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SDTC Contracting Webinar

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1 SDTC Contracting Webinar
2011B Funded Projects Welcome to the 2011B Funded Projects Webinar. Since it is necessary for a Contribution Agreement to be executed before SDTC is able to provide funding to your project, the goal behind this webinar is to provide you with some important background information that will help you put together your Contribution Agreement with SDTC in a timely manner.

2 Webinar Contents 1. General Pre-Contracting Information
Basis for Funding Approval Clarifications on funding Process Checklist Term Sheet Publicity and Announcements 2. The Contracting Process The Contribution Agreement Contracting Schedules A, B, C, and F Consortium Agreements Schedules where no input is needed (Schedule E and G) 3. Post Contracting – Disbursements & Reporting Milestone Completion and Reporting Claims and disbursements Quarterly Updates and Post Project Reporting 4. Reminders Timeliness – contracting documents will be closely scrutinized Quality Documentation – Meaningful quantitative metrics with clear deliverables Single point of contact 5. Next Steps and FAQ 1. Some general pre-contracting information - Funding Approval -Process Checklist -Term Sheet - Publicity and Announcements 2. A discussion concerning the contracting process The Contribution Agreement Contracting Schedules - Consortium Agreements 3. Post Contracting Reporting -Claims, Disbursements, reporting 4. Reminders In this webinar, we will go over….

3 General Pre-Contracting Information
Basis for Funding Approval Please note that the contracting process is undertaken on the basis that: No material changes have been made to the scope or objectives of the Final Proposal submitted. The standard terms and conditions associated with the funding will be put in place through the execution of a Contribution Agreement (CA). Any outstanding information not provided within the full proposal (for additional clarification) or any specific conditions stipulated for the approval by the SDTC Board of Directors will need to be provided to SDTC by the applicant prior to contracting. Notes:

4 General Pre-Contracting Information
Clarifications on Funding Project Start Date - for the purpose of contracting, the project start date should be the same as the anticipated date of execution of a CA between the Eligible Recipient (ER) and SDTC. The reason for this is that the actual date that the funding contract is executed is the date when expenses are eligible for funding. If a project must start in advance of the execution of the CA and the ER wishes any “pre- contracting” costs to be recognized by SDTC as part of the Project Eligible Costs, consideration will only be made under exceptional circumstances and on a case-by-case basis. ERs should not automatically assume that SDTC will recognize project expenses incurred prior to the project start date. Under no circumstances will SDTC disburse funds in the absence of an executed CA.

5 General Pre-Contracting Information
1. Standard Process Checklist Determines readiness for contracting; Establishes expected timeline and priority for SDTC. Key Items: Environmental Self Assessment Status of Consortium Agreement(s) Status of Financing The Standard Process Checklist is one of the attachments you would have recently received from the Projects Coordinator. The purpose of this checklist is to assist SDTC Project Managers and Management in determining your readiness to contract by understanding : the status of the consortium relationships, financing (is it in place) work plan and budget (is it completed and approved internally for the project), does the ER require an Environmental Assessment prior to commencing the project; are there any legal actions that will impede the launch of the project; is all the necessary insurance in place required for the project; a and a list of any other contingencies SDTC should be aware of before the launch of the project. Please complete the Checklist, providing the relevant information where applicable. Have the document signed by an Officer of the company or legal entities that make up the ER and return it to the Projects Coordinator by or by fax.

6 General Pre-Contracting Information
2. Term Sheet It establishes the terms and conditions prior to the execution of a CA and it provides the commitment to have a CA signed within a fixed time period. It document SDTC Funding Commitment ($ amount and % of eligible expenses) Key Clauses: 1. Confidentiality Provision 2. Public Disclosure Provision 3. Target Date for Contracting Close & Funding Revoke Date Both the Standard Process Checklist and the Term Sheet need to be completed, signed and returned to Diana Smithson, Projects Coordinator, by July 6, 2012. Upon receipt of the checklist and the signed term sheet, the assigned SDTC Project Manager will then follow-up with the ER to initiate contact and to establish a contracting plan. All funds noted on the term sheet are expressed in Cdn Dollars; Complete, sign and return the term sheet to the Projects Coordinator by Wednesday, December 14, 2011; The signed term sheet is used to demonstrate commitment from SDTC to fund the project and to assist the ER in raising additional required financing for the project; Notes: Review the terms and conditions within the term sheet document; Please note clauses within the term sheet cascade from SDTC’s Funding Agreement with Natural Resources Cda and EC and are not subject to change. Key Clauses to be reviewed and understood include: Confidentiality Provision Public Disclosure Provision Target Date for Contracting Close and Funding Revoke Date Your assigned PM will be in touch with you once you have signed the Term Sheet and returned it to SDTC.

7 General Pre-Contracting Information
3. Publicity and Announcements The Eligible Recipient will acknowledge the financial support of SDTC in all publicly disseminated information relating to the Project unless otherwise directed by SDTC. The Eligible Recipient hereby consents and agrees to the participation by SDTC or a representative of the Government of Canada at any public event relating to the Project. No press releases, public announcements or other material prepared by the ER (or its partners) relating to the Project shall be issued or distributed to the public without the prior written approval of SDTC. Any such press releases, public announcements or other material shall be submitted to SDTC for review and approval at least ten business days prior to scheduled release to the public. SDTC may issue press releases and other materials for promotional and general information purposes which refer to the Eligible Recipient, the Consortium, the Project and the Contribution without the approval or consent of the Eligible Recipient. For any questions regarding Publicity and Acknowledgements, please contact Pat Breton, Director, Communications at ext. 295 or

8 Contracting Process Consortium Agreements
Consortium Agreements are used to clearly define the role, responsibility and contribution of each of the consortium members in the Project. Once contracted, no changes can be made to the consortium composition (including key suppliers) without SDTC’s prior approval. The format and content of the Consortium Agreement is up to the ER and the consortium member(s) - not an agreement with SDTC but rather a commitment between or amongst the parties for the protection of the parties. SDTC has a template available if preferred. Regardless, the agreement must: describe the roles and commitments of the parties, including potential business arrangements for the market roll-out if applicable; acknowledge the representations and warrants made by the ER on behalf of the consortium under the CA and any other flow-down provisions; and quantify the contributions (cash and/or in-kind) by the consortium member and the methodology for the valuation (at cost), subject to verification by SDTC and final project audit; and specify ownership of Background and Project Intellectual Property. Signed Consortium Agreements must be in place and copies sent to SDTC before a CA can be executed. Purpose: To clearly define the role of each of the consortium members in the project. Establishes the difference between consortium members, funding partners and suppliers (role, commitment, stake in the project vs. providing funding only e.g. SDTC vs. a contract to deliver a service for a fee). All consortium members and key suppliers and funding partners must be identified in the CA in schedule D. Once contracted, no changes can be made to the consortium composition (including key suppliers) without SDTC approval. The format and content of the consortium agreement is up to the ER and it depends on the scope and complexity of the role of the consortium member. This is not an agreement with SDTC but rather a commitment between the parties. SDTC has a template that can be used but it is not a requirement. We will send the template out after the conference call. It must at a minimum describe: The roles and commitments of the parties (description of work to be done) including the role of the consortium member for future market roll-out, if applicable. Recognize the representations and warranties made by the ER on behalf of the consortium member under the CA (there are 5) and any other flow-down provisions (e.g. confidentiality, publicity, reporting requirements). Specify consortium member contributions whether cash or in-kind are at cost with no markup of any kind other than benefits - Max 20% (i.e. salaries are based on T4 slips, expenditures are at out of pocket cost, etc..). Ensure there is a means to validate labor charges (time/activity logs) and expenditures as they will be subject to SDTC review and audit during the project and upon project completion. The total of the line items in the Project budget attributed to the consortium member contributions should match the commitments outlined in the consortium agreements. All financial contributions to cover 100% of the project costs (cash and in-kind) must be committed and backed up either through consortium agreements, funding agreements or financial statements of the Lead Applicant.

9 Contracting Process The Contribution Agreement (CA)
The CA is a boilerplate agreement that is based upon SDTC’s funding agreement with GOC It establishes the Terms and Conditions for governing the implementation of the Project. Combined with appended Schedules, the CA establishes the Project’s: a) Scope of Work b) Objectives (technical, financial and environmental) c) Roles and Responsibilities d) Timelines e) Costs and Financial Contributions; and f) Reporting Requirements The CA is a boiler-plate document that establishes standard terms and conditions. Most of these represent flow-downs from the Funding Agreement between SDTC and the Government of Canada, therefore there is little room for negotiation. The various Schedules that you will be asked to provide to your Project Manager will be used to complete the Contribution Agreement. These schedules describe the: a) Scope of Work b) Project Objectives (technical, financial and environmental) c) Consortium Roles and Responsibilities d) Project Timelines e) Costs and Financial Contributions; and f) Reporting Requirements

10 Contracting Process Contribution Agreement Terms and Conditions
The Contribution Agreement is non-negotiable due to provisions flowed down through SDTC’s Funding Agreement (FA) with the Government of Canada. SDTC can explain intent, provide clarifications and/or address any concerns. Key conditions stemming from SDTC FA: - Requirement for Consortium – one non-related party with “skin” in the game - Minimum 25% private sector funding (cash and/or in-kind) - Events of Default including options on default (i.e. rights to Project IP) - Representations and Warranties (including Consortium Members) - Confidentiality and Publicity clauses - Period of Funding - Project Reporting (including 3-yr Post-Project Reporting)

11 Contracting Process Contribution Agreement Schedules
Schedule A – Work Plan and Statement of Project Objectives Schedule B – Project Milestones, Deliverables, Metrics and Risks Schedule C – Project Financials Schedule D – Consortium Members, Participants and Key Suppliers/SubContractors Schedule E – Project Reporting Requirements (no input required by the ER) Schedule F – Environmental Benefits Schedule G – Accepted Practices (no input required by the ER) Work Plan Development As Kate indicated, the Contribution Agreement is a template document that will be completed with the inclusion of the schedules listed here. With the exception of Schedules E and G, the other Schedules will be developed by the Eligible Recipient with the feedback and assistance of your assigned Project Manager.

12 Contracting Process 2011-A Schedule A - Work Plan and Statement of Project Objectives Structure Typically five or six pages of text, extracted and refined from Phase II Proposal to include: Project Overview Introduce ER, Consortium, Technology and Project Objectives and Scope Clearly define what is included and excluded from Project (consistent with budget); highlight key objectives and anticipated results Description of Technology Basis and benefits of technology, value proposition, stage of development, plans for scale-up, etc. Sustainable Development Focus and Contribution to Sustainability Environmental and economic benefits; key points to value proposition Intellectual Property IP protection and management entering the Project and during the Project Work Plan Include a Gantt Chart to define timelines and major deliverables/activities ,Schedule A is meant to provide a general Overview of the Project, and the idea is that anyone who reads schedule A would have a clear understanding of why the project is being undertaken . This schedule is typically made up of 5 or 6 pages of text that focuses on the the key highlights of the project. Essentially, it’s the who, what, where, when and why associated with the project. For the most part, the information that you will use to build Schedule A will have been part of your full proposal to SDTC, however in this schedule you are asked to refine that information to specifically provide: An overview of the project A list the project scope and objectives A description of the benefits and the value proposition associated with the technology, including a description of the remaining de-risking associated with the technology. A summary of the economic and environmental benefits associated with the technology and it’s anticipated contribution to sustainability A description of the existing IP, along with a description of the future IP strategy associated with the technology. Include a Gantt chart to show the work plan progression

13 Contracting Process Structure
Schedule B - Project Milestones, Deliverables, Metrics & Risks Structure Project is to be divided into numbered Milestone periods (sequential, non-overlapping) Milestones are to be results-based and should consist of specific deliverables, quantitative metrics, along with a list of potential risks and associated mitigation plans. Milestones are associated with specific timeframes to denote key project stages, with technical and financial reporting required upon the completion of each milestone; Milestones can have a maximum 12 month duration, although it is preferable to have them be less than 12 months because project reports are due to SDTC at least once every 12 months. Schedule B clarifies the timing and the specific deliverables associated with the project Putting together Schedule B involves a further refinement of the milestones that you initially worked on with your Screening and Evaluation Manager during the Detailed Proposal phase; In Schedule B, the Project is divided into numbered Milestone periods that are sequential and non-overlapping The Milestones are to be results-based and should consist of specific deliverables, quantitative metrics, along with a list of potential risks and associated mitigation plans. Milestones are associated with specific timeframes to denote key project stages, with technical and financial reporting required upon the completion of each milestone; Milestones can have a maximum 12 month duration, although it is preferable to have them be less than 12 months because project reports are due to SDTC at least once every 12 months.

14 Contracting Process - Deliverables Metrics
Schedule B (cont’d) -Project Milestones, Deliverables, Metrics & Risks Deliverables Listed in chronological, tabular format to describe key outcomes, results, achievements during the Milestone period Metrics Reportable evidence of successful achievement of Deliverables For example: Reports, permits, approvals, etc. Design criteria, standards, certifications, test results, etc. Equipment design, procurement, fabrication, delivery, acceptance, commissioning, operational duty cycles, etc. Price points/Capex & Opex targets (deliverable evaluating process economics required in last Milestone to compare against initial targets and margin stack from Detailed Proposal) Go/no-go decisions The following is an example of a Schedule B Milestone Again, Milestone B deliverables should be tied to specific achievements And examples of quantifiable metrics include: Reports, permits, approvals, etc. Design criteria, test results, etc. Design specifications, delivery and commissioning of equipment, operational duty cycles, etc. Price points/Capex & Opex targets (deliverable evaluating process economics required in last Milestone to compare against initial targets and margin stack from Detailed Proposal) Go/no-go decisions It’s important to note that deliverables and metrics should be reaslistic and achievable, and that failure to achieve targets is not considered an event of default.

15 Contracting Process - Schedule B (cont’d) Project Milestones, Deliverables, Metrics & Risks
Item Milestone Deliverable Delivery Date A Installation of ten 100 kw solar panels at ACME Co. July 15, 2012 B Connection of solar panels to three batteries having 1.0 MWh of storage capacity July 31, 2012 C 30 days of testing to achieve continuous power output for 24 hours October 31, 2012 Milestone Metrics Panels installed and commissioning certificate provided by Hydro One Engineering certificate attesting to battery configuration with 1.0 MWh of storage capacity Report describing average power output achievement over 24 hr period during 30 day test period. System is able to store and release 1MWh of power at least once a day with roundtrip storage efficiency of 75%. Risk(s) Identified per Deliverable Panel availability delays actual installation Potential weather delays in connecting the panels to batteries Storage system does not perform as planned Mitigation Steps per Risk Ensure availability of alternate source of solar panel Provision of two week window to ensure connection Alternate panel and battery configurations will be developed. This slide shows a generic example of a project Milestone. Essentially it captures the main activities associated with, in this case a solar panel technology. You’ll note that this Milestone is approximately 4 months long, it lists 3 specific deliverables, and that there are specific metrics tied to each deliverable. In addition, for each deliverable, you are required to identify the primary potential risk associated with the deliverable, along with your mitigation strategy for dealing with potential risks. Clarity and simplicity is key in building Milestone periods within Schedule B. Milestones should be set up so that the deliverables are logical, well-defined and quantifiable.

16 Contracting Process Schedule C - Detailed Project Budget
Built based on the Project Financial Certification Report template (PFCR - otherwise known as the detailed budget) Within each Milestone you will provide the anticipated budget breakdown for each of the SDTC cost categories; i.e. Labour, Equipment, Travel, etc.. Based on your inputs, the PFCR will generate an Overall Project Budget Summary The PFCR also contains a Funding Commitment Table, where the ER will indicate how the sources of funding match the project expenses At the completion of each Milestone, the PFCR is then updated with “actual expenses” and is used as the basis for cost tracking, financial reporting, and SDTC claim payments. Schedule C – the detailed project budget is based on updating the project budget that you would have submitted as part of your full proposal. Within each Milestone you will provide the anticipated budget breakdown in each of the SDTC cost categories; i.e. Labour, Equipment, Travel, etc.. Based on your inputs, the PFCR will generate an Overall Project Budget Summary. The PFCR also contains a Funding Commitment Table, where you will list the sources of funding that match the budgeted project expenses . At the completion of each Milestone, you will update your PFCR with “actual expenses”, and this updated PFCR is used as the basis for cost tracking, financial reporting, and SDTC claim payments.

17 Contracting Process Schedule C - Detailed Project Budget (cont’d)
Eligible Costs:  Eligible project costs include: (a) all goods and services and professional and technical personnel costs required to plan and conduct the project (labor rates = T4 rates); (b) The cost of capital items that have no residual value beyond the period of funding of the Eligible Project and are specifically required for the delivery of the project, (c) The depreciation expense for the period of funding, of capital items that have an enduring commercial value accrued to an individual organization beyond the funding period, as determined by GAAP; and Non-Eligible Project Costs (a) general overhead costs of the Eligible Recipient, (b) the cost to purchase or lease real property other than as permitted by (b) and (c) above (c) administrative costs not associated with eligible project costs; (d) conference or travel costs not specifically required for the project; (e) costs of office supplies, equipment and furniture not required for the project; (f) capital costs associated with ongoing scientific or technical activities of the project consortium; (g) costs to decommission a funded project; and costs associated with the subsequent diffusion of the technology, such as costs of preparing business plans, marketing studies and licensing of intellectual property. This slide contains a general summary of eligible and non-eligible project costs. We won’t go into detail here, but if you have any questions during the course of putting together your budget, your Project Manager will be able to give you advice on the eligibility of costs.

18 Contracting Process In-kind Costs/Contributions:
Schedule C - Detailed Project Budget (cont’d) In-kind Costs/Contributions: Provided by Consortium Member to the Project with no cash reimbursement required Services, labour, equipment or otherwise Valued in the budget at internal cost without profit; leveraged for SDTC cash funding for other Project activities “Opportunity costs”, market/charge out rates, etc. not acceptable as basis to determine in-kind valuation as these typically include profit and mark-ups Must be tracked to an auditable standard In-kind Costs/Contributions: In-kind costs are those quantifiable contributions that are made to the project by a Consortium Member where there is no cash reimbursement required In-kind contributions can be made up of services, labour, equipment or otherwise, as long as they are valued in the budget at an internal cost that doesn’t include any profit or markup. Please note that any in-kind contributions must be tracked to an auditable standard

19 Eligible Project Costs include:
Contracting Process 2011-A Schedule C - Detailed Project Budget (cont’d) Capital Assets Eligible Project Costs include: the cost of capital items that have no residual value beyond the Period of Funding as determined by Canadian Generally Accepted Accounting Principles (GAAP) and that are specifically required for the delivery of the Project. Where this enduring value of the asset beyond the Period of Funding, only the depreciable expense of capital items incurred during the Period of Funding, as determined by (GAAP) is eligible. In the case of Capital Assets, Eligible Project Costs include: the cost of capital items that have no residual value beyond the Period of Funding as long as the capital asset is specifically required for the delivery of the Project. In the case where a capital asset has a value beyond the Period of Funding, only the depreciable expense of the capital asset incurred during the Period of Funding, would be eligible. In both cases, the determination of the asset value would have to be determined by Canadian Generally Accepted Accounting principles.

20 Contracting Process Funding Sources:
Schedule C - Detailed Project Budget (cont’d) Funding Sources: Within the PFCR (Budget Spreadsheet) there is a tab labeled DEPFC (Funding Contribution Table). Within this tab you will identify all of the sources of funding and in-kind contributions that will cover the project costs. A minimum of 25% of the project funding must come from the ER and Consortium partners ( i.e. private sector funding in the form of cash and/or in-kind) All government contributions (federal, provincial, municipal) are to be listed in the DEPFC. The ratio of government (public) funding cannot exceed 75%. Prior to executing the CA, SDTC will ensure that the financial commitments to the project are validated by evidence of audited or unaudited financial statements and other forms of binding commitments With respect to the funding sources, please note that A minimum of 25% of the project funding must come from the ER and Consortium partners ( i.e. private sector funding in the form of cash and/or in-kind) All government contributions (federal, provincial, municipal) are to be listed in the DEPFC. The ratio of government (public) funding cannot exceed 75%. Prior to executing the CA with the Eligible Recipient, SDTC will ensure that the financial commitments to the project are validated by evidence of financial statements and other forms of binding commitments

21 Contracting Process 2011-A Schedule D – ER, Consortium and Sub-Contractors/Key Suppliers This is a contact list providing the HQ address and/or working address of the Eligible Recipient as well as info for the primary and secondary contacts. Contact information for all Consortium Members, key Suppliers and Funding Partners (such as other Government funding or “angel” investors) are listed. The roles of each entity is also specified here (one line). Once contracted, these entities cannot be changed without SDTC permission. Schedule D is simply a list of addresses and contacts for both the Eligible Recipient and the Consortium Members, where the general role of each entity is also specified If there are key Suppliers and Funding Partners (such as other Government funding or “angel” investors) they would also be listed in Schedule D Please note that once contracted, these entities cannot be changed without SDTC permission.

22 Contracting Process Schedule F – Environmental Benefits
For this schedule you are asked to refine the environmental benefits forecast that you provided in spreadsheet format as part of your Phase II Proposal Clearly identify assumptions and calculation methods in deriving benefit claims (realistic emission reduction factors, market rollout assumptions etc.) These tables are considered “live” as they will be continuously updated over the course of the project. To validate your assumptions and establish a Project Baseline Report, you will need to select and retain an expert consultant (from SDTC roster) to establish a Project Baseline Report prior to completion of Milestone 1. The same expert can (and should) prepare the Final Environmental Benefits Report upon completion of the Project. Estimated fees for expert consultants are to be included as an Eligible Cost in both Milestone 1 and the Final Milestone. For Schedule F, you are asked to simply refine the environmental benefits forecast that you provided in spreadsheet format as part of your Phase II Proposal This involves updating assumptions and calculation methods in deriving emission reduction factors, market rollout assumptions etc.) Please note that SDTC has a roster of env benefits consultants that are used to validate env. Benefits. You will need to select and retain one of these expert consultants to establish environmental benefit quantification, monitoring and reporting – this consultant will be used in Milestone 1 for the Baseline report and in the Final Milestone for the Final Environmental Benefits Report) Your project Manager will provide you with the roster of experts, and the estimated fees for expert consultants are to be included as an Eligible Cost in both Milestone 1 and the Final Milestone.

23 Contracting Process Schedules where no input is needed
Schedule E - (no input needed by the ER) This schedule outlines the reporting requirements upon completion of each Milestone and upon completion of the Project. Schedule G – (no input needed by the ER) This schedule simply contains a list of acceptable references used to estimate environmental benefits from the project activities. The list of acceptable sources includes IPCC / CDM methodologies and factors for greenhouse gas quantification, Environment Canada, Natural Resources Canada, Industry Canada and the US EPA. Finally, Schedules E and G will be part of the Contribution Agreement, but they require no input. Schedule E Simply outlines the reporting requirements associated with the project. These Requirements include: Status reports PFCR updates at each Milestone + Financial statements Env Benefits Final Reports including Marketing and Commercialization report - Audit Schedule G –simply contains a list of acceptable references that our Env Benefits consultants use to validate estimated environmental benefits from the project activities.

24 Post Contracting – Disbursements & Reporting
Milestone Completion and Reporting Milestone reports are due 30 days after scheduled milestone completion Milestone reports must be submitted at least once every 12 months Milestone Reporting requirements include: Milestone summary report (including technical achievements, actual achievements vs. original targets) Project Financial Certification Report (PFCR) supported by detailed ledger of actual expenses Environmental Benefits Reporting (where applicable) Project Financing update (where applicable) Claim Processing and Disbursement SDTC’s target is to disburse within 45 days, subject to receipt of satisfactory and complete reports Payments are typically structured as advances on milestones, but may be structured as reimbursable payments depending on project circumstances The 10% holdback (cumulative) is released upon Project completion and SDTC’s acceptance of the final reports and audit. The Reporting requirements are outlined in Schedule E of the CA with reference to Schedule B for dates for reporting on each milestone. At the completion of each milestone the ER has 30 days to report to SDTC including: Milestone Status report detailing the actual achievements compared to the targeted deliverables outlined in Schedule B, any setbacks, changes in consortium/staffing, IP created, market forecast, etc. SDTC can provide a template. Project Financial Certification Report (PFCR) which is similar to the budget and will include the actual milestone expenditures. Each expenditure should be entered line-by-line on the PFCR template. At the end of Milestone 1 the Baseline Environmental Benefits Report is due. This is to be prepared by an external consultant selected from SDTC’s approved roster of experts. At each milestone, if the project has changed in a way that affects the cumulative environmental benefits, this report must be updated to reflect the changes. The final Environmental Benefits Report is due at the end of the project and must be prepared by an external consultant. Company financial statements must be submitted to SDTC annually for our review. SDTC strives to process a claim and issue the next disbursement within 45 days of receipt of satisfactory and complete reports. Reporting to SDTC must occur at a minimum of once every 12 months to fulfill our obligations under our funding agreement with the government so if a milestone is delayed, interim reports will be required. In addition to Milestone Reports, SDTC keeps in touch with the ER to keep apprised of activities through quarterly phone calls. We ask approximately 15 questions and this call takes about minutes.

25 Post Contracting Process
Project Quarterly Updates Every quarter, Eligible Recipients are required to provide SDTC with project updates – this is typically a 30 minute exercise that is done by phone or Project Completion Reporting Milestone Completion Reports including: Milestone Status Report, PFCR and a Environmental Benefits Report - due 30 post project completion. Two specific reports are due at the end of the project – as per Schedule E) The Final Project Report and the Marketing and Commercialization Report –due 90 day post project completion, The final Financial audit and the Environmental Benefits Audit are both initiated and paid for by SDTC Post Project Completion Reporting Post Project Completion – to be completed by the ER annually for three (3) years following project completion. Upon completion of the Project, there are requirements for reporting to SDTC outlined in Schedule E of the CA. These include: A Final Project Report is due 90 days after project completion. This report discusses project successes, setbacks, learnings and a narrative regarding your experience with SDTC and how the funding helped in achieving your goals. A Marketing and Commercialization Report to describe the post project commercialization activities, forecasted market uptake rates, product costs and pricing etc. This report is due 90 days after project completion. The Final Environmental Benefits prepared by your external consultant and to be submitted with the final milestone report 30 days after project completion. Final financial and environmental benefits audits will be initiated and paid for by SDTC to close out the Project. Post Project Completion Reporting consists of a questionnaire with a number of relevant questions covering such topics as change in employee head count, company financial growth, market penetration, environmental benefits for Canada and the ROW. The questionnaire takes approx. 30 min. to complete. This questionnaire will be provided to you by the Projects Coordinator upon completion of your project and you will be notified in advance as to when each of the three respective questionnaires are due to SDTC.

26 Reminders 2011-A Do not underestimate project costs or the time it will take to put together the Contribution Agreement. It is expected that the Contribution Agreement will be executed according to the date in your Term Sheet. Putting together a Contribution Agreement is an iterative process. Solid documentation is mandatory to expedite the process. There should be a single point of contact from the ER. Once the term sheet is signed, the point of contact at SDTC is the Project Manager. SDTC will only disclose or discuss any project related information or issues with the contact designated by the ER. Third party consultants acting on behalf of the ER will require written authorization from the ER stating role, responsibility and authority. Final decisions and approvals reside with the ER. All media announcements and public disclosures related to the Project must be sent to SDTC communications for review and approval prior to release (SDTC requires 10 business days turn-around) Do not overplay the commercialization aspect in any public announcements/disclosures as this may conflict with SDTC’s basis for funding approval (pre-commercial development and demonstration) Any changes to the project require prior approval by SDTC. Project failure is not an event of default but misrepresentation, failure to comply with CA provisions, or working outside of the scope of the approved project.

27 Next Steps 2011-A Complete, sign and return the Standard Process Checklist and Term Sheet to Diana Smithson, Projects Coordinator at by July 6, 2012. Contracting: Step 1 – Project Manager to contact ER to transition project information and establish contracting plan. Step 2 - Completing key CA schedules and submit drafts for review/finalization. Step 3 – ER to provide executed funding and consortium agreements to confirm all funding and consortium commitments in place. Step 4 – ER to review final CA (including all schedules) and confirm acceptance. Step 5 – Execution of CA by authorized parties and project implementation.

28 FAQs When will I get my first payment?
A Contribution Agreement must be executed with SDTC before the first payment is made. SDTC then typically provides an advance payment on the first milestone, however SDTC also reserves the right to make reimbursable payments to the project. When will I hear from my assigned Project Manager? Your PM will contact you once we have received the signed Term Sheet and completed Process Checklist along with confirmation that you have listened to this webinar in its entirety. When can I publicly announce that we have been an awarded Project funding from SDTC? SDTC’s Communications team will advise you of a confirmed date for an announcement by the Government of Canada. Until the announcement is made, the award can only be discussed internally and with consortium members (Failure to comply with this request will put project funding at risk).

29 FAQs (cont’d) Who should I contact if I have questions about my Term Sheet or Process Checklist? Please contact Diana Smithson at or by phone at (613) x 285. Don’t wait until the deadline to get in touch with Diana as this will delay communication with your Project Manager. When can I start my Project? The Project Start Date should coincide with the anticipated CA Execution date. While you are free to start your Project at your discretion, it is the contracted Project Start Date that SDTC recognizes in terms of the date that expenses become eligible. If you have a special need for a Project Start Date that precedes the execution of the CA you must submit a written request to your Project Manager, clearly justifying the need for a pre-contract start date. Approval of a pre-contract start date is only granted on a case-by-case basis based on a rationale which clearly requires the ER to initiate expenses in the absence of a signed contract. Under no circumstance can a Project have a Project Start Date that is earlier than the SDTC Board approval date. NOTE: Do not assume that approval of a pre-contract start date will be automatically granted, and in the absence of an executed Contribution Agreement with SDTC, SDTC is not liable for any payment whatsoever. Therefore, incurring any pre-contracting expenses is done at your own risk.

30 For more information please contact
Diana Smithson, Projects Coordinator at x 285.


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