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Conditions of Contribution for NRC-IRAP

Contribution Agreements to Firms
OBLIGATIONS OF THE FIRM

Clause 1
During the life of the Contribution Agreement, the Firm must demonstrate, to the satisfaction of
NRC, acceptable performance of the Work, and the capability of continuing to perform the Work.
The Firm must permit NRC to inspect the facilities used by the Firm in the performance of the
Work and must agree to discuss the Work with NRC representatives.

Clause 2
In its performance of the Work, the Firm must maintain adequate environmental protection
measures, including those for bio-hazardous materials, to satisfy the requirements of all relevant
regulatory bodies.

Clause 3
Option 1: This clause will appear in the Contribution Agreement if the Work does NOT
involve human or animal experimentation.
The Firm warrants that no human or animal experimentation will be involved in the Work. If
during the course of the Work, human or animal trials will be part of the Work, the Firm must
immediately notify NRC and obtain NRC approval before receiving further NRC funding and
before commencing experimentation.
Failure to obtain NRC approval before commencing experimentation shall be considered a
breach and treated according to Clauses 23-24.

Option 2: This clause will appear in the Contribution Agreement if the Work involves
human or animal experimentation.

3a)If the Work involves human subjects, the related activities must be reviewed by the NRC's
Research Ethics Board - Ottawa (O-REB) and the written approval of NRC must be obtained
by the Firm before the Work is approved for NRC funding. This means that no part of the
Work can begin before the human trials part of it has been reviewed and approved.

However, if the proposed experimentation on or contact with human subjects will only take
place twelve (12) or more months after the Work commences and the Firm is unable to
completely define the protocol as it relates to human subjects at the time that the Work
would start, then, as an exception to the policy stated above, the Work can be approved for
NRC funding with a Go/No-Go review point specified in the Contribution Agreement. At this
review point, a required deliverable will be the protocol for human trials acceptable to O-
REB and to NRC. The written approval of NRC must be obtained before further NRC
funding for any part of the Work can be provided. In order to allow for adequate time to
review the protocol, the first submission of the documents for O-REB review must be made
a minimum of four (4) months prior to the anticipated date of commencement of the human
subjects research or contact with the human subjects.

Before commencing experimentation or contact with human subjects, the Firm must rectify
any conditions judged unacceptable by O-REB to the satisfaction of that Board and of NRC.

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 Furthermore, the Firm will report adverse events, which occur during the human trials to O-
REB within two (2) days for serious adverse events and within seven (7) days for all others.
The Firm will also provide status reports and a final report on the outcome of the human
trials as specified in Clause 5 of the Conditions of Contribution.

NRC approval of human trials is for a maximum of twelve (12) months. For continuation of
NRC support, the Firm must submit an annual report to NRC for review by O-REB and must
obtain NRC approval.

If the Firm engages in experimentation or contact with human subjects in the context of the
Work without O-REB approval, this shall be considered a breach and treated according to
Clauses 23-24.

3b) If the Work involves experiments with animals, the Firm must obtain, before any animal
experiments begin, the written approval of protocols by a local Canadian Council for Animal
Care (CCAC) accredited Animal Care Committee (ACC) operating in accordance with the
NRC Terms of Reference for Local ACCs. Before commencing experimentation, the Firm
must rectify any conditions judged unacceptable by the ACC to the satisfaction of that
Committee.

In the case of experiments involving the highest level of invasiveness (Category E), approval
must also be obtained from the NRC Animal Care Policy Committee (ACPC).

The Firm will provide status reports and a final report on the outcome of the experiments
with animals as specified in Clause 5 of the Conditions of Contribution.

If the Firm engages in animal experimentation in the context of the Work without approval by
a local CCAC accredited ACC, this shall be considered a breach and treated according to
Clauses 23-24.

Clause 4
Any significant change made to the Statement of Work or the Basis of Payment must be agreed
to in writing by both the Firm and NRC. The Firms failure to comply with this clause may result
in NRC taking any of the following action:

a) Withhold payment on any outstanding claims;

b) Reduce the amount of the contribution;
c) Treat this as an overpayment as provided in Clause 34; and/or
d) Treat this as a breach according to Clauses 23-24.

Clause 5
The Firm must submit reports and claims to NRC as specified in the Basis of Payment.
Payment of claims is contingent upon receipt of those reports.

Clause 6
The Firm must also declare any amounts, which it owes to the federal government under
legislation or contractual agreements and recognizes that amounts due to the Firm may be set-
off against amounts owing to the Crown.

Clause 7
7. The Firm must maintain adequate records related to the performance of the Work under the
Contribution Agreement. Upon reasonable notice, the Firm must make such records
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 available to authorized representatives of NRC for inspection, auditing or copying and must
permit authorized representatives of NRC to have access to the Firms facilities and
personnel for the purpose of inspection and interviewing. NRC reserves the right to conduct
any type of audits deemed appropriate. The rights granted in this paragraph shall survive the
termination of the Contribution Agreement for a period of three (3) years.

7.1 Adequate Financial Records and Accounts must be kept in accordance with Canadian
Generally Accepted Accounting Principles (GAAP). These records must be maintained with
proper segregation and identification of the costs associated with the Work supported under
the Contribution Agreement (project accounting system). Required records, when relevant to
the appropriate payment category, shall include the following: time records, payroll ledger,
T4s, cancelled cheques, invoices, receipts, general ledger, financial statements, tax returns,
claims for SR&ED tax credits and any other proof of payment.

7.2 The Firm must ensure that the invoice(s) it receives from a Contractor clearly identifies the
NRC project number and/or title, the period of the invoice and the costs claimed. The Firm
may add this information if it is not indicated on the invoice. In addition, the Contractor will
need to breakdown his invoice(s) to segregate labour costs from his other project costs.
Required evidence for an independent Contractor shall be: invoice(s) and cancelled
cheque(s). Required evidence for a contracted employee shall be either: 1) invoice(s) and
cancelled cheque(s); or 2) time records, a T4A and cancelled cheque(s). The independent
Contractor or the contracted employee cannot be on the Firms payroll and cannot be
claimed under the salary item.

7.3 As the employer, the Firm shall maintain appropriate records and accounts of employees
salary payments and payroll deductions thereof to the proper authorities. Required evidence
shall be: T4s, payroll ledger, cancelled cheques and time records.

Clause 8
The Firm shall give written notice to NRC if:
a) there are significant changes in ownership or control of the Firm;
b) there are any changes to the Firms name or address. The Firm must provide the
appropriate legal documents for the name change.

Clause 9
The Firm must notify NRC of any changes in the business relationship with any of its
Contractors which may cause such relationship to cease being at arms length (the Related
Party) as defined in the Income Tax Act of Canada. In such cases, costs must be charged as
Costs Incurred by the Related Party and not the "charge-out" rate. Related Party status will be
confirmed at NRCs discretion.

Clause 10
The Firm shall not assign the Contribution Agreement in whole or in part to a third party without
the prior written consent of NRC.

Clause 11
The Firm warrants and covenants 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 with the
view of obtaining the Contribution Agreement;

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 b) it has not directly or indirectly paid or offered to pay and will not directly or indirectly pay to
any person (other than to an employee of the Firm acting in the normal course of the
employees duties) a commission or contingency fee dependent upon the signing of the
Contribution Agreement by both parties;
c) no member of the House of Commons shall be admitted to any share or part of the
Contribution Agreement or to any related benefits; and
d) no current or former public office holder or public servant who is not in compliance with the
Conflict of Interest and Post-employment Code for Public Office Holders or the Values and
Ethics Code for the Public Service shall derive a direct benefit from the Contribution
Agreement.

Clause 12
The Firm acknowledges that it is a requirement of the Contribution Agreement that any person
lobbying on its behalf is registered pursuant to the Lobbyists Registration Act.

Clause 13
The Firm must not use the name of the National Research Council Canada (NRC) in any
manner that may imply endorsement or approval of a product, process or business without the
express written consent of NRC. The Firm must obtain the written consent of the NRC-IRAP
Director prior to including the NRC name in any promotional materials, including press releases
and advertisements.

Clause 14
The Firm shall indemnify NRC in respect of any claim against NRC by a third party resulting
directly or indirectly from the Firms performance of the Work or use by the Firm or a third party
of the results arising from the Work funded under the Contribution 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 incorrect data supplied, advice given or opinions
expressed in relation to the Work.

Clause 15
If the Firm receives financial assistance for the Work from any level of government, the Firm
must immediately notify NRC in writing. In such cases, NRC reserves the right to reduce the
amount of its contribution.
FIRMS BENEFITS TO CANADA OBLIGATIONS

Clause 16
The Firm acknowledges that the Contribution Agreement has been entered into by NRC in order
to achieve NRCs Benefits to Canada objectives.

Clause 17
The Firm must obtain prior written consent from NRC if, during the life of the Contribution
Agreement, it intends to do part of the Work outside of Canada. This would be approved if the
Firm could demonstrate to NRCs satisfaction that no suitable Canadian collaborator was
available.

Clause 18
The Firm shall normally own the Intellectual Property (IP) produced during the Work, and be
responsible for protecting it. This could include, without limitation, requiring third parties to sign
confidentiality agreements before disclosure by the Firm of trade secrets. If some or all of the IP
is owned by another person or organization, or if some or all of the IP will be owned by another

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person or organization collaborating with the Firm, the Firm must enter into an agreement
which, in the opinion of NRC, gives the Firm a license to use such IP.

Clause 19
The Firm shall endeavor to exploit the results of the Work to the public benefit of Canada.
During the life of the Contribution Agreement and within five (5) years after the end of the
Contribution Agreement, the Firm shall obtain NRC's prior written consent to:

a) enter into third party agreements including, without limitation, changes in ownership or
control of the Firm, that would limit the Firm's control of the IP;
b) manufacture or cause the manufacture outside of Canada of any products, services or
processes that incorporate the IP;
c) sell or otherwise dispose of the IP to any person or organization outside of Canada; and
d) license the IP for the purpose of manufacturing or producing outside of Canada of any
products or services that incorporate the IP.

Clause 20
Except as limited by Clause 19 (b) above, the Firm may disclose or license the IP, including,
without limitation, software, when necessary to permit generally accepted use by authorized
customers or users.

Clause 21
During the life of the Contribution Agreement and for five (5) years after the end of the
Contribution Agreement, the Firm shall obtain NRC's prior written consent to undertake any
action that would adversely impact its ability to fulfill its Benefits to Canada obligations.

Clause 22
The Firm must maintain data, as specified by NRC, relating to its performance and the Benefits
to Canada results traceable to the Contribution Agreement for at least the first five (5) years
after the end of the Contribution Agreement, and must provide NRC with such data upon
request.
BREACHES BY THE FIRM

Clause 23
The following constitute breaches of the Contribution Agreement:

a) Misrepresentation or the submission of false information to NRC;

b) Failure by the Firm to disclose relevant information which may have a negative impact on
the Firms financial position; or
c) Failure of the Firm to satisfy any of the warranties, terms, conditions, requirements or
obligations under the Contribution Agreement.

Clause 24
Consequences of a breach may be one or more of the following:

a) Suspension or termination by NRC of the Contribution Agreement;

b) Suspension or termination of any other Contribution Agreement that the Firm may have with
NRC;
c) Refusal by NRC to provide future assistance to the Firm;
d) Immediate repayment to NRC of all or part of the amount paid by NRC to the Firm under the
Contribution Agreement. Such amount shall bear interest, as outlined in Clause 35; and/or
e) Any other action permitted by law.
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 Clause 25
In the event of a breach, NRC shall inform the Firm by written notice (Notice of Breach").

Clause 26
Unless the Firm can demonstrate to NRCs satisfaction, within fourteen (14) days of the date of
the Notice of Breach, that either the breach has not occurred or that the breach has been fully
remedied, the Firm shall be fully bound by and comply with the terms of the Notice of Breach.

Clause 27
Failure on the part of NRC to act on any breach does not constitute a waiver of NRC's right to
act on that breach or any other breach.

Clause 28
Clauses 23 to 27 of the Contribution Agreement shall survive the expiration or termination of the
Contribution Agreement.
GENERAL TERMS AND CONDITIONS

Clause 29
NRC is not liable for any loans, capital leases or other obligations that the Firm may have
contracted in relation to the obligations for which the NRC Financial Contribution is provided.

Clause 30
Financial assistance is conditional upon there being an appropriation by Parliament and
Treasury Board approved terms and conditions for the Industrial Research Assistance Program.
NRC may cancel or reduce its financial assistance in the event that departmental funding levels
are changed by Parliament.

Clause 31
Any notice required under the Contribution Agreement shall be sent to the address stated at the
beginning of the Contribution Agreement or the last address provided by the Firm to NRC.

Clause 32
Nothing in the Contribution Agreement shall be construed as creating a partnership, joint
venture or agency relationship between NRC and the Firm.

Clause 33
Protection from third-party access to confidential business information supplied to NRC is
provided by the federal Access to Information Act. 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.

Clause 34
If the NRC Financial Contribution exceeds its original agreed percentage as identified in the
Basis of Payment, NRC's total contribution may be reduced and the resulting reduction shall
constitute an overpayment by NRC to the Firm. If NRC reimburses the Firm for costs claimed
which are not covered in the Basis of Payment, the amount of the costs shall constitute an
overpayment by NRC to the Firm.

Any overpayments or erroneous payments made by NRC to the Firm are debts due to the
Crown. Such amount shall bear interest, as outlined in Clause 35. If the firm has received an
overpayment or erroneous payment as a result of fraud, falsification of documents or willful
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misrepresentation, interest may be calculated from the time the overpayments or the erroneous
payment was made by NRC under the Contribution Agreement.

Clause 35
The Firm shall pay interest on any overdue amounts owed to NRC under the Contribution
Agreement. Interest will be calculated at the rate of one (1) per cent per month compounded
monthly (annual rate of 12.68%) commencing thirty (30) days after the date of the invoice for the
outstanding amounts. Since NRC's interest rate is periodically revised from time to time to
reflect the market rate and the federal government policy on this subject matter, NRC reserves
the right to revise this interest rate upon two (2) months' notice. The Firm shall repay an
administrative charge of twenty-five (25) dollars for any cheque that is refused payment by the
Firm's bank or financial institution.

Clause 36
NRC may terminate the Contribution Agreement immediately if the Firm ceases operations,
winds up, enters into receivership, becomes insolvent, or bankrupt. NRC will seek to recover
any debts due to the Crown related to the Firms obligations under the Contribution Agreement
that existed prior to its termination.

Clause 37
The Firm shall have no obligation to NRC to perform the Work after notice of termination is
given by NRC. NRC shall not reimburse costs incurred subsequent to the termination date, or
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.
NEGOCIATED EXIT

Clause 38
The Firm acknowledges that NRCs Benefits to Canada objectives will not be realized should the
Firm decide not to fulfill its obligations under the Contribution Agreement. The Firm shall comply
with the following in order to be relieved of its obligations under the Contribution Agreement:

a) Inform NRC in writing of its desire to be relieved of its obligations under the Contribution
Agreement;
b) Pay to NRC an amount (herein called the Exit Payment) to be determined by NRC, which
will be no more than two (2) times the amount paid by NRC to the Firm; and
c) In order for the Exit Payment to be reduced by NRC to an amount less than the maximum
amount described above, the Firm must demonstrate to NRCs satisfaction that there will be
residual Benefits to Canada related to the Work. In these cases, NRC may also request that
the Firm comply with certain conditions.

Clause 39
The Firm shall not be released from any of its obligations under the Contribution Agreement until
it complies with the requirements and conditions issued according to Clause 38. The Firm
accepts the present requirements to be a fair and reasonable equivalent for the performance of
the Contribution Agreement and execution of all the Firms obligations under the Contribution
Agreement.

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