating in accordance with the IRAP
       Terms of Reference for Local ACCs.

15.    This Agreement terminates immediately if the Firm ceases operations,
       assigns its rights under this Agreement, enters into receivership, or
       becomes insolvent or bankrupt. Upon such termination, the total amount of
       all payments made by NRC to the Firm under this Agreement become a debt
       due to the Receiver General -- National Research Council of Canada.

16.    The Firm shall indemnify NRC in respect of any claim against NRC by a
       third party resulting directly or indirectly from the Firm's performance
       of the Work or use by the Firm or a third party of the results arising
       from the Work funded under this Agreement. The Firm shall not take action
       against NRC for failure or delay in performance caused by circumstances
       beyond NRC's reasonable control or for incorrectness of data supplied,
       advice given, or opinions expressed in relation to the Work.

17.    Either party may terminate this Agreement for any reason, by giving the
       other party at least sixty days' notice in writing. The Firm shall have
       no obligation to NRC to perform the Work after notice is given or
       received, and NRC shall not reimburse costs incurred subsequent to the
       termination date, nor any costs incurred at a rate greater than the
       typical rate before the notice was given. Within the termination notice
       period given by a party, either party may request the other party to
       consider an amendment to the amount and terms of repayment. If within the
       termination notice period the parties do not enter into negotiations or
       do not agree to an amendment, the amount and manner of repayment
       specified in the Agreement will apply. Any termination is without
       prejudice to the rights and obligations of the parties that have accrued
       before termination.

                                     [END]

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