EXHIBIT 10.16

CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.

ADDITIONAL SPECIAL PROVISIONS

I. COST SHARE CONTRIBUTIONS

It is the intention of the Government and the Participant to share the allowable
and allocable costs of performance of the work during this Agreement as set
forth herein.

The Government's contribution and support for this Agreement during the project
period September 30, 1997 through March 31, 2000 will be $11,178,423.00. The
Participant will contribute $3,726,141.00 toward the aforementioned budget
period. It is the intention of the Government and the Participant to share the
total allowable and allocable costs of performance during the project period on
a 75.0 percent (Government) and 25.0 percent (Participant) based on total cost
of the project, see Block No. 16a.(6) of the Notice of Financial Assistance
Award, face page. It is understood by the parties that the DOE share of this
budget period is $11,178,423.00 and no additional Federal funding will be
provided notwithstanding the total cost of the project at completion. The cost
sharing formula zero percent (Government) and 100 percent (Participant) shall
apply to any increase in the Total Approved Budget.

2. INDIRECT COST APPLIED TO TEAMING PARTNERS' COSTS

Notwithstanding applicable cost principals, and allowable and allocable costs
for performance of the work under this Agreement, indirect costs charged by the
Participant to subaward(s) (Teaming Partners) shall not exceed 5% of the
subaward total costs. Any indirect costs above the ceiling restriction shall be
unallowable and shall be absorbed by the Applicant without reimbursement by the
Government under any other Government contract, financial assistance or any
subcontract under any other Government prime contract or financial assistance.

3. FEE

No fee shall be paid to the Recipient or any subaward for performance under this
Agreement.

4. ADEQUATE RECOGNITION

It is agreed that the Participant shall obtain adequate recognition of the
United States support for the technology developed under this cooperative
agreement in any contract, licenses, or other agreements which involve the
transfer to foreign entities of the fuel cell technology developed in whole or
in part at Government expense. The Participant agrees to notify and obtain
concurrence from the Assistant Secretary for Energy Efficiency and Renewable
Energy or designee in writing of the adequate recognition obtained prior to
entering into any such contracts, licenses, or other agreements. The Awardee
shall not enter into any such contracts, licenses, or other agreements without
the concurrence of the Assistant Secretary for Energy Efficiency and Renewable
Energy or designee. The determination of whether to grant such concurrence shall
be at the sole discretion of the Assistant Secretary for Energy Efficiency and
Renewable Energy or designee and is not subject to litigation under 10 CFR
(S)600.22, Disputes

and Appeals. The determination shall be in writing and shall be furnished to the
Awardee by the Contracting Officer. Examples of such an adequate recognition
could include: (1) a commitment to manufacture in the U.S.A.; (2) a requirement
to reimburse the U.S. Government for its R&D costs; and/or (3) a commitment to
jointly sponsor the R&D program.

5. STATEMENT OF SUBSTANTIAL INVOLVEMENT

The Department of Energy. (Department, DOE) will be substantially involved in
all Tasks of the Statement of Work. The Department will collaborate with the
participant in evaluating, accepting, and achieving the milestones for research
as proposed by the respondent.

The Department will provide technical direction to the overall program, as well
as the individual program elements as it is determined to be necessary and
appropriate by DOE. The Department will participate during the full duration of
the project, and will have continuing rights to conduct ongoing negotiations
with the participant regarding the technical direction of the work conducted
under this Agreement. The Department staff members will attend meetings and
participate in the formation and direction of scope of the key development
activities. The DOE Project Officer, all participate in the development, review
and approval of all proposed statements of work, including subcontractor
statements of work, prior to the execution of any subcontract. The Department
will review technical progress reports and provide input to these reports as
deemed necessary. In addition, the Department will have the right to have
National Laboratories or selected private organizations perform independent
tests and evaluations of the cooperative agreement's deliverables, thus
providing an additional measure of technical progress.

The Department may collaborate with the participant in the allocation of funds
budgeted for this Agreement. Further, as work progresses, funding needs may
change and depending upon availability of funds, the Department may collaborate
with the participant to reallocate funds budgeted between the different programs
and projects.

The Department will thus be actively monitoring all phases of the participant's
research and development activities, including participation in the
participant's reviews of its contractor's activities and review of the
contractor's reports to the participant. The Department will actively
participate in the participant's process of reviewing and approving each phase
of the proposed programs and projects.

The substantial involvement by the Department under this Agreement will remain
in effect for the term of the cooperative agreement award unless otherwise
requested in writing by the Contracting Officer. Moreover, this statement of
substantial involvement by the Department does not increase the Department of
Energy's liability under the Agreement award.

6. TECHNICAL DIRECTION

A. The work to be performed by the Participant under this Cooperative
Agreement is subject to the surveillance and written Technical Direction of a
"DOE Project Officer," identified in block II of the face page. The term
"Technical Direction" is defined to include, without limitation, the following:

1. Directions to the Participant which redirects the work effort, shifts
work emphasis between work areas or tasks, require pursuit of certain lines of
inquiry, fill in details or otherwise provide technical guidance to the
Participant in order to accomplish the tasks and requirements stated in the
Statement of Work as contained in the agreement.

2. Provision of information to the Participant which assists in the
interpretation of drawings, specifications or technical portions of the
Statement of Work as contained in the Agreement.

3. Review and, where required by the Cooperative Agreement, approval of
technical reports, drawings, specifications or technical information to be
delivered by the Participant to DOE under the Cooperative Agreement.

4. The DOE Project Officer shall monitor the Participant's performance with
respect to compliance with the requirements of this Cooperative Agreement.

B. Technical direction and management surveillance shall not impose tasks
or requirements upon the Participant additional to or different from the tasks
and requirements stated in the Statement of Work of this Agreement. The
Technical Direction to be valid:

1. Must be issued in writing consistent with the tasks and requirements
stated in the

Statement of Work of this Agreement; and

2. May not:

a. constitute an assignment of additional work outside the tasks and
requirements stated in the Statement of Work of this Agreement;

b. in any manner cause an increase or decrease in the total estimated
project cost or the time required for project performance;

c. change any of the expressed terms, conditions or specification of the
Cooperative Agreement; or

d. accept non-conforming work.

C. The Participant shall proceed promptly with the performance of Technical
Directions duly issued by the DOE Project Officer in the manner prescribed by
paragraph B. above and which are within his authority under the provisions of
paragraph A. above; provided, however, that the Participant shall immediately
cease the performance of any Technical Direction upon receipt of a written
instruction to that effect from the Contracting Officer.

D. If in the opinion of the Participant any Technical Direction issued by
the DOE Project Officer is within one of the categories as defined in B.2. (a)
through (d) above, the Participant shall not proceed but shall notify the
Contracting Officer in writing within five working days after the receipt of any
such Technical Direction and shall request the Contracting Officer to rescind
such direction or mutually agree to modify the agreement accordingly.

E. The only persons authorized to give Technical Direction to the
Participant under this Agreement are the Contracting Officer and any "DOE
Project Officer" as listed in Block II of the face page. Any action taken by the
Participant in response to any direction given by any person other than the
Contracting Officer or DOE Project Officer shall not be binding upon the
Government.

Intellectual Property Provisions - Assistance

LARGE BUSINESS, STATE AND LOCAL GOVERNMENTS
OR FOREIGN ORGANIZATIONS
(Research, Development or Demonstration)

CLAUSE REFERENCE TITLE PAGE
- ------ --------- ----- ----

01. 48 C.F.R. 52.227-1 Authorization and Consent (JUL 1995), Alternate ii 1

02. 48 C.F.R. 52.227-2 Notice and Assistance Regarding Patent and Copyright 1
Infringement (AUG 1996)
This clause is not applicable if the award is for less
then $100,000.

03. 48 C.F.R. 952.227-9 Refund or Royalties (FEB 1995)

04. 48 C.F.R. 952.227-13 Patent Rights - Acquisition by the Government 1
(FEB 1995)

05. 48 C.F.R. 52.227-14 Rights in Data - General (JUN 1987), with 10
Alternates ii and V, and paragraph (d)(3) as
supplemented by 10 C.F.R. Part 600.27
If this award requires the use or delivery of limited data
And/or restricted computer software, Alternates II and III
are incorporated, unless modified upon recommendation
Of Patent Counsel.

06. 48 C.F.R. 52.227.16 Additional Data Requirements (JUN 1987) 15

07. 48 C.F.R. 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) 16

Attachment 1 (for reference): Patent Rights - Retention
By Contractor (Short Form) (FED 1995);
48 C.F.R. 952.227-11

52.227-1 Authorization and Consent; Alternate ii (APR 1984)

AUTHORIZATION AND CONSENT

(a) The Government authorizes and consents to all use and manufacture of any
invention described in and covered by a United States patent in the performance
of this contract or any subcontract at any tier.

(b) The Contractor agrees to include and require inclusion of, this clause,
suitably modified to identify the parties, in all subcontracts at any tier for
supplies or services (including construction, architect-engineer services, and
materials, supplies, models, samples, and design or testing services expected to
exceed the simplified acquisition threshold)--however, omission of this clause
from any subcontract, including those at or below the simplified acquisition
threshold, does not affect this authorization and consent.

(End of clause)

52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement.

NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996)

(a) The Contractor shall report to the Contracting Officer, promptly and in
reasonable written detail, each notice or claim of patent or copyright
infringement based on the performance of this contract of which the Contractor
has knowledge.

(b) In the event of any claim or suit against the Government on account of any
alleged patent or copyright infringement arising out of the performance of this
contract or out of the use of any supplies furnished or work or services
performed under this contract, the Contractor shall furnish to the Government,
when requested by the Contracting Officer, all evidence and information in
possession of the Contractor pertaining to such suit or claim. Such evidence and
information shall be furnished at the expense of the Government except where the
Contractor has agreed to indemnify the Government.

(c) The Contractor agrees to include, and require inclusion of, this clause in
all subcontracts at any tier for supplies or services (including construction
and architect-engineer subcontracts and those for material, supplies, models,
samples, or design or testing services) expected to exceed the simplified
acquisition threshold at FAR 2.10 1.

(End of clause)

952.227-9 Refund of Royalties

REFUND OF ROYALTIES (FEB 1995)

(a) The contract price includes certain amounts for royalties payable by the
Contractor or subcontractors or both, which amounts have been reported to the
Contracting Officer.

(b) The term "royalties" as used in this clause refers to any costs or charges
in the nature of royalties, license fees, patent or license amortization costs,
or the like, for the use of or for rights in patents and patent applications in
connection with performing this contract or any subcontract hereunder. The term
also includes any costs or charges associated with the access to, use of, or
other right pertaining to data that is represented to be proprietary and is
related to the performance of this contract or the copying of such data or data
that is copyrighted.

(c) The Contractor shall furnish to the Contracting Officer, before final
payment under this contract, a statement of royalties paid or required to be
paid in connection with performing this contract and subcontracts hereunder
together with the reasons.

(d) The Contractor will be compensated for royalties reported under paragraph
(c) of this clause, only to the extent that such royalties were included in the
contract price and are determined by the Contracting Officer to be property
chargeable to the Government and allocable to the contract. To the extent that
any royalties that are included in the contract price are not, in fact, paid by
the Contractor or are determined by the Contracting Officer not to be properly
chargeable to the government and allocable to the contract, the contract price
shall be reduced. Repayment or credit to the Government shall be made as the
Contracting Officer directs. The approval by DOE of any individual payments or
royalties shall not prevent the Government from contesting at any time the
enforceability, validity, scope of, or title to, any patent or the proprietary
nature of data pursuant to which a royalty or other payment is to be or has been
made.

(e) If, at any time within 3 years after final payment under this contract, the
Contractor for any reason is relieved in whole or in part from the payment of
the royalties included in the final contract price as adjusted pursuant to
paragraph (d) of this clause, the Contractor shall promptly notify the
Contracting Officer of that fact and shall reimburse the Government in a
corresponding amount.

(f) The substance of this clause, including, this paragraph (f), shall be
included in any subcontract in which the amount of royalties reported during
negotiation of the subcontract exceeds $250.

(End of clause)

952.227-13 Patent Rights - Acquisition by the Government

PATENT RIGHTS-ACQUISITION BY THE GOVERNMENT (FEB 1995)

(a) Definitions.

"Invention", as used in this clause, means any invention or discovery which is
or may be patentable or otherwise protectable under title 35 of the United
States Code or any novel variety of plant that is or may be protectable under
the Plant Variety Protection Act (7 U.S.C. 232 1, et seq.).

"Practical application", as used in this clause, means to manufacture, in the
case of a composition or product; to practice, in the case of a process or
method; or to operate, in the case of a machine or system; and, in each case,
under such conditions as to establish that the invention is being utilized and
that its benefits are, to the extent permitted by law or Government regulations,
available to the public on reasonable terms.

"Subject invention", as used in this clause, means any invention of the
Contractor conceived or first actually reduced to practice in the course of or
under this contract.

"Patent Counsel", as used in this clause, means the Department of Energy Patent
Counsel assisting the procuring activity.

"DOE patent waiver regulations", as used in this clause, means the Department of
Energy patent waiver regulations at 41 CFR 9-9.109-6 or successor regulations.

"Agency licensing regulations" and "applicable agency licensing regulations", as
used in this clause, mean the Department of Energy patent licensing regulations
at 10 CFR Part 781.

(b) Allocations of principal rights.

(1) Assignment to the Government. The Contractor agrees to assign to the
Government the entire right, title, and interest throughout the world in and to
each subject invention, except to the extent that rights are retained by the
Contractor under subparagraph (b)(2) and paragraph (d) of this clause.

(2) Greater rights determinations.

(1) The contractor, or an employee-inventor after consultation with the
Contractor, may request greater rights than the non-exclusive license and
the foreign patent rights provided in paragraph (d) of this clause on
identified inventions in accordance with the DOE patent waiver regulations.
A request for a determination of whether the Contractor or the employee-
inventor is entitled to acquire such greater rights must be submitted to
the Patent Counsel with a copy to the Contracting Officer at the time of
the first disclosure of the invention pursuant to subparagraph (e)(2) of
this clause, or not later than 8 months thereafter, unless a longer period
is authorized in writing by the

Contracting Officer for good cause shown in writing by the Contractor. Each
determination of greater rights under this contract shall be subject to
paragraph (c) of this clause, unless otherwise provided in the greater
rights determination, and to the reservations and conditions deemed to be
appropriate by the Secretary of Energy or designee.

(ii) Within two (2) months after the filing of a patent application, the
Contractor shall provide the filing date, serial number and title, a copy of the
patent application (including an English-language version if filed in a language
other than English), and, promptly upon issuance of a patent, provide the patent
number and issue date for any subject invention in any country for which the
Contractor has been granted title or the right to file and prosecute on behalf
of the United States by the Department of Energy.

(iii) Not less than thirty (30) days before the expiration of the response
period for any action required by the Patent and Trademark Office, notify the
Patent Counsel of any decision not to continue prosecution of the application.

(iv) Upon request, the Contractor shall furnish the Government an irrevocable
power to inspect and make copies of the patent application file.

With respect to each subject invention to which the Department of Energy
grants the Contractor principal or exclusive rights, the Contractor agrees
as follows:

(ii) The Contractor hereby grants to the Government a nonexclusive,
nontransferable, irrevocable, paid-up license to practice or have practiced each
subject invention throughout the world by or on behalf of the Government of the
United States (including any Government agency).

(ii) The Contractor agrees that with respect to any subject invention in which
DOE has granted it title, DOE has the right in accordance with the procedures in
the DOE patent waiver regulations to require the Contractor, an assignee, or
exclusive licensee of a subject invention to grant a nonexclusive, partially
exclusive, or exclusive license in any field of use to a responsible applicant
or applicants, upon terms that are reasonable under the circumstances, and if
the Contractor, assignee, or exclusive licensee refuses such a request, DOE has
the right to grant such a license itself if it determines that--

(A) Such action is necessary because the Contractor or assignee has not taken,
or is not expected to take within a reasonable time, effective steps to achieve
practical application of the subject invention in such field of use;

(B) Such action is necessary to alleviate health or safety needs which are not
reasonably satisfied by the Contractor, assignee, or their licensees;

(C) Such action is necessary to meet requirements for public use specified by
Federal regulations and such requirements are not reasonably satisfied by the
Contractor, assignee, or licensees; or

(D) Such action is necessary because the agreement required by paragraph (ii) of
this clause has neither been obtained nor waived or because a licensee of the
exclusive right to use or sell any subject invention in the United States is in
breach of such agreement.

(iii) The Contractor agrees to submit on request periodic reports no more
frequently than annually on the utilization of a subject invention or on efforts
at obtaining such utilization of a subject invention or on efforts at obtaining
such utilization that are being made by the Contractor or its licensees or
assignees. Such reports shall include information regarding, the status of
development, date of first commercial sale or use, gross royalties received by
the Contractor, and such other data and information as DOE may reasonably
specify. The Contractor also agrees to provide additional reports as may be
requested by DOE in connection with any march-in proceedings undertaken by that
agency in accordance with subparagraph (c)(1)(ii) of this clause. To the extent
data or information supplied under this section is considered by the Contractor,
its licensee, or assignee to be privileged and confidential and is so marked,
the Department of Energy agrees that, to the extent permitted by law, it will
not disclose such information to persons outside the Government.

(iv) The Contractor agrees, when licensing a subject invention, to arrange to
avoid royalty charges on acquisitions involving Government funds, including
funds derived through a Military Assistance Program of the Government or
otherwise derived through the Government, to refund any amounts received as
royalty charges on a subject invention in acquisitions for, or on behalf of, the
Government, and to provide for such refund in any instrument transferring rights
in the invention to any party.

(v) The Contractor agrees to provide for the Government's paid-up license
pursuant to subparagraph (c)(1)(ii) of this clause in any instrument
transferring rights in a subject invention and to provide for the granting of
licenses as required by subparagraph (c)(1)(ii) of this clause, and for the
reporting of utilization information as required by subparagraph (c)(1)(iii) of
this clause, whenever the instrument transfers principal or exclusive rights in
a subject invention.

(2) Nothing contained in this paragraph (c) shall be deemed to grant to the
Government any rights with respect to any invention other than a subject
invention.

(d) Minimum rights to the Contractor.

(1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free
license in each patent application filed in any country on a subject invention
and any resulting patent in which the Government obtains title, unless the
Contractor fails to disclose the subject invention within the times specified in
subparagraph (e)(2) of this clause. The Contractor's license extends to its
domestic subsidiaries and affiliates, if any, within the corporate structure of
which the

Contractor is a part and includes the right to grant sublicenses of the same
scope to the extent the Contractor was legally obligated to do so at the time
the contract was awarded. The license is transferable only with the approval of
DOE except when transferred to the successor of that part of the Contractor's
business to which the invention pertains.

(2) The Contractor's domestic license may be revoked or modified by DOE to the
extent necessary to achieve expeditious practical application of the subject
invention pursuant to an application for an exclusive license submitted in
accordance with applicable provisions in 37 CFR Part 404 and agency licensing
regulations. This license will not be revoked in that field of use or the
geographical areas in which the Contractor has achieved practical applications
and continues to make the benefits of the invention reasonably accessible to the
public. The license in any foreign country may be revoked or modified at the
discretion of DOE to the extent the Contractor, its licensees or its domestic
subsidiaries or affiliates have failed to achieve practical application in that
foreign country.

(3) Before revocation or modification of the license, DOE will furnish the
Contractor a written notice of its intention to revoke or modify the license,
and the Contractor will be allowed 30 days (or such other time as may be
authorized by DOE for good cause shown by the Contractor) after the notice to
show cause why the license should not be revoked or modified. The Contractor has
the right to appeal, in accordance with applicable agency licensing regulations
and 37 CFR Part 404 concerning the licensing of Government-owned inventions, any
decision concerning the revocation or modification of its license.

(4) The Contractor may request the right to acquire patent rights to a subject
invention in any foreign country where the Government has elected not to secure
such rights, subject to the conditions in subparagraphs (d)(4)(ii) through
(d)(4)(vii) of this clause. Such request must be made in writing to the Patent
Counsel as part of the disclosure required by subparagraph (e)(2) of this
clause, with a copy to the DOE Contracting Officer. DOE approval, if given, will
be based on a determination that this would best serve the national interest.

(ii) The recipient of such rights, when specifically requested by DOE, and three
years after issuance of a foreign patent disclosing the subject invention, shall
furnish DOE a report stating:

(A) The commercial use that is being made, or is intended to be made, of said
invention, and

(B) The steps taken to bring the invention to the point of practical application
or to make the invention available for licensing.

(ii) The Government shall retain at least an irrevocable, nonexclusive, paid-up
license to make, use, and sell the invention throughout the world by or on
behalf of the Government (including any Government agency) and States and
domestic municipal governments, unless the Secretary of Energy or designee
determines that it would not be in the public interest to acquire the license
for the States and domestic municipal governments.

(iii) If noted elsewhere in this contract as a condition of the grant of an
advance waiver of the Government's title to inventions under this contract, or,
if no advance waiver was granted but a waiver of the Government's title to an
identified invention is granted pursuant to subparagraph (b)(2) of this clause
upon a determination by the Secretary of Energy that it is in the Government's
best interest, this license shall include the right of the Government to
sublicense foreign governments pursuant to any existing or future treaty or
agreement with such foreign governments.

(iv) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this
clause, the Secretary of Energy or designee shall have the right to terminate
the foreign patent rights granted in this subparagraph (d)(4) in whole or in
part unless the recipient of such rights demonstrates to the satisfaction of the
Secretary of Energy or designee that effective steps necessary to accomplish
substantial utilization of the invention have been taken or within a reasonable
time will be taken.

(v) Subject to the rights granted in subparagraphs (d)(1), (2), and (3) of this
clause, the Secretary of Energy or designee shall have the right, commencing
four years after foreign patent rights are accorded under this subparagraph
(d)(4), to require the granting of a nonexclusive or partially exclusive license
to a responsible applicant or applicants, upon terms reasonable under the
circumstances, and in appropriate circumstances to terminate said foreign patent
rights in whole or in part, following a hearing upon notice thereof to the
public, upon a petition by an interested person justifying such hearing:

(A) If the Secretary of Energy or designee determines, upon review of such
material as he deems relevant, and after the recipient of such rights or other
interested person has had the opportunity to provide such relevant and material
information as the Secretary or designee may require, that such foreign patent
rights have tended substantially to lessen competition or to result in undue
market concentration in any section of the United States in any line of commerce
to which the technology relates; or

(B) Unless the recipient of such rights demonstrates to the satisfaction of the
Secretary of Energy or designee at such hearing that the recipient has taken
effective steps, or within a reasonable time thereafter is expected to take such
steps, necessary to accomplish substantial utilization of the invention.

(vi) If the contractor is to file a foreign patent application on a subject
invention, the Government agrees, upon written request, to use its best efforts
to withhold publication of such invention disclosures for such period of time as
specified by Patent Counsel, but in no event shall the Government or its
employees be liable for any publication thereof.

(vii) Subject to the license specified in subparagraphs (d)(1), (2), and (3) of
this clause, the contractor or inventor agrees to convey to the Government, upon
request, the entire right, title, and interest in any foreign country in which
the contractor or inventor fails to have a patent application filed in a timely
manner or decides not to continue prosecution or to pay any

maintenance fees covering the invention. To avoid forfeiture of the patent
application or patent, the contractor or inventor shall, not less than 60 days
before the expiration period for any action required by any patent office,
notify the Patent Counsel of such failure or decision, and deliver to the Patent
Counsel, the executed instruments necessary for the conveyance specified in this
paragraph.

(e) Invention identification, disclosures, and reports.

(1) The Contractor shall establish and maintain active and effective procedures
to assure that subject inventions are promptly identified and disclosed to
Contractor personnel responsible for patent matters within 6 months of
conception and/or first actual reduction to practice, whichever occurs first in
the performance of work under this contract. These procedures shall include the
maintenance of laboratory notebooks or equivalent records and other records as
are reasonably necessary to document the conception and/or the first actual
reduction to practice of subject inventions, and records that show that the
procedures for identifying and disclosing the inventions are followed. Upon
request, the Contractor shall furnish the Contracting Officer a description of
such procedures for evaluation and for determination as to their effectiveness.

(2) The Contractor shall disclose each subject invention to the DOE Patent
Counsel with a copy to the Contracting Officer within 2 months after the
inventor discloses it in writing to Contractor personnel responsible for patent
matters or, if earlier, within 6 months after the Contractor becomes aware that
a subject invention has been made, but in any event before any on sale, public
use, or publication of such invention known to the Contractor. The disclosure to
DOE shall be in the form of a written report and shall identify the contract
under which the invention was made and the inventor(s). It shall be sufficiently
complete in technical detail to convey a clear understanding, to the extent
known at the time of the disclosure, of the nature, purpose, operation, and
physical, chemical, biological, or electrical characteristics of the invention.
The disclosure shall also identify any publication, on sale, or public use of
the invention and whether a manuscript describing the invention has been
submitted for publication and, if so, whether it has been accepted for
publication at the time of disclosure. In addition, after disclosure to DOE, the
Contractor shall promptly notify Patent Counsel of the acceptance of any
manuscript describing the invention for publication or of any on sale or public
use planned by the Contractor. The report should also include any request for a
greater rights determination in accordance with subparagraph (b)(2) of this
clause. When an invention is disclosed to DOE under this paragraph, it shall be
deemed to have been made in the manner specified in Sections (a)(1) and (a)(2)
of 42 U.S.C. 5908, unless the Contractor contends in writing at the time the
invention is disclosed that is was not so made.

(3) The Contractor shall furnish the Contracting Officer the following:

(ii) Interim reports every 12 months (or such longer period as may be specified
by the Contracting Officer) from the date of the contract, listing subject
inventions during that period, and certifying that all subject inventions have
been disclosed (or that there are not such

inventions) and that the procedures required by subparagraph (e)(1) of this
clause have been followed.

(ii) A final report, within 3 months after completion of the contracted work
listing all subject inventions or certifying that there were no such inventions,
and listing all subcontracts at any tier containing a patent rights clause or
certifying that there were no such subcontracts.

(4) The Contractor agrees to require, by written agreement, its employees, other
than clerical and nontechnical employees, to disclose promptly in writing to
personnel identified as responsible for the administration of patent matters and
in a format suggested by the Contractor each subject invention made under
contract in order that the Contractor can comply with the disclosure provisions
of paragraph (c) of this clause, and to execute all papers necessary to file
patent applications on subject inventions and to establish the Government's
rights in the subject inventions. This disclosure format should require, as a
minimum, the information required by subparagraph (e)(2) of this clause.

(5) The Contractor agrees, subject to FAR 27.3020), that the Government may
duplicate and disclose subject invention disclosures and all other reports and
papers furnished or required to be furnished pursuant to this clause.

(f) Examination of records relating to inventions.

(1) The Contracting Officer or any authorized representative shall, until 3
years after final payment under this contract, have the right to examine any
books (including laboratory notebooks), records, and documents of the Contractor
relating, to the conception or first actual reduction to practice of inventions
in the same field of technology as the work under this contract to determine
whether:

(ii) Any such inventions are subject inventions;

(ii) The Contractor has established and maintains the procedures required by
subparagraphs (e)(1) and (4) of this clause;

(iii) The Contractor and its inventors have complied with the procedures.

(2) If the Contracting Officer learns of an unreported Contractor invention
which the Contracting Officer believes may be a subject invention, the
Contractor may be required to disclose the invention to DOE for a determination
of ownership rights.

(3) Any examination of records under this paragraph will be subject to
appropriate conditions to protect the confidentiality of the information
involved.

(g) Withholding of payment (NOTE: This paragraph does not apply to
subcontracts).

(1) Any time before final payment under this contract, the Contracting Officer
may, in the Government's interest withhold payment until a reserve not exceeding
$50,000 or 5 percent of the amount of this contract, whichever is less, shall
have been set aside if, in the Contracting Officer's opinion, the Contractor
fails to:

(i) Convey to the Government, using a DOE-approved form, the title and/or
rights of the Government in each invention as required by this clause.

(ii) Establish, maintain, and follow effective procedures for identifying and
disclosing subject inventions pursuant to subparagraph (e)(1) of this clause;

(iii) Disclose any subject invention pursuant to subparagraph (e)(2) of this
clause;

(iv) Deliver acceptable interim reports pursuant to subparagraph (e)(3)(ii) of
this clause; or

(v) Provide the information regarding subcontracts pursuant to subparagraph
(h)(4) of this clause.

(2) Such reserve or balance shall be withheld until the Contracting Officer has
determined that the Contractor has rectified whatever deficiencies exist and has
delivered all reports, disclosures, and other information required by this
clause.

(3) Final payment under this contract shall not be made before the Contractor
delivers to the Contracting Officer all disclosures of subject inventions
required by subparagraph (e)(2) of this clause, and acceptable final report
pursuant to subparagraph (e)(3)(ii) of this clause, and the Patent Counsel has
issued a patent clearance certification to tile Contracting Officer.

(4) The Contracting Officer may decrease or increase the sums withheld up to the
maximum authorized above. No amount shall be withheld under this paragraph
while the amount specified by this paragraph is being withheld under other
provisions of the contract. The withholding of any amount or the subsequent
payment thereof shall not be construed as a waiver of any Government rights.

(h) Subcontracts.

(1) The contractor shall include the clause at 48 CFR 952.227-11 (suitably
modified to identify the parties) in all subcontracts, regardless of tier, for
experimental, developmental, demonstration, or research work to be performed by
a small business firm or domestic nonprofit organization, except where the work
of the subcontract is subject to an Exceptional Circumstances Determination by
DOE. In all other subcontracts, regardless of tier, for experimental,
developmental, demonstration, or research work, the contractor shall include
this clause (suitably modified to identify the parties). The contractor shall
not, as part of the consideration for awarding the subcontract, obtain rights in
the subcontractor's subject inventions.

(2) In the event of a refusal by a prospective subcontractor to accept such a
clause the Contractor---

(i) Shall promptly submit a written notice to the Contracting Officer setting
forth the subcontractor's reasons for such refusal and other pertinent
information that may expedite disposition of the matter; and

(ii) Shall not, proceed with such subcontract without the written authorization
of the Contracting Officer.

(3) In the case of subcontracts at any tier, DOE, the subcontractor, and
Contractor agree that the mutual obligations of the parties created by this
clause constitute a contract between the subcontractor and DOE with respect to
those matters covered by this clause.

(4) The Contractor shall promptly notify the Contracting Officer in writing upon
the award of any subcontract at any tier containing a Patent rights clause by
identifying the subcontractor, the applicable patent rights clause, the work to
be performed under the subcontract, and the dates of award and estimated
completion. Upon request of the Contracting Officer the Contractor shall furnish
a copy of such subcontract, and, no more frequently than annually, a listing of
the subcontracts that have been awarded.

(5) The contractor shall identify all subject inventions of the subcontractor of
which it acquires knowledge in the performance of this contract and shall notify
the Patent Counsel, with a copy to the contracting officer, promptly upon
identification of the inventions.

(ii) Preference United States industry, Unless provided otherwise, no Contractor
that receives title to any subject invention and no assignee of any such
Contractor shall grant to any person the exclusive right to use or sell any
subject invention in the United States unless such person agrees that any
products embodying the subject invention will be manufactured substantially in
the United States. However, in individual cases, the requirement may be waived
by the Government upon a showing by the Contractor or assignee that reasonable
but unsuccessful efforts have been made to grant licenses on similar terms to
potential licensees that would be likely to manufacture substantially in the
United States or that under the circumstances domestic manufacture is not
commercially feasible.

(j) Atomic energy

(1) No claim for pecuniary award of compensation under the provisions of the
Atomic Energy Act of 1954, as amended, shall be asserted with respect to any
invention or discovery made or conceived in the course of or under this
contract.

(2) Except as otherwise authorized in writing by the Contracting Officer, the
Contractor will obtain patent agreements to effectuate the provisions of
subparagraph (e)(1) of this clause from

all persons who perform any part of the work under this contract, except
nontechnical personnel, such as clerical employees and manual laborers.

(k) Background Patents.

(1) Background Patent means a domestic patent covering an invention or discovery
which is not a subject invention and which is owned or controlled by the
Contractor at any time through the completion of this contract:

(i) Which the contractor, but not the Government, has the right to license to
others without obligation to pay royalties thereon, and

(ii) Infringement of which cannot reasonably be avoided upon the practice of any
specific process, method, machine, manufacture, or composition of matter
(including relatively minor modifications thereof) which is a subject of the
research, development, or demonstration work performed under this contract.

(2) The Contractor agrees to and does hereby grant to the Government a royalty-
free, nonexclusive license under any background patent for purposes of
practicing a subject of this contract by or for the Government in research,
development, and demonstration work only.

(3) The Contractor also agrees that upon written application by DOE, it will
grant to responsible parties, for purposes of practicing a subject of this
contract, nonexclusive licenses under any background patent on terms that are
reasonable under the circumstances. If, however, the Contractor believes that
exclusive rights are necessary to achieve expeditious commercial development or
utilization, then a request may be made to DOE for DOE approval of such
licensing by the Contractor.

(4) Notwithstanding subparagraph (k)(3) of this clause, the contractor shall not
be obligated to license any background patent if the Contractor demonstrates to
the satisfaction of the Secretary of Energy or designee that:

(i) a competitive alternative to the subject matter covered by said background
patent is commercially available or readily introducible from one or more other
sources; or

(ii) the Contractor or its licensees are supplying the subject matter covered by
said background patent in sufficient quantity and at reasonable prices to
satisfy market needs, or have taken effective steps or within a matter.

Reasonable time are expected to take effective steps to so supply the subject

(1) Publication. It is recognized that during the course of the work under this
contract, the Contractor or its employees may from time to time desire to
release or publish information regarding scientific or technical developments
conceived or first actually reduced to practice in

the course of or under this contract. In order that public disclosure of such
information will not adversely affect the patent interests of DOE or the
Contractor, patent approval for release of publication shall be secured from
Patent Counsel prior to any such release or publication.

(m) Forfeiture of rights in unreported subject inventions.

(1) The Contractor shall forfeit and assign to the Government, at the request of
the Secretary of Energy or designee all rights in any subject invention which
the Contractor fails to report to Patent Counsel within six months after the
time the Contractor:

(i) Files or causes to be filed a United States or foreign patent application
thereon; or

(ii) Submits the final report required by subparagraph (e)(2)(ii) of this
clause, whichever is later.

(2) However, the Contractor shall not forfeit rights in a subject invention if,
within the time specified in subparagraph (m)(1) of this clause, the
Contractor:

(i) Prepares a written decision based upon a review of the record that the
invention was neither conceived nor first actually reduced to practice in the
course of or under the contract and delivers the decision to Patent Counsel,
with a copy to the Contracting Officer; or

(ii) Contending that the invention is not a subject invention, the Contractor
nevertheless discloses the invention and all facts pertinent to this contention
to the Patent Counsel, with a copy to the Contracting Officer; or

(iii) Establishes that the failure to disclose did not result from the
Contractor's fault or negligence.

(3) Pending written assignment of the patent application and patents on a
subject invention determined by the Secretary of Energy or designee to be
forfeited (such determination to be a final decision under the Disputes clause
of this contract), the Contractor shall be deemed to hold the invention and the
patent applications and patents pertaining thereto in trust for the Government.
The forfeiture provision of this paragraph (m) shall be in addition to and shall
not supersede other rights and remedies which the Government may have with
respect to subject inventions.

(End of clause)

52.227-14 Rights in Data - General, with Alternates I and V, and paragraph
(d)(3)

RIGHTS IN DATA - GENERAL (JUN 1987)

(a) Definitions.

"Computer software" as used in this clause, means computer programs, computer
data bases, and documentation thereof.

"Data," as used in this clause, means recorded information, regardless of form
or the media on which it may be recorded. The term includes technical data and
computer software. The terms does not include information incidental to contract
administration such as financial, administrative, cost or pricing, or management
information.

"Form, fit, and function data," as used in this clause, means data relating to
items, components, or processes that are sufficient to enable physical and
functional interchange ability, as well as data identifying source, size,
configuration, mating, and attachment characteristics, functional
characteristics, and performance requirements; except that for computer software
it means data identifying source, functional characteristics, and performance
requirements but specifically excludes the source code, algorithm, process,
formula, and flow charts of the software.

"Limited rights data," as used in this clause, means data (other than computer
software) developed at private expense that embody trade secrets or are
commercial or financial and confidential or privileged.

"Technical data," as used in this clause, means data (other than computer
software) which are of a scientific or technical nature.

"Restricted computer software," as used in this clause, means computer software
developed at private expense and that is a trade secret; is commercial or
financial and is confidential or privileged; or is published copyrighted
computer software; including minor modifications of such computer software.

"Unlimited rights," as used in this clause, means the right of the Government to
use, disclose, reproduce, prepare derivative works, distribute copies to the
public, and perform publicly and display publicly, in any manner and for any
purpose, and to have or permit others to do so.

"Limited rights," as used in this clause, means the rights of the Government in
limited rights data as set forth in the Limited Rights Notice of subparagraph
(a) (2) if included in this clause.

"Restricted rights," as used in this clause, means the rights of the Government
in restricted computer software, as set forth in a Restricted Rights Notice of
subparagraph (g)(3) if included in this clause, or as otherwise may be provided
in a collateral agreement incorporated in and made part of this contract,
including minor modifications of such computer software.

(b) Allocation of rights.

(1) Except as provided in paragraph (c) below regarding copyright, the
Government shall have unlimited rights in:

(i) Data first produced in the performance of this contract;

(ii) Form, fit, and function data delivered under this contract;

(iii) Data delivered under this contract (except for restricted computer
software) that constitute manuals or instructional and training material for
installation, operation, or routine maintenance and repair items, components, or
processes delivered or furnished for use under this contract; and

(iv) All other data delivered under this contract unless provided otherwise for
limited rights data or restricted computer software in accordance with paragraph
(g) below.

(2) The Contractor shall have the right to:

(i) Use, release to others, reproduce, distribute, or publish any data, first
produced or specifically used by the Contractor in the performance of this
contract, unless provided otherwise in paragraph (d) below;

(ii) Protect from unauthorized disclosure and use those data which are limited
rights data or restricted computer software to the extent provided in paragraph
(g) below;

(iii) Substantiate use of, add or correct limited rights, restricted rights, or
copyright notices and to take other appropriate action, in accordance with
paragraphs (e) and (f) below; and

(iv) Establish claim to copyright subsisting in data first produced in the
performance of this contract to the extent provided in subparagraph (c)(1)
below.

(1) Data first produced in the performance of this contract. Unless provided
otherwise in subparagraph (d) below, the Contractor may establish, without prior
approval of the Contracting Officer, claim to copyright subsisting in scientific
and technical articles based on or containing data first produced in the
performance of this contract and published in academic, technical or
professional journals, symposia proceedings or similar works. The prior, express
written permission of the Contracting Officer is required to establish claim to
copyright subsisting in all other data first produced in the performance of this
contract. When claim to copyright is made, the Contractor shall affix the
applicable copyright notices of 17 U.S.C. 401 or 402 and acknowledgment of
Government sponsorship (including contract number) to the data when such data
are delivered to the Government, as well as when the data

are published or deposited for registration as a published work in the U.S.
Copyright Office. For data other than computer software the Contractor grants to
the Government, and others acting on its behalf, a paid-up, nonexclusive,
irrevocable worldwide license in such copyrighted data to reproduce, prepare
derivative works, distribute copies to the public, and perform publicly and
display publicly, by or on behalf of the Government. For computer software, the
Contractor grants to the Government and others acting in its behalf, a paid-up
nonexclusive, irrevocable worldwide license in such copyrighted computer
software to reproduct, prepare derivative works, and perform publicly and
display publicly by or on behalf of the Government.

(2) Data not first produced in the performance of this contract. The Contractor
shall not, without prior written permission of the Contracting Officer,
incorporate in data delivered under this contract any data not first produced in
the performance of this contract and which contains the copyright notice of 17
U.S.C. 401 and 402, unless the Contractor identifies such data and grants to the
Government, or acquires on its behalf, a license of the same scope as set forth
in subparagraph (1) above; provided, however, that if such data are computer
software the Government shall acquire a copyright license as set forth in
subparagraph (g)(3) below if included in this contract or as otherwise may be
provided in a collateral agreement incorporated in or made part of this
contract.

(3) Removal of copyright notices. The Government agrees not to remove any
copyright notices place on data pursuant to this paragraph (c), and to include
such notices on all reproductions of the data.

(d) Release, publication and use of data.

(1) The Contractor shall have the right to use, release to others, reproduce,
distribute, or publish any data first produced or specifically used by the
Contractor in the performance of this contract, except to the extent such data
may be subject to the Federal export control or national security laws or
regulations, or unless otherwise provided below in this paragraph or expressly
set forth in this contract.

(2) The Contractor agrees that to the extent it receives or is given access to
data necessary for the performance of this contract which contain restrictive
markings, the Contractor shall treat the data in accordance with such markings.
Unless otherwise specifically authorized in writing by the Contracting Officer.

(3) The Contractor agrees not to establish claim to copyright in computer
software first produced in the performance of this contract without prior
written permission of the Contracting Officer. When such permission is granted
the Contracting Officer shall specify appropriate terms to assure dissemination
of the software. The Contractor shall promptly deliver to the Contracting
Officer or to the Patent Counsel designated by the Contracting Officer a duly
executed and approved instrument fully confirmatory of all rights to which the

Government is entitled and other terms pertaining to the computer software to
which claim to copyright is made.

(e) Unauthorized marking of data.
----------------------------

(1) Notwithstanding any other provisions of this contract concerning inspection
or acceptance, if any data delivered under this contract are marked with the
notices specified in subparagraphs (g)(2) or (g)(3) below and use of such is not
authorized by this clause, or if such data bears any other restrictive or
limiting markings not authorized by this contract, the Contracting Officer may
at any time either return the data to the Contractor, or cancel or ignore the
markings. However, the following procedures shall apply prior to canceling or
ignoring the markings.

(i) The Contracting Officer shall make written inquiry to the contractor
affording the Contractor 30 days from receipt of the inquiry to provide written
justification to substantiate the propriety of the markings;

(ii) If the Contractor fails to respond or fails to provide written
justification to substantiate the propriety of the markings within the 30-day
period (or a longer time not exceeding 90 days approved in writing by the
Contracting Officer for good cause shown), the Government shall have the right
to cancel or ignore the markings at any time after said period and the data will
not longer be made subject to any disclosure prohibitions.

(iii) If the Contractor provides written justification to substantiate the
propriety of the markings within the period set in subdivision (i) above, the
Contracting Officer shall consider such written justification and determine
whether or not the markings are to be canceled or ignore. If the Contracting
Officer determines that the markings are authorized, the Contractor shall be so
notified in writing. If the Contracting Officer determines, with concurrence of
the Head of the Contracting Activity, that the markings are not authorized, the
Contracting Officer shall furnish the Contractor a written determination, which
determination shall become the final agency decision regarding the
appropriateness of the markings unless the Contractor files suit in a court of
competent jurisdiction within 90 days of receipt of the Contracting Officer's
decision. The Government shall continue to abide by the markings under this
subdivision (iii) until final resolution of the matter either by the Contracting
Officer's determination becoming final (in which instance the Government shall
thereafter have the right to cancel or ignore the markings at any time and the
data will no longer be made subject to any disclosure prohibitions), or by final
disposition of the matter by court decision if suit is filed.

(2) The time limits in the procedures set forth in subparagraph (1) above may be
modified in accordance with agency regulations implementing the Freedom of
Information Act (5 U.S.C. 552) if necessary to respond to a request thereunder.

(3) This paragraph (e) does not apply if this contract is for a major system or
for support of a major system by a civilian agency other than NASA and the U.S.
Coast Guard subject to the provisions of Title III of the Federal Property and
Administrative Services Act of 1949.

(4) Except to the extent the Government's action occurs as the result of final
disposition of the matter by a court of competent jurisdiction, the Contractor
is not precluded by this paragraph (e) from bringing a claim under the Contract
Disputes Act, including pursuant to the Disputes clause of this contract, as
applicable, that may arise as the result of the Government removing or ignoring
authorized markings on data delivered under this contract.

(f) Omitted or incorrect markings.
-----------------------------

(1) Data delivered to the Government without either the limited rights or
restricted rights notice as authorized by paragraph (g) below, or the copyright
notice required by paragraph (c) above, shall be deemed to have been furnished
with unlimited rights, and the Government assumes no liability for disclosure,
use, or reproduction of such data. However, to the extent the data has not been
disclosed without restriction outside the Government, the Contractor may
request, within 6 months (or a longer time approved by the Contracting Officer
for good cause shown) after delivery of such data, permission to have notices
placed on qualifying data at the Contractor's expense, and the Contracting
Officer may agree to do so if the Contractor:

(i) Identifies the data to which the omitted notice is to be applied;

(ii) Demonstrates that the omission of the notice was inadvertent;

(iii) Establishes that the use of the proposed notice is authorized; and

(iv) Acknowledges that the Government has no liability with respect to the
disclosure, use, or reproduction of any such data made prior to the addition of
the notice or resulting from the omission of the notice.

(2) The Contracting Officer may also (i) permit correction at the Contractor's
expense of incorrect notices if the Contractor identifies the data on which
correction of the notice is to be made, and demonstrates that the correct notice
is authorized, or (ii) correct any incorrect notices.

(g) Protection of limited rights data and restricted computer software.

(1) When data other than that-listed in subparagraphs (b)(1)(i), (ii), and (iii)
above are specified to be delivered under this contract and qualify as either
limited rights data or restricted computer software, if the Contractor desires
to continue protection of such data, the Contractor shall withhold such data and
not furnish them to the Government under this Contract. As a condition to this
withholding, the Contractor shall identify the data being withheld and furnish
form, fit, and function data in lieu thereof. Limited rights data that are
formatted as a computer data base for delivery to the Government is to be
treated as limited rights data and not restricted computer software.

(2) [Reserved.]

(3) [Reserved.]

(h) Subcontracting.
--------------

The Contractor has the responsibility to obtain from its subcontractors all data
and rights therein necessary to fulfill the Contractor's obligations to the
Government under this contract. If a subcontractor refuses to accept terms
affording the Government such rights, the Contractor shall promptly bring such
refusal to the attention of the Contracting Officer and not proceed with
subcontract award without further authorization.

(i) Relationship to patents.

Nothing contained in this clause shall imply a license to the Government under
any patent or be construed as affecting the scope of any license or other right
otherwise granted to the Government.

The Contractor agrees, except as may be otherwise specified in this contract for
specific data items listed as not, subject to this paragraph, that the
Contracting Officer or an authorized representative may, up to three years after
acceptance of all items to be delivered under this contract, inspect at the
Contractor's facility any data withheld pursuant to paragraph (g)(1) above, for
purposes of verifying the Contractor's assertion pertaining to the limited
rights or restricted rights status of the data or for evaluating work
performance. Where the Contractor whose data are to be inspected demonstrates to
the Contracting Officer that there would be a possible conflict of interest if
the inspection where made by a particular representative, the Contracting
Officer shall designate an alternate inspector.

(End of clause)

ALTERNATE II

(g)(2) Notwithstanding subparagraph (g)(1) of this clause, the contract may
identify and specify the delivery of limited rights data, or the Contracting
Officer may require by written request the delivery of limited rights data that
has been withheld or would otherwise be withholdable. If delivery of such data
is so required, the Contractor may affix the following "Limited Rights Notice"
to the data and the Government will thereafter treat the data, subject to the
provisions of paragraphs (e) and (f) of this clause, in accordance with such
Notice:

LIMITED RIGHTS NOTICE (JUN 1987)

(a) These data are submitted with limited rights under Government contract No.
______ (and subcontract No. ______ if appropriate). These data may be reproduced
and used by the Government with the express limitation that they will not,
without written permission of the Contractor, be used for purposes of
manufacture nor disclosed outside the Government; except that the Government may
disclose these data outside the Government for the following,

purposes, if any, provided that the Government makes such disclosure subject to
prohibition against further use and disclosure:

[Agencies may list additional, purposes as set forth in 27.404(d)(1) or if none,
so state]

(b) This Notice shall be marked on any reproduction of these data, in whole or
in part.

(End of notice)

ALTERNATE III

(g)(3)(i) Notwithstanding subparagraph (g)(1) of this clause, the contract may
identify and specify the delivery of restricted computer software, or the
Contracting Officer may require by written request the delivery of restricted
computer software that has been withheld or would otherwise be withholdable. If
delivery of such computer software is so required, the Contractor may affix the
following "Restricted Rights Notice" to the computer software and the Government
will thereafter treat the computer software, subject to paragraphs (e) and (f)
of this clause, in accordance with the Notice:

RESTRICTED RIGHTS NOTICE (JUN 1987)

(a) This computer software is submitted with restricted rights under Government
Contract No. _____ (and subcontract, if appropriate). It may not be used,
reproduced, or disclosed by the Government except as provided in paragraph (b)
of this Notice or as otherwise expressly stated in the contract.

(b) This computer software may be:

(1) Used or copied for use in or with the computer or computers for which it was
acquired, including use, at any Government installation to which such computer
or computers may be transferred;

(2) Used or copied for use in a backup computer if any computer for which it was
acquired is inoperative;

(3) Reproduced for safekeeping (archives) or backup purposes;

(4) Modified, adapted, or combined with other computer software, provided that
the modified, combined, or adapted portions of the derivative software
incorporating restricted computer software are made subject to the same
restricted rights;

(5) Disclosed to and reproduced for use by support service Contractors in
accordance with subparagraphs (b)(1) through (4) of this clause, provided the
Government makes such disclosure or reproduction subject to these restricted
rights; and

(6) Used or copied for use in or transferred to a replacement computer.

(c) Notwithstanding the foregoing, if this computer software is published
copyrighted computer software, it is licensed to the Government, without
disclosure prohibitions, with the minimum rights set forth in paragraph (b) of
this clause.

(d) Any others rights or limitations regarding the use, duplication, or
disclosure of this computer software are to be expressly stated in, or
incorporated in, the contract.

(e) This Notice shall be marked on any reproduction of this computer software,
in whole or in part.

(End of notice)

(ii) Where it is impractical to include the Restricted Rights Notice on
restricted computer software, the following short-form Notice may be used in
lieu thereof:

RESTRICTED RIGHTS NOTICE

SHORT FORM (JUN 1987)

Use, reproduction, or disclosure is subject to restrictions set forth in
Contract No. _____ (and subcontract ___, if appropriate) with __________________
(name of Contractor and subcontractor).

(End of notice)

(iii) If restricted computer software is delivered with the copyright notice of
17 U.S.C. 401, it will be presumed to be published copyrighted computer software
licensed to the Government without disclosure prohibitions, with the minimum
rights set forth in paragraph (b) of this clause, unless the Contractor includes
the following statement with such copyright notice: "Unpublished-rights reserved
under the Copyright Laws of the United States."

(End of Clause)

48 CFR 52.227-16 Additional Data Requirements

ADDITIONAL DATA REQUIREMENTS (JUN 1987)

(a) In addition to the data (as defined in the clause at 52.227-14 Rights in
Data-General clause or other equivalent include in this contract) specified
elsewhere in this contract to be delivered, the Contracting Officer may, at any
time during contract performance or within a period of 3 years after acceptance
of all items to be delivered under this contract, order any data first produced
or specifically used in the performance of this contract.

(b) The Rights in Data-General clause or other equivalent included in this
contract is applicable to all data ordered under this Additional Data
Requirements clause. Nothing contained in this clause shall require the
Contractor to deliver any data the withholding of which is authorized by the
Rights in Data-General or other equivalent clause of this contract, or data
which are specifically identified in this contract as not subject to this
clause.

(c) When data are to be delivered under this clause, the Contractor will be
compensated for converting the data into the prescribed form, for reproduction,
and for delivery.

(d) The Contracting Officer may release the Contractor from the requirements of
this clause for specifically identified data items at any time during the 3-year
period set forth in paragraph (a) of this clause.

(End of clause)

48 CFR 52.227-23 Rights to Proposal Data

RIGHTS TO PROPOSAL DATA (TECHNICAL) (JUN, 1987)

Except for data contained on pages ____ it is agreed that as a condition of
award of this contract, and notwithstanding the conditions of any notice
appearing thereon, the Government shall have unlimited rights (as defined in the
"Rights in Data--General" clause contained in this contract) in and to the
technical data contained in the proposal dated 3-13-97 upon which this contract
is based.

3 through 22

Attachment 1:

952.227-11 Patent Rights - Retention by the Contractor (short form)

PATENT RIGHTS - RETENTION BY THE CONTRACTOR (SHORT FORM) (FEB 1995)

(a) Definitions.

(1) "Invention" means any invention or discovery which is or may be patentable
or otherwise protectable under title 35 of the United States Code, or any novel
variety of plant which is or may be protected under the Plant Variety Protection
Act (7 U.S.C. 2321, et seq.).

(2) "Made" when used in relation to any invention means the conception of first
actual reduction to practice of such invention.

(3) "Nonprofit organization" means a university or other institution of higher
education or an organization of the type described in section 501(c)(3) of the
Internal Revenue Code of 1954

(26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of the Internal
Revenue Code (26 U.S.C. 501(a)) or any nonprofit scientific or educational
organization qualified under a state nonprofit organization statute.

(4) "Practical application" means to manufacture, in the case of a composition
or product; to practice, in the case of a process or method; or to operate, in
the case of a machine or system; and, in each case, under such conditions as to
establish that the invention is being utilized and that is benefits are, to the
extent permitted by law or Government regulations, available to the public on
reasonable terms.

(5) "Small business firm" means a small business concern as defined at section 2
of Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the
Administrator of the Small Business Administration. For the purpose of this
clause, the size standards for small business concerns involved in Government
procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12,
respectively, will be used.

(6) "Subject invention" means any invention of the contractor conceived or first
actually reduced to practice in the performance of work under this contract,
provided that in the case of a variety of plant, the date of determination (as
defined in section 4 I(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d))
must also occur during the period of contract performance.

(7) "Agency licensing regulations" and "agency regulations concerning the
licensing of Government-owned inventions" mean the Department of Energy patent
licensing regulations at 10 CFR Part 781.

(b) "Allocation of principal rights." The Contractor may retain the entire
right, title, and interest throughout the world to each subject invention
subject to the provisions of this clause and 35 U.S.C. 20. With respect to any
subject invention in which the Contractor retains title, the Federal Government
shall have a nonexclusive, nontransferable, irrevocable, paid-up license to
practice or have practiced for or on behalf of the United States the subject
invention throughout the world.

(1) The Contractor will disclose each subject invention to the Department
of Energy (DOE) within 2 months after the inventor discloses it in writing
to Contractor personnel responsible for patent matters. The disclosure to
DOE shall be in the form of a written report and shall identify the
contract under which the invention was made and the inventor(s). It shall
be sufficiently complete in technical detail to convey a clear
understanding to the extent known at the time of the disclosure, of the
nature, purpose, operation, and the physical, chemical, biological or
electrical characteristics of the invention. The disclosure shall also
identify any publication, on sale or public use of the invention and
whether a manuscript describing the invention has been submitted for
publication and, if so, whether it has been accepted for publication at the
time of

disclosure. In addition, after disclosure to the DOE, the Contractor will
promptly notify that agency of the acceptance of any manuscript describing
the invention for publication or of any on sale or public use planned by
the Contractor.

(2) The Contractor will elect in writing whether or not to retain title to
any such invention by notifying DOE within 2 years of disclosure to DOE.
However, in any case where publication, on sale or public use has initiated
the 1-year statutory period wherein valid patent protection can still be
obtained in the United States, the period for election of title may be
shortened by DOE to a date that is no more than 60 days prior to the end of
the statutory period.

(3) The Contractor will file its initial patent application on a subject
invention to which it elects to retain title within 1 year after election
of title or, if earlier, prior to the end of any statutory period wherein
valid patent protection can be obtained in the United States after a
publication, on sale, or public use. The Contractor will file patent
applications in additional countries or international patent offices within
either 10 months of the corresponding initial patent application or 6
months from the date permission is granted by the Commissioner of Patents
and Trademarks to file foreign patent applications where such filing has
been prohibited by a Secrecy Order.

(4) Requests for extension of the time for disclosure, election, and filing
under subparagraphs (c)(1), (2), and (3) of this clause may, at the
discretion of the agency, be granted.

(d) Conditions when the Government may obtain title. The Contractor will convey
to the Federal agency, upon written request, title to any subject invention:

(1) If the Contractor fails to disclose or elect title to the subject
invention within the times specified in paragraph (c) of this clause, or
elects not to retain title; provided, that DOE may only request title
within 60 days after learning of the failure of the Contractor to disclose
or elect within the specified times.

(2) In those countries in which the Contractor fails to file patent
applications within the times specified in paragraph (c) of this clause;
provided, however, that if the Contractor has filed a patent application in
a country after the times specified in paragraph (c) of this clause, but
prior to its receipt of the written request of the Federal agency, the
Contractor shall continue to retain title in that country.

(3) In any country in which the Contractor decides not to continue the
prosecution of any application for, to pay the maintenance fees on, or
defend in reexamination or opposition proceeding on, a patent on a subject
invention.

(e) Minimum rights to Contractor and protection of the Contractor right to file.

(1) The Contractor will retain a nonexclusive royalty-free license
throughout the world in each subject invention to which the Government
obtains title, except if the Contractor fails to disclose the invention
within the times specified in paragraph (c) of this clause. The
Contractor's license extends to its domestic subsidiary and affiliates, if
any, within the corporate structure of which the Contractor is a party and
included the right to grant sublicenses of the same scope to the extent the
Contractor was legally obligated to do so at the time the contract was
awarded. The license is transferable only with the approval of the Federal
agency, except when transferred to the successor of that part of the
Contractor's business to which the invention pertains.

(2) The Contractor's domestic license may be revoked or modified by DOE to
the extent necessary to achieve expeditious practical application of
subject invention pursuant to an application for an exclusive license
submitted in accordance with applicable provisions at 37 CFR Part 404 and
agency licensing regulations. This license will not be revoked in that
field of use or the geographical areas in which the Contractor has achieved
practical application and continues to make the benefits of the invention
reasonably accessible to the public. The license in any foreign country may
be revoked or modified at the discretion of DOE to the extent the
Contractor, its licensees, or the domestic subsidiaries or affiliates have
failed to achieve practical application in that foreign country.

(3) Before revocation or modification of the license, DOE will furnish the
Contractor a written notice of its intention to revoke or modify the
license, and the Contractor will be allowed 30 days (or such other time as
may be authorized by DOE for good cause shown by the Contractor) after the
notice to show cause why the license should not be revoked or modified. The
Contractor has the right to appeal, in accordance with applicable
regulations in 37 CFR Part 404 and actual regulations concerning the
licensing of Government owned inventions, any decision concerning the
revocation or modification of the license.

(f) Contractor action to protect the Government's interest.

(1) The Contractor agrees to execute or to have executed and promptly
deliver to DOE all instruments necessary to (i) establish or confirm the
rights the Government has throughout the world in those subject inventions
to which the Contractor elects to retain title, and (ii) convey title to
DOE when requested under paragraph (d) of this clause and to enable the
government to obtain patent protection throughout the world in that subject
invention.

(2) The Contractor agrees to require, by written agreement, its employees,
other than clerical and nontechnical employees, to disclose promptly in
writing to personnel identified as responsible for the administration of
patent matters and in a format suggested by the Contractor each subject
invention made under contract in order that the Contractor can comply with
the disclosure provisions of paragraph (c) of this

clause, and to execute all papers necessary to file patent applications on
subject inventions and to establish the Government's rights in the subject
inventions. This disclosure format should require, as a minimum, the
information required by subparagraph (c)(1) of this clause. The Contractor
shall instruct such employees, through employee agreements or other
suitable educational programs, on the importance of reporting inventions in
sufficient time to permit the filing of patent applications prior to U.S.
or foreign statutory bars.

(3) The Contractor will notify DOE of any decision not to continue the
prosecution of a patent application, pay maintenance fees, or defend in a
reexamination or opposition proceeding on a patent, in any country, not
less than 30 days before the expiration of the response period required by
the relevant patent office.

(4) The Contractor agrees to include, within the specification of any
United States patent application and any patent issuing thereon covering a
subject invention, the following statement, "This invention was made with
Government support under (identify the contract) awarded by the United
States Department of Energy. The Government has certain rights in the
invention."

(g) Subcontracts.

(1) The Contractor will include this clause, suitably modified to identify
the parties, in all subcontracts, regardless of tier, for experimental,
developmental, or research work to be performed by a small business firm or
domestic nonprofit organization. The subcontractor will retain all rights
provided for the Contractor in this clause, and the Contractor will not, as
part of the consideration for awarding the subcontract, obtain rights in
the subcontractor's subject inventions.

(2) The contractor shall include in all other subcontracts, regardless of
tier, for experimental, developmental, demonstration, or research work the
patent rights clause at 952.227-13.

(3) In the case of subcontracts, at any tier, DOE, subcontractor, and the
Contractor agree that the mutual obligations of the parties created by this
clause constitute a contract between the subcontractor and DOE with respect
to the matters covered by the clause; provided, however, that nothing in
this paragraph is intended to confer any jurisdiction under the Contract
Disputes Act in connection with proceedings under paragraph (j) of this
clause.

(h) Reporting on utilization of subject inventions. The Contractor agrees to
submit, on request, periodic reports no more frequently than annually on the
utilization of a subject invention or on efforts at obtaining such utilization
that are being made by the Contractor or its licensees or assignees. Such
reports shall include information regarding the Development, date of first
commercial sale or use, gross royalties received, by the Contractor, and such
other data and

information as DOE may reasonably specify. The Contractor also agrees to provide
additional reports as may be requested by DOE in connection with any march-in
proceeding undertaken by that agency in accordance with paragraph (h) of this
clause. As required by 35 U.S.C. 202(c)(5), DOE agrees it will not disclose such
information to persons outside the Government without permission of the
Contractor.

(i) Preference for United States industry. Notwithstanding any other provision
of this clause, the Contractor agrees that neither it nor any assignee will
grant to any person the exclusive right to use or sell any subject invention in
the United States unless such person agrees that any product embodying the
subject invention or produced through the use of the subject invention will be
manufactured substantially in the United States. However, in individual cases,
the requirement for such an agreement may be waived by DOE upon a showing by the
Contractor or its assignee that reasonable but unsuccessful efforts have been
made to grant licenses on similar terms to potential licensees that would be
likely to manufacture substantially in the United States or that under the
circumstances domestic manufacture is not commercially feasible.

(j) March-in rights. The Contractor agrees that, with respect to any subject
invention in which it has acquired title, DOE has the right in accordance with
the procedures in 37 CFR 461.6 and any supplemental regulations of the agency to
require the Contractor, an assignee or exclusive licensee of a subject invention
to grant a nonexclusive, partially exclusive, or exclusive license in any field
of use to a responsible applicant or applicants, upon terms that are reasonable
under the circumstances, and, if the Contractor, assignee, or exclusive licensee
refuses such a request, DOE has the right to grant such a license itself if DOE
determines that-- (1) Such action is necessary because the Contractor or
assignee has not taken, or is not expected to take within a reasonable time,
effective steps to achieve practical application of the subject invention in
such field of use; (2) Such action is necessary to alleviate health or safety
needs which are not reasonably satisfied by the Contractor, assignee, or their
licensees; (3) Such action is necessary to meet requirements for public use
specified by Federal regulations and such requirements are not reasonably
satisfied by the Contractor, assignee, or licensees; or (4) such action is
necessary because the agreement required by paragraph (i) of this clause has not
been obtained or waived or because a licensee of the exclusive right to use or
sell any subject invention in the United States is in breach of such agreement.

(k) Special provisions for contracts-with nonprofit organizations. If the
Contractor is a nonprofit organization, it agrees that--

(1) Rights to a subject invention in the United States may not be assigned
without the approval of the Federal agency, except where such assignment is
made to an organization which has as one of its primary functions the
management of inventions; provided, that such assignee will be subject to
the same provisions as the Contractor;

(2) The Contractor will share royalties collected on a subject invention
with the inventor, including Federal employee co-inventors (when DOE deems
it appropriate)

when the subject invention is assigned in accordance with 35 U.S.C. 202(e)
and 37 CFR 401.10;

(3) The balance of any royalties or income earned by the Contractor with
respect to subject inventions, after payment of expenses (including
payments to inventors) incidental to the administration of subject
inventions will be utilized for the support of scientific research or
education; and

(4) It will make efforts that are reasonable under the circumstances to
attract licensees of subject inventions that are small business firms, and
that it will give a preference to a small business Finn when licensing a
subject invention if the Contractor determines that the small business firm
has a plan or proposal for marketing the invention which, if executed, is
equally as likely to bring the invention to practical application as any
plans or proposals from applicants that are not small business firms;
provided, that the Contractor is also satisfied that the small business
firm has the capability and resources to carry out its plan or proposal.
The decision whether to give a preference in any specific case will be at
the discretion of the contractor. However, the Contractor agrees that the
Secretary of Commerce may review the Contractor's licensing program and
decisions regarding small business applicants, and the Contractor will
negotiate changes to its licensing, policies, procedures, or practices with
the Secretary of Commerce when that Secretary's review discloses that the
Contractor could take reasonable steps to more effectively implement the
requirements of this subparagraph (k)(4).

(1) Communications.

(1) The contractor shall direct any notification, disclosure, or request to
DOE provided for in this clause to the DOE patent counsel assisting the DOE
contracting, activity, with a copy of the communication to the Contracting
Officer.

(2) Each exercise of discretion or decision provided for in this clause,
except subparagraph (k)(4), is reserved for the DOE Patent Counsel and is
not a claim or dispute and is not subject to the Contract Disputes Act of
1978.

(3) Upon request of the DOE Patent Counsel or the contracting officer, the
contractor shall provide any or all of the following:

(i) a copy of the patent application, filing date, serial number and
title, patent number, and issue date for any subject invention in any
country in which the contractor has applied for a patent;

(ii) a report, not more often than annually, summarizing, all subject
inventions which were disclosed to DOE individually during the
reporting period specified; or

(iii) a report, prior to closeout of the contract, listing all subject
inventions or stating that there were none.

(End of clause)

Amendment No. A000 to
Cooperative Agreement No.
DE-FC02-97EE50472
Page No.2 of 3

19. REMARKS (continued)

Appropriation Data:

89X0215.91 EE-0603 $2,101,816.00 HA/CH/410
89X0215.91 EE-0501 $ 114,000.00 HA/CH/410
89X0215.91 EE-0601 $ 92,000.00 HA/CH/410
89X0215.91 EE-0602 $ 102,000.00 HA/CH/410
89X0215.91 EE-0603 $ 82,000.00 HA/CH/410
89X0215.91 EE-0701 $ 10,000.00 HA/CH/410
89X0215.91 EE-0702 $ 200,000.00 HA/CH/410
89X0215.91 EE-0801 $ 100,000.00 HA/CH/410
89X0242.91 NP062006 $ 7,752.00 TE/CH/410

1. The following terms and conditions, attached hereto, are made a part hereof:

a. Budget Page - DOE F 4620.1, which sets forth the approved budget for the
Project Period;

b. Statement of Work;

c. Special Terms and Conditions for Research Financial Assistance Awards,
coded SPRG-0697/APM modified to include Provision No. 7. PARTIAL FUNDING;
---------------
d. Additional Special Provisions;

e. Federal Assistance Reporting Checklist, dated 3-12-97; and

f. Intellectual Property Provisions - Assistance, Large Business, State and
Local Governments, or Foreign Organizations (Research, Development or
Demonstration), coded GLB-697. Alternates I, II, III, and V in Clause No.
05. RIGHTS IN DATA, are hereby made applicable and incorporated into the
Intellectual Property Provisions, coded GLB-697.

2. The following Provision is added to the Additional Special Provisions,
attached hereto and made a part hereof:

"7. ADVANCED UNDERSTANDING
----------------------

Notwithstanding (S)600.127, Allowable Costs, reimbursement to the
Participant for indirect costs shall be subject to the following ceiling
rates and bases;

File Name: FuelCell/50472; RENPG2LB.DOC

Amendment No. A000 to
Cooperative Agreement No.
DE-FC02-97EE50472
Page No. 3 of 3

FY 1997 FY 1998 FY 1999 FY 2000
------- ------- ------- -------

Overhead (a) 160.7% 158.2% 160.9% 157.7%
G&A (b) 43.0% 21.5% 21.7% 21.9%

(a) Applicable to direct labor
(b) Applicable to total cost input

Facilitates Capital Cost of Money (FCCM) is unallowable under this
Cooperative Agreement.

Any and all indirect costs in excess of the above specified ceilings shall be
unallowable under this Cooperative Agreement and shall be absorbed by the
Participant without reimbursement by the Government under this Agreement or
any other Government contract or financial assistance or any subcontract
under any other Government prime contract or financial assistance. However,
in accordance with (S)600.123(b) unrecovered indirect costs may be included
as part of cost sharing or matching.

3. All references to the terms "grant(s)" or "contracts(s)" shall be read as
"cooperative agreement" or "agreement;" the terms "grantee" or "contractor"
shall be read as "participant, recipient or awardee;" the term "subgrant"
shall be read as "subaward;" and the terms "subcontract" or "contract"
awarded under a grant shall be read as "contract" under a cooperative
agreement.

Special Terms and Conditions for Financial Assistance Awards
------------------------------------------------------------

The requirements of this attachment take precedence over all other requirements
of this award found in regulations, the general terms and conditions, DOE
orders, etc., except requirements of statutory law. Any apparent contradiction
of statutory law stated herein should be presumed to be in error until
recipient has sought and received clarification from the Contracting Officer.

1. PAYMENT OFFICE
--------------

CR-54/CHO
Account Payable Division
U.S. Department of Energy
P.O. Box 500
Germantown, MD 20874-0500

2. FINANCE OFFICE
--------------

U.S. Department of Energy
Chicago Operations Office
Financial Services Group
9800 South Cass Avenue
Argonne, Illinois 60439

3. PAYMENT - Advance Payment under this award will be made by:
-------

[_] Department of Health & Human Services (DHHS) Payment Management System
(PMS), formerly DOE Letter of Credit

The recipient shall request cash only as needed for immediate
disbursements, shall report cash disbursments in a timely manner, and
shall impose the same standards of timing and amount, including
reporting requirements, on secondary recipients.

[XX] Treasury Check

An original Request for Advance or Reimbursement, SF 270, shall be
submitted as necessary to the Payment Office specified in Section 1.
above, and one copy of the SF 270 shall be submitted to the Contract
Specialist specified in Block - 12 of the Notice of Financial
Assistance Award (DOE F 4600.1). The timing and amount of advances
shall be as close as is administratively feasible to the actual
disbursements. Such requests shall not be made in excess of reasonable
estimates of Cash outlays for a 30 day period.

An electronics funds transfer will be accomplished if the Finance
Office has an Automated Clearing House (ACH) Vendor Miscellaneous
Payment Enrollment Form of file for your organization.

4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS
------------------------------------------------

Notwithstanding any other provisions of this Agreement, including but not
limited to FAR 31.205-31, when applicable, as incorporated by Financial
Assistance Rule 600.127(a), the Government shall not be responsible for or
have any obligation to the recipient for (i) Decontamination and/or
Decommissioning (D&D) of any of the Recipient's facilities, or (ii) any costs
which may be incurred by the Recipient in connection with the D&D of any of
its facilities due to the performance of the work under this Agreement,
whether said work was performed prior to or subsequent to the effective date
of this Agreement.

5. FEDERALLY-OWNED PROPERTY
------------------------

If you acquire federally-owned property under this award whether fabricated,
furnished or purchased with Capital Equipment Funds, then a listing of such
property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant &
Capital Equipment, to the Contracting Officer within 30 days after February 28
of each year and within 30 days after the project period ends. The report must
separately identify items which were fabricated, furnished, or purchased with
Capital Equipment funds under this award.

6. PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS - FISCAL
-----------------------------------------------------------------------------
YEAR 1997
---------

It is the sense of the Congress that, to the greatest extent practicable, all
equipment and products purchased with funds made available under this award
should be American-made.

7. PARTIAL FUNDING
---------------

This cooperative agreement is partially funded on a cost reimbursement basis
without fee or profit. The total estimated cost of the project to be
conducted during the current budget period is $14,904,564.00 of which the
estimated cost to DOE is $11,178,423.00 and the estimated cost to the
Participant is $3,726,141.00. The Cumulative DOE Obligation for the current
budget period is $2,809,568.00 and, subject to the availability of
additional funds, DOE anticipates obligating an additional $8,368,855.00
hereunder for the current budget period. The Participant shall not be
obligated to continue performance of the project beyond the total of: (a)
the amount of funds set forth as the Cumulative DOE Obligation for the
current budget period in Block 16.b.(1) of the face page, (b) the amount, if
any, set forth as DOE Funds Authorized for Carry Over in Block 16.a.(2) of
the face page, and (c) the amount of the Participant's corresponding
obligation for the current budget period, viz., $936,491.00; provided,
however, that once the Cumulative DOE Obligations for the current budget
period have been increased by DOE to $11,178,423.00, the Participants
obligation for the current budget period shall be increased to a total of
$3,726,141.00, and the Participant shall be expected to bring the project
(covered by the current budget period) to its conclusion within the amount
of $14,904,564.00, and there is no commitment by DOE to provide any
additional funding to the Participant. This cooperative agreement is subject
to a refund of unexpended funds to DOE.

ADDITIONAL SPECIAL PROVISIONS

TABLE OF CONTENTS

CLAUSE SUBJECT PAGE
- ------ ------- ----

1. Cost Share Contributions......................... 1

2. Indirect Cost Applied to
Teaming Partners' Costs.......................... 1

3. Fee.............................................. 1

4. Adequate Recognition............................. 1

5. Statement of Substantial Involvement............. 2

6. Technical Direction.............................. 2

EXHIBIT A
STATEMENT OF WORK

STATEMENT OF WORK

1. Statement of Work

The applicant shall research and develop an integrated fuel cell system that
operates on common transportation fuels for automotive applications. The effort
is directed toward development and delivery of a [***] (net) PEM fuel cell
integrated with a [***] (equivalent) fuel-flexible fuel processor that can
reform gasoline, methanol, ethanol, and natural gas. The fuel cell and compact
fuel processor will be integrated with balance-of -plant components to form a
complete, stand-alone power system capable of being tested and evaluated as a
vehicle propulsion system under driving-cycle profiles.

2. Project Description

The work to be performed consists of the following tasks: Phase 1: System
Definition and Integration Task 1.1: [***] Evaluation Task 1.2: Stack Component
Development Task 1.3: Fuel Processor Development Task 1.4: Initial CMEU
Development Task 1.5: System Definition Phase 2: [***] Subsystem Development
Task 2.1: [***] Stack Development Task 2.2: [***] Fuel Processor Development
Task 2.3: [***] Auxiliaries Development Task 2.4: Control Strategy and Hardware
Development Task 2.5: Subsystem Qualification Tests Phase 3: [***] Brassboard
System Integration Task 3.1: System Design Task 3.2: Stack Fabrication Task 3.3:
Fuel Processor Fabrication Task 3.4: System Assembly and Test Task 3.5:
Subsystem Design Upgrade Task 3.6: Endurance Test Phase 4: [***] Prototype
System Package Task 4.1: Package Design Task 4.2: Stack Fabrication Task 4.3:
Fuel Processor Fabrication Task 4.4: System Assembly Task 4.5: System Shakedown
and Test Task 4.6: Qualification Test and Delivery Task 5.1: Project Management;
Task 5.2: Monthly Reports; Task 5.3: Final Report

3. Performance Schedule

Tasks 1.1, 1.2, 1.3, 1.4, and 1.5 completed 7 months after start of work. Tasks
2.1, 2.2, 2.3, 2.4, and 2.5 completed 14 months after start of work. Task 3.1
completed 16 months after start of work; Tasks 3.2 and 3.3 completed 17 months
after start of work. Tasks 3.4 and 3.5 completed 20 months after start of work;
Tasks 4.1, 4.2, and 4.3 completed 23 months after start of work. Task 3.6
completed 24 months after start of work. Task 4.4 completed 25 months after
start of work; Task 4.5 completed 29 months after start of work. Tasks 4.6, 5.1,
5.2, and 5.3 completed 30 months after start of work.

4. Reporting Requirement

The applicant shall provide monthly technical and financial reports and a Final
Report containing the data from the work performed according to the project
tasks along with analyses and conclusions based on these data.

a. Identification and Significance of the Problem

The internal combustion engine (ICE) has reached a very high level of
sophistication and technical excellence as an automotive power plant. This
amazing device is relatively low in cost, highly responsive, has excellent power
density, is very reliable, reasonably long lived, incredibly convenient to use,
operates well over a range of ambient conditions, and tolerant of a surprising
amount of user-inflicted abuse, It has set the standard against which any other
competing automotive power plant will be judged. Despite these attributes, the
easy gains in ICE performance are past, and future gains will be achieved at an
ever-increasing cost. Unfortunately, the need to increase vehicular power train
performance remains, both to reduce U.S. dependence on foreign energy and reduce
the strain that a highly mobile population places on its surrounding environment
and the planet as a whole. Consequently, as we reach the upper limits of cost-
effective ICE performance, we must continue to mature alternative technologies
with the potential to move significantly beyond current limits.

The PNGV Program has recognized these challenges and established an automotive
industry goal for a production prototype of 80 mpg by 2005. To accomplish this
goal, automotive power systems based on proton exchange membrane (PEM) fuel
cells are a critical technology. Current PEM fuel cell transportation systems
under development include a methanol-fueled transit bus (Georgetown University),
a hydrogen-fueled van (Daimler-Benz), and a hydrogen-fueled automotive power
plant (Ford). However, to attract enough commercial funding for serious
development, a demonstrator PEM fuel cell system is needed that more closely
approximates the performance of ICEs with regard to weight, volume, and cost,
exceeds their efficiency and emission performance, and operates on gasoline and
other fuels such as methanol, ethanol, and natural gas.

To address this need, Mechanical Technology Incorporated (MTI) and Arthur D.
Little, Inc. (ADL), along with MascoTech and Texaco, propose a four-phase
program to develop a PEM fuel cell power system that will meet the goals of
Topic 1 of PRDA DE-RA02-97EE-50443. Based on U.S. technology, this highly
integrated, stand-alone, hydrocarbon-fueled system will be the basis for the
next-generation automotive power plant. The proposed program is both challenging
and aggressive but well within the proven capabilities of MTI and ADL and their
advanced technology base. The PRDA goals stretch the limits of existing
technology, and, although the program duration is short and funds limited, they
are sufficient to achieve these goals meaningfully. The salient technical
development issues to be addressed include a low-cost, high-performance,
automotive-ready stack optimized for gasoline reformate; a lightweight, high-
performance compressor-motor-expander unit (CMEU) for the air supply; a
lightweight, high-performance, durable stack bipolar plate and stack structure;
a high-performance, low-emissions, fast-response, multifuel reformer; and
integration of these components into a compact, rugged synergistic system that
works.

Although the program is not without risks, these are mitigated not only by the
experience and existing technology base of MTI and ADL but by an effective work
plan that combines parallel analysis, component development, and system
integration paths in a staged, evolutionary fashion. A [***] integrated
reformer and fuel cell stack brassboard based on existing MTI stack and ADL
reformer hardware will be assembled early in the program to allow an immediate
focus on system integration issues. Intensive component development is planned
for stack humidification; bipolar plate design; membrane electrode assembly
(MEA) and gas diffusion layer (GDL) design and fabrication; reformate clean-up;
diluent effects; transient behavior; CMEU size, weight, and performance; and
development of key automotive-ready auxiliaries (see the Technology Advancement
Roadmap in Table 1). Developments in IVITI's other ongoing fuel cell programs
will be incorporated to minimize cost and maximize technology gains. MascoTech's
experience as a Tier 1 auto industry manufacturer will be applied to review
designs and processes in conjunction with other auto industry experts to ensure
that the final components, subsystems, and system are consistent with the cost
requirement and needs of the automotive application.

The proposed program will result in a highly integrated, stand-alone, fuel-
flexible PEM fuel cell power system that provides the performance, operating
characteristics, cost, durability, and reliability potential to make this system
the power train choice for early 21st-century automobiles. The program will also
enhance and advance the U.S. technology base so as to support the next stage of
commercialization. This work will have a seminal impact on vehicular power plant
development in the next century and provide a portion of the technology critical
to regain and maintain U.S. industrial leadership in advanced automotive power
train development.

[***- Chart describing current performance of components of fuel cell stack
system, work plan and PRDA goal is omitted and filed separately with the
Securities and Exchange Commission pursuant to Rule 406 under the Securities
Act].

Mechanical Technology Incorporated

b. Background, Technical Approach, and Potential Uses

The PEM fuel cell has recently undergone rapid technology advancement and
emerged as a viable alternative to the ICE. It promises to deliver electromotive
power at high energy conversion efficiencies with very low emissions, operate at
temperatures below [***], and generate high current densities [***] at
elevated gas pressures. These attributes provide the potential for a compact,
lightweight cell, with a fast start capability, and enhance the attractiveness
of the PEM fuel cell for the automotive application. To realize this potential,
several key technical issues must be addressed.

Cost Issue. For the fuel cell to compete with ICEs in terms of cost, a high-
performance system must be developed that is suitable for low-cost, high-volume
manufacturing. This means development of mass-producible bipolar plates and
inexpensive MEA and GDL. Over the past few years, MTI has made major advances in
developing a high-performance, high-specific-power stack that uses double-foil,
hydroformed, metallic bipolar plates configured to provide direct humidification
and coolant to each cell. MTJ has already verified the flow field
aerothermodynamics, humidification and cooling features, end plates and
structure in a full-size [***] short stack. The MTI stack design approach is
based on proven high-rate, low-cost manufacturing techniques such as [***] and
automated assembly techniques such as [***]. Although [***]. With a fully
automated process, labor costs are anticipated to be at the cents-per-cell
level. MTI will use MascoTech's knowledge of high-speed, low-cost automotive
tolerance manufacturing processes to achieve the projections of the [***] high-
volume goal.

The low operating temperature of PEM fuel cells requires use of costly platinum
(Pt) catalyst, which has driven MTI's successful efforts to reduce Pt catalyst
loading while maximizing current density. Figure 1 shows MTI's progress in
achieving high power density at reduced Pt loading [***] - progress made
due to our manufacturing improvements on Los Alamos National Laboratories'
(LANL) low-loading technology, Our ongoing work to optimize catalyst
distribution over the anode and cathode electrodes will foster use of even lower
total loadings and thus lower cost.

Reformate Issues. To use the existing infrastructure and provide easy refueling,
the fuel cell will require onboard reforming of hydrocarbon fuel to reformate,
which contains about [***]. Unfortunately, fuel cell performance, using
platinum catalyst, drops markedly with increasing amounts of CO concentration,
even with contamination of a few ppm. Therefore, approaches are needed to reduce
CO concentration levels in the reformate to a cost-effective level and to modify
the anode electrocatalyst to provide appropriate tolerance levels. [***] alloy
electrocatalyst has been verified by LANL to provide superior CO tolerance, and
IVITI has collaborated with LANL to scale-up the technology and use it in full-
size cells. Figure 2 shows the [***] polarization and endurance curves
indicating a minimal voltage reduction of approximately [***] at [***]
and full cell recovery after injection of [***].

[Chart describing current density, power density and specific power is omitted
and filed separately with the Securities and Exchange Commission pursuant to
Rule 406 under the Securities Act]

Partial oxidation (POX) reformed fuel gas contains significant amounts of other
process effluents. Gasoline reformate consists of [***]. Consequently, with this
fuel, the partial pressure of hydrogen in the cell is about [***] of the total
pressure. Computer code predictions at this low partial pressure indicate a
[***] decrease in current density at the [***] design point for a stack
operating at [***]. (Power, specific power and power densities shown in Tables 2
through 5 are based on use of gasoline reformate with only [***].) To ameliorate
these effects, IVITI is developing, under another program, [***].

Other issues to consider are generation of [***]. The use of [***] significantly
reduces adverse effects of [***]. The influence of reduced diffusion rate of
hydrogen will be evaluated in Phase 1; however, because of the relative atomic
sizes, cell performance reduction is expected to be small. ([***].)

CMEU Issue. Although the efficiency of a fuel cell stack is very high, the
parasitic power allocated to the complete system is an important consideration,
with energy consumption of the air compressor required for high-specific-power
applications particularly important. Significant energy savings can be realized
by using the [***]. DOE is presently funding development of three very different
approaches to the CMEU design: an advanced turbomachine, a piston compressor and
piston expander, and a scroll compressor and scroll expander. Since none of
these approaches meet the requirements for a successful automotive CMEU, either
in weight, volume, or parasitic power draw, development of an alternative CMEU
is an important issue.

The alternative CMEU proposed by MTI is a [***] and combines their desirable
features to provide high efficiency at relatively low weight. Driven by a [***]
and designed to run at [***] at the full load operating point, this [***]. The
[***] mechanism is inherently balanced and can operate at high speed without
high inertia loads on the bearing and compressor structure; further, the rotor
and casing can be made of [***] for low weight and cleanliness. A similar unit
is already being used as an automotive supercharger and should provide the basis
for a rugged, low-cost, automotive component. Table 6 illustrates the power,
weight, mass flow, and volume advantages of the proposed MTI [***] approach as
compared to others. However, should this advanced design not fulfill its
promise, MTI will use either its [***].

[*** - Four charts demonstrating stack component weight/volume; stack system
component weight/volume, integrated system parasitic power/efficiency and
integrated fuel cell power system performance are omitted and filed separately
with the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act].

Specific Power and Power Density Issue. To prepare for this proposal, MTI
completed a preliminary design of a [***] fuel cell power system based on our
current technology and compatible with reformate containing [***]. Stack
efficiencies of [***] were established at [***] and [***], respectively, which
yielded a stack system specific power of [***] that exceeded the DOE goal but
was less than that required to attain system power density. However, a [***]
increase in stack system specific power to [***] has been projected for a design
using [***]. Table 2 shows stack component weight and volume for the [***].
Table 3 shows weight and volume distribution of the stack system components, and
Table 4 shows the parasitic power and efficiency projections at design operating
point conditions. Finally, Table 5 shows the projected performance of the final
integrated fuel cell power system that meets the PRDA goals.

Fuel Processor Issue. ADL was the first to point out that conventional wisdom,
which tended to discount any reforming technology other than steam reforming,
failed to consider the very different requirements that distinguish
transportation fuel processors from stationary ones. Over the last five years,
ADL has used a multi disciplinary team to design, fabricate, and demonstrate
several generations of multifuel processors in several applications and sizes.
Such equipment is now being tested at the [***] level in a very compact,
lightweight, fast-response, highly integrated design that combines all required
reformers, shift reactors, heat exchangers, and steam generators in a
transportation-suitable package that can meet the stringent PNG' goals of [***].
The ADL fuel processor has proven that gasoline, ethanol, methanol, and natural
gas can be converted into a hydrogen-rich gas stream with CO exit concentrations
on the order of [***].

Catalytic POX offers several advantages for vehicles compared to autothermal
reforming and steam reforming. Specifically, the POX process developed by ADL
exhibits the most favorable characteristics in terms of low weight and volume,
low-cost: construction, multifuel capability, and rapid start-up and shutdown.
Furthermore, it can [***]. The extent of the oxidation reaction is regulated by
the quantity of oxygen addition. Without the benefit of the catalyst clean-up
bed after the combustion zone, the POX process must operate at higher
temperature [***] than the catalyst-assisted reforming process [***]. Separation
of POX and catalyst zone provides a pure gas-phase front end to the reformer,
allowing for multifuel operation. Process effluent from the POX react consists
of [***].

The ADL multifuel reformer, like all other reformers, outputs approximately 0.5%
CO along with the hydrogen-rich mixture therefore, to use any reformer with a
PEM fuel cell, some CO clean-up is required. As the preferred approach,
preferential oxidation (PROX) introduces a small quantity of oxygen, usually as
a component in air, to the fuel stream, and then reacts that mixture on
heterogeneous combustion catalysts. This PROX reaction can be very effective.
[***]. At higher temperatures, the adsorption advantage [***] is less favorable,
and the same catalyst also works to react [***].

Many have demonstrated PROX designs using Pt or Pt-alloy catalysts that achieve
engineering success over a narrow 5 rate range at steady-state conditions.
However, transient operation is far more difficult because designs must include
features to alter the heat removal rate. Tight thermal control is needed to
maintain optimal CO oxidation conditions. SL designs could result in very large
heat exchangers and other solutions generally unfavorable for automotive
applications. Another option to tight control over the heat removal rate is to
develop a catalyst formulation that offers enhanced selectivity.

Table 6. Comparison of CMEU Approaches.

Characteristics MTI Twin Screw MTI Turbo ADL Scroll Vairex
Reciprocating
- -------------------------------------------------------------------------------------------

Required Shaft Power, kW [***] [***] [***] [***]
- -------------------------------------------------------------------------------------------
Weight (excluding motor), kg [***] [***] [***] [***]
- -------------------------------------------------------------------------------------------
Volume (excluding motor), (l) [***] [***] [***] [***]
- -------------------------------------------------------------------------------------------
Compressor/Expander Mass [***] [***] [***] [***]
Flow, g/sec
- -------------------------------------------------------------------------------------------
Compressor/Expander Pressure [***] [***] [***] [***]
Ratio
- -------------------------------------------------------------------------------------------
Expander Inlet Temperature, C [***] [***] [***] [***]
- -------------------------------------------------------------------------------------------
Estimated Motor [***] [***] [***] [***]
Weight/Volume, kg/(l)
- -------------------------------------------------------------------------------------------

over traditional Pt-based PROX catalysts. Over the past year, scientists at ADL
have formulated a proprietary catalyst that has been tested with very
encouraging results. This catalyst offers over [***] the selectivity and
reactivity of platinum PROX catalysts. The greatly increased selectivity means
that a PROX device using this catalyst is inherently more transient capable than
a traditional PROX for two reasons: 1. tight control of heat generation is not
necessary, and 2. less heat is produced because less hydrogen is consumed while
converting the CO. The increased reactivity of the new catalyst will allow for a
more compact PROX reactor. In recent research at ADL, we have devised a family
of catalysts that remove CO from simulated reformate to the desired level of
concentration via PROX using air as the oxidant. Extrapolation of our results
from bench-scale testing suggest that a full-scale PROX reactor for a [***] fuel
cell/fuel processor system capable of transient operation could be constructed
to occupy a volume of about [***] and would operate at low temperatures
compatible with the outlet temperature of a low-temperature-shift catalytic
reactor.

ADL has developed the most advanced small-scale fuel processor to date, but some
refinement for the transportation application is still required, Inappropriate
fuel processor design or incorrect system integration can result in poor
start/stop characteristics, sensitivity to poisoning by fuel contaminants, and
excessive system water consumption. Catalyst cost and mass, currently
representing [***] of overall reformer cost and mass, must also be addressed.
ADL has considered all these issues and has developed the simple, low-risk POX
approach to providing the required hydrogen-rich stream to the fuel cell.

Key System Design Features. MTI's preliminary design was based on a [***], shown
in Figure 3. In this system, the twin-screw CMEU provides clean, oil-free air at
[***] to the fuel processor and fuel cell stack at the rate of [***],
respectively. The fuel processor supplies [***] of processed fuel [***] to an
accumulator bottle, with a pressure regulator and a shut-off valve, incorporated
at the interface of the fuel processor and the fuel cell stack. As hydrogen is
consumed by the anode reaction, the regulator will admit sufficient makeup gas
to maintain the inlet pressure at a premium above the [***]. This accumulator is
intended to accommodate only short, fast transients. However, the gas flow rate
time constant is a fraction of a second for both the stack and fuel processor
subsystems.

[***]

Commercial Potential. When accepted as a viable replacement for the ICE, the
fuel cell power system developed in this program will create an entirely new
manufacturing industry with billions of dollars in annual sales. Acceptance will
require first and foremost that this new power system is cost competitive with
the ICE. With a potential production cost of less than [***], including [***]
for the fuel processor, and a rising value for the other features of fuel cells,
that is, high efficiency and low emissions, the potential for such an industry
and its impact on U.S. automotive leadership is becoming more real.

It has often been said that the first application of a fuel cell power system
will be in a stationary application and that only after its success in that
application would the auto industry consider it a viable alternative to the ICE.
MTI is currently negotiating with the Edison Development Corporation (EDC), the
investment subsidiary of DTE Energy, Inc. (a major Midwestern utility holding
company) and [***] for the creation of a new company to commercialize fuel-cell-
based power systems for the stationary and other markets. [***] is a major
designer and manufacturer of production and automated assembly line equipment
for the automobile manufacturing industry, and will apply its expertise to
develop low-cost methods for producing fuel cell systems. EDC will provide its
strong marketing, sales, and distribution capabilities in the transfer and
commercialization of fuel cell power systems for stationary applications.
Initiation of this effort in conjunction with the PRDA would ensure "critical
mass" for the establishment of a U.S. PEM fuel cell manufacturing presence.

As well, the commercial potential of both the fuel processor and the PROX
reactor is enormous if one considers the volumes associated with automotive
production. The fuel processor has been analyzed for cost both by ADL and
Chrysler. In both cases, production costs were consistent with automotive cost
structures [***]. In fact, Chrysler has recently shown commercial interest in
the POX by announcing their interest in producing a prototype fuel cell vehicle
using the ADL technology, if it becomes sufficiently refined in the next two
years. Finally, initial cost projections for the full-size [***] PROX reactor
indicate that it will contain less than [***] in catalyst material. The outcome
of the proposed program will be a fuel processor capable of satisfying the year
2000 PNGV targets.

[***-Chart describing the integrated fuel cell stack/fuel cell processor system
is omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act].

c. Technical Objectives

1. Functionally successful integrated stack/fuel processor system. Issues are:
functionality of stack subsystem; functional integration between stack and fuel
processor subsystems; and an adequate match between transient CO delivery of the
fuel processor and stack CO tolerance. Risk will be mitigated by a stack
subsystem design based on MTI's experience designing a complete automotive stack
system for DOE Ford Phase 11 program; a fuel processor design directly based on
ADL's existing [***] transportation fuel processor; Task 1.1, the integration
and test of a [***] system, using existing hardware, which will occur
during the first 7 months of the program.

2. Integrated system efficiency [***]. Issues are: hydrogen conversion
efficiency of fuel processor with transportation fuels; fuel cell current
density ([***]. Risk will be mitigated by an impressive body of prior work: ADL
has already developed an ethanol fuel processor for transportation use with
efficiency [***]; MTI has developed a [***] stack meeting combined efficiency
and W/kg requirements with Pt loading [***]; MTI has demonstrated superior [***]
alloy catalyst performance with [***] in short stack with LANL assistance. Other
factors include determination of cell/catalyst/operating conditions to optimize
[***] during the first 7 months of program; ADL/MTI close liaison with LANL and
access to LANL's PROX technology for post-processor CO clean-up; [***] (fully
developed commercial technology) identified and selected by MTI that will
provide a more efficient system CMEU.

3. Stack subsystem efficiency [***]. Issues are: need for high fuel-cell current
density [***]. Risk will be mitigated by the existing MTI [***] that meets
combined efficiency and W/kg requirements with [***].

4. Multifuel-capable fuel processor. Issues are: availability of catalysts that
can reform hydrocarbons, with adequate life and acceptable cost. Risk will be
mitigated by the several generations of fuel processors developed by ADL for
transportation application with demonstrated successful reformation of gasoline,
ethanol, methanol and natural gas.

5. Integrated system specific power [***]. Issues are: fuel processor catalysts
that meet performance requirements with minimum mass; weight of stack bipolar
plates and clamping structure; cell current density under reformate operating
conditions, affecting total cell area required. Risk will be mitigated by ADL's
experience in developing compact, lightweight fuel processors for transportation
uses; the MTI [***].

6. System up-power transient response time: [***]. Issues are: system design and
control of fuel processor to maintain effluent composition during transients;
response time of CMEU; response of stack humidification to load changes. Risk
will be mitigated by ADL experience in development of fuel processors for
transportation, where transient response has been a major driver for the
research; MTI first-hand experience in engineering design of an automotive -
stack subsystem and CMEU response considerations; MTI selection of [***] CMEU
for fast transient response/high system efficiency; work with [***] to establish
a vehicle model and evaluate transient performance in Task 4.1.1.

7. Manufacturing cost [***]. Issues are: costs for fuel processor catalysts,
stack design architecture for manufacturability, and stack components. Risk will
be mitigated by ADL identification of catalysts for fuel processor, estimated at
[***] in high production; MTI development of bipolar plate design [***].

8. System start-up to full power [***]. Issues are: thermal response time of
fuel processor mass operating at higher temperature; chemical stability and
control of CO during start-up transient; thermal response of stack in reaching
[***] operating temperature. Risk will be mitigated by ADL experience in
developing lightweight fuel processors with minimum thermal mass; MTI [***]
stack for DOE Ford Phase H with lightweight bipolar plates and specific power
[***]. MTI ongoing development of lighter-weight stack with specific power
[***]; [***].

9. Operating life [***]. Issues are: life of fuel processor catalysts; stack
performance degradation due to CO poisoning of MEA catalyst. Risk will be
mitigated by ADL demonstration of extended fuel processor operation; LANL
demonstration of extended operation of PROX post-processor CO clean-up unit
while maintaining [***].

10. Subfreezing start-up and operation. Issues are: [***].

11. System power density [***].

d. Work Plan

Phase 1: System Definition and Integration

Task 1.1., [***] Building and operating an integrated stack/fuel processor early
in the program willl provide vital experience in the functional and control-
requirements for the integrated system. To this end a [***] system based on
existing hardware for the fuel processor and stack will be assembled and tested.
All thermal and fluid-flow-stream aspects will be addressed. The air-handling
system will not be addressed; rather, the effort will focus on close integration
of the fuel processor and stack to evaluate efforts of varying key system
operating parameters. The system will be assembled and tested at ADUs
laboratories, using their superior facilities for fuel-gas analysis. Tests will
include assessment of the effects on stack performance of reformer and [***]
operating characteristics. Fuel processor effluent composition, mass flows and
state-point conditions for air, fuel, and steam flows will be determined for
operation [***]. Control and transient performance of the fuel processor will be
addressed to the extent possible [***]. The following issues will also be
explored: design, operation, and control of stack afterburner for efficient use
of excess fuel from the anode exhaust; integration of air supplies for both
stack and fuel processor; supply of feedwater from the stack water management
subsystem to the fuel processor shift reactor; maintenance of constant system
inventories of both "clean water" (for stack and shift reactor) and "dirty
water" (condensed from fuel gas and supplied to fuel processor steam generator)
at all conditions; and control of the fuel processor and fuel-gas composition
during transients. The [***] system will also be used for verification tests of
different candidate fuel processor catalyst and for evaluation of candidate
system control strategies.

Task 1.2: Stack Component Development. This task will involve initial component
development work on certain aspects of the stack: [***]

[***] will be tested over a range of loadings within the total allowance of
[***] to identify the disposition of catalyst that provides the highest current
density. Tolerance to CO contamination of the anode gas will also be determined
for each anode catalyst mixture and loading tested, under both steady-state
conditions and 3-sec transient excursions of CO content. After preferred
membrane/catalyst and operating conditions have been identified, a number of
cells will be set up to run long-term endurance tests at the selected conditions
with the final design materials.

Fuel Cell Bipolar Plate. A primary design path will be pursued based on use of a
[***]. Alloys, surface treatments, and in-stack conditions will be identified
that broaden the passive potential domain and minimize corrosion current density
for these plates in service. A back-up design path based on use of a [***] will
also be pursued. Preliminary designs will be made for [***] multicell stacks.
The manufacturing processes required to make bipolar plates for these designs
will be developed to the point where reliable production of [***] plates can be
predicted. These processes include hydroforming of [***]. This work will be
performed by MTI using a well established vendor team. The [***] stacks will be
fabricated, assembled, and tested at MTI under the operating conditions selected
in Task 1.5. This work will be performed for both primary and back-up designs.
At the end of Task 1.2, one design will be selected as the final design based on
cell performance and estimated manufacturing costs.

[***] An alternative material will be developed for the [***]. The requirements
for this material are: [***] MTI will develop the new [***] material using base
stock of either [***] or other suitable substrates. Improvements in cell
polarization curves and reduced stack cost are the anticipated benefits.
Equipment for processing the base stock to produce the final [***] will be
installed at MTI.

Fuel Cell Sealing System and Gaskets, MTI will continue its ongoing work to
identify a superior design and material [***]. The criteria for success are:
[***]. The final seal design will be selected at the end of this task.

Task 1.3: Fuel Processor Development. To ensure efficient system operation, the
POX front end of the ADL fuel processor must be designed to convert a multitude
of fuels [***]. ADL will work with Texaco R&D to speciate and quantify the
output of the POX reactor by operating a [***] experimental POX reactor in the
Texaco laboratories. Testing will be performed to determine POX operating points
and fuel formulation effects on reformate quality, yielding an optimized POX
design. In a parallel path, ADL will design an integrated [***] fuel processor
based on existing hardware designs that will accept the optimized POX reactor
design developed based on test data furnished by Texaco. The [***] design will
include [***].

[***]. Using a [***], ADL will perform tests using the best currently available
catalyst technology or catalyst technology identified from research
studies.

For the [***], ADL will perform a limited number of small-scale tests to refine
the kinetics parameters needed to scale up the catalyst bed, and then construct
a [***]. ADL will then operate the [***] reactor with the [***] to acquire data
on reaction kinetics and heat and mass transfer.

Task 1.4: Initial CMEU Development. An initial evaluation of a [***] compressor
for application to a [***] system will be performed. A preliminary functional
specification will be developed and reviewed with any one of three commercial
supplier of these units for automotive supercharger duty. Two units will be
selected from existing product lines which are close to the specification
requirements. A [***] unit of appropriate size will be obtained and tested,
[***]. [***]. Both effects will increase the compression efficiency and reduce
the exit air temperature. [***].

Operating speed for these units is expected to be about [***]. The compressor
will be tested at the required operating conditions, [***]. Concurrently, the
expander unit will also be tested using [***]. These tests will both validate
the suitability of the [***] compressor for fuel cell systems, and provide
guidance for better adaptation of these units specifically for the final [***]
system. These test results, together with the system definition produced in Task
1.5, will be used to develop a final design specification for the CMEU system,
which will then be provided to the selected compressor manufacturer. This
specification will include a device for [***].

Task 1.5: System Definition. This task will involve design analyses of the
complete integrated system to identify all required system components, identify
design operating conditions and system control strategy which best enable the
system to meet the PRDA goals, and formulate functional and performance
specifications for all components. Laboratory tests of single cells will also be
conducted to develop performance data to support the system definition. Major
Milestone: at the conclusion of Task 1.5, a system design review will be held
with DOE.

Task 1.5.1: Single-Cell Test Data. The current density [***] attainable from
the PEM cell at the peak-power design voltage is the major determinant of the
total cell area and stack size required. Current density is directly affected by
catalyst constituents and loading; anode fuel gas composition; pressures of
reactant gases; utilization of anode and cathode gases; attributes of the
specific membrane used; the humidification water supplied to anode and cathode;
and cell operating temperature and other material and operating parameters.
Tests will be performed to develop polarization curves for a matrix of those
variables affecting current density, stack size, and cost. These data are
required to perform valid trade-off studies between conflicting parameters. MTI
already has a significant library of such data, a large portion of which
pertains to [***]. However, MTI has recently obtained additional test data and
experience working with [***]. Additional data must be obtained on cells with
different permutations of total [***].

A means to provide [***]. (By including a [***].) This will be evaluated by
tests of [***]. This will identify the [***] before any power can be obtained
[***].

Task 1.5.2: Operating Conditions and Control Strategy, ADL has conducted
detailed computer simulations of PEM fuel cell systems for mobile applications.
One such study modeled and examined the design point and off-design operation of
POX, ethanol-fueled systems. The simulation model from this work will be
modified using results from Task 1.1 to duplicate operation of the [***]
hardware. The modified model will then be used to optimize component designs and
operating conditions for the [***]. This work will include development of: a
consistent approach for sizing fuel processor components; conceptual flow
diagrams to identify and analyze heat- and mass-flow interactions between fuel
processor and stack; critical dimensions and component arrangements; heat and
mass balances for candidate system designs; and heat duties for required heat
exchangers. MTI will perform parallel [***].

Cell test results from Task 1.5.1 will be fed into the system analysis as
available. These results will define variations with operating conditions of
attainable current density, which directly affects total cell area, stack size,
weight, and cost. Trade-off studies will be performed to examine the effects on
overall system efficiency, size, weight, and cost of: reactant gas pressure
levels; anode and cathode gas uses; anode and cathode catalyst loading levels;
CO content of fuel gas; combustion of excess fuel gas at stack exhaust and
energy recovery in expander; water (steam) consumption in shift reactors of the
fuel processor and for stack humidification; operating temperatures of fuel
processor effluent versus stack requirements; and other operating and system
design parameters. The trade-off studies will identify those specific system
design and operating conditions that best enable attainment of the efficiency,
weight, volume, and cost targets of Tables 1, 2 and 3 of PRDA Appendix A. The
stack configuration will be determined in part by the required output voltage.
As defined by DOE Ford Phase 11 technical requirements, an output voltage range
of [***] will be targeted, which is compatible with the needs of vehicle
traction-motor systems and should be applicable. The peak-power operating point
of [***] per cell used on the DOE Ford work yielded an estimated stack system
efficiency of [***] [***] required by the PRDA. Peak-power operating voltage for
the proposed program will be altered to [***] to meet efficiency targets and
will increase to approximately [***] power while simultaneously surpassing
specific power and power density goals for stack and integrated power systems as
shown in Tables 3 and 5.

MTI and ADL will produce a system schematic identifying all system components
such as heat exchangers, pumps, gas compressors, flow and pressure control
valves, reactor vessels, and interconnecting pipes, tubes and signal-
transmitting wires. After identification of components and associated operating
conditions, process-flow diagrams for the complete system will be made for peak
power, 1/4 power, and idle. These diagrams will show fluid mass flow, chemical
composition, temperature, and pressure at all points throughout the system.
Functional specifications will then be written for each component. These
specifications will direct the work in Phase 2 to procure or design/develop all
the system components.

Candidate system designs for accomplishing subfreezing start-up will be
evaluated. System configuration and shutdown procedures will be defined to bring
the [***]. Close integration between the fuel processor and stack subsystems may
allow use of the POX combustor to heat the coolant for start-up.

The control strategy for system start-up, idle, and up-power transients will be
defined during this task, to ensure that the selected system configuration and
components will provide stable operation and the required transient response.
Baseline control strategy and logic will be taken from the [***] test results of
Task 1.1. More optimized control systems will be formulated and analyzed against
this baseline. Preliminary estimates of transient response will be made for the
fuel processor and the CMEU. The CMEU offers the potential to overcome a
deficiency in transient response encountered with aerodynamic CMEU components
during the DOE Ford Phase 11 work. A system control strategy documented by
system state diagrams and logic-flow diagrams for system start-up, idle, power
transients, and shutdown will be selected to be carried forward into Phase 3.
Complete development of the control system will be accomplished in Task 2.5.

Phase 2: [***] Subsystem Development

This phase will address the design, development, and test of the subsystems and
components identified in Task 1.5 and on the operating conditions selected
during Task 1.5. Much of this work can be narrowly focused on single components.
However, some aspects, e.g., successful start-up and operation at [***] C, must
be approached on a broader, system-oriented basis as described in Task 3.1.
Phase 2 will conclude with qualification tests of both the fuel processor and
stack, addressing each item in Tables 2 and 3 of PRDA Appendix A. Manufacturing
costs will be addressed during Phase 2 by frequent consultation with MascoTech
and other automotive industry suppliers to review candidate component designs
for manufacturability and by comparative cost estimates developed during Tasks
2.1 and 2.2.

Task 2.1: [***] Stack Development. Task 2.1.1: Primary Stack. Since cell design,
performance, and manufacturing processes will have been proven at a [***] size
in Phase 1, the first step in this task will be the detailed analytical and
layout design of the [***] stack, incorporating MTI proprietary components and
technology, based on the peak-power process-flow diagram data generated in Task
1.5.2. In support of [***]. Sequential procurement of [***]. A previously
assembled team of competent vendors will be used. MTI will also procure the
membrane, substrate for the GDL material, and other materials for manufacturing
the GDL and MEAs. Final manufacture of the MEAs and GDL will be done at MTIs
facilities in a newly installed processing line.

MTI's primary design for bipolar plates will consist of [***]. Sufficient [***]
will be procured to assemble three short stacks of about [***]. These will be
tested at MTI's lab on simulated reformate including [***] and the operating
conditions selected in Task 1.5.2. One of the short stacks will be run for [***]
under peak-power conditions. All of these tests will be done with [***] system.
After performance of the other two short stacks has been characterized, one will
be tested using [***]. Liquid in the anode and cathode exhaust gases will be
sampled and analyzed by capillary gas chromatography in search of any trace of
the [***] compound. Stack performance will be carefully monitored for any
evidence of degradation. The third short stack will be-dedicated to further
exploration of subfreezing start-up and operation. A [***] and large enough to
contain the short stack, gas cooling coils, and associated instrumentation will
be purchased and modified to serve as a test chamber. The short stack [***].
Tests similar to those done with single cells in Task 1.5.1 will be performed to
define the variation of start-up performance capability with stack
temperature.

Confirmation of proper assembly and anticipated performance of the short stacks
will lead to production of sufficient detail components, MEAs, and GDL to
assemble the two stack modules comprising the [***] stack. The full [***] stack
will also be tested at MTI on simulated reformate. The content of [***] will be
formulated per analyses provided by [***] gas stream, so that a range of
concentrations can be used to determine stack CO tolerance Stack polarization
curves will be produced by test, applying the schedule of anode and cathode gas
pressures and use versus power that were selected during Task 1.5.2. MTI's
stack-test facility can supply cathode air flow for a [***] stack at pressures
up to [***]. The simulated [***] Stack humidification water requirements
will also be met by MTI's facilities. Start-up transient response of the stack
itself at room temperature will be determined, operating from test facilities
for air and fuel supply. These initial tests will be performed using [***] in
the facility stack-cooling system. After all performance characterization
testing is completed [***]. The [***]. After obtaining successful operation of
the first module with [***], the second module will be included in the [***] for
final tests of the two-module stack assembly. The intent of this task is the
development of a robust, automotive-ready stack prototype.

Task 2.1.2: Backup Stack. Steps similar to those described above will be taken
to create two short stacks based on the backup design for bipolar plates.
Testing will be performed to ensure that the backup design is adequately
developed so that it could be quickly implemented in a full [***] stack if any
impediment to use of the primary design were to arise.

Task 2.2:[***] Processor Development. Task 2.2. 1: Hardware Configuration. Using
the design output from Task 1.3, ADL will fabricate a multifuel fuel processor
for testing. Working with MTI, ADL will develop a fuel processor specification.
The specification will define mechanical, electrical, thermal, fluidic, and
flowstream composition interfaces Special considerations related to testing,
instrumentation, and safety will also be defined. ADL's multifuel fuel processor
design will be modified to accommodate any changes dictated by the specification
or results of ADL's ongoing test program. [***]. Based on previous experience,
[***]. The fuel processor geometry and integration will be optimized to provide
the maximum conversion efficiency of [***] while minimizing the CO output. ADL
will work with Modine Manufacturing Company to perform a design of
manufacturability and cost analysis on this design to identify cost savings for
the final version of the fuel processor. Furthermore, Modine will supply all
necessary heat exchangers for the complete system.

Task 2.2.2: Catalyst Development. Using the steam reformer and WGS catalyst data
from Task 1.3, ADL will work with [***], an industrial catalyst manufacturer, to
further optimize, develop, and test catalyst for application in small-scale fuel
processors. Using the PROX data from Task 1.3, ADL will design and construct a
full-scale [***] PROX reactor and operate it to acquire data on its
performance. ADL will test the second-generation prototype packaged reactor both
as a stand-alone unit and as a part of the integrated system. The result of the
PROX work will be a vehicle-ready device capable of handling transients and
quick start that is [***]. Finally, ADL has standing agreements to test the
[***] PROX devices of both [***] and [***] as they become available. These
devices will provide additional backup technology should the ADL PROX device not
perform as anticipated.

Task 2.3: [***] Auxiliaries Development. Task 2.3.1: CMEU Development. The CMEU
specification prepared in Task 1.4 will be used-to procure [***] machines.
[***]. [***]. MTI will separately specify and procure the drive motor, inverter,
and controller, as well as the actuation means for the slide valves to vary
displacement. MTI will assemble and test the CMEU over the range of conditions
anticipated during stack operation. Expander inlet conditions will be set to
simulate effluent from the system afterburner. A schedule of [***] that results
in superior performance will be determined. A control strategy using both [***]
will be developed that best [***]. Coordinated use of the [***] will be explored
to determine their usefulness in accommodating off-design excursions expander-
inlet conditions. Code will be developed to control [***] control strategy.

Task 2.3.2: Balance of Plant. Water Management Subsystem. A [***]. Water
recovery will be effected by a [***]. The pressure-control device maintain a
[***]; [***] may be used to meter required flow to the stack anode, stack
cathode, and fuel-processor shift reactor. The reservoir will be designed to
receive the [***].

Temperature Control Subsystem. [***] will also incorporate means for [***]. A
first approach for this function will be to use the fuel processor PROX [***].

Task 2.4: Control Strategy and Hardware Development. The system schematic
developed in Task 1.5.2 will be reviewed, and the required sensors and control
elements specified. Existing [***] will be reviewed to determine if they can be
adapted to serve the required functions. Devices will either be adapted from
[***] or designed and built to serve all necessary sensing, actuation, or
control functions. The total number of control inputs and outputs will be
identified. The system control strategy conceived in Task 1.5.2 will be
reviewed, and preliminary blocks of code required to implement the control
identified, The microprocessor-based executive system control developed [***]
will be upgraded and hardened for control of the integrated fuel cell power
system interfacing with and supervising the ADL distributed controls. [***]
will be used wherever possible.

Task 2.5: Subsystem Qualification Tests. Task 2.5.1: Stack Subsystem. The stack,
CMEU, water management, and temperature control subsystems will be assembled as
a [***] and operated on [***] as a complete stack subsystem. Shakedown tests
will be performed to achieve satisfactory functionality. A test procedure will
be developed for tests to determine efficiency at [***]; CO tolerance
during steady-state operation; [***]; time for start-up to max power at [***];
and capability to start up after [***]. An environmental chamber large enough to
contain the subsystem and capable of [***] will be rented for this test.

Task 2.5.2: Fuel Processor Subsystem. Using existing test facilities, test
stand, support instrumentation, and test procedures from previous programs, ADL
will evaluate the performance of the [***]. Major components (POX, shift
reactors, sulfur removal, etc.) will be evaluated based on thermal and chemical
analysis. Shakedown tests will be conducted to verify proper operation of
instrumentation and test hardware. A test procedure will be developed by MTI and
ADL Efficiency, [***] will be key system-level measurements. Intermediate
temperature, pressure and chemistry measurements will be used to establish
operating characteristics of important components and subsystems. The proposed
testing will be developed to support the technology advancement roadmap shown in
Table 1.

Major Milestone: at the conclusion of Task 2.5, a subsystem design review will
be held with DOE.

Phase 3: [***] System Integration

Task 3.1: System Design. Layout and piping drawings will be made to define
physical disposition of components an interconnecting piping for integration of
the stack/fuel processor subsystems in a [***] configuration. Emphasis will be
placed on [***]. Integration of fuel processor control, stack control, and
overall system executive control will be defined and implemented in both
hardware and software. [***]. ([***] of the entire system will be carefully
assessed during the ensuing test program.) The system layout will be compatible
with installation at MTI's lab where electrical loading facilities with fast
transient capabilities are available. Major milestone: at the conclusion of Task
3 a [***] performance and design review will be held with DOE.

Task 3.2: Stack Fabrication. The intent is that the stack tested in Task 2.5.1
will demonstrate good operating characteristics and performance and will be
carried forward intact into the integrated [***] system. Any significant
operating or performance deficiency will be investigated to determine the cause.
If readily correctable, this will be done. If necessary, the stack may be
disassembled and rebuilt with new [***] or replacement components. [***]
system testing will be a much more productive development activity if the
components are performing at or near their intended level.

Task 3.3: Fuel Processor Fabrication. It is also the intent that the fuel
processor tested in Task 2.5.2 will demonstrate good operating characteristics
and performance and will be carried forward intact into the integrated
brassboard system. The same approach as described in Task 3.2 will pertain to
the fuel processor.

Task 3.4: System Assembly and Test. The integrated brassboard system will be
assembled and installed at MTI's facilities, which include a computer-
controlled, electric load system and a test cell incorporating the safety
measures required for [***] and [***]. A test plan will be developed to guide
the test procedures. A start-up procedure for the integrated system will be
developed to ensure that [***] is supplied to the stack at all times. [***].
Steady-state operation of the system will be perfected at gradually increasing
power levels. Power transients will then be practiced at gradually increasing
rate of changes.

Task 3.5: Subsystem Design Upgrade. After completing tests of the integrated
[***] system and reviewing all test results, design modifications will be
identified to improve system operation and performance. Design efforts will be
directed toward the design target of achieving a reliable operating life of at
least [***].

Task 3.5.1: Stack Upgrade. All data pertaining to operation of the CMEU will be
reviewed with the supplier of the [***] units. This will include steady-state
operations and efficiency over the entire operating range and transient response
data. The possible merit of changing the max-efficiency design point will be
discussed in the context of obtaining an efficiency curve better suited to the
anticipated system duty cycle in automotive service. Any required improvements
in operation of the [***] system will be noted for correction. In addition, any
design modifications to facilitate integration of the [***] package will be
identified. These modifications will be summarized in a modified procurement
specification for an upgraded CMEU. Operation and performance data for the stack
and water management and temperature control subsystems will also be reviewed,
and any required upgrades made. The designs will also be reviewed with [***]
manufacturing engineers for modifications to minimize manufacturing cost.

Task 3.5.2: Fuel Processor Upgrade. ADL will review the complete library of
operating and performance data pertaining to the fuel processor, and identify
all design modifications which may improve performance or help reduce weight or
size. This will include incorporation of improved catalysts identified during
parallel investigations. ADL will also incorporate design modifications from
[***] manufacturability study for minimizing manufacturing cost.

Task 3.6: Endurance Test. A [***] endurance test will be conducted on the
integrated [***] system, in its final configuration from Task 3.4. A computer-
controlled load system will be programmed to impose a [***] that will be
repeated continually during the test. [***] will also be included. Records will
be maintained of any component malfunctions or system upsets which occur.
Continuous records will also be kept of system power output compared to the
power setpoint value.

Phase 4. [***] Prototype System Package

During Phase 4, a precommercial, prototype, [***] packaged, stand-alone system
will be designed, built, and tested to demonstrate the level of achievement
against the targets defined by Table 1, PRDA Appendix A.

Task 4.1: Packaged Design. A system packaged design will be developed that best
implements the [***] required for start-up and operation in subfreezing ambient
temperatures. This capability will be given first priority during packaged
design. The level of overall packaging integration will also reflect the
functional relationship between components whether or not function will be
favored by contiguous location of components. Components may be grouped in two
or more subpackages which might be placed in separate locations when the system
is installed in an automobile. The [***] is a good example of a subpackage that
could be distant from the stack. Each subpackage will be designed for the
maximum compactness attainable within the constraints of the existing component
designs, and the time and resources available to the program. Particular
attention will be given to the design of the stack subsystem to ensure that the
[***] requirements for [***] start-up are met. Influence of this requirement on
the design of [***] components will be reflected by changes to those designs, if
necessary. Layout design drawings for the subpackages will be produced, together
with new component manufacturing drawings where necessary. To the greatest
extent possible, the package will be designed to be automotive ready, compact,
light, and able to run in a stand-alone or over-the-road configuration. [***]
will provide an independent assessment of progress toward this goal.

Task 4.1.1: Vehicle Transient Model. This task anticipates the time when
emissions test data will be taken for the final system. Those data must be
presented in terms of grams/mile of the emission products, for comparison with
EPA Tier II emissions limits. This can be done in one of two ways. First, [***].
The second method will be selected to avoid costs and time required to [***].
This requires the creation of a [***]. MTI will work with [***] to generate the
[***] that will then be used for evaluation of transient operation and vehicle
emissions. Texaco will define a likely configuration for the fuel-cell-powered
vehicle and verify the model by comparison with known and measured field
data.

Task 4.1.2: Manufacturing Cost Estimate. A team consisting of MascoTech
manufacturing engineers, MTI manufacturing and design engineers, and auto
industry specialists will develop an estimate of manufacturing cost for the
prototype. Further, MTI will use the results of existing manufacturing and cost
analysis from the DOE Ford Phase II program to enhance and refine the
manufacturing cost estimate. MTI will provide access to the manufacturing
drawings for system components. Access will also be provided to MTI's and ADL's
design engineering personnel if questions arise concerning drawing requirements
or the suitability of contemplated manufacturing methods.

Major milestone: at the conclusion of Task 4.1, a packaged design review will be
held with DOE.

Task 4.2: Stack Fabrication. A new stack will be built for the prototype system,
incorporating all design upgrades identified during Task 3.5.1. Total loading of
[***]. A new CMEU will be ordered from the supplier of this equipment. All
design upgrades to these machines will also be incorporated. A complete
complement of new [***] subsystem components will be fabricated, reflecting
design modifications defined in Task 4.1. A new set of components for the [***]
subsystem will be manufactured.

Task 4.3: Fuel Processor Fabrication. Based on the results of Task 2.2, the
[***] of Task 3.4, the design upgrades of Task 3.5.2, and the [***]
manufacturability analysis, ADL will design and build a precommercial multifuel
processor prototype for the final [***] packaged system. All improvements to
catalyst designs available at this time will be incorporated. The PROX cleanup
unit may be integrated into the packaged containing the balance-of the fuel
processor and improved packaged integration of the afterburner/fuel vaporizer
may be implemented.

Task 4.4: System Assembly. The prototype system will be assembled at MTI. All
components or subassemblies will be weighed. The rectangular volume required to
enclose each subassembly or component will also be determined. The subpackages
will be assembled using the structural supports and brackets designed in Task
4.1. Instrumentation required for monitoring subsystem and component performance
will be installed. The subpackages will be united into an overall system
package enabling convenient lifting and transport via fork-lift truck. The
system will then be installed in MTI's [***].

Task 4.5: System Shakedown and Tests. As in Task 3.4, a test plan will be
developed for the prototype system. Fuel will be obtained from [***] in
accordance with specifications previously agreed to. The start-up procedure from
Task 3.4 will be used initially. Steady-state system operation will again be
perfected, at gradually increasing power levels, up to the maximum attainable
steady-state power. Control code may be modified to accommodate differences
between the [***] and prototype systems. Data will be taken at steady-state
conditions to define heat and mass balance and energy efficiency data for the
system. Performance data will be taken to define a plot of system efficiency
versus net power from idle to the peak power point of [***]. System [***] at
steady-state conditions will again be closely observed. Specific power and power
density will be defined using the max power obtained during these tests. The
summation of subassembly or component weights and volumes determined during Task
4.4 will be used in this determination of specific power and power density.
Power transients will then be practiced, at gradually increasing rates.
Measurements of fuel-gas CO content during power transients will be made to
verify proper control of fuel processor operation during these events. Up-power
transients from [***] power will be practiced, and the control code developed to
achieve a transient response [***] for this transient event. The start-up
sequence will then be developed by trials of successive modifications to the
code, with intent to achieve [***]. Finally, observations will be made to
determine whether or not the full system inventory of [***] is returned to the
reservoir during shutdown. Any [***] that prevent this will be changed to ensure
proper [***]. System provisions for [***] will be checked at room temperature
for functionality.

Task 4.6: Qualification Test and Delivery. The subcontract to Texaco's Beacon
Laboratory cited under Task 4.1.1 will include performance of a qualification
test at their site. The prototype packaged system will be shipped there,
installed in a test cell, and connected to both a computer-controlled electric
loading system and emissions-measuring equipment. Steady-state tests will be
performed at [***] net output to verify the energy efficiency determinations
made during Task 4.5. Transient runs from [***] power will also be performed to
confirm the transient response data taken in Task 4.5. Simulated Federal Test
Procedure (FTP) urban driving cycles and highway fuel economy cycles will be
performed. The fuel cell vehicle model created in Task 4.1.1 will be used to
simulate EPA driving cycles to generate fuel economy and emissions results that
can be stated in terms of mpg and g/mile of emissions products. The FTP for
these tests includes a [***]. This will initially be done at [***] ambient
temperature. Additional [***] tests will be performed to determine [***].Upon
demonstration to DOE, the packaged fuel cell system will be delivered to DOE for
a 12-month test period.

Project Management. The project management task (Task 5. 1) will ensure that MTI
provides the required monthly technical and financial reports (Task 5.2) to DOE
and a final project report (Task 5.3) containing data from the work performed
according to the project tasks along with analyses and conclusions based on
these data.

e. Performance Schedule

Table 7 presents the performance schedule for the proposed 30-month program.

f. Related Research or R&D

The unlimited potential of fuel cells as a low-cost, clean power source has
created a fast-paced, competitive environment with many R&D opportunities. Much
of this research is directly relevant to Topic 1 and some of the most
significant advances have been made by MTI and ADL. A summary of a portion of
this experience is presented in Table 8.

g. Key Personnel and Bibliography of Directly Related Work

The key MTI personnel are Dr. William Ernst, Principal Investigator; John
Meacher, MTI Program Manager; Dr. Wayne Huang, Electrochemistry; Dr. Manmohan
Dhar, System Modeling/Analysis; Daniel Jones, System Design and Test Engineer;
and Gary Antonelli, Manufacturing Cost Analysis. Dr. Ernst has successfully
initiated and directed over $120 million in research programs during his 35-year
career. His most relevant research spans five years of fuel cell development
programs, including the DOE Ford Direct Hydrogen PEM Fuel Cell Phase I and II
programs. Dr. Ernst received a Ph.D. in aeronautical engineering from RPI, holds
one patent and has six patent disclosures pending. A frequent speaker, reviewer,
and attendee at national and international fuel cell conferences and workshops
(1996 Fuel Cell Seminar, NASA Space 2000 Conference, Electric & Hybrid Vehicle
Technology'95), he also served as a panelist on several fuel cell program
reviews. Mr. Meacher has over 35 years of experience in power systems
development, specializing in heat transfer analysis, heat exchanger design, and
system integration. He has managed several of MTI's fuel cell development
projects and specializes in simplification of complex power systems. He received
a B.S. (mechanical engineering) from Texas A&M University. Dr. Huang has over
six years experience in the design of high-performance catalysts, material
characterization, electrocatalysis, and hands-on experience with single-cell and
prototype fuel cell stacks from 5cm/2/ to 320 cm/2/. A former staff scientist at
LANL and senior researcher at the DMFC research hub at the Illinois Institute of
Technology, he has a Ph.D in analytical chemistry from the Ohio State
University. Relevant publications by Dr. Huang include: "Preparation of
Nanoscale Platinum (0) Clusters in Glassy Carbon and Their Catalytic Activity,"
Chem. Materials 5 (1993) 1727-38; "A New Composite Electrolyte System for Direct
Methanol Fuel Cells," submitted to J. Phys Chem.; "The Structural Evolution of
Carbon Supported Fuel Cell Catalysts Studied by in-situ X-ray Absorption Fine
Structure Spectroscopy," submitted to Carbon; "Oxygen Reduction on Modified
Glassy Carbon Electrodes in Alkaline Solution," submitted to J. Electroanal.
Chem; and "Iron Doped Glassy Carbon: Synthesis, Characterization and
Electrochemical Behavior," Abstract 57, Pittsburgh Conference, March 1993. Dr.
Dhar has over 20 years experience in the modeling, analysis, and integration of
complex power systems and performed the analytical work for the proposed
preliminary system design. He has a Ph.D. (mechanical engineering) from Purdue
University. Mr. Jones has 12 years of experience as a design and test engineer
and is performing this role on the DOE Ford program. He has an M.S. in
mechanical engineering from MTI. Mr. Antonelli has more than 25 years experience
as a manufacturing engineer and most recently reduced MTI's fuel cell plate
manufacturing costs by a factor of 3. He holds a B.S. in mechanical engineering
from Union College.

The key ADL personnel are Jeffrey Bentley, ADL Program Manager; Gus Block,
Testing Support; James Cross, System Modeling; Bo He, Test Setup; William
Mitchell, System Integration; Brian Norwicki, Data Analysis; Robert Weber, PROX
development. Mr. Bentley will serve as the primary ADL interface with MTI. He
has 15 years experience in managing complex, multimillion-dollar development
programs. Mr. Block specializes in testing support/data acquisition for
alternative energy systems, specifically hydrogen, and Mr. Cross performs system
modeling with experience in chemical engineering analysis, energy systems
modeling, and natural gas technologies. Mr. He supports test setup with
experience in energy systems and emission control, process engineering, product
development, and cost analysis. Mr. Mitchell specializes in system integration,
with 7 years experience in advanced power systems, fuel cell technology and fuel
processing, Mr. Norwicki performs data collection/analysis with experience in
gas composition sampling techniques, and Mr. Weber specializes in PROX
development/catalyst formulation with experience in catalyst characterization,
chemical kinetics measurements, and chemical reaction engineering.

Key personnel from other subcontractors are: Peter Liiva, Texaco; Richard
Johnson and Vince Stempien of Masco. Mr. Lilva received an M.S.M.E. from
Pennsylvania State University and has worked at Texaco since 1991 on various
projects ranging from partial oxidation speciation studies to vehicle emissions
and performance. He conducts electric vehicle performance testing and provides
guidance to executive staff on advances in alternate fuels. A regular
participant in DOE working group meetings and an organizer of technical sessions
at industry conferences, Mr. Liiva is the author of numerous technical papers,
Mr. Johnson is the Director of Research and Development for the Masco
Corporation, and was previously employed for 33 years by the Chrysler
Corporation in various engineering and management positions. He has an M.A.E.
from the Chrysler Institute of Engineering. Mr. Stemplen, Director of
Engineering at MascoTech, has been involved in the design, development,
introduction, and manufacturing of new products with Tier 1 suppliers to the
automotive market for 20 years. His manufacturing experience includes stamping,
roll forming, stretch bending, fabrication, welding, finishing and assembly of
light-gage stainless steel parts as well as production of TIG-welded stainless
steel tubing.

[Chart ("Table 7") describing performance schedule and tasks is omitted pursuant
to Rule 406 under the Securities Act and has been filed separately with the
Securities and Exchange Commission.]

[Chart ("Table 8") lists MTI and ADL Related Research, as set forth below:

Table 8. MTI and ADL Related Research

Program Benefit to Proposed Program

MTI

Ford Motor Co. . Demonstrated 10-kWe PEM fuel cell (power density
(greater than) 7.1 lb/kW, MEA performance (less
than) 850 mA/cm/2/, (greater than) 0.17 mg/cm/2/ Pt
loading. Cost projections for automotive volumes of
S28/kW for materials.
. Developing 50-kWe PEM fuel cell power system for
automotive application with such advanced components
as improved CMEU and lightweight and low-pitch
reactant plates suitable for automated
manufacturing.
. Innovative modular power system concept similar to
ICE concept enables compact system construction and
facilitates system maintenance and stack module
replacement.

DOE . Developing and fabricating innovative CO and N/2/
separation membranes using metal deposition
techniques in collaboration with the Center for
Advanced Technology at the State University of
Albany.

NY State Energy Authority . Developed basic fuel cell technology including
internal humidification.

MTI IR&D . Advanced component development: reformate-tolerant
catalysts, alternative reactant plate designs.
. Extensive investment in new facilities for fuel cell
manufacture and test.
. Design for manufacturability: cost-effective plate
fabrication processes similar to auto industry
techniques.
. Investigation of material interactions to
eliminate formation of performance-degrading
oxides on metallic plates.

ADL

DOE . Development of advanced fuel processing and hydrogen
storage technologies.
. Technical/market analysis of fuel cell applications
in building cogeneration.
. Development of commercialization policies.
. Role of fuel cells in New Generation Vehicle
strategy.

Ford Motor Co. . Analyzed fuel chain efficiency and emissions for
alternative-fueled vehicles.
. Assessed investment cost of different
alternative-fuel infrastructures.

General Motors . PROX development.

U.S. Tier 1 Auto. . Developed POX reformer capable of operation on
Supplier petroleum fuels.
. Developing a high-efficiency scroll
compressor/expander for fuel cell vehicles.

European Truck . Designed fully integrated auxiliary power unit for
Manufacturer heavy-duty truck based on PEM technology.
. Performed HAZOP analysis to identify and address any
safety concerns.

Industrial Gas . Developing advanced natural gas fuel processing
Manufacturer technology.
. Refinement of complete system integration.

NREL . Assessed state of the art for polymer electrolyte
fuel cells worldwide for transportation
applications.

h. Facilities/Equipment

MTI has made an aggressive investment to design, install, and commission more
than 4,000 ft/2/of new facilities to support the development, manufacture, and
test of PEM fuel cell stacks and components. These include a 300 ft/2/
environmentally controlled stack assembly facility and a 600 ft/2/ chemical
processing room for MEA preprocessing. Recently commissioned facilities include
a 1700 ft/2/ facility for automated MEA and GDL manufacturing, a fully
instrumented 600 ft/2/ CMEU test facility, and an 800 ft/2/ power system test
facility certified for hydrogen and multifuel use and equipped with automated
control and data acquisition systems and 70-kW, electrical load bank capability
for real-time monitoring of 100 channels of stack data under LabView control.
Other available equipment includes computerized stack test stations for 1-kW and
10-kW stacks, small cell test stations for MEAs, GDLs, and membranes as well as
complete machine shop, quality control inspection, and electronics fabrication
and testing facilities. A complete array of design and analysis tools are also
available including AutoCAD, ProEngineer, ANSYS, and numerous proprietary codes
for analysis of rotating equipment, fuel cells, stacks, and systems including
control-level automotive simulations. Further, in 1998, MTI will complete a
state-of-the-art fuel-flexible test facility for integrated power systems
complete with reformate analysis capability. MTI owns and will make available
these extensive fuel cell development facilities and equipment to support the
proposed research.

The ADL fuel processor test facility is a 1500 ft/2/ pilot plant equipped with
liquid and gaseous fuel supply systems, continuous gas sampling and composition
monitoring equipment, fuel cell load banks and support system, and the ability
to simultaneously measure 50 channels of performance data at 10-Hz sample
frequency. ADL also has a 13,300 ft/2/ facility for manufacturing and prototype
development that is equipped with computer-aided data acquisition equipment,
vacuum equipment, mass spectrometer leak detectors, and an assembly area as well
as a fully-equipped precision metrology laboratory. The analytical chemistry
facilities at ADL are equipped with instrumentation for organic and inorganic
species analysis; computerized gas chromatography and nondispersive
infraredCo2analyzer for CO, C02, N2 , and a range of HC species; computerized
mass spectrometers; Fourier transform infrared spectrometers, liquid
chromatographs, atomic absorption and plasma emission spectrometers; thermal
analyzers X-ray fluorescence and diffraction spectrometers; and scanning and
transmission electron microscopes. ADL researchers also have available a full
complement of computer-aided design and analysis tools including ProEngineer and
ComputerVision for mechanical design and engineering and Algor's Supersap, ACSL,
MathCad, Mathematica, and PAPST and APES3D. To support its core competencies in
fuel development and related refinery processing, the Texaco Beacon Laboratory
has extensive resources for power plant and emissions testing, including more
than 50 engine dynamometer test stands, 9 vehicle chassis dynamometers, and a
staff of automotive engineers. Driven by strict pollution control regulations
and a desire to develop new, environmentally friendly products, Texaco has also
invested in and developed state-of-the-art emission diagnostics such as rapid
sampling systems and in-cylinder laser diagnostics. Masco Corporation, through
its Research Center and MascoTech Industrial Components, has a full complement
of facilities appropriate for a $2-billion automotive industry Tier 1 supplier.
Specifically, with respect to stack and system manufacture, most types of light-
gage stainless steel sheet stack and tubing processing equipment are in use at
their facilities. The Research Center and several Masco, divisions have full
experimental, analytical, and engineering capabilities appropriate for product
development. Further, their management and staff are thoroughly familiar with
all aspects of the supply of high-volume automotive components.

I. Consultants, Subcontractors, and Teaming Partners

Three subcontractors will support MTI in the conduct of the proposed program:
ADL, MascoTech, and Texaco. ADL will develop a [***] fuel processor; MascoTech
will review candidate component designs for manufacturability, propose
productivity improvements, and prepare comparative cost estimates; Texaco will
assist ADL in the evaluation of the integrated fuel processor and will support
MTI by performing transient and emission tests of the packaged [***] system and
[***].

MTI has well established working relationships with all of its subcontractors.
MTI and ADL have worked together since 1995 on the integration of PEM fuel cell
and reformer technology and have a memorandum of understanding dating from 1996
for application of this technology to specific stationary power systems. As a
former major stockholder in MTI, Masco has maintained a close business
relationship with MTI for more than 30 years. MTI will work with MascoTech, a
Tier 1 automotive supplier, and one of their subsidiaries, MascoTech Industrial
Components, a manufacturer of stainless steel sheet and tube products. Their
knowledge of state-of-the-art manufacturing processes and industry practices
will help achieve manufacturing cost goals and provide a pathway to inclusion of
other automotive-volume manufacturers in the PNGV program. Through our
association with ADL, MTI has begun working with Texaco's Beacon Laboratory.
Texaco brings an intimate knowledge of fuels, emissions, and EPA test
procedures, as well as extensive test facilities with transient test data
acquisition equipment and a fully equipped cold test facility. In addition to
these subcontractors, MTI will also solicit support from several qualified U.S.
suppliers: Courtauld (carbon composites), Gore (membrane), Hoechst Celanese
(ultra-low-cost membrane, adhesives, conducting plastics), C. B. Kaup (metal
forming), and Manning (carbon materials). MTI has existing business and/or
proprietary agreements in place with these and other suppliers.

j. Similar Financial Assistance Applications, Proposals, or Awards

None.

Mechanical Technology Incorporated

SPECIAL TERMS AND CONDITIONS FOR FINANCIAL ASSISTANCE AWARDS
------------------------------------------------------------

The requirements of this attachment take precedence over all other requirements
of this award found in regulations, the general terms and conditions, DOE
orders, etc., except requirements of statutory law. Any apparent contradiction
of statutory law stated herein should be presumed to be in error until recipient
has sought and received clarification from the Contracting Officer.

1. PAYMENT OFFICE
--------------

CR-54/CHO Account Payable Division U. S. Department of Energy P.O. Box 500
Germantown, MD 20874-0500

2. FINANCE OFFICE
--------------

U. S. Department of Energy Chicago Operations Office Financial Services Group
9800 South Cass Avenue Argonne, Illinois 60439

3. PAYMENT - Advance Payment under this award will be made by:
-------

[ ] Department of Health & Human Services (DHHS) Payment Management System
(PMS), formerly DOE Letter of Credit.

The recipient shall request cash only as needed for immediate disbursements,
shall report cash disbursements in a timely manner, and shall impose the same
standards of timing and amount, including reporting requirements, on secondary
recipients.

[X] Treasury Check

An original Request for Advance or Reimbursement, SF 270, shall be submitted as
necessary to the Payment Office specified in Section 1. above, and one copy of
the SF 270 shall be submitted to the Contract Specialist specified in Block 12
of the Notice of Financial Assistance Award (DOE F 4600.1). The timing and
amount of advances shall be as close as is administratively feasible to the
actual disbursements. Such requests shall not be made in excess of reasonable
estimates of cash outlays for a 30 day period.

An electronic funds transfer will be accomplished if the Finance Office has an
Automated Clearing House (ACH) Vendor Miscellaneous Payment Enrollment Form on
file for your organization.

Mechanical Technology Incorporated

4. DECONTAMINATION AND/OR DECOMMISSIONING D&D COSTS
------------------------------------------------

Notwithstanding any other provisions of this Agreement, including but not
limited to FAR 31.205-31, when applicable, as incorporated by Financial
Assistance Rule 600.127(a), the Government shall not be responsible for or have
any obligation to the recipient for (i) Decontamination and/or Decommissioning
(D&D) of any of the Recipient's facilities, or (ii) any costs which may be
incurred by the Recipient in connection with the D&D of any of its facilities
due to the performance of the work under this Agreement, whether said work was
performed prior to or subsequent to the effective date of this Agreement.

5. FEDERALLY-OWNED PROPERTY
------------------------

If you acquire federally-owned property under this award whether fabricated,
furnished or purchased With Capital Equipment Funds, then a listing of such
property shall be submitted on DOE F 4300.3, Summary Report of DOE-Owned Plant &
Capital Equipment, to the Contracting Officer within 30 days after February 28
of each year and within 30 days after the project period ends. The report must
separately identify items which were fabricated, furnished, or purchased with
Capital Equipment funds under this award.

6. PURCHASE OF AMERICAN-MADE EQUIPMENT AND PRODUCTS - SENSE OF CONGRESS -
----------------------------------------------------------------------
FISCAL YEAR 1998
----------------

It is the sense of the Congress that, to the greatest extent practicable, all
equipment and products purchased with funds made available under this award
should be American-made.

7. NOTICE REGARDING UNALLOWABLE COSTS AND LOBBYING ACTIVITIES
----------------------------------------------------------

Recipients of financial assistance are cautioned to carefully review the
allowable cost and other provisions applicable to expenditures under their
particular award instruments. If financial assistance funds are spent for
purposes or in amounts inconsistent with the allowable cost or any other
provisions governing expenditures in an award instrument, the government may
pursue a number of remedies against the recipient, including in appropriate
circumstances, recovery of such funds, termination of the award, suspension or
debarment of the recipient from future awards, and criminal prosecution for
false statements.

Particular care should be taken by the recipient to comply with the provisions
prohibiting the expenditure of funds for lobbying and related activities.
Financial assistance awards may be used to describe and promote the
understanding of scientific and technical aspects of specific energy
technologies, but not to encourage or support political activities such as the
collection and dissemination of information related to potential, planned or
pending legislation.

8. ADDITIONAL PROVISIONS
---------------------

If the appropriation symbol contained in Block 14.a. of the Notice of Financial
Assistance Award for this award is listed below, paragraph 8.a. is applicable to
this award, otherwise paragraph 8.b. applies:

89X0213.91 8990216.91 89M0216.91 89M0217.91 89X9219.91
89X0215.91 8900216.91 89X0216.91 89X0218.91 89M0219.91
89X0214.91 8910216.91 8990217.91 89M0218.91 89X0235.91

a. Department of Interior Appropriations Act Funding:
--------------------------------------------------

1. Lobbying Restriction
--------------------

The contractor or awardee agrees that none of the funds obligated on
this award shall be made available for any activity or the publication
or distribution of literature that in any way tends to promote public
support or opposition to any legislative proposal on which
Congressional action is not complete. This restriction is in addition
to those prescribed elsewhere in statute and regulation.

2. Compliance With Buy American Act
--------------------------------

In accepting this award, the recipient agrees to comply with sections 2
through 4 of the Act of March 3, 1933 (41 U.S.C. 10a-10c, popularly
known as the "Buy American Act"). The recipient should review the
provisions of the Act to ensure that expenditures made under this award
are in accordance with it.

b. Energy & Water Development Appropriations Act Funding:
------------------------------------------------------

Lobbying Restriction
--------------------

The contractor or awardee agrees that none of the funds obligated on
this award shall be expended, directly or indirectly, to influence
congressional action on any legislation or appropriation matters
pending before Congress, other than to communicate to Members of
Congress as described in 18 U.S.C. 1913. This restriction is in
addition to those prescribed elsewhere in statute and regulation.

Mechanical Technology Incorporated

9. REPORTING
---------

Failure to comply with the reporting requirements contained in this award will
be considered a material noncompliance with the terms of the award.
Noncompliance may result in a withholding of future payments, suspension or
termination of the current award, and withholding of future awards. A willful
failure to perform, a history of failure to perform or of unsatisfactory
performance of this and/or other financial assistance awards, may also result in
a debarment action to preclude future awards by Federal agencies.

10. PARTIAL FUNDING
---------------

This cooperative agreement is partially funded on a cost reimbursement basis
without fee or profit. The total estimated cost of the project to be conducted
during the current budget period is $14,904,564.00 of which the estimated cost
to DOE is $11,178,423.00 and the estimated cost to the Participant is
$3,726,141.00. The Cumulative DOE Obligation for the current budget period is
$3,601,816.00 and, subject to the availability of additional funds, DOE
anticipates obligating an additional $7,576,607.00 hereunder for the current
budget period. The Participant shall not be obligated to continue performance of
the project beyond the total of: (a) the amount of funds set forth as the
Cumulative DOE Obligation for the current budget period in Block 16.b.(I) of the
face page, (b) the amount, if any, set forth as DOE Funds Authorized for Carry
Over in Block 16.a.(2) of the face page, and (c) the amount of the Participant's
corresponding obligation for the current budget period, viz., $1,200,563.00;
provided, however, that once the Cumulative DOE Obligations for the current
budget period have been increased by DOE to $11,178,423.00, the Participants
obligation for the current budget period shall be increased to a total of
$3,726,141.00, and the Participant shall be expected to bring the project
(covered by the current budget period) to its conclusion within the amount of
$14,904,564.00, and there is no commitment by DOE to provide any additional
funding to the Participant. This cooperative agreement is subject to a refund of
unexpended funds to DOE.

ADDITIONAL SPECIAL PROVISIONS

TABLE OF CONTENTS

CLAUSE SUBJECT PAGE
- ------ ------- ----

I. Cost Share Contributions ....................................... 1

2. Indirect Cost Applied to Teaming Partners' Costs ................ 1

3. Fee I .......................................................... 1

4. Adequate Recognition ............................................ 1

5. U.S. Competitiveness ............................................

5. Statement of Substantial Involvement ............................ 2

6. Technical Direction ............................................. 3

ADDITIONAL SPECIAL PROVISIONS

1. COST SHARE CONTRIBUTIONS
------------------------

It is the intention of the Government and the Participant to share the allowable
and allocable costs of performance of the work during this Agreement as set
forth herein.

The Government's contribution and support for this Agreement during the project
period September 30, 1997 through March 31, 2000 will be $11,178,423.00.
The Participant will contribute $3,726,141.00 toward the aforementioned budget
period. It is the intention of the Government and the Participant to share the
total allowable and allocable costs of performance during the project period on
a 75.0 percent (Government) and 25.0 percent (Participant) based on total cost
of the project, see Block No. 16a.(6) of the Notice of Financial Assistance
Award, face page. It is understood by the parties that the DOE share of this
budget period is $11,178,423.00 and no additional Federal funding will be
provided notwithstanding the total cost of the project at completion. The cost
sharing formula zero percent (Government) and 100 percent (Participant) shall
apply to any increase in the Total Approved Budget.

2. INDIRECT COST APPLIED TO TEAMING PARTNERS' COSTS
------------------------------------------------

3. FEE
---

No fee shall be paid to the Recipient or any subaward for performance under this
Agreement.

4. ADEQUATE RECOGNITION
--------------------

It is agreed that the Participant shall obtain adequate recognition of the
United States support for the technology developed under this cooperative
agreement in any contracts, licenses, or other agreements which involve the
transfer to foreign entities of the fuel cell technology developed in whole or
in part at Government expense. The Participant agrees to notify and obtain
concurrence from the Assistant Secretary for Energy Efficiency and Renewable
Energy or designee in writing of the adequate recognition obtained prior to
entering into any such contracts, licenses, or other agreements. The Awardee
shall not enter into any such contracts, licenses, or other agreements without
the concurrence of the Assistant Secretary for Energy Efficiency and Renewable
Energy or designee. The determination of whether to grant such concurrence shall
be at the sole discretion of the Assistant Secretary for Energy Efficiency and
Renewable Energy or designee and is not subject to litigation under 10 CFR
(S)600.22, Disputes and Appeals. The determination shall be in writing and shall
be furnished to the Awardee by the Contracting Officer. Examples of such an
adequate recognition could include: (1) a commitment to manufacture in the
U.S.A.; (2) a requirement to reimburse the U.S. Government for its R&D costs;
and/or (3) a commitment to jointly sponsor the R&D program.

5. U.S. COMPETITIVENESS
--------------------

The Contractor agrees that any products embodying any waived invention or
produced through the use of any waived invention will be manufactured
substantially in the United States, unless the Contractor can show to the
satisfaction of DOE that it is not commercially feasible to do so. The
Contractor further agrees to make the above condition binding on any assignee or
licensee or any entity otherwise acquiring rights to any waived invention,
including subsequent assignees or licensees. Should the Contractor or other such
entity receiving rights in any waived invention undergo a change in ownership
amounting to a controlling interest, then the waiver, assignment, license, or
other transfer of rights in the waived invention is suspended until approved in
writing by DOE.

6. STATEMENT OF SUBSTANTIAL INVOLVEMENT
------------------------------------

The Department of Energy (Department, DOE) will be substantially involved in all
Tasks of the Statement of Work. The Department will collaborate with the
participant in evaluating, accepting, and achieving the milestones for research
as proposed by the respondent.

The Department will provide technical direction to the overall program, as well
as the individual program elements as it is determined to be necessary and
appropriate by DOE. The Department will participate during the full duration of
the project, and will have continuing rights to conduct ongoing negotiations
with the participant regarding the technical direction of the work conducted
under this Agreement. The Department staff members will attend meetings and
participate in the formation and direction of scope of the key development
activities. The DOE Project Officer will participate in the development, review
and approval of all proposed statements of work, including subcontractor
statements of work, prior to the execution of any subcontract. The Department
will review technical progress reports and provide input to these reports as
deemed necessary. In addition, the Department will have the right to have
National Laboratories or selected private organizations perform independent
tests and evaluations of the cooperative agreement's deliverables, thus
providing an additional measure of technical progress.

The substantial involvement by the Department under this Agreement will remain
in effect for the term of the cooperative agreement award unless otherwise
amended in writing by the Contracting Officer. Moreover, this statement of
substantial involvement by the Department does not increase the Department of
Energy's liability under the Agreement award.

7. TECHNICAL DIRECTION
-------------------

A. The work to be performed by the Participant under this Cooperative Agreement
is subject to the surveillance and written Technical Direction of a "DOE Project
Officer," identified in block 11 of the face page. The term "Technical
Direction" is defined to include, without limitation, the following:

1. Directions to the Participant which redirects the work effort, shifts work
emphasis between work areas or tasks, require pursuit of certain lines of
inquiry, fill in details or otherwise provide technical guidance to the
Participant in order to accomplish the tasks and requirements stated in the
Statement of Work as contained in the agreement.

2. Provision of information to the Participant which assists in the
interpretation of drawings, specifications or technical portions of the
Statement of Work as contained in the Agreement.

4. The DOE Project Officer shall monitor the Participant's performance with
respect to compliance with the requirements of this Cooperative Agreement.

B. Technical direction and management surveillance shall not impose tasks or
requirements upon the Participant additional to or different from the tasks and
requirements stated in the Statement of Work of this Agreement. The Technical
Direction to be valid:

1. Must be issued in writing consistent with the tasks and requirements stated
in the Statement of Work of this Agreement; and

2. May not:

a. constitute an assignment of additional work outside the tasks and
requirements stated in the Statement of Work of this Agreement;

b. in any manner cause an increase or decrease in the total estimated project
cost or the time required for project performance;

C. change any of the expressed terms, conditions or specification of the
Cooperative Agreement; or

d. accept non-conforming work.

D. If in the opinion of the Participant any Technical Direction issued by the
DOE Project Officer is within one of the categories as defined in B.2. (a)
through (d) above, the Participant shall not proceed but shall notify the
Contracting Officer in writing within five working days after the receipt of any
such Technical Direction and shall request the Contracting Officer to rescind
such direction or mutually agree to modify the agreement accordingly.

E. The only persons authorized to give Technical Direction to the Participant
under this Agreement are the Contracting Officer and any "DOE Project Officer"
as listed in Block 11 of the face page. Any action taken by the Participant in
response to any direction given by any person other than the Contracting Officer
or DOE Project Officer shall not be binding upon the Government.

Mechanical Technology Incorporated

U.S. Department of Energy
FEDERAL ASSISTANCE REPORTING CHECKLIST

1. Identification Number: DE-FC02-97EE50472

2. Program/Project Title: Integrated Power System for Transportation

3. Recipient: Plug Power, LLC
Pl William D. Ernst

4. Reporting Requirements: Frequency No. of Copies Addressees
--------- ------------- ----------

PROGRAM/PROJECT MANAGEMENT REPORTING See Block 5 below

[x] DOE F 4600.3, "Federal Assistance Milestone Plan" Y Orig + 2 Orig C & 2 cy to D

[x] DOE F 4600.3A, "Milestone Log" M Orig + 2 Orig C, & 2 cy to D

[x] DOE F 4600.4, "Federal Assistance Budget Information" A Orig + 2 Orig B, C, & D

[x] Program Management Plan, (See Attachment 1) Y Orig + 4 Orig + 1cy C & 3 to D

[x] DOE F 4600.6, "Federal Assistance Program/Project Status Report" M Orig + 2 Orig C, & 2 cy to D

[x] SF-269A, "Financial Status Report" Long Form M Orig + 2 Orig B, C, & E

TECHNICAL INFORMATION REPORTING

[x] Biweekly Technical Progress Report Every Other FAX FAX to C and D below
Week

[x] Technical Progress Report** Q Orig + 4 Orig + 1cy C, 3 D

[x] Topical Report** A Orig + 4 Orig + 1cy C, 3 cy D

[x] Final Technical Report** F Orig + 4 Orig + 1cy B, 2 C, 1 D

[x] Review Meeting/Meeting Agenda--10 days prior to any meeting. Q Orig + 2 Orig C, & 2cy to D

FREQUENCY CODES AND DUE DATES:

A - As Necessary; within 5 calendar days after events.

F - Final; 90 calendar days after the performance of the effort ends.

Q - Quarterly; within 30 days after the end of calendar quarter or portion
thereof.

O - One time after project starts; within 30 days after award.

X - Required with proposals or the application or with significant planning
changes.

Y - Yearly; 30 days after the end of program year. (Financial Status Reports
90 days).

S - Semiannually; within 30 days after end of program fiscal half year.

Special Instructions:

** All scientific, technical documents, and technical reports i.e. monthly,
quarterly, annual progress reports, periodic scientific, topical, final
report, and conference papers shall be submitted with 2 copies of DOE
Form 1332.15, Recommendations for the Announcement and Distribution of
--------------------------------------------------------
Department of Energy (DOE) Scientific and Technical Information (STI).
---------------------------------------------------------------------

MAIL REPORTS TO: Original--Contracting Officer
U.S. Department of Energy
Chicago Operations Office
9800 South Cass Avenue
Argonne, Illinois 60439

JoAnn Milliken, EE-32 D. Walt Podolski
Department of Energy Argonne National Laboratory
1000 Independence Ave. Building No. 205
Washington, DC 20585-0121 Argonne, Illinois 60439
FAX: (202) 586-9811 FAX: (630) 252-4176

E. Financial Service Group
Department of Energy
9800 S. Cass Avenue
Argonne, Illinois 60439

- -------------------------------------- --------------------------------------
Prepared by: (Signature and Date) Reviewed by: (Signature and Date)

/s/ Donna Lee Ho 12/22/97
- -------------------------------------- --------------------------------------

Replaces

Clause No. 04., 48 C.F.R. 952.227-13 Patent Rights

52.227-12 Patent Rights - Waiver (JUL 1996), as modified by 10 C.F.R. 784, DOE

Patent Waiver Regulations

PATENT RIGHTS - WAIVER (JUL 1996)

(a) Definitions. As used in this clause:

"Background patent" means a domestic patent covering an invention or discovery
which is not a Subject Invention and which is owned or controlled by the
Contractor at any time through the completion of this contract: (i) Which the
Contractor, but not the Government, has the right to license to others without
obligation to pay royalties thereon, and (ii) Infringement of which cannot
reasonably be avoided upon the practice of any specified process, method,
machine. manufacture or composition of matter (including relatively minor
modifications thereof) which is a subject of the research, development, or
demonstration work performed under this contract.

"Contract" means any contract, grant, agreement, understanding, or other
arrangement, which includes research, development, or demonstration work, and
includes any assignment or substitution of parties.

"DOE Patent Waiver regulations" means the Department of Energy patent waiver
regulations at 10 CFR Part 784.

"Invention" as used in this clause, means any invention or discovery which is or
may be patentable or otherwise protectable under Title 33 J5 of the United
States Code or any novel variety of plant that is or may be protectable under,
the Plant Variety Protection Act (7 U.S. 2321 et seq.)

"MADE" when used In relation to any invention means the conception or first
actual reduction to the practice of such invention.

Nonprofit Organization means a university or other institution of higher
education or an organization of the type described in section .501(c)(3) of the
Internal Revenue Code of 195426 U.S.C. 501(c) and exempt from taxation under
section 301(a) of the Internal Revenue Code (26 U.S.C. 501 (a)) or any nonprofit
scientific or educational organization qualified under a state nonprofit
organization statute.

Patent Counsel means the Department of Energy Patent Counsel assisting the
procuring activity.

Practical application means to manufacture, in the case of a composition or
product; to practice in the case of a process or method, or to operate, in the
case of a machine or system: and, in each case, under such conditions as to
establish that the invention is being utilized and that its

benefits are, to the extent permitted by law or Government regulations,
available to the public on reasonable terms.

Secretary means the Secretary of Energy.

Small business firm means a small business concern as defined at Section 2 of
the Pub. L. 85-536 (15 U.S.C. 632) and implementing regulations of the
Administrator of the Small Business Administration. For the purpose of this
clause, the size standards for small business concerns involved in Government
procurement and subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12,
respectively, will be used.

Subject invention means any invention of the Contractor conceived or first
actually reduced to practice in the course of or under this contract, provided
that in the case of a variety of plant, the date of determination (as defined in
section 4 1 (d) of the Plant Variety Protection Act (17 U.S.C. 21,10 1 (d)) must
also occur during the period of contract performance.

(b) Allocation of principal rights. Whereas DOE has granted a waiver of rights
to subject inventions to the Contractor, the Contractor may elect to retain the
entire right, title, and interest throughout he world to each subject invention
subject to the provisions of this clause and 35 U.S.C. (S)(S)202 and 203. With
respect to any subject invention in which the Contractor elects to retain title,
the Federal Government shall have a nonexclusive, nontransferable, irrevocable.
paid-up license to practice or have practiced for or on behalf of the United
States the subject invention throughout the world.

(1) The Contractor shall disclose each subject invention to the Patent Counsel
within six months after conception or first actual reduction to practice,
whichever occurs first in the course of or under this contract, but in any
event, prior to any sale, public use, or public disclosure of such invention
known to the Contractor. The disclosure to the Patent Counsel shall be in the
form of a written report and shall identify the inventors and the contract under
which the invention was made. It shall be sufficiently complete in technical
detail to convey a clear understanding, to the extent known at the time of the
disclosure, of the patent, operation, and physical, chemical, biological, or
electrical characteristics of the invention. The disclosure shall also identify
any publication, on sale, or public use of the invention and whether a
manuscript describing the invention has been submitted for publication and, if
so, whether it has been accepted for publication at the time of disclosure.
In addition, after disclosure to the Patent Counsel, the Contractor shall
promptly notify the Patent Counsel of the acceptance of any manuscript
describing the invention for publication or of any or, sale or public use
planned by the contractor.

(2) The Contractor shall elect in writing whether or not to retain title to any
such invention by notifying the Patent Counsel at the time of disclosure or
within 8 months of disclosure, as to those countries (including the United
States), in which the Contractor will retain title;

provided, that in any case where publication, on sale, or public use has
initiated the 1-year statutory period wherein valid patent protection can still
be obtained in the United States, the period of election of title may be
shortened by the Agency to a date that is no more than 60 days prior to the end
of the statutory period. The Contractor shall notify the Patent Counsel as to
those countries (including the United States) in which the Contractor will
retain title not later than 60 days prior to the end of the statutory period.

(3) The Contractor shall file its United States patent application within 1-year
after election, but not later than at least 60 days prior to the end of any
statutory period wherein valid patent protection can be obtained in the United
States after a publication, on sale, or public use. The Contractor shall file
patent applications in additional countries (including the European Patent
Office and under the Patent Cooperation Treaty) within either 10 months of the
corresponding initial patent application or 6 months from the date permission is
granted by the Commissioner of Patents and Trademarks to file foreign patent
applications where foreign filing has been prohibited by a Secrecy Order.

(4) Requests for extension of the time for disclosure to the Patent Counsel,
election, and filing may, at the discretion of DOE, be granted, and will
normally be granted unless the Patent Counsel has reason to believe that a
particular extension would prejudice the Governments interest.

(d) Condition when the Government may obtain title notwithstanding an existing
waiver. The Contractor shall convey to DOE, upon written request, title to any
subject invention.

(1) If the Contractor elects not to retain title to a subject invention.

(2) If the Contractor fails to disclose or elect the subject invention within
the times specified in paragraph (c) of this clause (provided that DOE may only
request title within 60 days after learning of the Contractor's failure to
report or elect within the specified times).

(3) In those countries in which the Contractor falls to file patent applications
within the times specified in paragraph (c) of this clause provided, however,
that if the Contractor has filed, a patent application in a country after the
times specified in paragraph (c) of this clause, but prior to its receipt of the
written request of DOE, the Contractor shall continue to retain title in that
country.

(4) In any country in which the Contractor decides not to continue the
prosecution of any application for, to pay the maintenance fees on, or defend in
re-examination or opposition proceeding on, a patent on a subject invention, or

(5) If the waiver authorizing the use of this clause is terminated as provided
in paragraph (p) of this clause.

(e) Minimum Rights Contractor when the Government retains title.

(1) The Contractor shall retain a non-exclusive Royalty-Free license throughout
the world each subject invention to which the Government obtains title under
paragraph (d) of this clause except if the Contractor fails to disclose the
subject invention within times specified in paragraph (c) of this clause.
The Contractor's license extends to its domestic subsidiaries and affiliates if
any, within the corporate Structure of which the Contract or is a part and
includes the right to grant sublicenses of the same scope to the extent the
Contractor was legally obligated to do so at the time the contract was Awarded.
The license is transferable only with the approval of DOE except when
transferred to the successor of the part of the Contractor's business to which
the invention pertains.

(2) The Contractor's domestic license may be revoked or modified by DOE to the
extent necessary to achieve expeditious practical application of the subject
invention pursuant to an application for an exclusive license submitted in
accordance with applicable provisions in 37 CFR part 404 and DOE licensing
regulations. This license shall not be revoked in that field of use or the
geographical areas in which the Contractor has achieved practical application
and continues to make the benefits of the invention reasonably accessible to the
public. The license in any foreign country may be revoked or modified at the
discretion of DOE to the extent the Contractor, its licensees, or its domestic
subsidiaries or affiliates have failed to achieve practical application in that
foreign country.

(3) Before revocation or modification of the license, DOE shall furnish the
Contractor a written notice of its intention to revoke or modify the license,
and the Contractor shall be allowed 30 days (or such other time as may be
authorized by DOE for good cause shown by the Contractor) after the notice to
show cause why the license should not be revoked or modified. The Contractor has
the right to appeal, in accordance with applicable agency licensing regulations
and 37 CFR part 404 concerning the licensing of Government-owned inventions, any
decision concerning the revocation or modification of its license.

(f) Contractor action to protect the Government's interest.

(1) The Contractor agrees to execute or to have executed and promptly deliver to
DOE all instruments necessary to:

(i) establish or confirm the rights the Government has throughout the world in
those subject inventions to which the Contractor elects to retain title, and

(ii) convey title to DOE when requested under paragraphs (d) and (n)(2) of this
clause, and to enable the Government to obtain patent protection throughout the
world in that subject invention.

each subject invention made under contract in order that the Contractor can
comply with the disclosure provisions of paragraph (c) of this clause, and to
execute all papers necessary to file patent applications on subject inventions
and establish the Government's right in the subject inventions. This disclosure
format should require, as a minimum, the information required by paragraph
(c)(1) of this clause. The Contractor shall instruct such employees through
employee agreements or other suitable educational programs on the importance of
reporting inventions in sufficient time to permit the filing of patent
applications prior to U.S. Foreign statutory bars.

(3) The Contractor shall notify DOE of any decision not to continue the
prosecution of a patent Application, pay maintenance fees, or defend in a
reexamination or opposition on a patent, in any Country, not less than 330 days
before the expiration of the response period required by the relevant patent
office.

(4) The Contractor agrees to include, within the specification of any United
States patent application and any patent issuing thereon Covering a subject
invention, the following statement: this invention was made with Government
support under (identify its Contract) awarded by DOE. The Government has
certain rights in this invention.

(5) The Contractor shall establish and maintain active and effective procedures
to assure that subject, inventions are promptly identified and disclosed to
Contractor personnel responsible for patent matters within 6 months of
conception and/or first actual reduction to practice, whichever occurs first in
the course of or under this contract. These procedures shall include the
maintenance of laboratory notebooks or equivalent records and other records as
are reasonably necessary to document the conception and/or the first actual
reduction to practice of subject inventions, and records that show that the
procedures for identifying and disclosing the inventions are followed. Upon
request, the Contractor shall furnish the Patent Counsel a description of such
procedures for evaluation and for determination as to their effectiveness.

(6) The Contractor agrees, when licensing a subject invention, to arrange to
avoid royalty charges on acquisitions involving Government funds, including
funds derived through Military Assistance Program of the Government or otherwise
derived through the Government; to refund any amounts received as royalty
charges on the subject invention in acquisitions for, or on behalf of, the
Government; and to provide for such refund in any instrument transferring rights
in the invention to any party.

(7) The Contractor shall furnish the Patent Counsel the following:

(i) Interim reports every 12 months (or such longer period as may be specified
by the Patent Counsel) from the date of the contract, listing subject inventions
during that period and certifying that all subject inventions have been
disclosed or that there are no such inventions.

(ii) A final report, within 3 months after completion of the contracted work,
listing all subject inventions or certifying that there were no such inventions,
and listing all subcontracts at any tier containing a patent rights clause or
certifying that there were no such subcontracts.

(8) The Contractor shall promptly notify the Patent Counsel in writing upon the
award of any subcontract at any tier containing a patent rights clause by
identifying the subcontractor, the applicable patent rights clause, the work to
be performed under the subcontract, and the dates of award and estimated
completion. Upon request of the Patent Counsel, the Contractor shall furnish a
copy of such subcontract, and no more frequently than annually, a listing of the
subcontracts that have been awarded.

(9) The Contractor shall provide, upon request, the filing date, serial number
and title, a copy of the patent application (including an English-language
version if filed in a language other than English), and patent number and issue
date for any subject invention for which the Contractor has retained title.

(10) Upon request, the Contractor shall furnish the Government an irrevocable
power to inspect and make copies of the patent application file.

(g) Subcontracts.

(1) Unless otherwise directed by the Contracting Officer, the Contractor shall
include the Clause at 4S CM 952.227-T 1, suitably modified to identify the
parties, in all subcontracts regardless of the tier for experimental,
developmental, or research work to be performed by a small business firm or
nonprofit organization except where the work of the subcontract is subject to
Exceptional Circumstances Determination by DOE. In all other subcontracts,
regardless of tier, for experimental, developmental, demonstrative or research
work, the Contractor shall include the patent rights clause at 48 CFR 952.227-13
(suitably modified to identify the parties).

(2) The Contractor shall not, as part of the consideration for awarding the
subcontract, obtain rights in the subcontractor's subject inventions.

(3) In the case of subcontractors at any tier, the Department, the
subcontractor, and Contractor agree that the mutual obligations of the parties
created by this clause constitute a contract between the subcontractor and the
Department with respect to those matters covered by this clause.

(4) The Contractor shall promptly notify the Contracting Officer in writing upon
the award of any subcontract at any tier containing a patent rights clause by
identifying the subcontractor, the applicable patent rights clause, the work to
be performed under the subcontract, and the dates of award and estimated
completion. Upon request of the Contracting Officer, the Contracting Officer
shall furnish a copy of such subcontract, and, no more frequently than annually,
a listing of the subcontracts that have been awarded.

(h) Reporting on utilization of subject inventions. The Contractor agrees to
submit on request periodic reports no more frequently than annually on the
utilization of a subject invention or on efforts at obtaining such utilization
that are being made by the Contractor and any of its licensees or assignees.
Such reports shall include information regarding the status of development, date
of first commercial sale or use, gross royalties received by the Contractor, and
such other data and information as DOE may reasonably specify. The Contractor
also agrees to provide additional reports as may be requested by DOE in
connection with any march-in proceedings undertaken by DOE in accordance with
paragraph (0) of this clause. To the extent data or information supplied under
this paragraph is considered by the Contractor, its licensee or assignee to be
privileged and confidential and is so marked, DOE agrees that, to the extent
permitted by law, it shall not disclose such information to persons outside the
Government.

(i) Preference for United States industry. Notwithstanding any other provision
of this clause, the Contractor agrees that neither it nor any assignee will
grant to any person the exclusive right to use or sell any subject invention in
the United States unless such person agrees that any products embodying the
subject invention will be manufactured substantially in the United States.
However, in individual cases, the requirement for such an agreement may be
waived by DOE upon a showing by the Contractor or its assignee that reasonable
but unsuccessful efforts have been made to grant licenses on similar terms to
potential licensees that would be likely to manufacture substantially in the
United States or that under the circumstances domestic manufacture is not
commercially feasible.

(j) March-lin rights.

The Contractor agrees that with respect to any subject invention in which it has
acquired title, DOE has the right in accordance with the procedures in 48 CFR
27.304-1 (g) to require the Contractor, an assignee, or exclusive licensee of a
subject invention to grant a nonexclusive, partially exclusive, or exclusive
license in any field of use to a responsible applicant or applicants upon terms
that are reasonable under the circumstances, and if the Contractor, assignee, or
exclusive licensee refuses such a request. DOE has the right to grant such a
license itself if DOE determines that the Contractor or assignee has not taken,
or is

(1) Such action is necessary because the Contractor or assignee has not taken or
is not expected to take within a reasonable time, effective steps to achieve
practical application of the subject Invention in such field of use;

(2) Such action is necessary to alleviate health or safety needs which are not
reasonably satisfied by the Contractor, assignee, or their licensees or

(3) Such action is necessary to meet requirements for public use specified by
Federal regulations and such requirements are not reasonably satisfied by the
Contractor, assignee, or licensees; or

(4) Such action is necessary because the agreement required by paragraph (1) of
this clause has not been obtained or waived or because a licensee of the
exclusive right to use or sell any subject invention in the United States is in
breach of such agreement.

(k) Background Patents.

(1) The Contractor agrees:

(i) to grant to the Government a royalty-free, nonexclusive license under any
Background Patent for purposes of practicing a subject of this contract by or
for the Government in research, development, and demonstration work only.

(ii) that, upon written application by DOE, it will grant to responsible parties
for purposes of practicing a subject of this contract, nonexclusive licenses
under any Background Patent on terms that are reasonable under the
circumstances. If, however, the Contractor believes that exclusive or partially
exclusive rights are necessary to achieve expeditious commercial development or
utilization, then a request may be made to DOE for DOE approval of such
licensing by the Contractor.

(2) Notwithstanding paragraph (k)(1)(ii), the Contractor shall not be obligated
to license any Background Patent if the Contractor demonstrates to the
satisfaction of the Secretary or his designee that:

(i) a competitive alternative to the subject matter covered by said Background
Patent is commercially available from one or more other sources, or

(ii) the Contractor or its licensees are supplying the subject matter covered by
said Background Patent in sufficient quantity and at reasonable prices to
satisfy market needs, or have taken effective steps or within a reasonable time
are expected to take effective steps to so supply the subject matter.

(1) Communications. All reports and notifications required by this clause shall
be submitted to the Patent Counsel unless otherwise instructed.

(m) Other Inventions. Nothing contained in this clause shall be deemed to grant
to the Government any rights with respect to any invention other than a subject
invention, except, with respect to Background Patents, above.

(n) Examination of records relating to inventions.

(1) The Contracting Officer or any authorized representative shall, until
3 years after final payment under this contract, have the right to examine any
books (Including laboratory notebooks), records, and documents of the Contractor
relating to the conception or first actual

reduction to practice of inventions in the same field of technology as the work
under this contract to determines whether

(ii) The Contractor has established and maintains the procedures required by
paragraphs (f)(2) and (f)(5) of this clause, and

(iii) The Contractor and its inventor have complied with the procedures.

(2) If the Contracting Officer determines that an inventor has not disclosed a
subject invention to the Contractor in accordance with the procedures required
by paragraph (f)(5) of this clause, the Contracting Officer may, within 60 days
after the determination, request title in accordance with paragraphs (d)(2) and
(d)(3) of this clause. However, if the Contractor establishes that the failure
to disclose did not result from the Contractor's fault or negligence, the
Contracting Officer shall not request title.

(3) If the Contracting Officer learns of an unreported Contractor invention
which the Contracting Officer believes may be a subject invention, the
Contractor may be required to disclose the invention to DOE for a determination
of ownership rights.

(4) Any examination of records under this paragraph shall be conducted in such a
mariner as to protect the confidentiality of the information involved.

(o) Withholding of payment. NOTE: This paragraph does not apply to subcontracts
or grants.

(1) Any time before final payment under this contract, the Contracting Officer
may, in the Government's interest, withhold payment until a reserve nor
exceeding $50,000 or 5 percent of the amount of the contract, whichever is less,
shall have been set aside if, in the Contracting Officer's opinion, the
Contractor fails to-- (i) Establish, maintain, and follow effective procedures
for identifying and disclosing subject inventions pursuant to paragraph (f)(5)
of this clause-, (ii) Disclose any subject invention pursuant to paragraph (c)
(17) of this clause-, (iii) Deliver acceptable interim reports pursuant to
paragraph (f)(7)(I) of this clause-, or (iv) Provide the information regarding
subcontracts pursuant to paragraph (f)(6) of this clause, (v) Convey to the
Government, using a DOE approved form, the title and/or rights of the Government
in each subject invention as required by this clause.

(3) Final payment under this contract shall not be made before the Contractor
delivers to the Patent Counsel all disclosures of subject inventions required by
paragraph (c)(1) of this clause, an acceptable final report pursuant to
paragraph (ff)(7)

(ii) of this clause, and all past "DOE confirmatory instruments," and the Patent
Counsel has issued a patent clearance certification to the Contracting Officer.

(4) The Contracting Officer may decrease or increase the sums withheld up to the
maximum authorized above. If the maximum amount authorized above is already
being withheld under other provisions of the contract, no additional amount
shall be withheld under this paragraph. The withholding of any amount or the
subsequent payment thereof shall not be construed as a waiver of any Government
right.

(5) Waiver Terminations. Any waiver granted to the Contractor authorizing the
use of this clause (including any retention of rights pursuant thereto by the
Contractor under paragraph (b) of this clause) may be terminated at the
discretion of the Secretary or his designee in whole or in part if the request
for waiver by the Contractor is found to contain false material statements or
nondisclosure of material facts, and such were specifically relied upon by DOE
in reaching the waiver determination. Prior to any such termination, the
Contractor will be given written notice stating the extent of such proposed
termination and the reasons therefor, and a period of 30 days, or such longer
period as the Secretary or his designee shall determine for good cause shown in
writing, to show cause why the waiver of rights should not be so terminated.
Any waiver termination shall be subject to the Contractor's minimum license as
provided in paragraph (e) of this clause.

(q) Atomic Energy. No claim for pecuniary award or compensation under the
provisions of the Atomic Energy Act of 1954, as amended, shall be asserted by
the Contractor or its employees with respect to any invention or discovery made
or conceived in the course of or under this contract.

(r) Publication. It is recognized that during the course of work under this
contract, the contractor or its employees may from time to time desire to
release or publish information regarding Scientific or technical developments
conceived or first actually reduced to practice in the course of or under this
contract. In order that public disclosure of such information will not
adversely affect the patent interests of DOE or the contractor, approval for
release of publication shall be secured from Patent Counsel prior to any such
release or publication. In appropriate circumstances, and after consultation
with the contractor, Patent Counsel, may waive the rights of prepublication
review.

(s) Forfeiture of rights in unreported subject inventions.

(1) The contractor shall forfeit and assign to the Government, at the request of
the Secretary of Energy or designee, all rights in any subject invention which
the contractor fails to report to Patent Counsel within six months after the
time the contractor: (i) Files or causes to be filed a United States or foreign
patent application thereon, or (ii) Submits the final report required by
paragraph (e)(2)(ii) of this clause, whichever is later.

(2) However, the contractor shall not forfeit rights in a subject invention, if
within the time specified in paragraph (m)(l) of this clause, the contractor:
(i) Prepares a written decision based upon a review of the record that the
invention was neither conceived nor first actually reduced to practice in the
course of or under the contract and delivers the decision to Patent Counsel,
with a copy to the Contracting Officer; (ii) Contending that the subject
invention and all facts pertinent to this contention to the Patent Counsel, with
a copy to the Contracting Officer, or (iii) Establishes that the failure to
disclose did not result from the contractor's fault or negligence.

(3) Pending written assignment of the patent application and patents on a
subject invention determined by the Contracting Officer to be forfeited (such
determination to be a Final Decision under the Disputes clause of this
contract), the contractor shall be deemed to hold the invention and the patent
applications and patents pertaining thereto in trust for the Government. The
forfeiture provision of this paragraph shall be in addition to and shall not
supersede any other rights and remedies which the Government may have with
respect to subject inventions.

(t) U.S. COMPETITIVENESS The Contractor agrees that any products embodying any
waived invention or produced through the use of any waived invention will be
manufactured substantially in the United States unless the Contractor can show
to the satisfaction of the DOE that it is not commercially feasible to do so.
The Contractor further agrees to make the above condition binding on any
assignees or licensees or any entity otherwise acquiring rights to any waived
invention, including subsequent assignees or licensees. Should the Contractor or
other such entity receiving rights in any waived invention undergo a change in
ownership amounting to a controlling interest, then the waiver, assignment,
license or other transfer of rights in the waived invention is suspended until
approved in writing by DOE. In the event DOE agrees to foreign manufacture,
there will be a requirement that the Government's support of the technology be
recognized in some appropriate manner, e.g., recoupment of the government's
investment, etc.
(End of clause)

MECHANICAL TECHNOLOGY INC.

March 13, 1997

U.S. Department of Energy
Chicago Operations Office
9800 South Cass Avenue
Argonne, Illinois 60439
ATT: Mr. Brian Cass
Executive Secretary
Building. 201, Room 3E-19

Dear Mr. Cass:

SUBJ: PRDA DE-RA02-97EE50443

Mechanical Technology Incorporated is pleased to submit herewith its proposal,
"Integrated Power System for Transportation". Enclosed are eight (8) copies each
of the cost and technical proposal, including all the supporting details

Any technical matters pertaining to this proposal should be directed to Dr.
William D. Ernst (518-785-2859); all other matters should be directed to Mr.
William P. Surnigray (518-785-2276).

Very truly yours,

Dr. William D. Ernst, Manager
Power & Energy Systems

Enclosures

MECHANICAL TECHNOLOGY INC.
96 ALBANY-SHAKER ROAD
LATHAM, NEW YORK 12110518f785.2211
FAX (518) 785-2420 or 2127