5-13 Exh A Supplement 2 (Equipment) - Natrium Subcontractor Flowdown Final.docx

EXHIBIT A - SUPPLEMENT 2

EQUIPMENT

DOE FLOWDOWN PROVISIONS

Where incorporated by Exhibit A, the following DOE Flowdown Provisions are also applicable to Supplier, per the terms set forth in Exhibit A:

Subject to the conditions provided in 2 CFR 200.313, title to equipment (property) acquired under a Federal award will vest conditionally with the non-Federal entity.

The non-Federal entity cannot encumber this property and must follow the requirements of 2 CFR § 200.313 before disposing of the property.

States must use equipment acquired under a Federal award by the state in accordance with state laws and procedures.

Equipment must be used by the non-Federal entity in the program or project for which it was acquired as long as it is needed, whether or not the project or program continues to be supported by the Federal award. When no longer needed for the originally authorized purpose, the equipment may be used by programs supported by the Federal awarding agency in the priority order specified in 2 CFR § 200.313(c)(1)(i) and (ii).

Management requirements, including inventory and control systems, for equipment are provided in 2 CFR § 200.313(d).

When equipment acquired under a Federal award is no longer needed, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or pass-through entity.

Disposition will be made as follows: (a) items of equipment with a current fair market value of $5,000 or less may be retained, sold, or otherwise disposed of with no further obligation to the Federal awarding agency; (b) Non-Federal entity may retain title or sell the equipment after compensating the Federal awarding agency as described in 2 CFR § 200.313(e)(2); or (c) transfer title to the Federal awarding agency or to an eligible third Party as specified in CFR § 200.313(e)(3).

See 2 CFR § 200.313 for additional requirements pertaining to equipment acquired under a Federal award. Also see 2 CFR § 200.439 Equipment and other capital expenditures.

See 2 CFR § 910.360 for amended requirements for Equipment for For-Profit recipients.

If there is a statutory change that allows DOE to vest unconditional title to property in the non-Federal entity, without reference to the above requirements, then DOE agrees to amend this Agreement to delete the foregoing language and substitute the word "RESERVED".

(29) USE OF REAL PROPERTY AND EQUIPMENT ACQUIRED UNDER THE AWARD

For real property and equipment acquired in the performance of this award, the real property and equipment can continue to be used for the originally authorized purpose as long as needed for that purpose (i.e., as part of the power generation facilities of an electric utility system or in any other manner for the purpose of demonstrating the suitability for commercial application of the advanced nuclear reactor. Accordingly, at the end of the award project period, DOE will proceed with its normal award close out procedures; however, the recipient shall maintain conditional title to the property and continue to use it for its originally authorized purpose. The Recipient cannot encumber this property, without prior written approval by Contracting Officer, and must follow the requirements set forth in 2 C.F.R. § 910.360 before disposing of the property.

It is anticipated that the recipient will continue to use the property for the originally authorized purpose as long as needed for that purpose, for the life of the plant/reactor (which could be of an extended duration). The Recipient is solely responsible for the operation, maintenance and any other costs and liabilities (including accidents) associated with the plant/reactor, including all end of reactor service life decommissioning costs, unless otherwise agreed to in writing by the Contracting Officer. The recipient may make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to the property that materially increases its value or useful life (other than normal ordinary repairs and maintenance) but must make advanced written notification, at least 60 days prior, to the Contracting Officer (such that the Contracting Officer can ensure the property will continue to be used for its original purpose). If the change to the property prevents its continue use for the original purpose, the Government has the right to deny the change provided that denial is issued within the 60 day period. The recipient must maintain records of any changes to the property, which shall be subject to DOE or NRC review upon request.

Recipient will be allowed to continue to use all equipment and property acquired in connection with this award for the original purposes of the award after the award term has ended. Title to this equipment and property will be held by the recipient conditionally with the US Government maintaining a reversionary interest commensurate with the federal participation in the original project. Recipient shall provide a report at least once every five (5) years following the award term period of performance to describe the continued use and to certify that it is in accordance with current regulations, licensing and the original purpose(s) of the award. This report shall also include updated current Fair Market Value (FMV) of the aggregate equipment and property, hereafter referred to as the complex. (see next paragraph) Within 90 days of initial award, recipient shall submit to the Contracting Officer (CO) a projected progressive FMV (in 2020 dollars) in 5 year increments lasting 75 years (or whatever the design time period for the operational life of the reactor is; e.g. value at construction completion, value at 5/10/15/20/25/..../75 years after construction) of the entire operational complex constructed for the award. The projected progressive FMV (in current year dollars) shall be updated and submitted to the CO within 90 days following completion of the complex construction. The projected FMV will serve as a basis for determining when the US Government will surrender all interest in the title of the complex acquired/constructed in connection with this award. Values should be projections of expected sales price if complex were to be advertised widely and sold to an open and competitive market. Do not use depreciated or book value. When the FMV of the complex is less than $5,000, the US government will surrender/abandon claim to title for the complex acquired/constructed in connection with this award. FMV calculations should consider anticipated liabilities and costs associated with maintenance and end of life remediation.

Recipient will remain liable for all maintenance, remediation, and end of life disposition activities associated with the complex throughout its entire lifecycle.

If recipient desires to sell or transfer the complex to a different entity at any time prior to full title transfer, contact the CO for guidance.

During the time the property continues to be used, the recipient must report to DOE on the continued use of the property, as specified in the award’s Reporting Requirements Checklist and in accordance with 2 CFR § 200.329. Further, at the time recipient decides to no longer use the property for its originally authorized purpose, the recipient shall proceed with obtaining disposition instructions, as specified in the terms and conditions of this award.

In addition, should the recipient, during reactor operation, sell or have a change of control, the parties will follow 2 CFR § 910.368 and §910.370, as applicable.

If there is a statutory change that allows DOE to vest unconditional title to property in the non-Federal entity, without reference to the above requirements, then DOE agrees to amend this Agreement to delete the foregoing language and substitute: "DOE agrees that all equipment and property will vest unconditionally in the recipient with retroactive effect to the date of award to the extent allowable by applicable law.”

(30) SUPPLIES (DECEMBER 2014)

See 2 CFR § 200.314 for requirements pertaining to supplies acquired under a Federal award. See also § 200.453 Materials and supplies costs, including costs of computing devices.

(32) PROPERTY TRUST RELATIONSHIP (DECEMBER 2014)

Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved.

See 2 CFR § 200.316 for additional requirements pertaining to real property, equipment, and intangible property acquired or improved under a Federal award.

If there is a statutory change that allows DOE to vest unconditional title to property in the non-Federal entity, without reference to the above requirements, then DOE agrees to amend this Agreement to delete the foregoing language and substitute the word "RESERVED".