ASP ISOTOPES INC.
2025 INDUCEMENT EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
|
|
ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan |
1 |
1. Establishment, Purpose and term of Plan. |
1 |
1.1 Establishment |
1 |
1.2 Purpose |
1 |
1.3 Term of Plan |
1 |
2. Definitions and Construction. |
1 |
2.1 Definitions |
1 |
2.2 Construction |
8 |
3. Administration. |
9 |
3.1 Administration by the Committee |
9 |
3.2 Authority of Officers |
9 |
3.3 Administration with Respect to Insiders |
9 |
3.4 Powers of the Committee |
9 |
3.5 Option or SAR Repricing |
11 |
3.6 Indemnification |
11 |
4. Shares Subject to Plan. |
11 |
4.1 Maximum Number of Shares Issuable |
11 |
4.2 Share Counting |
11 |
4.3 Adjustments for Changes in Capital Structure |
12 |
4.4 Assumption or Substitution of Awards |
13 |
5. Eligibility, Participation and Award Limitations. |
13 |
5.1 Persons Eligible for Awards |
13 |
5.2 Participation in the Plan |
13 |
6. Stock Options. |
13 |
6.1 Exercise Price |
13 |
6.2 Exercisability and Term of Options |
13 |
6.3 Payment of Exercise Price |
14 |
6.4 Effect of Termination of Service |
15 |
6.5 Transferability of Options |
16 |
7. Stock Appreciation Rights. |
16 |
7.1 Types of SARs Authorized |
16 |
|
|
7.2 Exercise Price |
16 |
7.3 Exercisability and Term of SARs |
16 |
7.4 Exercise of SARs |
17 |
7.5 Deemed Exercise of SARs |
17 |
7.6 Effect of Termination of Service |
17 |
7.7 Transferability of SARs |
18 |
8. Restricted Stock Awards. |
18 |
8.1 Types of Restricted Stock Awards Authorized |
18 |
8.2 Purchase Price |
18 |
8.3 Purchase Period |
18 |
8.4 Payment of Purchase Price |
18 |
8.5 Vesting and Restrictions on Transfer |
19 |
8.6 Voting Rights; Dividends and Distributions |
19 |
8.7 Effect of Termination of Service |
19 |
8.8 Nontransferability of Restricted Stock Award Rights |
20 |
9. Restricted Stock Units. |
20 |
9.1 Grant of Restricted Stock Unit Awards |
20 |
9.2 Purchase Price |
20 |
9.3 Vesting |
20 |
9.4 Voting Rights, Dividend Equivalent Rights and Distributions |
20 |
9.5 Effect of Termination of Service |
21 |
9.6 Settlement of Restricted Stock Unit Awards |
21 |
9.7 Nontransferability of Restricted Stock Unit Awards |
22 |
10. Performance Awards. |
22 |
10.1 Types of Performance Awards Authorized |
22 |
10.2 Initial Value of Performance Shares and Performance Units |
22 |
10.3 Establishment of Performance Period, Performance Goals and Performance Award Formula |
22 |
10.4 Measurement of Performance Goals |
22 |
10.5 Settlement of Performance Awards |
23 |
10.6 Voting Rights; Dividend Equivalent Rights and Distributions |
24 |
10.7 Effect of Termination of Service |
25 |
10.8 Nontransferability of Performance Awards |
25 |
|
|
11. Cash-Based Awards and Other Stock-Based Awards. |
26 |
11.1 Grant of Cash-Based Awards |
26 |
11.2 Grant of Other Stock-Based Awards |
26 |
11.3 Value of Cash-Based and Other Stock-Based Awards |
26 |
11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards |
26 |
11.5 Voting Rights; Dividend Equivalent Rights and Distributions |
26 |
11.6 Effect of Termination of Service |
27 |
11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards |
27 |
12. Standard Forms of Award Agreement. |
27 |
12.1 Award Agreements |
27 |
12.2 Authority to Vary Terms |
27 |
13. Change in Control. |
28 |
13.1 Effect of Change in Control on Awards |
28 |
13.2 Federal Excise Tax Under Section 4999 of the Code |
29 |
14. Compliance with Securities Law. |
30 |
15. Compliance with Section 409A. |
30 |
15.1 Awards Subject to Section 409A |
30 |
15.2 Deferral and/or Distribution Elections |
31 |
15.3 Subsequent Elections |
31 |
15.4 Payment of Section 409A Deferred Compensation |
32 |
16. Tax Withholding. |
34 |
16.1 Tax Withholding in General |
34 |
16.2 Withholding in or Directed Sale of Shares |
34 |
17. Amendment, Suspension or Termination of Plan. |
35 |
18. Miscellaneous Provisions. |
35 |
18.1 Repurchase Rights |
35 |
18.2 Forfeiture Events |
35 |
18.3 Provision of Information |
36 |
18.4 Electronic Delivery and Participation |
36 |
18.5 Change in Time Commitment |
36 |
18.6 Rights as an Employee |
36 |
18.7 Rights as a Stockholder |
37 |
|
|
18.8 Delivery of Title to Shares |
37 |
18.9 Fractional Shares |
37 |
18.10 Provisions for Non-U.S |
37 |
18.11 Lock-Up Period |
37 |
18.12 Data Privacy |
37 |
18.13 Retirement and Welfare Plans |
38 |
18.14 Beneficiary Designation |
38 |
18.15 Severability |
38 |
18.16 No Constraint on Corporate Action |
38 |
18.17 Unfunded Obligation |
39 |
18.18 Choice of Law |
39 |
ASP Isotopes Inc.
2025 Inducement Equity Incentive Plan
1. Establishment, Purpose and term of Plan.
1.1 Establishment.
(a) The ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan (the “Plan”) is hereby established effective as of the Effective Date. Certain capitalized terms used herein have the meanings set forth in Section 2 of the Plan.
(b) Each Award under the Plan is intended to qualify as an employment inducement grant under Nasdaq Listing Rule 5635(c)(4) and the official regulations thereunder (together, the “Inducement Listing Rule”) or to qualify under the exception to plans or arrangements relating to an acquisition or merger under Nasdaq Rule 5635(c)(3) and the official guidance thereunder.
(c) No Award may be granted under the Plan prior to the Effective Date.
1.2 Purpose. The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. The Plan seeks to achieve this purpose by providing for Awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.
1.3 Term of Plan. The Plan shall continue in effect until the 10th anniversary of the Effective Date, unless the Plan is sooner terminated by the Committee.
2. Definitions and Construction.
2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:
(a) “Affiliate” means (i) a parent entity, other than a Parent Corporation, that directly, or indirectly through one or more intermediary entities, controls the Company or (ii) a subsidiary entity, other than a Subsidiary Corporation, that is controlled by the Company directly or indirectly through one or more intermediary entities. For this purpose, the terms “parent,” “subsidiary,” “control” and “controlled by” shall have the meanings assigned to such terms for the purposes of registration of securities on Form S-8 under the Securities Act.
(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock Purchase Right, Restricted Stock Bonus, Restricted Stock Unit, Performance Share, Performance Unit, Cash-Based Award or Other Stock-Based Award granted under the Plan.
(c) “Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions and restrictions applicable to an Award.
(d) “Board” means the Board of Directors of the Company.
(e) “Cash-Based Award” means an Award denominated in cash and granted pursuant to Section 11.
(f) “Cashless Exercise” means a Cashless Exercise as defined in Section 6.3(b)(i).
(g) “Cause” has the meaning ascribed to such term in any written agreement between the Participant and the applicable Participating Company that employs or engages Participant defining such term and, in the absence of such an agreement that contains such term, “Cause” means, with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records; (ii) the Participant’s material failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on a Participating Company’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement (except with respect to a disclosure protected by applicable law); or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with a Participating Company.
(h) “Change in Control” means the occurrence of any one or a combination of the following:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total Fair Market Value or total combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of Directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (A) an acquisition by any person who on the Effective Date is the beneficial owner of more than fifty percent (50%) of such voting power, (B) any acquisition directly from the Company, including, without limitation, pursuant to
or in connection with a public offering of securities, (C) any acquisition by the Company, (D) any acquisition by a trustee or other fiduciary under an employee benefit plan of a Participating Company or (E) any acquisition by an entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; or
(ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities entitled to vote generally in the election of Directors or, in the case of an Ownership Change Event described in Section 2.1(bb)(iii), the entity to which the assets of the Company were transferred (the “Transferee”), as the case may be; or
(iii) a date specified by the Committee following approval by the stockholders of a plan of complete liquidation or dissolution of the Company; provided, however, that a Change in Control shall be deemed not to include a transaction described in subsections (i) or (ii) of this Section 2.1(h) in which a majority of the members of the board of directors of the continuing, surviving or successor entity, or parent thereof, immediately after such transaction is comprised of Incumbent Directors.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Committee shall determine whether multiple events described in subsections (i), (ii) and (iii) of this Section 2.1(h) are related and to be treated in the aggregate as a single Change in Control, and its determination shall be final, binding and conclusive.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsections (i), (ii) and (iii) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).
The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.
(i) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder.
(j) “Committee” means the Compensation Committee and such other committee or subcommittee of the Board, if any, duly appointed to administer the Plan and having such powers in each instance as shall be specified by the Board. If, at any time, there is no committee of the Board then authorized or properly constituted to administer the Plan, the Board shall exercise all of the powers of the Committee granted herein, and, in any event, the Board may in its discretion exercise any or all of such powers and, in such instances, references herein to the Committee shall mean the Board. Unless the Board specifically determines otherwise, each member of the Committee shall, at the time it takes any action with respect to an Award under the Plan, be a “non-employee director” within the meaning of Rule 16b-3 and an “independent director” under the rules of any stock exchange on which the Stock is listed. However, the fact that a Committee member shall fail to qualify as “non-employee director” or an “independent director” shall not invalidate any Award granted by the Committee which Award is otherwise validly granted under the Plan.
(k) “Company” means ASP Isotopes Inc., a Delaware corporation, and any successor corporation thereto.
(l) “Director” means a member of the Board.
(m) “Disability” means the permanent and total disability of the Participant, within the meaning of Section 22(e)(3) of the Code.
(n) “Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one share of Stock for each share of Stock represented by an Award held by such Participant.
(o) “Effective Date” means the date on which the Plan is approved by the Board.
(p) “Employee” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of a Participating Company; provided, however, that neither service as a Director nor payment of a Director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the terms of the Plan as of the time of the Company’s determination of whether or not the individual is an Employee, all such determinations by the Company shall be final, binding and conclusive as to such rights, if any, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination as to such individual’s status as an Employee.
(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(r) “Fair Market Value” means, as of any date, the value of a share of Stock or other property as determined by the Committee, in its discretion, or by the Company, in
its discretion, if such determination is expressly allocated to the Company herein, subject to the following:
(i) Except as otherwise determined by the Committee, if, on such date, the Stock is listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock as quoted on the national or regional securities exchange or quotation system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or quotation system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded or quoted prior to the relevant date, or such other appropriate day as shall be determined by the Committee, in its discretion.
(ii) If, on such date, the Stock is not listed or quoted on a national or regional securities exchange or quotation system, the Fair Market Value of a share of Stock shall be as determined by the Committee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse, and in a manner consistent with the requirements of Section 409A of the Code to the extent applicable.
(s) “Full Value Award” means any Award settled in Stock, other than (i) an Option, (ii) a Stock Appreciation Right, or (iii) a Restricted Stock Purchase Right or an Other Stock-Based Award under which the Company will receive monetary consideration equal to the Fair Market Value (determined on the effective date of grant) of the shares subject to such Award.
(t) “Incumbent Director” means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).
(u) “Insider” means an Officer or other person whose transactions in Stock are subject to Section 16 of the Exchange Act.
(v) “Materially Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s rights under the Award. A Participant’s rights under an Award will not be deemed to have been Materially Impaired by any such amendment if the Committee, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights. For example, the following types of amendments to the terms of an Award do not Materially Impair the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject to an Option that may be exercised, (ii) to clarify the manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (iii) to comply with other applicable laws.
(w) “Net Exercise” means a Net Exercise as defined in Section 6.3(b)(iii).
(x) “Nonstatutory Stock Option” means an Option not intended to be or which does not qualify as an incentive stock option within the meaning of Section 422(b) of the Code.
(y) “Officer” means any person designated by the Board as an officer of the Company.
(z) “Option” means a Nonstatutory Stock Option granted pursuant to the Plan.
(aa) “Other Stock-Based Award” means an Award denominated in shares of Stock and granted pursuant to Section 11.
(bb) “Ownership Change Event” means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of Directors; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).
(cc) “Parent Corporation” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code.
(dd) “Participant” means any eligible person who has been granted one or more Awards.
(ee) “Participating Company” means the Company or any Parent Corporation, Subsidiary Corporation or Affiliate.
(ff) “Participating Company Group” means, at any point in time, the Company and all other entities collectively which are then Participating Companies.
(gg) “Performance Award” means an Award of Performance Shares or Performance Units.
(hh) “Performance Award Formula” means, for any Performance Award, a formula or table established by the Committee pursuant to Section 10.3 which provides the basis for computing the value of a Performance Award at one or more levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.
(ii) “Performance Goal” means a performance goal established by the Committee pursuant to Section 10.3.
(jj) “Performance Period” means a period established by the Committee pursuant to Section 10.3 at the end of which one or more Performance Goals are to be measured.
(kk) “Performance Share” means a right granted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Share, as determined by the Committee, based upon attainment of applicable Performance Goal(s).
(ll) “Performance Unit” means a right granted to a Participant pursuant to Section 10 to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon attainment of applicable Performance Goal(s).
(mm) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company to administer the day to day operations of the Plan and the Company’s other equity incentive programs.
(nn) “Prior Plan” means the Company’s 2021 Equity Incentive Plan.
(oo) “Post-Termination Exercise Period” means the period following termination of a Participant’s continuous Service within which an Option or SAR is exercisable, as specified in Section 6.4(a).
(pp) “Restricted Stock Award” means an Award of a Restricted Stock Bonus or a Restricted Stock Purchase Right.
(qq) “Restricted Stock Bonus” means Stock granted to a Participant pursuant to Section 8.
(rr) “Restricted Stock Purchase Right” means a right to purchase Stock granted to a Participant pursuant to Section 8.
(ss) “Restricted Stock Unit” means a right granted to a Participant pursuant to Section 9 to receive on a future date or occurrence of a future event a share of Stock or cash in lieu thereof, as determined by the Committee.
(tt) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation.
(uu) “SAR” or “Stock Appreciation Right” means a right granted to a Participant pursuant to Section 7 to receive payment, for each share of Stock subject to such Award, of an amount equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the Award over the exercise price thereof.
(vv) “Section 409A” means Section 409A of the Code.
(ww) “Section 409A Deferred Compensation” means compensation provided pursuant to an Award that constitutes nonqualified deferred compensation within the meaning of Section 409A.
(xx) “Securities Act” means the Securities Act of 1933, as amended.
(yy) “Service” means a Participant’s employment with the Participating Company Group as an Employee. Unless otherwise provided by the Committee, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service or a change in the Participating Company for which the Participant renders Service, provided that there is no interruption or termination of the Participant’s Service. Furthermore, a Participant’s Service shall not be deemed to have been interrupted or terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company. However, unless otherwise provided by the Committee, if any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day following the commencement of such leave the Participant’s Service shall be deemed to have terminated, unless the Participant’s right to return to Service is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, an unpaid leave of absence shall not be treated as Service for purposes of determining vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the business entity for which the Participant performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Participant’s Service has terminated and the effective date of and reason for such termination.
(zz) “Stock” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.
(aaa) “Stock Tender Exercise” means a Stock Tender Exercise as defined in Section 6.3(b)(ii).
(bbb) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
(ccc) “Ten Percent Owner” means a Participant who, at the time an Option is granted to the Participant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company (other than an Affiliate) within the meaning of Section 422(b)(6) of the Code.
(ddd) “Trading Compliance Policy” means the written policy of the Company pertaining to the purchase, sale, transfer or other disposition of the Company’s equity securities by Directors, Officers, Employees or other service providers who may possess material, nonpublic information regarding the Company or its securities.
(eee) “Vesting Conditions” mean those conditions established in accordance with the Plan prior to the satisfaction of which an Award or shares subject to an Award remain subject to forfeiture or a repurchase option in favor of the Company exercisable for the Participant’s monetary purchase price, if any, for such shares upon the Participant’s termination of Service or failure of a performance condition to be satisfied.
2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include
the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
3. Administration.
3.1 Administration by the Committee. The Plan shall be administered by the Committee. All questions of interpretation of the Plan, of any Award Agreement or of any other form of agreement or other document employed by the Company in the administration of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final, binding and conclusive upon all persons having an interest in the Plan or such Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or Award Agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein. All expenses incurred in connection with the administration of the Plan shall be paid by the Company.
3.2 Authority of Officers. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election that is the responsibility of or that is allocated to the Company herein, provided that the Officer has apparent authority with respect to such matter, right, obligation, determination or election. To the extent permitted by applicable law, the Committee may, in its discretion, delegate to a committee comprised of one or more Officers the authority to grant one or more Awards, without further approval of the Committee, to any Employee, other than a person who, at the time of such grant, is an Insider, and to exercise such other powers under the Plan as the Committee may determine; provided, however, that (a) the Committee shall fix the maximum number of shares subject to Awards that may be granted by such Officers, (b) each such Award shall be subject to the terms and conditions of the appropriate standard form of Award Agreement approved by the Board or the Committee and shall conform to the provisions of the Plan, and (c) each such Award shall conform to such other limits and guidelines as may be established from time to time by the Committee.
3.3 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3.
3.4 Powers of the Committee. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time or times at which, Awards shall be granted and the number of shares of Stock, units or monetary value to be subject to each Award;
(b) to determine the type of Award granted;
(c) to determine the Fair Market Value of shares of Stock or other property;
(d) to determine the terms, conditions and restrictions applicable to each Award (which need not be identical) and any shares acquired pursuant thereto, including, without limitation, (i) the exercise or purchase price of shares pursuant to any Award, (ii) the method of payment for shares purchased pursuant to any Award, (iii) the method for satisfaction of any tax withholding obligation arising in connection with any Award, including by the withholding or delivery of shares of Stock, (iv) the timing, terms and conditions of the exercisability or vesting of any Award or any shares acquired pursuant thereto, (v) the Performance Measures, Performance Period, Performance Award Formula and Performance Goals applicable to any Award and the extent to which such Performance Goals have been attained, (vi) the time of expiration of any Award, (vii) the effect of any Participant’s termination of Service on any of the foregoing, and (viii) all other terms, conditions and restrictions applicable to any Award or shares acquired pursuant thereto not inconsistent with the terms of the Plan;
(e) to determine whether an Award will be settled in shares of Stock, cash, other property or in any combination thereof;
(f) to approve one or more forms of Award Agreement;
(g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions or conditions applicable to any Award or any shares acquired pursuant thereto provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing;
(h) to accelerate, continue, extend or defer the exercisability or vesting of any Award or any shares acquired pursuant thereto, including with respect to the period following a Participant’s termination of Service provided however, that, a Participant’s rights under any Award will not be Materially Impaired by any such amendment unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing;
(i) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including, without limitation, as the Committee deems necessary or desirable to comply with the laws of, or to accommodate the tax policy, accounting principles or custom of, foreign jurisdictions whose residents may be granted Awards;
(j) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Stock or the share price of the Stock including any Change in Control, for reasons of administrative convenience;
(k) To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired by such action, (i) the reduction of the
exercise price (or strike price) of any outstanding Option or SAR; (i) the cancellation of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares of Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (iii) any other action that is treated as a repricing under generally accepted accounting principles; and
(l) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award as the Committee may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law.
3.5 Option or SAR Repricing. The Committee shall have the authority, without additional approval by the stockholders of the Company, to approve a program providing for either (a) the cancellation of outstanding Options or SARs having exercise prices per share greater than the then Fair Market Value of a share of Stock (“Underwater Awards”) and the grant in substitution therefor of new Options or SARs covering the same or a different number of shares but with an exercise price per share equal to the Fair Market Value per share on the new grant date, Full Value Awards, or payments in cash, or (b) the amendment of outstanding Underwater Awards to reduce the exercise price thereof to the Fair Market Value per share on the date of amendment.
3.6 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, to the extent permitted by applicable law, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
4. Shares Subject to Plan.
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Sections 4.2 and 4.3, the maximum aggregate number of shares of Stock that may be issued under the Plan shall be 2,000,000 shares.
4.2 Share Counting. If an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by
the Company for an amount not greater than the Participant’s purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon payment in shares of Stock pursuant to the exercise of an SAR, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the SAR is exercised. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant, or by means of a Net Exercise, the number of shares available for issuance under the Plan shall be reduced only by the net number of shares for which the Option is exercised. Shares purchased in the open market with proceeds from the exercise of Options shall not be added to the limit set forth in Section 4.1. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the exercise or settlement of Options or SARs pursuant to Section 16.2 and Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to the vesting or settlement of Full Value Awards pursuant to Section 16.2 shall again become available for issuance under the Plan.
4.3 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company and the requirements of Section 409A and Section 424 of the Code to the extent applicable, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting regular, periodic cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number and kind of shares subject to the Plan and to any outstanding Awards, and in the exercise or purchase price per share under any outstanding Award in order to prevent dilution or enlargement of Participants’ rights under the Plan. For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.” If a majority of the shares which are of the same class as the shares that are subject to outstanding Awards are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Committee may unilaterally amend the outstanding Awards to provide that such Awards are for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise or purchase price per share of, the outstanding Awards shall be adjusted in a fair and equitable manner as determined by the Committee, in its discretion and in accordance with Section 409A and Section 424 of the Code to the extent applicable. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the exercise or purchase price per share shall be rounded up to the nearest whole cent. In no event may the exercise or purchase price, if any, under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. The Committee in its discretion, may also make such adjustments in the terms of any Award to reflect, or related to, such changes in the capital structure of the Company or distributions as it deems appropriate, including modification of Performance Goals, Performance Award Formulas and Performance Periods. The adjustments determined by the Committee pursuant to this Section shall be final, binding and conclusive.
4.4 Assumption or Substitution of Awards. The Committee may, without affecting the number of shares of Stock reserved or available hereunder, authorize the issuance or assumption of equity awards under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with Section 409A and any other applicable provisions of the Code, without reducing the number of shares otherwise available for issuance under the Plan. In addition, subject to compliance with applicable laws, and listing requirements, shares available for grant under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for awards under the Plan to individuals who were not Employees or Directors of the Participating Company Group prior to the transaction and shall not reduce the number of shares otherwise available for issuance under the Plan.
5. Eligibility, Participation and Award Limitations.
5.1 Persons Eligible for Awards. Awards may be granted only to Employees.
5.2 Participation in the Plan. Awards are granted solely at the discretion of the Committee. Eligible persons may be granted more than one Award. However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.
6. Stock Options.
Options shall be evidenced by Award Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
6.1 Exercise Price. The exercise price for each Option shall be established in the discretion of the Committee; provided, however, that the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option may be granted with an exercise price less than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner that would qualify under the provisions of Section 409A or Section 424(a) of the Code.
6.2 Exercisability and Term of Options. Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, and (b) no Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such Option (except in the event of such Employee’s death, disability or retirement, upon a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Committee in the
grant of an Option, each Option shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Committee and subject to the limitations contained in Section 6.3(b), by means of (1) a Cashless Exercise, (2) a Stock Tender Exercise or (3) a Net Exercise (for Nonstatutory Stock Options); (iii) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (iv) if permitted by the Committee, by any combination thereof. The Committee may at any time or from time to time grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.
(b) Limitations on Forms of Consideration.
(i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise, including with respect to one or more Participants specified by the Company notwithstanding that such program or procedures may be available to other Participants.
(ii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed exercise notice accompanied by a Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock owned by the Participant having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.
(iii) Net Exercise. A “Net Exercise” means the delivery of a properly executed exercise notice followed by a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate exercise price for the shares with respect to which the Option is exercised, and (2) the
Participant shall pay to the Company in cash the remaining balance of such aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued.
6.4 Effect of Termination of Service.
(a) Option Exercisability. Subject to earlier termination of the Option as otherwise provided by this Plan and unless otherwise provided by the Committee or in an Award Agreement, an Option shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period specified below, or if applicable, such other period provided in the applicable Award Agreement or other written agreement between the Participant and the Company; provided however, in no event may such Option be exercised after expiration of its maximum permitted term as set forth in the Award Agreement evidencing such Option or any earlier date the Option is terminated in connection with a Change in Control (the “Option Expiration Date”), and thereafter shall terminate if not exercised during such period.
(i) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated.
(ii) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service for any reason other than Cause.
(iii) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary, if the Participant’s Service is terminated for Cause or if, following the Participant’s termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.
(iv) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for vested shares on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated.
(b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of Service for Cause, if the exercise of an Option within the Post-Termination Exercise Period is prevented by the provisions of Section 14 below or other applicable law, the Option shall remain exercisable until the later of (i) thirty (30) days after the date such
exercise first would no longer be prevented by such provisions or (ii) the end of the applicable Post-Termination Exercise Period, but in any event no later than the Option Expiration Date.
6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. An Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Option, an Option shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 under the Securities Act.
7. Stock Appreciation Rights.
Stock Appreciation Rights shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
7.1 Types of SARs Authorized. SARs may be granted in tandem with all or any portion of a related Option (a “Tandem SAR”) or may be granted independently of any Option (a “Freestanding SAR”). A Tandem SAR may only be granted concurrently with the grant of the related Option.
7.2 Exercise Price. The exercise price for each SAR shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share subject to a Tandem SAR shall be the exercise price per share under the related Option and (b) the exercise price per share subject to a Freestanding SAR shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the SAR. Notwithstanding the foregoing, an SAR may be granted with an exercise price lower than the minimum exercise price set forth above if such SAR is granted pursuant to an assumption or substitution for another stock appreciation right in a manner that would qualify under the provisions of Section 409A.
7.3 Exercisability and Term of SARs.
(a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent, and only to the extent, that the related Option is exercisable, subject to such provisions as the Committee may specify where the Tandem SAR is granted with respect to less than the full number of shares of Stock subject to the related Option. The Committee may, in its discretion, provide in any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance approval of the Company and, if such approval is not given, then the Option shall nevertheless remain exercisable in accordance with its terms. A Tandem SAR shall terminate and cease to be exercisable no later than the date on which the related Option expires or is terminated or canceled. Upon the exercise of a Tandem SAR with respect to some or all of the shares subject to such SAR, the related Option shall be canceled automatically as to the number of shares with respect to which the Tandem SAR was exercised. Upon the exercise of an
Option related to a Tandem SAR as to some or all of the shares subject to such Option, the related Tandem SAR shall be canceled automatically as to the number of shares with respect to which the related Option was exercised.
(b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such SAR; provided, however, that (i) no Freestanding SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such SAR and (ii) no Freestanding SAR granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable until at least six (6) months following the date of grant of such SAR (except in the event of such Employee’s death, disability or retirement, upon a Change in Control, or as otherwise permitted by the Worker Economic Opportunity Act). Subject to the foregoing, unless otherwise specified by the Committee in the grant of a Freestanding SAR, each Freestanding SAR shall terminate ten (10) years after the effective date of grant of the SAR, unless earlier terminated in accordance with its provisions.
7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5) of an SAR, the Participant (or the Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made (a) in the case of a Tandem SAR, solely in shares of Stock in a lump sum upon the date of exercise of the SAR and (b) in the case of a Freestanding SAR, in cash, shares of Stock, or any combination thereof as determined by the Committee and set forth in the Award Agreement, in a lump sum upon the date of exercise of the SAR. When payment is to be made in shares of Stock, the number of shares to be issued shall be determined on the basis of the Fair Market Value of a share of Stock on the date of exercise of the SAR. For purposes of Section 7, an SAR shall be deemed exercised on the date on which the Company receives notice of exercise from the Participant or as otherwise provided in Section 7.5.
7.5 Deemed Exercise of SARs. If, on the date on which an SAR would otherwise terminate or expire, the SAR by its terms remains exercisable immediately prior to such termination or expiration and, if so exercised, would result in a payment to the holder of such SAR, then any portion of such SAR which has not previously been exercised shall automatically be deemed to be exercised as of such date with respect to such portion. The Company may elect to discontinue the deemed exercise of SARs pursuant to this Section 7.5 at any time upon notice to a Participant or to apply the deemed exercise feature only to certain groups of Participants. The deemed exercise of a SAR pursuant to this Section 7.5 shall apply only to a SAR that has been timely accepted by a Participant under procedures specified by the Company from time to time.
7.6 Effect of Termination of Service. Subject to earlier termination of the SAR as otherwise provided herein and unless otherwise provided by the Committee or in an Award Agreement, an SAR shall be exercisable after a Participant’s termination of Service only to the
extent and during the applicable time period determined in accordance with Section 6.4 (treating the SAR as if it were an Option) and thereafter shall terminate.
7.7 Transferability of SARs. During the lifetime of the Participant, an SAR shall be exercisable only by the Participant or the Participant’s guardian or legal representative. An SAR shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Award, a Tandem SAR related to a Nonstatutory Stock Option or a Freestanding SAR shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8 under the Securities Act.
8. Restricted Stock Awards.
Restricted Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Restricted Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Stock subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
8.1 Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be granted in the form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If either the grant of or satisfaction of Vesting Conditions applicable to a Restricted Stock Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).
8.2 Purchase Price. The purchase price for shares of Stock issuable under each Restricted Stock Purchase Right shall be established by the Committee in its discretion. No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving shares of Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock subject to a Restricted Stock Award.
8.3 Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Restricted Stock Purchase Right.
8.4 Payment of Purchase Price. Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made (a) in cash, by check or in cash equivalent, (b) by
such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (c) by any combination thereof.
8.5 Vesting and Restrictions on Transfer. Shares issued pursuant to any Restricted Stock Award may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event or as provided in Section 8.8. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Award that, if the satisfaction of Vesting Conditions with respect to any shares subject to such Restricted Stock Award would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then satisfaction of the Vesting Conditions automatically shall be determined on the next trading day on which the sale of such shares would not violate the Trading Compliance Policy. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
8.6 Voting Rights; Dividends and Distributions. Except as provided in this Section, Section 8.5 and any Award Agreement, during any period in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such shares; provided, however, that if so determined by the Committee and provided by the Award Agreement, such dividends and distributions shall be subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid, and otherwise shall be paid no later than the end of the calendar year in which such dividends or distributions are paid to stockholders (or, if later, the 15th day of the third month following the date such dividends or distributions are paid to stockholders). In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant is entitled by reason of the Participant’s Restricted Stock Award shall be immediately subject to the same Vesting Conditions as the shares subject to the Restricted Stock Award with respect to which such dividends or distributions were paid or adjustments were made.
8.7 Effect of Termination of Service. Unless otherwise provided by the Committee in the Award Agreement evidencing a Restricted Stock Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then (a) the Company shall have the option to repurchase for the purchase price paid by the Participant any shares acquired by the Participant pursuant to a Restricted Stock Purchase Right which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service and (b) the Participant shall forfeit to the Company any shares acquired by
the Participant pursuant to a Restricted Stock Bonus which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.
8.8 Nontransferability of Restricted Stock Award Rights. Rights to acquire shares of Stock pursuant to a Restricted Stock Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or the laws of descent and distribution. All rights with respect to a Restricted Stock Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.
9. Restricted Stock Units.
Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying the number of Restricted Stock Units subject to the Award, in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
9.1 Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted upon such conditions as the Committee shall determine, including, without limitation, upon the attainment of one or more Performance Goals described in Section 10.4. If either the grant of a Restricted Stock Unit Award or the Vesting Conditions with respect to such Award is to be contingent upon the attainment of one or more Performance Goals, the Committee shall follow procedures substantially equivalent to those set forth in Sections 10.3 through 10.5(a).
9.2 Purchase Price. No monetary payment (other than applicable tax withholding, if any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued upon settlement of the Restricted Stock Unit Award.
9.3 Vesting. Restricted Stock Unit Awards may (but need not) be made subject to Vesting Conditions based upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award.
9.4 Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Restricted Stock Units until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to Dividend Equivalent Rights with respect
to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Dividend Equivalent Rights, if any, shall be paid by crediting the Participant with a cash amount or with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Stock, as determined by the Committee. The number of additional Restricted Stock Units (rounded to the nearest whole number), if any, to be credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. If so determined by the Committee and provided by the Award Agreement, such cash amount or additional Restricted Stock Units shall be subject to the same terms and conditions (including vesting terms) and shall be settled in the same manner and at the same time as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions as are applicable to the Award.
9.5 Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a Participant’s Service terminates for any reason, whether voluntary or involuntary (including the Participant’s death or disability), then the Participant shall forfeit to the Company any Restricted Stock Units pursuant to the Award which remain subject to Vesting Conditions as of the date of the Participant’s termination of Service.
9.6 Settlement of Restricted Stock Unit Awards. The Company shall issue to a Participant on the date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Award vest or on such other date determined by the Committee in compliance with Section 409A, if applicable, and set forth in the Award Agreement one (1) share of Stock (and/or any other new, substituted or additional securities or other property pursuant to an adjustment described in Section 9.4) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date, subject to the withholding of applicable taxes, if any. The Committee, in its discretion, may provide in any Award Agreement evidencing a Restricted Stock Unit Award that if the settlement date with respect to any shares issuable upon vesting of Restricted Stock Units would otherwise occur on a day on which the sale of such shares would violate the provisions of the Trading Compliance Policy, then the settlement date shall be deferred until the next trading day on which the sale of such shares would not violate the Trading Compliance Policy but in any event no later than the 15th day of the third calendar month following the year in which such Restricted Stock Units vest. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance date(s) and amount(s) elected by the Participant shall be set forth in the Award Agreement or an Election (as defined in Section 15.2). Notwithstanding the foregoing, the Committee, in its
discretion, may provide in an Award Agreement for settlement of any Restricted Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value on the payment date of the shares of Stock or other property otherwise issuable to the Participant pursuant to this Section.
9.7 Nontransferability of Restricted Stock Unit Awards. The right to receive shares pursuant to a Restricted Stock Unit Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Restricted Stock Unit Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.
10. Performance Awards.
Performance Awards shall be evidenced by Award Agreements in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
10.1 Types of Performance Awards Authorized. Performance Awards may be granted in the form of either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance Award shall specify the number of Performance Shares or Performance Units subject thereto, the Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.
10.2 Initial Value of Performance Shares and Performance Units. Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an initial monetary value equal to the Fair Market Value of one (1) share of Stock, subject to adjustment as provided in Section 4.3, on the effective date of grant of the Performance Share, and each Performance Unit shall have an initial monetary value established by the Committee at the time of grant. The final value payable to the Participant in settlement of a Performance Award determined on the basis of the applicable Performance Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.
10.3 Establishment of Performance Period, Performance Goals and Performance Award Formula. In granting each Performance Award, the Committee shall establish in writing the applicable Performance Period, Performance Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Award Formula the final value of the Performance Award to be paid to the Participant. The Company shall notify each Participant granted a Performance Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.
10.4 Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets to be attained (“Performance Targets”) with
respect to one or more measures of objective or subjective business, financial, or individual performance or other performance criteria established by the Committee (each, a “Performance Measure”), subject to the following:
(a) Performance Measures. Unless otherwise determined by the Committee no later than the grant of the Performance Award, Performance Measures based on objective criteria shall be calculated in accordance with the Company’s financial statements, or, if such measures are not reported in the Company’s financial statements, they shall be calculated in accordance with generally accepted accounting principles, a method used generally in the Company’s industry, or in accordance with a methodology established by the Committee prior to the grant of the Performance Award. Performance Measures based on subjective criteria shall be determined on the basis established by the Committee in granting the Award. As specified by the Committee, Performance Measures may be calculated with respect to the Company and each Subsidiary Corporation consolidated therewith for financial reporting purposes, one or more Subsidiary Corporations or such division or other business unit of any of them selected by the Committee. Unless otherwise determined by the Committee no later than the grant of the Performance Award, the Performance Measures applicable to the Performance Award shall be calculated prior to the accrual of expense for any Performance Award for the same Performance Period and excluding the effect (whether positive or negative) on the Performance Measures of any change in accounting standards or any unusual or infrequently occurring event or transaction, as determined by the Committee, occurring after the establishment of the Performance Goals applicable to the Performance Award. Each such adjustment, if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of Performance Measures in order to prevent the dilution or enlargement of the Participant’s rights with respect to a Performance Award.
(b) Performance Targets. Performance Targets may include a minimum, maximum, target level and intermediate levels of performance, with the final value of a Performance Award determined under the applicable Performance Award Formula by the Performance Target level attained during the applicable Performance Period. A Performance Target may be stated as an absolute value, an increase or decrease in a value, or as a value determined relative to an index, budget or other standard selected by the Committee.
10.5 Settlement of Performance Awards.
(a) Determination of Final Value. As soon as practicable following the completion of the Performance Period applicable to a Performance Award, the Committee shall determine the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Award Formula.
(b) Discretionary Adjustment of Award Formula. In its discretion, the Committee may, either at the time it grants a Performance Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Award Formula applicable to a Performance Award to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine.
(c) Effect of Leaves of Absence. Unless otherwise required by law or a Participant’s Award Agreement, payment of the final value, if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days in unpaid leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on an unpaid leave of absence.
(d) Notice to Participants. As soon as practicable following the Committee’s determination in accordance with Sections 10.5(a) and (b), the Company shall notify each Participant of the determination of the Committee.
(e) Payment in Settlement of Performance Awards. As soon as practicable following the Committee’s determination in accordance with Sections 10.5(a) and (b), but in any event within the Short-Term Deferral Period described in Section 15.1 (except as otherwise provided below or consistent with the requirements of Section 409A), payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Award. Payment of such amount shall be made in cash, shares of Stock, or a combination thereof as determined by the Committee and set forth in the Award Agreement. Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. If permitted by the Committee, the Participant may elect, consistent with the requirements of Section 409A, to defer receipt of all or any portion of the payment to be made to the Participant pursuant to this Section, and such deferred payment date(s) elected by the Participant shall be set forth in the Award Agreement or an Election. If any payment is to be made on a deferred basis, the Committee may, but shall not be obligated to, provide for the payment during the deferral period of Dividend Equivalent Rights or interest.
(f) Provisions Applicable to Payment in Shares. If payment is to be made in shares of Stock, the number of such shares shall be determined by dividing the final value of the Performance Award by the Fair Market Value of a share of Stock determined by the method specified in the Award Agreement. Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 8.5. Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement and shall be subject to the provisions of Sections 8.5 through 8.8 above.
10.6 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Performance Share Awards until the date of the issuance of such shares, if any (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Performance Share Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date the Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date on which the Performance Shares are settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant either in cash or in the form of additional whole Performance Shares as of the date of payment of such cash dividends on Stock, as determined by the Committee. The number of additional Performance Shares (rounded to the
nearest whole number), if any, to be so credited shall be determined by dividing (a) the amount of cash dividends paid on the dividend payment date with respect to the number of shares of Stock represented by the Performance Shares previously credited to the Participant by (b) the Fair Market Value per share of Stock on such date. Dividend Equivalent Rights, if any, shall be accumulated and paid to the extent that the related Performance Shares become nonforfeitable. Settlement of Dividend Equivalent Rights may be made in cash, shares of Stock, or a combination thereof as determined by the Committee, and may be paid on the same basis as settlement of the related Performance Share as provided in Section 10.5. Dividend Equivalent Rights shall not be paid with respect to Performance Units. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participant’s Performance Share Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Performance Goals as are applicable to the Award.
10.7 Effect of Termination of Service. Unless otherwise provided by the Committee and set forth in the Award Agreement evidencing a Performance Award, the effect of a Participant’s termination of Service on the Performance Award shall be as follows:
(a) Death or Disability. If the Participant’s Service terminates because of the death or Disability of the Participant before the completion of the Performance Period applicable to the Performance Award, the final value of the Participant’s Performance Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of months of the Participant’s Service during the Performance Period. Payment shall be made following the end of the Performance Period in any manner permitted by Section 10.5.
(b) Other Termination of Service. If the Participant’s Service terminates for any reason except death or Disability before the completion of the Performance Period applicable to the Performance Award, such Award shall be forfeited in its entirety; provided, however, that in the event of an involuntary termination of the Participant’s Service, the Committee, in its discretion, may waive the automatic forfeiture of all or any portion of any such Award and determine the final value of the Performance Award in the manner provided by Section 10.7(a). Payment of any amount pursuant to this Section shall be made following the end of the Performance Period in any manner permitted by Section 10.5.
10.8 Nontransferability of Performance Awards. Prior to settlement in accordance with the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to a Performance Award granted to a Participant hereunder shall be exercisable during his or her lifetime only by such Participant or the Participant’s guardian or legal representative.
11. Cash-Based Awards and Other Stock-Based Awards.
Cash-Based Awards and Other Stock-Based Awards shall be evidenced by Award Agreements in such form as the Committee shall establish. Such Award Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions:
11.1 Grant of Cash-Based Awards. Subject to the provisions of the Plan, the Committee, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms and conditions, including the achievement of performance criteria, as the Committee may determine.
11.2 Grant of Other Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted securities, stock-equivalent units, stock appreciation units, securities or debentures convertible into common stock or other forms determined by the Committee) in such amounts and subject to such terms and conditions as the Committee shall determine. Other Stock-Based Awards may be made available as a form of payment in the settlement of other Awards or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may involve the transfer of actual shares of Stock to Participants, or payment in cash or otherwise of amounts based on the value of Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
11.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a monetary payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of shares of Stock or units based on such shares of Stock, as determined by the Committee. The Committee may require the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. If the Committee exercises its discretion to establish performance criteria, the final value of Cash-Based Awards or Other Stock-Based Awards that will be paid to the Participant will depend on the extent to which the performance criteria are met.
11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards. Payment or settlement, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, shares of Stock or other securities or any combination thereof as the Committee determines and set forth in the Award Agreement. To the extent applicable, payment or settlement with respect to each Cash-Based Award and Other Stock-Based Award shall be made in compliance with the requirements of Section 409A.
11.5 Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall have no voting rights with respect to shares of Stock represented by Other Stock-Based Awards until the date of the issuance of such shares of Stock (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), if any, in settlement of such Award. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Other Stock-Based Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Stock during the period beginning on the date such Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date the Award is settled or the date on which it is terminated. Such Dividend Equivalent Rights, if any, shall be paid in accordance with the provisions set forth in Section 9.4. Dividend Equivalent Rights shall not be granted with respect to Cash-Based Awards. In the event of a dividend or distribution paid in shares of Stock or other property or any other adjustment made upon a change in the capital structure of the Company as described in Section 4.3, appropriate adjustments shall be made in the Participant’s Other Stock-Based Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than regular, periodic cash dividends) to which the Participant would be entitled by reason of the shares of Stock issuable upon settlement of such Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same Vesting Conditions and performance criteria, if any, as are applicable to the Award.
11.6 Effect of Termination of Service. Each Award Agreement evidencing a Cash-Based Award or Other Stock-Based Award shall set forth the extent to which the Participant shall have the right to retain such Award following termination of the Participant’s Service. Such provisions shall be determined in the discretion of the Committee, need not be uniform among all Cash-Based Awards or Other Stock-Based Awards, and may reflect distinctions based on the reasons for termination, subject to the requirements of Section 409A, if applicable.
11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards. Prior to the payment or settlement of a Cash-Based Award or Other Stock-Based Award, the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. The Committee may impose such additional restrictions on any shares of Stock issued in settlement of Cash-Based Awards and Other Stock-Based Awards as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such shares of Stock are then listed and/or traded, or under any state securities laws or foreign law applicable to such shares of Stock.
12. Standard Forms of Award Agreement.
12.1 Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee and as amended from time to time. No Award or purported Award shall be a valid and binding obligation of the Company unless evidenced by a Company-executed Award Agreement, which execution may be evidenced by electronic means.
12.2 Authority to Vary Terms. The Committee shall have the authority from time to time to vary the terms of any standard form of Award Agreement either in connection with the grant or amendment of an individual Award or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Award Agreement are not inconsistent with the terms of the Plan.
13. Change in Control.
13.1 Effect of Change in Control on Awards. In the event of a Change in Control, outstanding Awards shall be subject to the definitive agreement entered into by the Company in connection with the Change in Control. Subject to the requirements and limitations of Section 409A, if applicable, the following provisions will apply to Awards in the event of a Change in Control unless otherwise provided in the Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Committee at the time of grant of an Award. In the event of a Change in Control, then, notwithstanding any other provision of the Plan, the Committee may take one or more of the following actions with respect to Awards, contingent upon the closing or completion of the Change in Control. The Committee need not take the same action or actions with respect to all Awards or portions thereof or with respect to all Participants and in each case may make such determination in its discretion and without the consent of any Participant (unless otherwise provided in the Award Agreement or any other written agreement between the Company or any Affiliate and the Participant or unless otherwise expressly provided by the Committee at the time of grant of an Award).
(a) Accelerated Vesting. The Committee may take such action as it deems appropriate to provide for acceleration of the exercisability, vesting and/or settlement in connection with a Change in Control of each or any outstanding Award or portion thereof and shares acquired pursuant thereto upon such conditions, including termination of the Participant’s Service prior to, upon, or following the Change in Control, and to such extent as the Committee determines.
(b) Assumption, Continuation or Substitution. The Committee may arrange for the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”), to assume or continue the Company’s rights and obligations under each or any Award or portion thereof outstanding immediately prior to the Change in Control or substitute for each or any such outstanding Award or portion thereof a substantially equivalent award with respect to the Acquiror’s stock, as applicable, with appropriate adjustments in accordance with Section 4.3. For purposes of this Section, if so determined by the Committee in its discretion, an Award denominated in shares of Stock shall be deemed assumed if, following the Change in Control, the Award confers the right to receive, subject to the terms and conditions of the Plan and the applicable Award Agreement, for each share of Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration is not solely common stock of the Acquiror, the Committee may provide for the consideration to be received upon the exercise or settlement of the Award, for each share of Stock subject to the Award, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders
of Stock pursuant to the Change in Control. Any Award or portion thereof which is not assumed, continued, or substituted by the Acquiror in connection with the Change in Control nor exercised prior to the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control.
(c) Assignment or Lapse of Reacquisition or Repurchase Rights. The Committee may arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Stock issued pursuant to the Award to the Acquiror or arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the Award.
(d) Cancellation. In its discretion, the Committee may cancel or arrange for the cancellation of the Award, to the extent not vested or not exercised prior to the effective time of the Change in Control, in exchange for no consideration ($0) or such consideration, if any, as determined by the Committee.
(e) Cash-Out of Outstanding Stock-Based Awards. The Committee may determine that, upon the occurrence of a Change in Control, each or any Award denominated in shares of Stock or portion thereof outstanding immediately prior to the Change in Control and not previously exercised shall be canceled in exchange for a payment with respect to each vested share (and each unvested share, if so determined by the Committee) of Stock subject to such canceled Award in (i) cash, (ii) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (iii) other property which, in any such case, shall be in an amount having a Fair Market Value equal to the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control, reduced (but not below zero) by the exercise or purchase price per share, if any, under such Award. In the event such determination is made by the Committee, an Award having an exercise or purchase price per share equal to or greater than the Fair Market Value of the consideration to be paid per share of Stock in the Change in Control may be canceled without notice or payment of consideration to the holder thereof. Payment pursuant to this Section (reduced by applicable withholding taxes, if any) shall be made to Participants in respect of the vested portions of their canceled Awards as soon as practicable following the date of the Change in Control and in respect of the unvested portions of their canceled Awards in accordance with the vesting schedules applicable to such Awards or, if determined by the Committee and in compliance with Section 409A, as soon as practicable following the date of the Change in Control.
(f) Adjustments and Earnouts. In making any determination pursuant to this Section 13.1 in the event of a Change in Control, the Committee may, in its discretion, determine that an Award shall or shall not be subject to the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, earnouts and similar conditions as the other holders of the Company’s Stock, subject to any limitations or reductions as may be necessary to comply with Section 409A or Section 424 of the Code.
13.2 Federal Excise Tax Under Section 4999 of the Code.
(a) Excess Parachute Payment. If any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant
would subject the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section 280G of the Code, then, provided such election would not subject the Participant to taxation under Section 409A, the Participant may elect to reduce the amount of any acceleration of vesting called for under the Award in order to avoid such characterization.
(b) Determination by Tax Firm. To aid the Participant in making any election called for under Section 13.2(a), no later than the date of the occurrence of any event that might reasonably be anticipated to result in an “excess parachute payment” to the Participant as described in Section 13.2(a), the Company shall request a determination in writing by the professional firm engaged by the Company for general tax purposes, or, if the tax firm so engaged by the Company is serving as accountant or auditor for the Acquiror, the Company will appoint a nationally recognized tax firm to make the determinations required by this Section (the “Tax Firm”). As soon as practicable thereafter, the Tax Firm shall determine and report to the Company and the Participant the amount of such acceleration of vesting, payments and benefits which would produce the greatest after-tax benefit to the Participant. For the purposes of such determination, the Tax Firm may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Participant shall furnish to the Tax Firm such information and documents as the Tax Firm may reasonably request in order to make its required determination. The Company shall bear all fees and expenses the Tax Firm charges in connection with its services contemplated by this Section.
14. Compliance with Securities Law.
The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities and the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Award may be exercised or shares issued pursuant to an Award unless (a) a registration statement under the Securities Act shall at the time of such exercise or issuance be in effect with respect to the shares issuable pursuant to the Award, or (b) in the opinion of legal counsel to the Company, the shares issuable pursuant to the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
15. Compliance with Section 409A.
15.1 Awards Subject to Section 409A. The Company intends that Awards granted pursuant to the Plan shall either be exempt from or comply with Section 409A, and the Plan shall be so construed. The provisions of this Section 15 shall apply to any Award or portion
thereof that constitutes or provides for payment of Section 409A Deferred Compensation. Such Awards may include, without limitation:
(a) A Nonstatutory Stock Option or SAR that includes any feature for the deferral of compensation other than the deferral of recognition of income until the later of (i) the exercise or disposition of the Award or (ii) the time the stock acquired pursuant to the exercise of the Award first becomes substantially vested.
(b) Any Restricted Stock Unit Award, Performance Award, Cash-Based Award or Other Stock-Based Award that either (i) provides by its terms for settlement of all or any portion of the Award at a time or upon an event that will or may occur later than the end of the Short-Term Deferral Period (as defined below) or (ii) permits the Participant granted the Award to elect one or more dates or events upon which the Award will be settled after the end of the Short-Term Deferral Period.
Subject to the provisions of Section 409A, the term “Short-Term Deferral Period” means the 2 1/2 month period ending on the later of (i) the 15th day of the third month following the end of the Participant’s taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture or (ii) the 15th day of the third month following the end of the Company’s taxable year in which the right to payment under the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning provided by Section 409A.
15.2 Deferral and/or Distribution Elections. Except as otherwise permitted or required by Section 409A and the Company, the following rules shall apply to any compensation deferral and/or payment elections (each, an “Election”) that may be permitted or required by the Committee pursuant to an Award providing Section 409A Deferred Compensation:
(a) Elections must be in writing and specify the amount of the payment in settlement of an Award being deferred, as well as the time and form of payment as permitted by this Plan.
(b) Elections shall be made by the end of the Participant’s taxable year prior to the year in which services commence for which an Award may be granted to the Participant.
(c) Elections shall continue in effect until a written revocation or change in Election is received by the Company, except that a written revocation or change in Election must be received by the Company prior to the last day for making the Election determined in accordance with paragraph (b) above or as permitted by Section 15.3.
15.3 Subsequent Elections. Except as otherwise permitted or required by Section 409A, any Award providing Section 409A Deferred Compensation which permits a subsequent Election to delay the payment or change the form of payment in settlement of such Award shall comply with the following requirements:
(a) No subsequent Election may take effect until at least twelve (12) months after the date on which the subsequent Election is made.
(b) Each subsequent Election related to a payment in settlement of an Award not described in Section 15.4(a)(ii), 15.4(a)(iii) or 15.4(a)(vi) must result in a delay of the payment for a period of not less than five (5) years from the date on which such payment would otherwise have been made.
(c) No subsequent Election related to a payment pursuant to Section 15.4(a)(vi) shall be made less than twelve (12) months before the date on which such payment would otherwise have been made.
(d) Subsequent Elections shall continue in effect until a written revocation or change in the subsequent Election is received by the Company, except that a written revocation or change in a subsequent Election must be received by the Company prior to the last day for making the subsequent Election determined in accordance the preceding paragraphs of this Section 15.3.
15.4 Payment of Section 409A Deferred Compensation.
(a) Permissible Payments. Except as otherwise permitted or required by Section 409A, an Award providing Section 409A Deferred Compensation must provide for payment in settlement of the Award only upon one or more of the following:
(i) The Participant’s “separation from service” (as defined by Section 409A);
(ii) The Participant’s becoming “disabled” (as defined by Section 409A);
(iii) The Participant’s death;
(iv) A time or fixed schedule that is either (i) specified by the Committee upon the grant of an Award and set forth in the Award Agreement evidencing such Award or (ii) specified by the Participant in an Election complying with the requirements of Section 15.2 or 15.3, as applicable;
(v) A change in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 409A; or
(vi) The occurrence of an “unforeseeable emergency” (as defined by Section 409A).
(b) Installment Payments. It is the intent of this Plan that any right of a Participant to receive installment payments (within the meaning of Section 409A) shall, for all purposes of Section 409A, be treated as a right to a series of separate payments.
(c) Required Delay in Payment to Specified Employee Pursuant to Separation from Service. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as otherwise permitted by Section 409A, no payment pursuant to Section
15.4(a)(i) in settlement of an Award providing for Section 409A Deferred Compensation may be made to a Participant who is a “specified employee” (as defined by Section 409A) as of the date of the Participant’s separation from service before the date (the “Delayed Payment Date”) that is six (6) months after the date of such Participant’s separation from service, or, if earlier, the date of the Participant’s death. All such amounts that would, but for this paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.
(d) Payment Upon Disability. All distributions of Section 409A Deferred Compensation payable pursuant to Section 15.4(a)(ii) by reason of a Participant becoming disabled shall be paid in a lump sum or in periodic installments as established by the Participant’s Election. If the Participant has made no Election with respect to distributions of Section 409A Deferred Compensation upon becoming disabled, all such distributions shall be paid in a lump sum or commence upon the determination that the Participant has become disabled.
(e) Payment Upon Death. If a Participant dies before complete distribution of amounts payable upon settlement of an Award subject to Section 409A, such undistributed amounts shall be distributed to his or her beneficiary under the distribution method for death established by the Participant’s Election upon receipt by the Committee of satisfactory notice and confirmation of the Participant’s death. If the Participant has made no Election with respect to distributions of Section 409A Deferred Compensation upon death, all such distributions shall be paid in a lump sum upon receipt by the Committee of satisfactory notice and confirmation of the Participant’s death.
(f) Payment Upon Change in Control. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, to the extent that any amount constituting Section 409A Deferred Compensation would become payable under this Plan by reason of a Change in Control, such amount shall become payable only if the event constituting a Change in Control would also constitute a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A. Any Award which constitutes Section 409A Deferred Compensation and which would vest and otherwise become payable upon a Change in Control as a result of the failure of the Acquiror to assume, continue or substitute for such Award in accordance with Section 13.1(b) shall vest to the extent provided by such Award but shall be converted automatically at the effective time of such Change in Control into a right to receive, in cash on the date or dates such award would have been settled in accordance with its then existing settlement schedule (or as required by Section 15.4(c)), an amount or amounts equal in the aggregate to the intrinsic value of the Award at the time of the Change in Control.
(g) Payment Upon Unforeseeable Emergency. The Committee shall have the authority to provide in the Award Agreement evidencing any Award providing for Section 409A Deferred Compensation for payment pursuant to Section 15.4(a)(vi) in settlement of all or a portion of such Award in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an unforeseeable emergency. In such event, the amount(s) distributed with respect to such unforeseeable emergency cannot exceed the amounts reasonably necessary to satisfy the emergency need plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution(s), after taking into account the extent to which such emergency need is or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under the Award. All distributions with respect to an unforeseeable emergency shall be made in a lump sum upon the Committee’s determination that an unforeseeable emergency has occurred. The Committee’s decision with respect to whether an unforeseeable emergency has occurred and the manner in which, if at all, the payment in settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal.
(h) Prohibition of Acceleration of Payments. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, this Plan does not permit the acceleration of the time or schedule of any payment under an Award providing Section 409A Deferred Compensation, except as permitted by Section 409A. The Company reserves the right in its discretion to accelerate the time or schedule of any payment under an Award providing Section 409A Deferred Compensation to the maximum extent permitted by Section 409A.
(i) No Representation Regarding Section 409A Compliance. Notwithstanding any other provision of the Plan, the Company makes no representation that Awards shall be exempt from or comply with Section 409A. No Participating Company shall be liable for any tax, penalty or interest imposed on a Participant by Section 409A.
16. Tax Withholding.
16.1 Tax Withholding in General. The Company shall have the right to deduct from any and all payments made under the Plan, or to require the Participant, through payroll withholding, cash payment or otherwise, to make adequate provision for, the federal, state, local and foreign taxes (including social insurance), if any, required by law to be withheld by any Participating Company with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Group’s tax withholding obligations have been satisfied by the Participant.
16.2 Withholding in or Directed Sale of Shares. The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable to a Participant upon the exercise or settlement of an Award, or to accept from the Participant the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the tax withholding obligations of any Participating Company. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall be determined by the Company in accordance with the Company’s withholding procedures and considering any accounting consequences or cost. The Company may require a Participant to direct a broker, upon the vesting, exercise or settlement of an Award, to sell a portion of the shares subject to the Award determined by the Company in its discretion to be sufficient to cover the tax withholding obligations of any Participating Company and to remit an amount equal to such tax withholding obligations to such Participating Company in cash.
17. Amendment, Suspension or Termination of Plan.
The Committee may amend, suspend or terminate the Plan at any time. However, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Sections 4.2 and 4.3, and (b) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system upon which the Stock may then be listed or quoted. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided by the next sentence, no amendment, suspension or termination of the Plan may have a materially adverse effect on any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A.
18. Miscellaneous Provisions.
18.1 Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.
18.2 Forfeiture Events.
(a) The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of Service for Cause or any act by a Participant, whether before or after termination of Service, that would constitute Cause for termination of Service, or any accounting restatement due to material noncompliance of the Company with any financial reporting requirements of securities laws as a result of which, and to the extent that, such reduction, cancellation, forfeiture, or recoupment is required by applicable securities laws. In addition, to the extent that claw-back or similar provisions applicable to Awards are required by applicable law, listing standards and/or policies adopted by the Company, Awards granted under the Plan shall be subject to such provisions.
(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for (i) the amount of any payment in settlement of an Award received by such Participant during the twelve- (12-) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document embodying such financial reporting requirement, and (ii) any profits realized by such Participant from the sale of securities of the Company during such twelve- (12-) month period.
(c) No recovery of compensation pursuant to the foregoing provisions will constitute an event giving rise to a Participant’s right to voluntarily terminate employment upon a “resignation for good reason” or for a “constructive termination” or any similar term under any plan or agreement with the Company.
18.3 Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common stockholders.
18.4 Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant has access). By accepting any Award, the Participant consents to receive documents by electronic delivery and to participate in the Plan through any on-line electronic system established and maintained by the Plan Administrator or another third party selected by the Plan Administrator. The form of delivery of any Stock (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
18.5 Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the number of shares, amount of cash, or other property subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
18.6 Rights as an Employee. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee or interfere with or limit in any way any right of a Participating Company to terminate the Participant’s Service at any time. To the extent that an Employee of a Participating Company other than the Company receives an Award under
the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company.
18.7 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such shares are issued, except as provided in Section 4 or another provision of the Plan.
18.8 Delivery of Title to Shares. Subject to any governing rules or regulations, the Company shall issue or cause to be issued the shares of Stock acquired pursuant to an Award and shall deliver such shares to or for the benefit of the Participant by means of one or more of the following: (a) by delivering to the Participant evidence of book entry shares of Stock credited to the account of the Participant, (b) by depositing such shares of Stock for the benefit of the Participant with any broker with which the Participant has an account relationship, or (c) by delivering such shares of Stock to the Participant in certificate form.
18.9 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.
18.10 Provisions for Non-U.S. Participants. The Committee may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
18.11 Lock-Up Period. The Company may, at the request of any underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any share of Stock or other Company securities during a period of up to 180 days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.
18.12 Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any shares of Stock held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the
Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any shares of Stock. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 18.12 in writing, without cost, by contacting the local human resources representative. If the Participant refuses or withdraws the consents in this Section 18.12, the Company may cancel Participant’s ability to participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.
18.13 Retirement and Welfare Plans. Neither Awards made under this Plan nor shares of Stock or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under any Participating Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit. In addition, unless a written employment agreement or other service agreement specifically references Awards, a general reference to “benefits” or a similar term in such agreement shall not be deemed to refer to Awards granted hereunder.
18.14 Beneficiary Designation. Subject to local laws and procedures, each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. If a married Participant designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation may be subject to the consent of the Participant’s spouse. If a Participant dies without an effective designation of a beneficiary who is living at the time of the Participant’s death, the Company will pay any remaining unpaid benefits to the Participant’s legal representative.
18.15 Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.
18.16 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (a) limit, impair, or otherwise affect the Company’s or another Participating Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (b) limit the right or power of the Company or another Participating Company to take any action which such entity deems to be necessary or appropriate.
18.17 Unfunded Obligation. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be considered unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Committee or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company. The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.
18.18 Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without regard to its conflict of law rules.
ASP ISOTOPES INC.
NOTICE OF GRANT OF RESTRICTED STOCK
You have been granted an award (the “Award”) of certain shares of Stock (the “Shares”) of ASP Isotopes Inc. pursuant to the ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan (the “Plan”) and your Restricted Stock Agreement (the “Agreement”), as follows:
|
|
|
Participant: |
_______________________ |
Date of Grant: |
_______________________ |
|
|
Total Number of Shares: |
_______________________ , subject to adjustment as provided by the Agreement. |
|
|
Fair Market Per Share on Date of Grant: |
$_______________________ |
|
|
Vesting Commencement Date: |
[Insert Date] |
|
|
Vested Shares: |
Except as provided below or in the Agreement, the number of Vested Shares (disregarding any resulting fractional share) as of any date is determined by multiplying the Total Number of Shares by the “Vested Ratio” determined as of such date as follows: |
|
|
|
|
Vested Ratio |
|
_______________________________ |
___ |
|
_______________________________ |
___ |
|
|
|
You and the Company agree that the Award is governed by this Notice of Grant and by the provisions of the Plan and the Agreement, all of which are attached to and made a part of this document. You acknowledge receipt of copies of the Plan and the Agreement, represent that you have read and are familiar with their provisions and accept the Award subject to all of their terms and conditions.
|
|
|
|
ASP ISOTOPES INC. |
|
PARTICIPANT |
|
|
|
|
|
|
By: |
|
|
|
|
|
Signature |
Its: |
|
|
|
|
|
Date |
Address: |
|
|
|
|
|
|
Address |
|
|
|
|
ATTACHMENTS: 2025 Inducement Equity Incentive Plan, Restricted Stock Agreement, Assignment Separate from Certificate, form of Section 83(b) Election and Plan Prospectus
ASP ISOTOPES INC.
RESTRICTED STOCK AGREEMENT
ASP Isotopes Inc. has granted to the Participant named in the Notice of Grant of Restricted Stock (the “Grant Notice”) to which this Restricted Stock Agreement (the “Agreement”) is attached an Award consisting of shares of Stock subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to, and is in all respects subject to, the terms and conditions of, the ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan (the “Plan”).
By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, the Grant Notice, this Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of shares issuable pursuant to the Award (the “Plan Prospectus”), (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Agreement or the Plan.
Unless otherwise defined by this Agreement, capitalized terms have the meanings assigned by the Grant Notice or the Plan.
1. Tax Matters.
1.1 Election under Section 83(b) of the Code. The Participant understands that Section 83 of the Code taxes as ordinary income the fair market value of the shares of Stock as of the date on which the shares of Stock are “substantially vested,” within the meaning of Section 83. In this context, “substantially vested” means that the right of the Company to reacquire the shares of Stock pursuant to the Company Reacquisition Right has lapsed. The Participant understands that he or she may elect to have his or her taxable income determined at the time he or she acquires the shares of Stock rather than when the Company Reacquisition Right lapses by filing an election under Section 83(b) of the Code with the Internal Revenue Service no later than thirty (30) days after the date of acquisition of the shares of Stock. The Participant understands that failure to make a timely filing under Section 83(b) will result in his or her recognition of ordinary income, as the Company Reacquisition Right lapses, on the Fair Market Value of the shares of Stock at the time such restrictions lapse. The Participant further understands, however, that if shares of Stock with respect to which an election under Section 83(b) has been made are forfeited to the Company pursuant to its Company Reacquisition Right, he or she will be unable to recognize any loss on the forfeiture of the shares of Stock even though the Participant incurred a tax liability by making an election under Section 83(b).
1.2 Notice to Company. The Participant will notify the Company in writing if the Participant files an election pursuant to Section 83(b) of the Code. The Company intends, in the event it does not receive from the Participant evidence of such filing, to claim a tax deduction for any amount which would otherwise be taxable to the Participant in the absence of such an election.
1.3 Consultation with Tax Advisors. The Participant hereby acknowledges that the Participant been advised by the Company to seek independent tax advice from
Participant’s own advisors regarding the availability and advisability of making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, and that any such election, if made, must be made within 30 days of the Grant Date. Participant expressly acknowledges that Participant is solely responsible for filing any such Section 83(b) election with the appropriate governmental authorities, irrespective of the fact that such election is also delivered to the Company. Participant may not rely on the Company or any of its officers, directors or employees for tax or legal advice regarding this Award. Participant acknowledges that Participant has sought tax and legal advice from Participant’s own advisors regarding this Award or has voluntarily and knowingly foregone such consultation.
ANY ELECTION UNDER SECTION 83(b) THE PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH THE PARTICIPANT ACQUIRES THE SHARES OF STOCK. THIS TIME PERIOD CANNOT BE EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b) ELECTION IS THE PARTICIPANT’S SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER BEHALF.
1.4 Tax Withholding.
(a) In General. At the time the Grant Notice is executed, or at any time thereafter as requested by a Participating Company, the Participant authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company Group, if any, which arise in connection with the Award, including, without limitation, obligations arising upon (i) the transfer of shares of Stock to the Participant, (ii) the lapsing of any restriction with respect to any shares of Stock, (iii) the filing of an election to recognize tax liability, or (iv) the transfer by the Participant of any shares of Stock. The Company has no obligation to deliver the shares of Stock or to release any shares of Stock from the Escrow established pursuant to Section 7 until the tax withholding obligations of the Participating Company have been satisfied by the Participant.
(b) Withholding in Shares. The Company has the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations by withholding a number of whole Vested Shares otherwise deliverable to the Participant or by the Participant’s tender to the Company of a number of whole Vested Shares or vested shares acquired otherwise than pursuant to the Award having, in any such case, a Fair Market Value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates.
2. Administration.
All questions of interpretation concerning the Grant Notice, this Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Award are determined by the Committee as set forth in Section 3 of the Plan. All such determinations by the Committee shall be final, binding and conclusive upon all persons
having an interest in the Award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Award or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Award. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.
3. The Award.
3.1 Grant and Issuance of Shares. On the Date of Grant, the Participant will acquire and the Company will issue, subject to the provisions of this Agreement, a number of shares of Stock equal to the Total Number of Shares. As a condition to the issuance of the shares of Stock, the Participant will execute and deliver the Grant Notice to the Company, accompanied by an Assignment Separate from Certificate duly endorsed (with date and number of shares blank) in the form provided by the Company.
3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than to satisfy applicable tax withholding, if any, with respect to the issuance or vesting of the shares of Stock) as a condition to receiving the shares of Stock, the consideration will be past services actually rendered or future services to be rendered to a Participating Company or for its benefit. Notwithstanding the foregoing, if required by applicable law, the Participant will furnish consideration in the form of cash or past services rendered to a Participating Company or for its benefit having a value not less than the par value of the shares of Stock issued pursuant to the Award.
3.3 Beneficial Ownership of Shares of Stock; Certificate Registration. The Participant authorizes the Company, in its sole discretion, to deposit the shares of Stock with the Company’s transfer agent, including any successor transfer agent, to be held in book entry form. Furthermore, the Participant authorizes the Company, in its sole discretion, to deposit, following the term of the Escrow pursuant to Section 7, for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares of Stock which are no longer subject to such Escrow. Except as provided by the foregoing, a certificate for the shares of Stock will be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.
3.4 Issuance of Shares in Compliance with Law. The issuance of shares of Stock will be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. No shares of Stock will be issued if their issuance would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares of Stock will relieve the Company of any liability in respect of the failure to issue such shares of Stock as to which such requisite authority will not have been obtained. As a condition to the issuance of the shares of Stock, the Company may require the Participant to satisfy
any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty as may be requested by the Company.
4. Vesting of Shares.
Shares of Stock acquired pursuant to this Agreement will become Vested Shares as provided in the Grant Notice. For purposes of determining the number of Vested Shares following an Ownership Change Event, credited Service will include all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after the Ownership Change Event.
5. Company Reacquisition Right.
5.1 Grant of Company Reacquisition Right. In the event that (a) the Participant’s Service terminates for any reason or no reason, with or without Cause, or, (b) the Participant, the Participant’s legal representative, or other holder of the shares of Stock, attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership Change Event), including, without limitation, any transfer to a nominee or agent of the Participant, any shares of Stock which are not Vested Shares (“Unvested Shares”), the Participant will forfeit and the Company will automatically reacquire the Unvested Shares, and the Participant will not be entitled to any payment therefor (the “Company Reacquisition Right”).
5.2 Ownership Change Event, Dividends, Distributions and Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property, or any other adjustment upon a change in the capital structure of the Company as described in Section 9, any and all new, substituted or additional securities or other property (other than regular, periodic dividends paid on Stock pursuant to the Company’s dividend policy) to which the Participant is entitled by reason of the Participant’s ownership of Unvested Shares will be immediately subject to the Company Reacquisition Right and included in the terms “Shares,” “Stock” and “Unvested Shares” for all purposes of the Company Reacquisition Right with the same force and effect as the Unvested Shares immediately prior to the Ownership Change Event, dividend, distribution or adjustment, as the case may be. For purposes of determining the number of Vested Shares following an Ownership Change Event, dividend, distribution or adjustment, credited Service includes all Service with any corporation which is a Participating Company at the time the Service is rendered, whether or not such corporation is a Participating Company both before and after any such event.
5.3 Regular Periodic Dividends. Any regular dividends that become payable with respect to an Unvested Share will be accrued and held by the Company until the Unvested Share becomes vested and will be paid to Participant within fifteen days after the date on which the related Unvested Share becomes vested.
6. Stock Distributions Subject to Agreement.
If, from time to time, there is any stock dividend, stock split or other change, as described in Section 9, in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Agreement, then in such event any and all new,
substituted or additional securities to which the Participant is entitled by reason of the Participant’s ownership of the shares of Stock acquired pursuant to this Agreement will be immediately subject to the Company Reacquisition Right set forth in the Plan with the same force and effect as the shares subject to the Company Reacquisition Right immediately before such event.
7. Escrow.
7.1 Appointment of Agent. To ensure that shares of Stock subject to the Company Reacquisition Right will be available for reacquisition, the Participant and the Company hereby appoint the Secretary of the Company, or any other person designated by the Company, as their agent and as attorney-in-fact for the Participant (the “Agent”) to hold any and all Unvested Shares and to sell, assign and transfer to the Company any Unvested Shares reacquired by the Company pursuant to the Company Reacquisition Right. The Participant understands that appointment of the Agent is a material inducement to make this Agreement and that such appointment is coupled with an interest and is irrevocable. The Agent will not be personally liable for any act the Agent may do or omit to do hereunder as escrow agent, agent for the Company, or attorney in fact for the Participant while acting in good faith and in the exercise of the Agent’s own good judgment, and any act done or omitted by the Agent pursuant to the advice of the Agent’s own attorneys will be conclusive evidence of good faith. The Agent may rely upon any letter, notice or other document executed by any signature purporting to be genuine and may resign at any time.
7.2 Establishment of Escrow. The Participant authorizes the Company to deposit the Unvested Shares with the Company’s transfer agent to be held in book entry form, as provided by Section 3.3, and the Participant agrees to deliver to and deposit with the Agent each certificate, if any, evidencing the shares of Stock and an Assignment Separate from Certificate with respect to such book entry shares and each such certificate duly endorsed (with date and number of shares of Stock blank) in the form attached to this Agreement, to be held by the Agent under the terms and conditions of this Section (the “Escrow”). Upon the occurrence of an Ownership Change Event, a dividend or distribution to the stockholders of the Company paid in shares of Stock or other property (other than regular, periodic dividends paid on Stock pursuant to the Company’s dividend policy), or any other adjustment upon a change in the capital structure of the Company, as described in Section 9, any and all new, substituted or additional securities or other property to which the Participant is entitled by reason of his or her ownership of the shares of Stock that remain, following such Ownership Change Event, dividend, distribution or change described in Section 9, subject to the Company Reacquisition Right will be immediately subject to the Escrow to the same extent as the shares of Stock immediately before such event. The Company will bear the expenses of the Escrow.
7.3 Delivery of Shares of Stock to Participant. The Escrow will continue with respect to any shares of Stock for so long as the shares of Stock remain subject to the Company Reacquisition Right. Upon termination of the Company Reacquisition Right with respect to shares of Stock, the Company will notify the Agent and direct the Agent to deliver such number of shares of Stock to the Participant. As soon as practicable after receipt of such notice, the Agent will cause the shares of Stock specified by such notice to be delivered to the Participant, and the Escrow will terminate with respect to such shares of Stock.
8. Effect of Change in Control.
In the event of a Change in Control, the treatment of the Award and the shares of Stock will be governed by Section 13 of the Plan and any applicable provisions of the Grant Notice.
9. Adjustments for Changes in Capital Structure.
The Shares are subject to the adjustment as provided by Section 4.3 of the Plan.
10. Rights as a Stockholder.
10.1 In General. Subject to the provisions of this Agreement, the Participant will exercise all rights and privileges of a stockholder of the Company with respect to shares of Stock deposited in the Escrow pursuant to Section 7 hereof.
11. Rights as an Employee.
If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Agreement confers upon the Participant any right to continue in the Service of a Participating Company or interferes in any way with any right of the Participating Company Group to terminate the Participant’s Service, as the case may be, at any time.
12. Legends.
The Company may at any time place legends referencing the Company Reacquisition Right and any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Stock. The Participant must, at the request of the Company, promptly present to the Company any and all certificates representing shares of Stock in the possession of the Participant in order to carry out the provisions of this Section. Unless otherwise specified by the Company, legends placed on such certificates may include, but are not limited to, the following:
12.1 “THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND REAQUISITION RIGHTS IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”
13. Miscellaneous Provisions.
13.1 Captions. Captions and titles contained herein are for convenience only and do not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular includes the plural and the plural includes the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
13.2 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.
13.3 Binding Effect. This Agreement will inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.
13.4 Delivery of Documents and Notices. Any document relating to participation in the Plan, or any notice required or permitted hereunder must be given in writing and will be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.
(a) Description of Electronic Delivery. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Agreement, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.
(b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has read Section 13.4(a) of this Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and notices in connection with the Escrow, as described in Section 13.4(a). The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third-party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.4(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.4(a).
13.5 Entire Agreement. The Grant Notice, this Agreement and the Plan constitute the entire understanding and agreement of the Participant and the Participating Company
Group with respect to the subject matter contained herein or therein and supersede any prior or contemporaneous agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest (other than as permitted by the Plan) except by means of a writing signed by the Company and Participant. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan will survive any settlement of the Award and will remain in full force and effect.
13.6 Applicable Law. The Agreement will be governed by the laws of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within Delaware.
13.7 Counterparts. The Grant Notice may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED the undersigned does hereby sell, assign and transfer unto ___________________________________________________________________________
___________________________________________________ (_________________) shares of the Capital Stock of ASP Isotopes Inc. standing in the undersigned’s name on the books of said corporation represented by Certificate No. __________________ herewith and does hereby irrevocably constitute and appoint ________________________________ Attorney to transfer the said stock on the books of said corporation with full power of substitution in the premises.
|
|
|
|
Dated: |
|
|
|
|
|
|
|
|
Signature |
|
|
|
|
|
Print Name |
Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Company Reacquisition Right set forth in the Restricted Stock Agreement without requiring additional signatures on the part of the Participant.
SAMPLE
|
|
Internal Revenue Service |
|
|
|
|
|
[IRS Service Center |
|
where Form 1040 is Filed] |
|
Re: Section 83(b) Election
Dear Sir or Madam:
The following information is submitted pursuant to Section 1.83-2 of the Treasury Regulations in connection with this election by the undersigned under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
1. The name, address and taxpayer identification number of the taxpayer are:
|
|
|
|
|
Name:________________________________ |
|
|
|
|
Address:____________________________ |
|
|
|
_______________________________ |
|
|
|
|
Social Security Number:____________________ |
|
2. The following is a description of each item of property with respect to which the election is made:
________________ shares of common stock of ASP Isotopes Inc. (the “Shares”), acquired from ASP Isotopes Inc. (the “Company”) pursuant to a restricted stock grant.
3. The property was transferred to the undersigned on:
Restricted stock grant date: ________________________
The taxable year for which the election is made is:
Calendar Year ___________
4. The nature of the restriction to which the property is subject:
The Shares are subject to automatic forfeiture to the Company upon the occurrence of certain events. This forfeiture provision lapses with regard to a portion of the Shares based upon the continued performance of services by the taxpayer over time.
5. The following is the fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the property with respect to which the election is made:
$__________________ (_____________ Shares at $__________ per share).
The property was transferred to the taxpayer pursuant to the grant of an award of restricted stock.
6. The following is the amount paid for the property:
No monetary consideration was provided in exchange for the Shares.
7. A copy of this election has been furnished to the Company, the corporation for which the services were performed by the undersigned.
Please acknowledge receipt of this election by date or received-stamping the enclosed copy of this letter and returning it to the undersigned. A self-addressed stamped envelope is provided for your convenience.
Enclosures
cc: ASP Isotopes Inc.
ASP ISOTOPES INC.
STOCK OPTION AGREEMENT
(U.S. Participants)
ASP Isotopes Inc., a Delaware corporation (the “Company”), has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Stock Option Agreement (the “Option Agreement”) is attached an option (the “Option”) to purchase a number of shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan (the “Plan”), as amended, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with, the Grant Notice, this Option Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of shares issuable pursuant to the Option (the “Plan Prospectus”), (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Plan and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Grant Notice, this Option Agreement or the Plan.
1. Definitions and Construction.
1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.
1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
2. Tax Consequences.
2.1 Tax Status of Option. This Option is intended to be a Nonstatutory Stock Option and shall not be treated as an incentive stock option within the meaning of Section 422(b) of the Code.
3. Administration.
All questions of interpretation concerning the Grant Notice, this Option Agreement, the Plan or any other form of agreement or other document employed by the Company in the administration of the Plan or the Option shall be determined by the Committee. All such determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Option, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the Committee in the exercise of its discretion pursuant to the Plan or the Option or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest in the Option. Any Officer shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.
4. Exercise of the Option.
4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable on and after the Vesting Start Date and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise of the Option. In no event shall the Option be exercisable for more shares than the Number of Option Shares, as adjusted pursuant to Section 9.
4.2 Method of Exercise. Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company. An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company). In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company). Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 6 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.
4.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash, by check or in cash equivalent; (ii) if permitted by the Company and subject to the limitations contained in Section 4.3(b), by means of (1) a Cashless Exercise, (2) a Net-Exercise, or (3) a Stock Tender Exercise; or (iii) by any combination of the foregoing.
(b) Limitations on Forms of Consideration. The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedure providing for payment of the Exercise Price through any of the means described below, including with respect to the Participant notwithstanding that such program or procedures may be available to others. Any determination by the Company with respect to whether to permit the withholding or tendering of shares of Stock
to satisfy the Exercise Price shall be made by the Committee if the Participant is subject to Section 16 of the Exchange Act.
(i) Cashless Exercise. A “Cashless Exercise” means the delivery of a properly executed Exercise Notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to shares of Stock acquired upon the exercise of the Option in an amount not less than the aggregate Exercise Price for such shares (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).
(ii) Net-Exercise. A “Net-Exercise” means the delivery of a properly executed Exercise Notice electing a procedure pursuant to which (1) the Company will reduce the number of shares otherwise issuable to the Participant upon the exercise of the Option by the largest whole number of shares having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate Exercise Price not satisfied by such reduction in the number of whole shares to be issued. Following a Net-Exercise, the number of shares remaining subject to the Option, if any, shall be reduced by the sum of (1) the net number of shares issued to the Participant upon such exercise, and (2) the number of shares deducted by the Company for payment of the aggregate Exercise Price.
(iii) Stock Tender Exercise. A “Stock Tender Exercise” means the delivery of a properly executed Exercise Notice accompanied by (1) the Participant’s tender to the Company, or attestation to the ownership, in a form acceptable to the Company of whole shares of Stock having a Fair Market Value that does not exceed the aggregate Exercise Price for the shares with respect to which the Option is exercised, and (2) the Participant’s payment to the Company in cash of the remaining balance of such aggregate Exercise Price not satisfied by such shares’ Fair Market Value. A Stock Tender Exercise shall not be permitted if it would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. If required by the Company, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for a period of time required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.
4.4 Tax Withholding.
(a) In General. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by a Participating Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax (including any social insurance) withholding obligations of the Participating Company Group, if any, which arise in connection with the Option. The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.
(b) Withholding in Shares. The Company shall have the right, but not the obligation, to require the Participant to satisfy all or any portion of a Participating Company’s tax withholding obligations upon exercise of the Option by deducting from the shares of Stock otherwise issuable to the Participant upon such exercise a number of whole shares having a fair market value, as determined by the Company as of the date of exercise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates if required to avoid liability classification of the Option under generally accepted accounting principles in the United States. Any determination by the Company with respect to whether to permit the withholding of shares of Stock to satisfy the tax withholding obligations shall be made by the Committee if the Participant is subject to Section 16 of the Exchange Act.
4.5 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit for the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has notice any or all shares acquired by the Participant pursuant to the exercise of the Option. Except as provided by the preceding sentence, a certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.
4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option, or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.
4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option.
5. Nontransferability of the Option.
During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. Following the death of the Participant, the Option, to the extent provided in Section 7, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.
6. Termination of the Option.
The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on the last date for exercising the Option following termination of the Participant’s Service as described in Section 7, or (c) a Change in Control to the extent provided in Section 8.
7. Effect of Termination of Service.
7.1 Option Exercisability. The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable time period as determined below and thereafter shall terminate.
(a) Disability. If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant (or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.
(b) Death. If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account of death if the Participant dies within three (3) months after the Participant’s termination of Service other than for Cause.
(c) Termination for Cause. Notwithstanding any other provision of this Option Agreement to the contrary, if the Participant’s Service is terminated for Cause or if, following the Participant’s termination of Service and during any period in which the Option otherwise would remain exercisable, the Participant engages in any act that would constitute Cause, the Option shall terminate in its entirety and cease to be exercisable immediately upon such termination of Service or act.
(d) Other Termination of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option, to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.
7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of the Participant’s Service for Cause, if the exercise of the Option within the applicable time periods set forth in Section 7.17.1 is prevented by the provisions of Section 4.6, the Option shall remain exercisable until the later of (a) thirty (30) days after the date such exercise first would no longer be prevented by such provisions, or (b) the end of the applicable time period under Section 7.1, but in any event no later than the Option Expiration Date.
8. Effect of Change in Control.
In the event of a Change in Control, the Option shall be subject to and treated as set forth in Section 13 of the Plan.
9. Adjustments for Changes in Capital Structure.
The Option shall be subject to and treated as set forth in Section 4.3 of the Plan.
10. Rights as a Stockholder or Employee.
The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 9. The Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as an Employee at any time.
11. Notice of Sales Upon Disqualifying Disposition.
The Participant shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. Until such time as the Participant disposes of such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise expressly authorized by the Company, the Participant shall hold all shares acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee) for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Grant. At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing shares acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company of any
such transfers. The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.
12. Legends.
The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Stock subject to the provisions of this Option Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section.
13. Miscellaneous Provisions.
13.1 Termination or Amendment. The Committee may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 8 in connection with a Change in Control, no such termination or amendment may have a materially adverse effect on the Option or any unexercised portion thereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation. No amendment or addition to this Option Agreement shall be effective unless in writing.
13.2 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.
13.3 Binding Effect. This Option Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.
13.4 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by a Participating Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.
(a) Description of Electronic Delivery and Signature. The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, the Plan Prospectus, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to the Participant electronically. In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic
delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company. Any and all such documents and notices may be electronically signed.
(b) Consent to Electronic Delivery and Signature. The Participant acknowledges that the Participant has read Section 13.4(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 13.4(a). The Participant agrees that any and all such documents requiring a signature may be electronically signed and that such electronic signature shall have the same effect as handwritten signature for the purposes of validity, enforceability and admissibility. The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. Similarly, the Participant understands that the Participant must provide the Company or any designated third-party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents described in Section 13.4(a) or may change the electronic mail address to which such documents are to be delivered (if the Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 13.4(a).
13.5 Integrated Agreement. The Grant Notice, this Option Agreement and the Plan, together with the Superseding Agreement, if any, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter. To the extent contemplated herein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.
13.6 Applicable Law. This Option Agreement shall be governed by the laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.
13.7 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
ASP ISOTOPES INC.
NOTICE OF GRANT OF STOCK OPTION
(U.S. Participants)
ASP Isotopes Inc., a Delaware corporation (the “Company”), has granted to the Participant an option (the “Option”) to purchase certain shares of Stock pursuant to the ASP Isotopes Inc. 2025 Inducement Equity Incentive Plan (the “Plan”), as follows:
|
|
|
|
Participant: |
__________________ |
Employee ID: |
_______________ |
Date of Grant: |
__________________ |
Number of Option Shares: |
__________________, subject to adjustment as provided by the Option Agreement. |
Exercise Price: |
$__________________ |
Vesting Start Date: |
|
Option Expiration Date: |
The tenth anniversary of the Date of Grant. |
Tax Status of Option: |
__________________ Stock Option. (Enter “Incentive” or “Nonstatutory.” If blank, this Option will be a Nonstatutory Stock Option.) |
Vested Shares: |
Except as provided in the Option Agreement and provided the Participant’s Service has not terminated prior to the applicable date, the number of Vested Shares (disregarding any resulting fractional share) as of any date is determined by multiplying the Number of Option Shares by the “Vested Percentage” determined as of such date, as follows: |
|
Vesting Date |
Vested
Percentage |
|
_______________________________ |
___ |
|
_______________________________ |
___ |
|
_______________________________ |
___ |
|
|
|
|
|
|
Superseding Agreement: |
None. |
By their signatures below or by electronic acceptance or authentication in a form authorized by the Company, the Company and the Participant agree that the Option is governed by this Grant Notice and by the provisions of the Option Agreement and the Plan, both of which are made a part of this document, and by the Superseding Agreement, if any. The Participant acknowledges that copies of the Plan, the Option Agreement and the prospectus for the Plan are available on the Company’s internal web site and may be viewed and printed by the Participant for attachment to the Participant’s copy of this Grant Notice. The Participant represents that the Participant has read and is familiar with the provisions of the Option Agreement and the Plan, and hereby accepts the Option subject to all of their terms and conditions.
|
|
|
|
ASP ISOTOPES INC. |
|
PARTICIPANT |
|
|
|
By: |
|
|
|
|
|
|
|
[Officer Name] |
|
Signature |
[Officer Title] |
|
|
|
|
Date |
Address: |
|
|
|
|
|
|
Address |
|
|
|
|
ATTACHMENTS: 2025 Inducement Equity Incentive Plan, Stock Option Agreement, Exercise Notice, and Plan Prospectus
NATRIUM PROJECT PROCUREMENT TERMS AND CONDITIONS –
ENRICHMENT SERVICES
BY AND BETWEEN
TERRAPOWER, llc
AND
ASP ISOTOPES INC.
DATED AS OF
MAY 16, 2025
TABLE OF CONTENTS
|
|
|
1. |
Definitions. |
1 |
2. |
Work Authorization - Purchase Order. |
6 |
2.1. |
Issuance of Purchase Order. |
6 |
2.2. |
Base Line Item. |
6 |
2.3. |
[Reserved]. |
6 |
2.4. |
Price Basis. |
6 |
3. |
Performance of the Work. |
6 |
3.1. |
Statement of Work Contents. |
6 |
3.2. |
Compliance with the Statement of Work. |
6 |
3.3. |
Purchase Order to Authorize Work. |
7 |
3.4. |
Use of Subcontractors. |
7 |
3.5. |
Submittals. |
7 |
3.6. |
Acceptance. |
7 |
3.7. |
Contractor Requests. |
7 |
4. |
Representations, Certifications. |
8 |
4.1. |
U.S. Government Flowdown Requirements. |
8 |
4.2. |
Parties’ Authority and Capacity to Contract. |
8 |
4.3. |
Contractor Authority and Capacity to Contract. |
8 |
5. |
Changes. |
10 |
5.1. |
TerraPower Changes. |
10 |
5.2. |
Contractor Identified Change Conditions. |
11 |
5.3. |
Change Conditions – Equitable Adjustments. |
11 |
5.4. |
Content of Change Requests. |
11 |
5.5. |
Change Requests – Effectiveness. |
11 |
6. |
Term and Termination; Suspension. |
12 |
|
|
|
6.1. |
Term. |
12 |
6.2. |
Breach; Default. |
13 |
6.3. |
Convenience. |
14 |
6.4. |
Effect of Termination. |
14 |
6.5. |
Suspension, Shipment to Storage. |
15 |
7. |
Compensation/Payment/Project Controls. |
16 |
7.1. |
Compensation. |
16 |
7.2. |
[Reserved.] |
17 |
7.3. |
[Reserved]. |
18 |
7.4. |
Firm Fixed Price Basis. |
18 |
8. |
Taxes; [Reserved]. |
19 |
8.1. |
Co-Employment. |
19 |
8.2. |
Compliance with Tax Laws. |
19 |
8.3. |
Tax Exemptions; Cooperation. |
19 |
8.4. |
Location of Performance of Work. |
19 |
8.5. |
[Reserved]. |
19 |
9. |
Competitors; Non-Solicitation; Publicity. |
19 |
9.1. |
Prohibition on Interference with TerraPower Activities. |
19 |
9.2. |
Prohibition on Disclosure of Deliverables or Confidential Information. |
20 |
9.3. |
Non-solicitation. |
20 |
9.4. |
Use of TerraPower Name or Logo. |
20 |
10. |
Quality Assurance; Environmental, Health & Safety. |
20 |
10.1. |
Quality Assurance and Environmental Health & Safety Requirements. |
20 |
10.2. |
Incorporation of Quality Assurance and Environmental Health & Safety Requirements Into Subcontracts. |
20 |
10.3. |
Hold Points and Stop Work. |
20 |
11. |
Warranty; Delay and Performance Remedies. |
21 |
|
|
|
11.1. |
Compliance with Agreement and Purchase Order; Duration. |
21 |
11.2. |
TerraPower Testing. |
22 |
11.3. |
TerraPower Right to Remedy Contractor Failure to Meet Warranties. |
22 |
11.4. |
Warranty Beneficiaries; Assignment. |
22 |
11.5. |
Liquidated Damages. |
22 |
12. |
Proprietary Rights and Confidentiality. |
23 |
12.1. |
Background and Foreground Intellectual Property. |
23 |
12.2. |
[Reserved] |
23 |
12.3. |
[Reserved] |
23 |
12.4. |
Compliance with Confidential Information Obligations. |
23 |
12.5. |
Exclusions from Confidentiality Obligations. |
23 |
12.6. |
Ownership of Confidential Information. |
24 |
12.7. |
Markings. |
24 |
12.8. |
Injunctive Relief. |
24 |
12.9. |
Use of Confidential Information. |
24 |
12.10. |
Statutory Protections. |
24 |
12.11. |
Relationship with U.S. Government Requirements. |
25 |
12.12. |
Ownership of Patentable Inventions and Contractor Support. |
25 |
13. |
Title; Risk of Loss; TerraPower-Provided Equipment |
25 |
13.1. |
Title, Risk of Loss. |
25 |
13.2. |
TerraPower-Provided Equipment. |
26 |
14. |
Indemnification. |
26 |
14.1. |
Indemnification. |
26 |
14.2. |
Notification, Rights, and Cooperation. |
27 |
14.3. |
Investigations. |
27 |
14.4. |
Indemnification by TerraPower. |
27 |
15. |
Insurance. |
28 |
|
|
|
15.1. |
Coverage Requirements. |
28 |
15.2. |
Additional Requirements. |
29 |
15.3. |
Nuclear Liability. |
29 |
16. |
Force Majeure Event. |
31 |
16.1. |
Suspension of Performance. |
31 |
16.2. |
Obligation of the Nonperforming Party. |
31 |
16.3. |
Right of the Performing Party. |
31 |
17. |
Limitation of Liability |
32 |
17.1. |
LIABILITY CAP. |
32 |
17.2. |
NO LIABILITY FOR CERTAIN DAMAGES; EXCEPTIONS. |
32 |
18. |
Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities. |
33 |
18.1. |
Recordkeeping Requirements. |
33 |
18.2. |
Onsite Inspections. |
33 |
18.3. |
Entering Contractor Facilities to Verify Compliance. |
33 |
18.4. |
Consequence of Failure to Comply. |
33 |
18.5. |
Retention of Records; Notification Prior to Destruction. |
33 |
18.6. |
Electronic Records. |
34 |
18.7. |
TerraPower Inspection Rights. |
34 |
18.8. |
Contractor Assistance. |
34 |
18.9. |
Contractor Assistance – DOE Requests. |
35 |
19. |
Miscellaneous. |
35 |
19.1. |
Export Control. |
35 |
19.2. |
[Reserved.] |
36 |
19.3. |
Communication and Protection of Data |
36 |
19.4. |
Counterparts |
36 |
19.5. |
Amendments; Modifications |
36 |
|
|
|
19.6. |
Notices |
36 |
19.7. |
Binding Effect; Assignment; Security |
37 |
19.8. |
Integration; Construction |
37 |
19.9. |
Governing Law; Dispute Resolution |
37 |
19.10. |
Severability of Provisions |
38 |
19.11. |
Waiver; Rights and Remedies |
38 |
19.12. |
Order of Precedence |
38 |
19.13. |
Interpretation |
38 |
19.14. |
Independent Contractor |
39 |
19.15. |
Survival |
39 |
19.16. |
Nuclear Liability |
39 |
Exhibit A: Statement of Work
Exhibit B: U.S. Government Flowdown Requirements
Exhibit C: Sample Invoice
Exhibit D: Marking Guidance
Natrium Project Procurement Terms and Conditions - Enrichment Services
These Natrium Project Procurement Terms and Conditions - Enrichment Services (this “Agreement”), effective as of May 16, 2025 (“Effective Date”) is made and entered into by and between TerraPower, LLC, a Delaware limited liability company, on behalf of itself and US SFR Owner, LLC, a Delaware limited liability company (collectively, “TerraPower”), and ASP Isotopes Inc., a Delaware corporation (“Contractor”) (each of TerraPower and Contractor a “Party” and collectively “the Parties”). The Parties agree as follows:
1. Definitions.
For purposes of this Agreement, the following terms shall have the meanings assigned to them below:
“Agreement” means these Natrium Project Procurement Terms and Conditions – Enrichment Services and any schedules, attachments, annexes and exhibits hereto (including the Statement of Work and any attachments thereto), the Purchase Order(s) and any schedules, attachments, annexes and exhibits thereto and any modifications agreed to in writing by the Parties in accordance with the terms set forth herein.
“Applicable Laws” means all laws, ordinances, rules, regulations, orders, licenses, permits and other requirements, now or hereafter in effect, of any governmental or regulatory authority applicable to a Party.
“Assay” means the total weight of 235U isotope divided by the total weight of all uranium isotopes expressed as weight percent (w/o).
“Background Intellectual Property” means any Intellectual Property, that is owned (or sub-licensable by a Party) before, or created independently of, performance of the Work.
“Change Condition” means any of the following circumstances:
i. Any change required by TerraPower pursuant to subsection 5.1, except to the extent such change arises from the acts or omissions of Contractor; provided, no Work performed on a Firm Fixed Price Basis shall be eligible for any adjustment to compensation due to any circumstances described in this clause (i) except to the extent TerraPower required such change pursuant to subsection 5.1 materially modifies the schedule for performance of the Work or adds material Submittals, Deliverables, or Supplies to be provided hereunder that has not been at such time agreed in a Statement of Work;
ii. Any change in Applicable Laws that was not foreseeable as of the Effective Date of this Agreement or the date of the relevant SOW that results, or is reasonably likely to result, in a material adverse effect on the Work, provided, that (a) Contractor has used its reasonably diligent efforts to identify and describe in reasonable detail such change in Applicable Laws and its effects on the Project or performance of Work hereunder as early as possible to TerraPower (including in advance of its effectiveness) and to mitigate any such adverse effects, and (b) no Work performed on a Firm Fixed Price Basis shall be eligible for any adjustment to compensation due to any circumstances described in this clause (ii);
iii. Any change in the cost or availability of Feedstock or energy (vs. the costs of Feedstock and energy set forth in Contractor’s response to TerraPower’s RFP 2024-4833); or
iv. Any other circumstances expressly described in this Agreement or a Statement of Work as enabling Contractor to submit an SCR for an adjustment; provided, that, except as set forth herein (including in clause (iii) above), under no circumstances shall any changes in the cost or availability of underlying supplies, commodities, materials, labor or other inputs give rise to or be considered in connection with any Change Condition with respect to Work performed on a Firm Fixed Price Basis.
“Co-Employee” has the meaning given in subsection 14.1 (Indemnification).
“Confidential Information” means all designs, drawings, diagrams, plans, reports, equipment, specifications, operations, products, services, research, prices, pricing policies, processes and inventions, samples, prototypes,
Page 1 of SECTIONPAGES 39
software, source code, object code, passwords, customer lists, customer documents and requirements, financial information, employee lists, business strategies and business plans and information and marketing and advertising information made known to the receiving Party by the disclosing Party or any of the disclosing Party’s officers, managers, independent contractors or employees, or learned by the Receiving Party from the disclosing Party or any of the disclosing Party’s officers, managers, independent contractors or employees during the Term, or developed by pursuant to this Agreement, whether or not marked or identified as confidential or proprietary. Confidential Information includes written, graphic and electronically or magnetically recorded information furnished by disclosing Party for the receiving Party’s use, as well as archival copies maintained by the receiving Party under this Agreement. Unless otherwise identified in writing by the Parties, Deliverables are considered Confidential Information.
“Consignee” (the recipient) and “Consignor” (the sender) mean Contractor or TerraPower, as the case may be, or their authorized representatives.
“Contract Administrator” or “CA” means TerraPower’s contract administrator and sole point-of-contact who will interface directly with the Contractor on commercial matters related to this Agreement. TerraPower may change the CA upon written notice delivered to Contractor.
“Contractor Indemnified Person” has the meaning given in subsection 14.4 (Indemnification by TerraPower).
“Control” means the holding or possession of the beneficial interest in, or the ability to exercise the voting rights applicable to, shares or other securities in any corporation (whether directly or indirectly) which confer in aggregate on the holders thereof fifty percent (50%) or more of the total voting rights exercisable in relation to all, or substantially all, matters relating to that corporation.
“Cooperative Agreement” means that certain Cooperative Agreement #DE-NE0009054, entered into between DOE and USO on May 3, 2021, as amended from time to time.
“Correction” means the elimination of a defect.
“Deconverter” means the uranium deconversion and metallization facility operated by Framatome Inc., at Richland, Washington, United States of America.
“Deliverables” means Product Material, Supplies, and Submittals delivered by Contractor to TerraPower.
“Delivery Quantity” means the established annual quantities of SWU to be purchased and received by TerraPower in accordance with the schedule set forth in the SOW, and as may be increased or decreased pursuant to the express terms of this Agreement.
“Delivery Year” means the relevant Year set forth in the SOW.
“Department of Energy” of “DOE” means the United States Department of Energy.
“EH&S Requirements” has the meaning given in Section 10 (Quality Assurance; Environmental, Health & Safety).
“Enriched Uranium Product” or “EUP” means uranium having an Assay higher than that of the Feed Material.
“Enrichment Service” means the production from Feed Material of: (i) Product Material and (ii) Tails Material and is expressed in Separative Work Units (SWU).
“Estimated PO Total Cost” has the meaning given in subsection 2.4 (if appliable).
“Export Control Laws” has the meaning given in subsection 19.1(Export Control).
“Feed Material” means any form of uranium required for the Enrichment Service, including natural uranium as a metal, enriched uranium hexafluoride, or natural uranium in the form of uranium hexafluoride (UF6) supplied for the enrichment process which shall conform to the definition of “commercial natural uranium
Page 2 of SECTIONPAGES 39
hexafluoride” in the latest version of ASTM International’s “Standard Specification for Uranium Hexafluoride for Enrichment,” Designation: C787. No re-processed uranium shall be used as part of the Feed Material.
“Feedstock” means Feed Material that may, at Contractor’s discretion, be Enriched Uranium Product.
“Firm Fixed Price Basis” or “FFP” means for any line item so identified the Work shall be performed for a fixed price as identified in the Purchase Order, subject to adjustment only as provided in Section 5 (Changes) or as otherwise mutually agreed by the Parties in writing.
“Foreground Intellectual Property” means any Intellectual Property, created by a Party in in its performance of this Agreement.
“Foreign National” means any person who is neither a U.S. citizen or U.S. national nor a “Lawful Permanent Resident” (Green Card holder, 8 U.S.C. § 1101(a)(20)) or other “Protected Individual” under the Immigration and Naturalization Act (8 U.S.C. §1324b(a)(3)) designated an asylee, refugee, or a temporary resident under amnesty provisions. A Foreign National also means any corporation, business association, partnership or any other entity or group that is not incorporated to do business in the United States.
“Force Majeure Event” means:
For the period beginning on the Effective Date and ending on September 30, 2025, an act or event, not reasonably foreseeable with the exercise of due diligence, that (a) prevents a Party (the “Nonperforming Party”) in whole or in part from performing its obligations under this Agreement or satisfying any conditions to the Performing Party’s obligations under this Agreement; (b) is beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party, and (c) is not avoidable or able to be overcome by the Nonperforming Party by the exercise of due diligence. Notwithstanding the generality of the foregoing definition, Force Majeure Events during such period shall specifically include the following acts, events or circumstances: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or actions; (e) embargoes or blockades in effect on or after the date of this Agreement; (f) national or regional emergency; (g) strikes, labor stoppages or slowdowns, or other industrial disturbances; (h) failure of Contractor’s research and development activities to demonstrate the capabilities of Contractor’s designs, structures, systems, components, and processes necessary to enrich uranium to HALEU Assay; (i) Contractor’s inability to establish business relationships with third parties that are necessary to enable construction of its Enrichment Service facility, including, but not limited to, the South African Nuclear Energy Corporation; (j) Contractor’s inability to establish Feed Material supplies; and, (k) other events beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party.
For the period beginning on October 1, 2025, an act or event, not reasonably foreseeable with the exercise of due diligence, that (a) prevents a Party (the “Nonperforming Party”) in whole or in part from performing its obligations under this Agreement or satisfying any conditions to the Performing Party’s obligations under this Agreement; (b) is beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party, and (c) is not avoidable or able to be overcome by the Nonperforming Party by the exercise of due diligence. Force Majeure Events include: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or actions; (e) embargoes or blockades in effect on or after the date of this Agreement; (f) national or regional emergency; (g) strikes, labor stoppages or slowdowns, or other industrial disturbances; and (h) other events beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party. Despite the preceding definition of a Force Majeure Event, a Force Majeure Event excludes (i) economic hardship, changes in market conditions, or insufficiency of funds; (ii) changes in the cost or availability of underlying supplies, commodities, materials, labor or other inputs; (iii) facts, events or circumstances arising due to the COVID-19 pandemic and outbreaks, except (and subject to the other criteria in this definition of “Force Majeure
Page 3 of SECTIONPAGES 39
Event”) to the extent any governmental order, law or action announced and promulgated after the Effective Date materially and adversely affects the performance of the Work. The “Performing Party” means the Party who is unaffected by a Force Majeure Event and whose performance is in accordance with this Agreement.
“High Assay Low Enriched Uranium” or “HALEU” means uranium enriched to 19.75% in the isotope 235U.
“Intellectual Property” means all intellectual property rights of any kind, worldwide, including without limitation, utility patents, design patents, and all applications for the foregoing; registered and unregistered trademarks, service marks, trade dress, logos, domain names, and other source identifiers, and all applications and registrations for the foregoing, and all goodwill associated with the foregoing; published and unpublished works of authorship, registered and unregistered copyrights, database rights, moral rights, and all registrations and applications for the foregoing; software, firmware, computer programs, source code, object code, logic, models, diagrams, technology, and documentation; and trade secrets, know-how, ideas, inventions, improvements, data, and other confidential and proprietary information, in whatever form.
“Kilograms Uranium” or “kgU” means the quantity of HALEU measured in kilograms.
“Nuclear Incident” shall have the meaning given in the United States Atomic Energy Act of 1954, as amended, 42 U.S.C. §§ 2210, et seq., as amended.
“Nuclear Regulatory Commission” or “NRC” means the United States Nuclear Regulatory Commission.
“Nuclear Risk” means all risks arising out of or resulting from a Nuclear Incident.
“Price” means the total compensation to be paid to Contractor on a Firm Fixed Price Basis for the Work as set forth in the Statement of Work and the applicable Purchase Order.
“Price Ceiling” means the cumulative Price for all Work, which shall be on Firm Fixed Price Basis.
“Price Anderson Act” means United States Public Law 85-256, Section 170 of the United States Atomic Energy Act of 1954, as amended, 42 U.S.C. §§ 2210, et seq., as amended, and related provisions of Section 11 of the United States Atomic Energy Act.
“Product Material” means Enriched Uranium Product in the form of uranium hexafluoride (UF6) resulting from the enrichment process which shall conform to the definition of “enriched commercial grade UF6” in the latest version of ASTM International’s “Standard Specification for Uranium Hexafluoride Enriched to Less Than 20% 235U,” Designation: C996.
“Project” means the demonstration facility that is in development by TerraPower in coordination with DOE utilizing the Natrium sodium reactor technology (together with all auxiliary equipment, ancillary and associated facilities and equipment, electrical transformers, interconnection and metering facilities and all other improvements and assets and rights related thereto), also known as Kemmerer Power Station, Unit 1.
“Prudent Industry Practices” means that degree of skill and judgment and the utilization of practices, methods, and techniques and standards that are generally expected of skilled and experienced engineering firms by a significant portion of the nuclear power industry in the United States of America in light of the facts known or ought to have been known at the time the decision was made, could reasonably have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, safety, reliability, expedition, and Applicable Laws. Prudent Industry Practice is not limited to the optimum practice, method or act to the exclusion of all others, but rather to a spectrum of reasonable and prudent practices, methods, standards and procedures.
“Purchase Order” or “PO” means the purchase order document included with this Agreement, including the signature page, all parts referenced on the signature page and all attachments thereto, each of which is incorporated therein, as may be amended from time to time.
Page 4 of SECTIONPAGES 39
“QA Requirements” has the meaning given in Section 10 (Quality Assurance; Environmental, Health & Safety).
“Recordkeeping Period” has the meaning given in subsection 18.1 (Recordkeeping Requirements).
“Sanctions” means any economic or trade sanctions or restrictive measures enacted, administered, imposed or enforced by a Sanctions Authority.
“Sanctions Authority” means the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the European Union, His Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority.
“Separative Work Unit” or “SWU” means the unit of measure of the work required to enrich Feed Material. The quantity of SWU is calculated in accordance with the formula in the SOW.
“Services” means the services to be provided by the Contractor to TerraPower under this Agreement, as authorized by the PO and detailed in the Statement of Work, including, as applicable, supplying the Deliverables.
“Specification” means the formal applicable technical description, requirements and acceptance criteria as defined and/or referenced in a Statement of Work.
“Statement of Work” or “SOW” means the description of requirements pertaining to the Work, including Services, Supplies, and Submittals, based on the form and/or requirements attached hereto as Exhibit A, and including any documents incorporated therein by reference.
“Submittals” means the documentation and data, furnished by the Contractor to TerraPower under this Agreement associated with the Product Material, as specifically identified in the applicable SOW and/or PO.
“Supplier” means, as the context indicates, Contractor.
“Supplier Coordination Request” or “SCR” means a Contractor coordination request submitted by Contractor to TerraPower for disposition and response. SCR may be used to request information or clarification, request deviation from a contract requirement and/or a technical requirement, or to disposition a Contractor non-conformance to technical requirements.
“Supplier Project Engineer” or “SPE” means TerraPower’s liaison between Contractor and TerraPower stakeholders. The SPE is Contractor’s main point of contact. The SPE role includes responsibility for the coordination and approvals of supplier documents, conducting regularly scheduled supplier progress meetings, overseeing supplier performance, as well as facilitating efforts to resolve technical issues. The SPE works in conjunction with the CA and TR throughout the Term. TerraPower may change the SPE upon written notice delivered to Contractor from time to time.
“Supplies” means the end items or products, including supporting related documentation and data, specified in the applicable Purchase Order(s) and Statement(s) of Work, and furnished by the Contractor to TerraPower under this Agreement. Supplies may be referred to as “products” in the applicable PO or SOW.
“Suspension” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Suspension Notice” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Suspension Period” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Tails Material” means uranium in the form of uranium hexafluoride (UF6) which, as a result of the Enrichment Service, has an Assay lower than that produced from Feed Material by Contractor.
“Technical Representative” or “TR” means TerraPower’s point of contact who will interface with the Contractor on technical matters related to the Agreement. TerraPower may change the TR upon written notice delivered to Contractor from time to time.
Page 5 of SECTIONPAGES 39
“Term” means the period beginning from the Effective Date of this Agreement and expiring on the completion/delivery date(s) for all Deliverables as set forth in a PO or SOW, unless extended or earlier terminated in accordance with this Agreement.
“TerraPower Indemnified Person” has the meaning given in subsection 14.1 (Indemnification by Contractor).
“US SFR Owner” or USO” means US SFR Owner, LLC, a wholly owned subsidiary of TerraPower, LLC; US SFR Owner is the Project owner.
“Warranty Period” has the meaning given in subsection 11.1 (Compliance with Agreement and Purchase Order; Duration.).
“Work” means all obligations of Contractor under this Agreement for the production and delivery of the Services and Deliverables, and satisfaction of all warranty obligations, all in accordance with the requirements of this Agreement.
“Work Product” means all Deliverables, including any documents, reports, materials, techniques, ideas, algorithms, software, source code, object code, specifications, plans, drawings, designs, inventions, data, information and other items or materials that are authored, conceived, created, or developed, by or on behalf of Contractor in connection with the Work, together with any and all Intellectual Property rights (other than Contractor Background Intellectual Property) in the foregoing.
2. Work Authorization - Purchase Order.
2.1. Issuance of Purchase Order.
Work shall be authorized only by issuance of the PO, which may be amended, and that shall be performed during the Term. The cumulative Price for all Work may not exceed the Price Ceiling without prior written approval from TerraPower. Contractor acknowledges and agrees that: (a) TerraPower is not obligated to issue any one or more POs that together amount to the full amount of the Price Ceiling and (b) TerraPower will not be liable to pay any amounts in excess of the Price Ceiling unless the Price Ceiling has been increased pursuant to Section 5 (Changes).
2.2. Base Line Item.
The PO and SOW identify Work that is delineated by line item as the Base Line Item. Issuance of the PO shall authorize Contractor to perform the Work identified as Base Line Item only.
2.3. [Reserved].
2.4. Price Basis.
The PO shall specify its Price basis as Firm Fixed Price.
3. Performance of the Work.
3.1. Statement of Work Contents.
The SOW shall specify the Deliverables, the CA, the TR, the SPE, technical requirements, QA Requirements, EH&S Requirements, schedule, and period of performance (including, as applicable, by identifying separate documents by number and description, which shall be deemed to be incorporated in their entirety within such SOW as though set forth therein).
3.2. Compliance with the Statement of Work.
Contractor shall complete the Work in accordance with any deadlines and other scheduling requirements set forth in the applicable SOW. The Contractor shall devote the time, energy, interest, ability and skill that are necessary to satisfactorily perform the Work, including utilizing personnel of appropriate levels of skill, experience and qualifications (including, as applicable, any professional
Page 6 of SECTIONPAGES 39
certifications, licenses and other credentials required by Applicable Laws or any applicable SOW). With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. Contractor shall perform the Work in accordance with Prudent Industry Practices and Applicable Law and in compliance with the material rules, regulations and policies of TerraPower (to the extent made known to Contractor).
3.3. Purchase Order to Authorize Work.
The Contractor shall provide Work for TerraPower as authorized by the PO, including any amendments thereto, according to the terms of this Agreement and the SOW. The CA has the authority to provide written direction on behalf of TerraPower to the Contractor for matters of clarification, provided that any such direction that increases or decreases the Work, schedule, or compensation shall be subject to Section 5 (Changes). The SPE and/or TR will interface with the Contractor concerning technical matters. TerraPower and the Contractor shall, on a regular basis, but not less than monthly, as specified by the CA, SPE, and TR, communicate to discuss the status of the Work (including any changes), cost (as appropriate), schedule and Work performance as outlined in the SOW. Communication may be in the form of in-person meetings, teleconferences and/or written status reports.
3.4. Use of Subcontractors.
The Contractor shall not engage lower-tier Contractors to provide all or any portion of the Work without TerraPower’s written consent (which may be provided in the PO), except for the Contractor’s wholly owned subsidiaries. If the Contractor utilizes the services of permitted lower-tier contractors or acquires any products in order to provide the Work, (i) the Contractor will be solely responsible for the payment to such permitted lower-tier Contractors and for the compliance and conformity with this Agreement of any such services and products and (ii) Contractor shall bind any such lower-tier contractors, suppliers or vendors to the applicable terms and conditions of this Agreement to the portion of the Work subcontracted and to the contractual flowdown provisions set forth in Exhibit B.
3.5. Submittals.
The Contractor shall deliver Submittals to TerraPower for review, information or approval. Submittals shall be provided via secure electronic information transfer system in accordance with subsection 19.3 (Communication and Protection of Data) and with a separate notification to submittals@terrapower.com, unless otherwise specified by TerraPower in the SOW. Administrative items (i.e., not Confidential Information) may be provided by email to submittals@terrapower.com only. The CA and SOW will provide any specific additional guidance and other submittal methods as required by this Agreement. Contractor shall appropriately mark (in accordance with TerraPower’s marking requirements) all Submittals to allow processing and control of the Submittals, in accordance with this Agreement.
3.6. Acceptance.
The SOW will provide specific guidance regarding data/document Submittals and other Supplies, and their Acceptance, as applicable. All Work performed under this Agreement shall be subject to Acceptance by TerraPower and inspection by TerraPower or its designee in connection therewith. Notwithstanding anything to the contrary herein, under no circumstances shall Acceptance by TerraPower or the performance of any inspection in connection therewith constitute or be deemed a waiver of any rights, remedies or interests of TerraPower in this Agreement, including those pursuant to Section 11 (Warranty; Delay and Performance Remedies).
3.7. Contractor Requests.
Page 7 of SECTIONPAGES 39
The Contractor may request information or contractual direction from TerraPower using an SCR. The CA will make the SCR Form, with instructions, available to the Contractor. The SCR will formally document Contractor requests, and TerraPower’s responses. If the disposition of an SCR requires a change to this Agreement, or to a PO, then the CA will initiate the change in accordance with Section 5 (Changes).
4. Representations, Certifications.
4.1. U.S. Government Flowdown Requirements.
The required contractual flowdown provisions set forth in Exhibit B (U.S. Government Flowdown Requirements) to this Agreement are incorporated into and form an integral part of this Agreement and Contractor shall comply with the same in all respects.
4.2. Parties’ Authority and Capacity to Contract.
Each Party represents and warrants to the other that it has the full right and authority to enter into and to perform its obligations under this Agreement and that its performance of its obligations under this Agreement will not conflict with any other obligation it may have to any third party.
4.3. Contractor Authority and Capacity to Contract.
The Contractor represents and warrants (or certifies, as applicable) to TerraPower, and agrees, that:
a. Contractor
i. is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization;
ii. is duly qualified to do business and is in good standing in each jurisdiction in which its respective ownership or lease of property or the conduct of its business requires such qualification;
iii. has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged; and
b. Contractor
i. and its affiliates and sub-tier contractors, and their respective employees, agents, vendors, consultants or other representatives shall comply with all Applicable Laws, obtain (where required and as specified in the PO and/or SOW), maintain and comply with all authorizations, licenses, professional certifications, permits, and other certifications (provided that such additional regulatory authorizations, licenses and permits in South Africa will be required to enrich uranium) as may be required in connection with the Work and the performance of Contractor's obligations under this Agreement and Contractor shall ensure that the Work and its permitted sub-tier subcontractors comply with all Applicable Laws; and
ii. is aware of, understands and shall comply with, and will ensure that any permitted sub-tier subcontractors are aware of, understand and shall comply with, all applicable U.S. and foreign anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, as such laws may be amended from time to time;
c. Contractor, its affiliates, and their respective employees, agents, vendors, consultants or other representatives
i. have not been excluded, debarred, declared ineligible or suspended from (or proposed for debarment or suspension from) participation in, or is otherwise ineligible to participate in, any Federal program, any transaction with any Federal
Page 8 of SECTIONPAGES 39
department or agency or any Federal procurement or non-procurement programs; and
ii. are not the subject of any pending action, suit, claim, investigation or proceeding that could result in the foregoing. Contractor agrees to promptly inform TerraPower in writing of any debarment, exclusion, suspension, conviction, ineligibility or other event addressed by the above with respect to Contractor, its affiliates, and their respective employees, agents, vendors, consultants or other representatives. Should Contractor, its affiliates, or any of their respective employees, agents, vendors, consultants or other representatives become subject to any of the foregoing, upon receipt of such notification, such entity or individual shall immediately become ineligible to perform the services contemplated by this Agreement and TerraPower shall have the right to immediately terminate this Agreement;
d. Contractor is currently, and will remain, in compliance with the regulations of the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce (BIS), the Directorate of Defense Trade Controls of the U.S. Department of States (DDTC), NRC and DOE, and any other applicable governmental requirements administered by governmental authorities with jurisdiction over the Parties to this Agreement relating thereto;
e. Contractor and its principals are not designated on any lists of sanctioned individuals or entities maintained by the United Nations, the United Kingdom, the United States, the European Union, and any other relevant jurisdiction including but not limited to the following lists: the Specially Designated National and Blocked Persons (SDN) List, the Sectoral Sanctions Identifications (SSI) List, or the Foreign Sanctions Evaders (FSE) List, the Non-SDN Communist Chinese Military-Industrial Complex Companies List and any other lists administered by OFAC, as amended from time to time; the U.S. Denied Persons List, the U.S. Entity List, the U.S. Unverified List, and the Military End User List, administered by BIS; the consolidated list of Persons, Groups and Entities Subject to EU Financial Sanctions, as implemented by the EU Common Foreign & Security Policy; and similar lists of restricted parties maintained under applicable law;
f. Contractor and its principals are not organized under the laws of, located or ordinarily resident in, a country or territory subject to comprehensive sanctions (as of the date of this Agreement, Iran, Syria, Cuba, North Korea, the Crimea region of Ukraine, Donetsk and Luhansk)(“Embargoed Territory”);
g. Contractor is not directly or indirectly owned or controlled by any of the foregoing parties described in clauses e and f above, or otherwise the target of sanctions or export control restrictions (collectively “Restricted Parties”);
h. Contractor and its principals are not directly or indirectly acting or purporting to act on behalf of one or more Restricted Parties in performance of the Work under this Agreement;
i. Contractor will not provide to TerraPower any service, good, software or technology under this Agreement that has been sourced, procured, manufactured, produced or transported in or from an Embargoed Territory;
j. If the Price (including any adjustments): exceeds $100,000, Contractor expressly agrees to comply with all applicable standards, orders or regulations issued pursuant to the Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-3708), as amended;
k. If the Price (including any adjustments) exceeds $150,000, Contractor expressly agrees to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air
Page 9 of SECTIONPAGES 39
Act (42 U.S.C. 7401-7671q) and the Federal Water Pollution Control Act (33 U.S.C. 1251-1387), in each case as amended;
l. No federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress or an employee of a Member of Congress on its behalf in connection with the awarding of this Agreement. If the Price exceeds $100,000, Contractor shall provide the certification required pursuant to 31 U.S.C. 1352(b)(1)(A);
m. Contractor’s System for Award Management (SAM) registration (https://uscontractorregistration.com/) and certification in connection therewith is active and current;
n. Contractor shall ensure that the Work performed by sub-tier subcontractors comply with all requirements set forth in this subsection 4, as applicable;
o. Contractor represents and warrants to TerraPower as of the Effective Date and (except as otherwise specified in this clause o below) at all times during the Term that:
i. it has not received notice from any third party alleging that the use of its technology, services, products, Intellectual Property or components thereof as contemplated to be used in the performance of this Agreement infringes, misappropriates or otherwise violates, or requires a license to use, any Intellectual Property of any third party;
ii. it has enforceable written agreements with all of its employees (and shall cause any contractors that are working for it on a contractor basis, as applicable) who receive Confidential Information and/or perform activities under this Agreement that contain confidentiality obligations no less restrictive than those in this Agreement and that assign ownership of all Intellectual Property rights created in the course of their employment to Contractor;
iii. the use, commercialization or other exploitation of its technology, services, Work Product, Intellectual Property and components thereof as contemplated to be used, provided, commercialized, and/or otherwise exploited in connection with or as permitted by this Agreement does not infringe, misappropriate or otherwise violate any Intellectual Property right of any third party; and
p. In the event of any noncompliance with, or breach of or inaccuracy in any representation and warranty in, any of subsections d–i, TerraPower shall be entitled to immediately terminate the Agreement and take such other actions as are permitted or required to be taken under Applicable Law.
5. Changes.
5.1. TerraPower Changes.
TerraPower shall have the right from time to time, upon written notice to Contractor, to make changes to the scope or contents of this Agreement, including changes to: (i) specifications; (ii) schedule; (iii) additions to or deletions from quantities ordered; (iv) the method of delivery, shipment or packaging of Supplies; (v) Price; or (vi) the date or delivery destination specified in the SOW or PO (as applicable); provided, however, no such change to the scope or contents of this Agreement shall materially or adversely affect the rights or obligations of Contractor hereunder or create additional rights or obligations of Contractor or any Contractor Affiliate without Contractor’s prior written consent.
Page 10 of SECTIONPAGES 39
a. Contractor shall submit to TerraPower, as a Deliverable, by the date specified in Table 5-1 of the SOW, its cost of Feedstock and energy (compared to the costs of Feedstock and energy set forth in Contractor’s response to TerraPower’s RFP 2024-4833). In the event that Contractor’s cost of either Feedstock or energy are five (5) percent or more less than the costs of Feedstock and energy set forth in Contractor’s response to TerraPower’s RFP 2024-4833, TerraPower shall be entitled to an equitable adjustment to the Price based on the corresponding decrease in Feedstock or energy.
5.2. Contractor Identified Change Conditions.
The Contractor shall promptly notify the CA in writing (but in any event within twenty (20) days) after Contractor becomes aware of any Change Condition that could justify changes under this Agreement; provided, however, the failure to give such prompt written notice shall not relieve TerraPower of its obligation to consider the request for a change hereunder. Subject to the foregoing, if there has been a Change Condition, Contractor may make, via SCR, a change request or non-conformance request to TerraPower relating to the Agreement.
5.3. Change Conditions – Equitable Adjustments.
If any change made by TerraPower under subsection 5.1 (to the extent it comprises a Change Condition), or Change Condition pursuant to subsection 5.2, causes an increase or decrease in the cost or timing required to perform the Work or certain portions of the Work, then Contractor may request an equitable adjustment in (a) the Price Ceiling, Estimated Budget Period Total Cost, Estimated PO Total Cost or Price (as applicable) or (b) the schedule, or both, and, as applicable, this Agreement or the PO shall be modified by a written amendment to this Agreement or a revision to the PO executed by an authorized representative of each Party; provided, that (i) such changes shall be subject to mutual agreement after reasonable consideration of all relevant facts and circumstances, including any adjustments requested for any increases in Contractor’s production costs based on the cost or availability of Feedstock or energy, and (ii) Change Conditions shall not, in and of itself, enable adjustments to the Price Ceiling, Estimated Budget Period Total Cost, Estimated PO Total Cost or Price where prohibited or otherwise limited in the definition of “Change Conditions”.
5.4. Content of Change Requests.
With respect to any request for a change pursuant to subsection 5.2, the Contractor shall provide the following information, as applicable to any particular Change Condition:
a. a description of the change;
b. a timetable for implementation;
c. any relevant Acceptance criteria;
d. options to mitigate the costs or delays associated with the change;
e. any associated infrastructure requirements;
f. effect on subcontracts and other third-party agreements, if any;
g. proposed amendments to the applicable SOW;
h. proposed changes to the Price Ceiling, Estimated Budget Period Total Cost, Estimated PO Total Cost or Price (as applicable), if any;
i. proposed amendments to this Agreement, if any; and
j. any other matter reasonably requested by TerraPower or reasonably considered by Contractor to be relevant.
5.5. Change Requests – Effectiveness.
Page 11 of SECTIONPAGES 39
Changes requested by Contractor shall not violate, conflict with or breach any terms or conditions in this Agreement, including any SOW, and shall not become effective except if approved in writing by TerraPower and Contractor. In the event that Contractor and TerraPower disagree on any equitable adjustment in connection with this Section 5, such disagreement shall not excuse Contractor from performing its obligations with respect to any authorized Work and the Work as changed under this Agreement.
a. Contractor shall submit to TerraPower, as a Deliverable, by the date specified in Table 5-1 of the SOW, a schedule of all permits, authorizations, and licenses required for Contractor to perform the Work. If Contractor determines that this schedule constitutes a Change Condition, Contractor shall, contemporaneously with the schedule submittal (notwithstanding the 20-day submittal time limit specified in subsection 5.2) submit a Change Request for equitable adjustment pursuant to subsections 5.3 and 5.4.
i. TerraPower shall, within 30 days of receipt of the aforementioned Change Request, notify Contractor of its intent to approve Contractor’s Change Request, or, in TerraPower’s sole discretion, terminate this Agreement for its convenience in accordance with subsection 6.3.
b. Contractor reserves the right to terminate this Agreement if TerraPower does not agree with any proposed changes to the Price Ceiling, Estimated Budget Period Total Cost, Estimated PO Total Cost or Price (as applicable) reasonably requested by Contractor as a result of a change in the cost or availability of Feedstock or energy (vs. the cost set forth in Contractor’s response to TerraPower’s RFP 2024-4833).
6. Term and Termination; Suspension.
6.1. Term.
a. Duration.
Subject to the terms of this Agreement, TerraPower hereby engages Contractor until the earlier of:
i. the date on which all Work as identified in the applicable Purchase Order and SOW has been satisfactorily performed, delivered and Accepted within the period specified;
ii. the date that is the end of the then-applicable Budget Period (provided, that with respect to this clause (ii), the term of this Agreement shall automatically and without further action of the Parties be extended for the duration of any subsequent Budget Periods commenced or to be commenced pursuant to Continuation Applications approved by DOE (in each case pursuant to the Cooperative Agreement)), or
iii. the date on which the Agreement is terminated earlier pursuant to the terms of this Agreement or by written agreement of the Parties.
b. Continuation Applications.
Contractor shall use its commercially reasonable efforts to facilitate the preparation, submission and negotiation of any Continuation Application by TerraPower or USO and the addition of any Budget Periods applicable to the Project through the Cooperative Agreement, including the entry into additional Statements of Work, in each case as requested by TerraPower in its sole discretion (the Parties acknowledging that the negotiation of such extensions as between themselves shall generally be limited to budgets, the Work to be performed during the period of such extension and relevant scheduling requirements and milestones). Without limiting the foregoing, Contractor shall provide to TerraPower any information reasonably requested by TerraPower as being subject to review by DOE in connection with such Continuation Application, including (not later than 135 days prior to
Page 12 of SECTIONPAGES 39
the end of the preceding Budget Period) detailed budgets, on a line-item basis and including estimated total Reimbursable Costs expected to be invoiced by Contractor during such Budget Period (the “Estimated Budget Period Total Cost”). If the Parties are unable to agree upon such budgets or a Statement of Work applicable to any newly commenced Budget Period, Contractor shall, at the election of TerraPower, continue to perform such Work as is requested by TerraPower on a month-to-month basis, subject to payment hereunder as though such Work was performed during the immediately preceding Budget Period. Nothing in this subsection b shall limit any right of TerraPower to terminate, or to not extend or renew, this Agreement or any Statement of Work or Purchase Order.
6.2. Breach; Default.
a. The Parties hereto agree that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any Services under this Agreement are not performed by Contractor in accordance with its specific terms or if this Agreement is otherwise breached. It is accordingly agreed that in addition to any and all other rights and remedies that may be available to it at law, at equity or otherwise in respect of such breach, (a) TerraPower will be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of actual damages, this being in addition to any other remedy to which they are entitled under this Agreement, (b) the other remedies under this Agreement are not intended to and do not adequately compensate for the harm that would result from a breach of this Agreement by Contractor and will not be construed to diminish or otherwise impair in any respect TerraPower’s right to specific performance or other equitable relief and (c) the right of specific performance and other equitable relief is an integral part of the transactions under this Agreement and without that right TerraPower would not have entered into this Agreement. Contractor agrees not to assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that TerraPower otherwise has an adequate remedy at law. The Parties acknowledge and agree that TerraPower pursuing an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 6 will not be required to provide any bond or other security in connection with any such court order.
The rights and remedies under this Agreement are cumulative and not exclusive of any rights or remedies which a Party would otherwise have under this Agreement, at law or in equity. The failure or forbearance by a Party to exercise any of its rights or remedies with respect to any default or breach of this Agreement by the other Party will not operate as a waiver of any such default or breach, or other or subsequent non-performance.
b. TerraPower may terminate this Agreement, or any part thereof, by written notice:
i. in the event of any breach or default by Contractor of any of its obligations under this Agreement,
ii. if, following request by TerraPower, Contractor fails to provide timely and acceptable assurance of Contractor’s ability to meet all applicable QA Requirements and EH&S Requirements or the delivery date(s) of this Agreement,
iii. if Contractor fails to comply with Applicable Laws; or
iv. if Contractor becomes insolvent, does not pay its debts as due, or makes a general assignment for the benefit of creditors or reasonable grounds for insecurity arise
Page 13 of SECTIONPAGES 39
with respect to Contractor’s ability to perform. Contractor shall immediately notify TerraPower of the occurrence of any of the events described in this subsection iv.
In the event of any occurrence of subsection b.i above, TerraPower will provide Contractor with written notice of the nature of the default and TerraPower’s intention to terminate for default. TerraPower may by written notice terminate this Agreement in the event Contractor does not correct the default within ten (10) days of such notice or such longer period of time if specified in such notice of default to Contractor.
Upon the occurrence of any of subsections b.ii., b.iii., or b.iv., TerraPower may terminate this Agreement immediately upon written notice without any cure period.
c. Contractor may terminate this Agreement, or any part thereof, by written notice:
i. in the event of any breach or default by TerraPower of any of its obligations under this Agreement,
ii. if TerraPower fails to comply with Applicable Laws; or
iii. if TerraPower becomes insolvent, does not pay its debts as due, or makes a general assignment for the benefit of creditors or reasonable grounds for insecurity arise with respect to TerraPower’s ability to perform. TerraPower shall immediately notify Contractor of the occurrence of any of the events described in this subsection iii.
In the event of any occurrence of subsection c.i above, Contractor will provide TerraPower with written notice of the nature of the default and Contractor’s intention to terminate for default. Contractor may by written notice terminate this Agreement in the event TerraPower does not correct the default within ten (10) days of such notice or such longer period of time if specified in such notice of default to TerraPower.
Upon the occurrence of any of subsections c.ii. or c.iii., Contractor may terminate this Agreement immediately upon written notice without any cure period.
6.3. Convenience.
TerraPower may terminate this Agreement, or any part thereof, at any time for its convenience by giving written notice to Contractor. Upon termination pursuant to this subsection 6.3, Contractor may claim reasonable costs incurred for the Work completed prior to the effective date of such termination based on the percentage of Work complete, but not previously paid, and a reasonable amount for any Supplies then in production (other than for Supplies which are Contractor’s standard stock); provided, however, that the total sum payable to Contractor upon termination shall not exceed the Price had all Work been completed under this Agreement. The amounts to be paid to Contractor shall be set out in a written PO revision signed by TerraPower’s authorized representative. The payment will not include any consideration for loss of anticipated profits on the terminated Work, all claims for which Contractor agrees to waive. Furthermore, the total sum to be paid to Contractor for termination shall be subject to adjustment to the extent any Work contains defects as of the termination date. Contractor shall dispose of or transfer all partially completed Work or raw material in accordance with TerraPower’s instructions.
6.4. Effect of Termination.
Upon the completion, termination or cancellation of this Agreement pursuant to subsections 6.2 or 6.3 above, the Parties shall cooperate to execute an orderly, efficient, and expeditious termination of the Parties’ respective activities under this Agreement.
a. Upon receipt of any notice of termination, or any other expiration of the term of this Agreement, pursuant to this Section 6, Contractor shall, unless the notice requires otherwise:
Page 14 of SECTIONPAGES 39
i. immediately discontinue the Work on the date and to the extent specified in the notice,
ii. place no further orders for Supplies, Services, or TerraPower-Provided equipment other than as may be necessarily required for completion of any portion of the Work that is not terminated;
iii. obtain cancellation on terms satisfactory to TerraPower of all subcontracts with sub-tier subcontractors unless Contractor is directed by TerraPower to take other actions with respect to the same, which may include assignment of all or some of those contracts to TerraPower or TerraPower’s designee on terms satisfactory to such assignee;
iv. within ten (10) days of the effective termination date, return to TerraPower or destroy all Confidential Information pursuant to Section 12 (Proprietary Rights and Confidentiality); and
v. assist TerraPower upon request in the maintenance, protection, and disposition of property acquired by Contractor under this Agreement (including any transportation, delivery and storage, to TerraPower, its designee or any storage site designated by TerraPower, of Supplies and other Work Product).
b. Except to the extent there is a Contractor delay or failure in performance as a result of a Force Majeure Event or in the case of a termination of this Agreement by TerraPower as a result of a Force Majeure Event or pursuant to subsection 6.3 above, in which case this subsection 6.4.b will not apply, in addition to the requirements of subsection 6.4.a, in the event of a notice of termination pursuant to subsection 6.2, TerraPower may procure, or TerraPower may request Contractor to procure, under such terms and in such manner as TerraPower may deem appropriate, items of the Work that are the items so terminated, and Contractor shall be liable to TerraPower for:
i. any additional costs for such similar items of Work that exceed the amounts that TerraPower would have paid Contractor for the terminated items of Work pursuant to this Agreement; and
ii. any other costs incurred by TerraPower for Contractor’s non-delivery, repudiation and breach of this Agreement or any SOW or PO, including all fees and costs in exercising any remedy. TerraPower may exercise any other rights or remedies available to TerraPower at law or in equity.
Contractor’s liability for costs specified in this Section 6.4.b. shall be subject to the limitations specified in Section 17.1.
c. If this Agreement is not terminated in its entirety, Contractor shall continue the performance of this Agreement to the extent not terminated by TerraPower.
6.5. Suspension, Shipment to Storage.
a. TerraPower may at any time suspend performance of the Work or any portion thereof (a “Suspension”) by giving written notice, at least fourteen (14) days in advance, to Contractor (a “Suspension Notice”). Contractor shall promptly thereafter take all reasonable measures to implement such Suspension and to mitigate the effects of such Suspension. Such Suspension shall continue for the period (the “Suspension Period”) specified in the Suspension Notice. At any time after the effective date of the Suspension, TerraPower may require Contractor to resume performance. In the case of any Suspension at TerraPower’s request (other than one arising out of acts, omissions or delays of Contractor or its subcontractors, suppliers or vendors, and to the extent Contractor has not otherwise breached
Page 15 of SECTIONPAGES 39
or violated its obligations pursuant to this Agreement), Contractor may submit an SCR pursuant to subsection 5.2 to request any required equitable relief.
b. If Contractor elects to deliver Product Material more than ninety (90) days in advance of the date for such delivery in the applicable SOW, Contractor must provide TerraPower with advanced notice of such shipment and delivery at least ninety (90) days prior to such early delivery and TerraPower shall have the option to either accept such early delivery or to request that such Product Material be shipped to storage at a site selected by TerraPower. Whether or not in connection with any election by Contractor pursuant to the foregoing sentence, TerraPower may at its sole discretion elect to require that any Product Material comprising part of the Work hereunder be placed into storage at such location as TerraPower may direct rather than delivered to the location set out in the applicable SOW or PO. If TerraPower so elects to have any Product Material placed into storage, then
i. at TerraPower’s sole discretion, title to such Product Material shall transfer to TerraPower upon placement in storage (in which case such Product Material shall be identified and separated from other goods and materials at such storage location);
ii. Contractor will remain responsible for the risk of loss with respect to such items while they are in storage and at all times until they are delivered to TerraPower at the location required pursuant to the applicable SOW or PO and otherwise in accordance with this Agreement;
iii. subject to Contractor’s right to submit an SCR under subsection 5.2 hereof, Contractor shall bear all costs associated with such storage (including preparation for, transportation to and from and placement into storage, handling, preservation, insurance, inspections, removal charges, and additional taxes attributable to storage, etc.); and,
iv. Contractor shall resume transportation and normal delivery as and when instructed by TerraPower. In the case of any early delivery or shipment to storage at TerraPower’s request (other than one arising out of acts, omissions or delays of Contractor (including any election made by Contractor pursuant to the first sentence of this subsection a) or its subcontractors, suppliers or vendors, and to the extent Contractor has not otherwise breached or violated its obligations pursuant to this Agreement), Contractor may submit an SCR pursuant to subsection 5.2 to request any required relief.
7. Compensation/Payment/Project Controls.
7.1. Compensation.
TerraPower shall compensate the Contractor for Work on a FFP Basis in accordance with the provisions set forth in this Agreement. The following is also applicable:
a. The Price is reflected and payable in United States Dollars. All payments to the Contractor will be made by check or, at TerraPower’s sole discretion, wire transfer.
b. Contemporaneous with submittal of any invoice by Contractor with regard to the purchase of Feedstock and contemporaneous with submittal of any Contractor invoice for Product Material, Contractor shall:
i. provide TerraPower with sufficient information and copies of all documentation that specifically identifies in an objectively determinable manner exact identifying information and the exact location of the Feedstock or Product Material (e.g., specific shipping/storage containers), and
Page 16 of SECTIONPAGES 39
ii. if required by TerraPower and at TerraPower’s reasonable cost (by advance on an as-incurred basis of all costs and expenses incurred by Contractor), procure and ensure that, as security for the performance by Contractor of all its obligations under this Agreement, TerraPower is granted (by the owner of the Feedstock) special notarial bonds or general notarial bonds, or both, over all the Feedstock on terms and conditions acceptable to TerraPower. In addition, Contractor shall assist and cooperate with (and procure and ensure that the owner of the Feedstock assists and cooperates with) TerraPower to ensure that:
i. such bonds are registered in favor of TerraPower in the relevant Deeds Registry Office in the Republic of South Africa by or on behalf of TerraPower and in accordance with all applicable South African laws and regulations;
ii. all regulatory approvals for such bonds and/or their enforcement (including all approvals from the Financial Surveillance Department of the South African Reserve Bank) are obtained and maintained.
TerraPower will advance, on an as-incurred basis, any and all costs and expenses which are incurred by Contractor in connection with obtaining security for the performance by Contractor of all its obligations under this Agreement, including special notarial bonds or general notarial bonds, or both.
Contractor shall also procure and ensure that:
i. TerraPower is given all information reasonably required by TerraPower from time to time regarding the storage and/or usage of the Feedstock; and
ii. TerraPower, its representatives, agents and/or contractors is given access to the Feedstock to verify and/or inspect the Feedstock,
to enable TerraPower to perfect a security interest in the Feedstock upon payment of the respective invoice(s) for such Feedstock.
c. Subject to receipt of payment of applicable amounts in respect of TerraPower’s or USO’s corresponding invoice to DOE, TerraPower agrees to pay all undisputed amounts due to the Contractor for Work before the later of (i) thirty (30) days after receipt of the Contractor’s invoice or (ii) any other date applicable in the SOW or PO. TerraPower shall notify the Contractor of any disputed amounts within thirty (30) days of receipt of an invoice from Contractor. TerraPower is not obligated to pay any disputed amounts. During the pendency of a dispute described in this subsection 7.1, Contractor shall continue performing Work hereunder and shall have no right to suspend performance or otherwise withhold any Work.
d. If Contractor fails to deliver an invoice within ninety (90) days after any Work is performed hereunder (including, after any specific Supplies are shipped), then TerraPower shall have no obligation to pay such invoices, and Contractor’s right to payment shall be deemed conclusively waived; provided, that this sentence shall be subject to any modification to the frequency of invoicing (including any applicable milestones) agreed in writing between the Parties, including pursuant to any applicable SOW or PO.
e. Payment represents full compensation to Contractor for performance by Contractor of the Work and includes all of Contractor’s costs, expenses, taxes, duties, fees, insurance, overhead and profit for performance of the Work, compliance with all terms and conditions of this Agreement, and for Contractor’s payment of all obligations incurred in, or applicable to the performance of the Work.
7.2. [Reserved.]
Page 17 of SECTIONPAGES 39
7.3. [Reserved].
7.4. Firm Fixed Price Basis.
If a line item set forth in the PO is identified as issued on a FFP Basis, the following provisions apply:
a. The Contractor shall submit to the CA an invoice within twenty (20) days after the completion of each milestone or in accordance with the payment schedule identified in the PO.
b. Project Controls.
i. Contractor shall implement project controls and reporting with respect to the Work, including: (A) the cost and schedule reporting necessary to support TerraPower’s project management plan; (B) any relevant Project Controls Plan(s)/instruction(s) that are created for Project use by TerraPower; and, (C) that are set forth in the SOW.
ii. Contractor shall provide the names of the Contractor’s key employees (including, if applicable, permitted Contractors).
iii. In a progress report (“Progress Report”) to be delivered to TerraPower not later than the ninth (9th) business day of each calendar month, in a form to be provided by TerraPower, Contractor shall describe in writing: (A) status of key Contractor tasks; (B) key accomplishments; (C) risks and opportunities; (D) Project issues and commentary; (E) the status of Contractor’s Deliverables relative to the expected date for delivery thereof, including variance explanations; (F) Contractor’s plans to use commercially reasonable efforts to recover from any delays or forecasted cost increases associated with the Deliverables; and, (G) the status of the Work in respect of the milestones set forth in any applicable SOW, among other content to be mutually agreed upon.
iv. On a weekly basis, Contractor shall provide: (A) schedule status updates directly in the Project’s Integrated Master Control Schedule to include percent complete and updated start and finish dates; and, (B) weekly estimated hours of work performed.
v. At all times during the Term, Contractor shall maintain and comply in all respects with financial and organizational conflicts of interest policies as described in 2 CFR § 200.112 and 2 CFR § 200.318(c). Not later than thirty (30) days after the Effective Date, Contractor shall supplement such policies in writing (e.g., as part of a project work plan) and provide such supplements to TerraPower for its review and comment, such that requirements under 2 CFR § 200.319 are included in such policies (and thereafter Contractor shall maintain and comply in all respects with such policies as so supplemented). Without limiting the foregoing, at all times during the Term, Contractor shall report any actual or potential conflicts of interest applicable to procurements as described in 2 CFR § 200.318(c) or 2 CFR § 200.319(b) to TerraPower in writing as promptly as practicable. In the event of an actual or potential conflict of interest, Contractor shall develop a mitigation plan (if requested by TerraPower) to avoid, neutralize or mitigate the potential conflict. Such plan will be subject to review and approval of TerraPower in accordance with the Cooperative Agreement and Applicable Law. Contractor agrees to maintain any documentation and records contemplated by this section in accordance with 2 CFR § 200.334.
Page 18 of SECTIONPAGES 39
8. Taxes; [Reserved].
8.1. Co-Employment.
Neither the Contractor nor those performing Work on behalf of the Contractor will be deemed an employee of TerraPower within the meaning or the applications of any federal, state or local laws or regulations including, but not limited to, laws or regulations covering unemployment insurance, old age benefits, worker's compensation, industrial accident, labor or taxes of any kind. The Contractor and those performing the Work on behalf of Contractor will not be entitled to benefits that may be afforded from time to time to TerraPower's officers, managers or employees including, without limitation, options or awards, bonuses or other discretionary payments, health insurance, vacation time, holidays, sick leave, worker's compensation or unemployment insurance. Contractor shall be responsible to comply with all Applicable Laws, and for payment of all applicable amounts, in respect of the foregoing matters.
8.2. Compliance with Tax Laws.
The Contractor shall comply with all Applicable Laws related to taxes and is responsible for paying when due all income taxes, including estimated taxes, incurred as a result of the compensation paid by TerraPower to the Contractor for the Work and for providing all benefits required to those performing Work on its behalf. On request, the Contractor will provide TerraPower with proof of timely payment. The Contractor acknowledges that TerraPower will not withhold or make any payment for payroll or unemployment taxes of any kind that may be due from payments to the Contractor hereunder. The payroll or employment taxes referred to in this Section 8 include, but are not limited to, FICA, FUTA, federal personal income tax, state personal income tax, state disability insurance tax, and state unemployment insurance tax. Contractor shall be responsible for (i) all taxes that may be assessed against or in connection with the Work, and (ii) any penalties, fines or assessments that result from the late or insufficient payment of taxes for which Contractor is obligated to pay to the applicable taxing authority.
8.3. Tax Exemptions; Cooperation.
Notwithstanding anything the contrary herein, Contractor shall provide assistance as reasonably requested by TerraPower or its tax consultant(s) in identifying, confirming eligibility for and claiming exemptions from taxes.
8.4. Location of Performance of Work.
Contractor shall not perform any Work outside of the United States, or if Contractor is located outside the United Sates, the country in which Contractor is located, including any purchases of Supplies, without TerraPower’s prior written consent. TerraPower hereby grants consent for the Work to be performed in the Republic of South Africa.
8.5. [Reserved].
9. Competitors; Non-Solicitation; Publicity.
9.1. Prohibition on Interference with TerraPower Activities.
The Contractor shall not, during the Term, directly or indirectly, (i) promote, participate, or engage in any business activity that would materially interfere with the performance of the Contractor's duties under this Agreement or (ii) willfully take (or fail to take) any action that materially interferes with the performance of the Contractor's duties under this Agreement or results in, or could reasonably be expected to result in, a failure to perform the Contractor's duties under this Agreement. .
Page 19 of SECTIONPAGES 39
9.2. Prohibition on Disclosure of Deliverables or Confidential Information.
The Contractor shall not, under any circumstances, use or disclose any of TerraPower’s Confidential Information while working for, on behalf of, or with, a company that competes with the current or anticipated business of TerraPower. The limitation in this subsection 9.2 applies irrespective of whether the Contractor is allowed by virtue of this Section 9 to work for a company that competes with the current or anticipated business of TerraPower.
9.3. Non-solicitation.
During the term of this Agreement and for a period of one (1) year after the expiration or earlier termination of this Agreement, the Contractor shall not solicit, attempt to solicit, or cause to be solicited any customers of TerraPower for purposes of promoting or selling products or services that are the subject of the Work provided hereunder.
9.4. Use of TerraPower Name or Logo.
Contractor shall submit to TerraPower prior to use all advertising, sales promotion, papers, presentations, or other publicity material relating to this Agreement or the Cooperative Agreement wherein TerraPower’s name or logo or the name or logo any of its affiliates or the Project is mentioned, and Contractor shall not use or publish such advertising, sales promotion, paper, presentation, or publicity material without the prior written consent of TerraPower.
10. Quality Assurance; Environmental, Health & Safety.
10.1. Quality Assurance and Environmental Health & Safety Requirements.
If any quality assurance requirements (“QA Requirements”) and/or environmental, health and safety requirements (“EH&S Requirements”) apply to the Work, TerraPower shall provide the QA Requirements and/or EH&S Requirements in the SOW. Specific tasks associated with the Work may be subject to different QA Requirements and EH&S requirements. Contractor shall perform Work in conformance with all QA Requirements and EH&S Requirements, as applicable. In the event that the Contractor does not have a TerraPower-approved Quality Assurance Program, at TerraPower’s discretion and if stated in the applicable SOW, the Contractor may perform Work under TerraPower’s Quality Assurance Program.
10.2. Incorporation of Quality Assurance and Environmental Health & Safety Requirements Into Subcontracts.
The Contractor shall incorporate this Section 10 (Quality Assurance; Environmental Health & Safety) in its subcontracts with any permitted lower-tier Contractors and lower-tier supply agreements, including any technical, QA Requirements and EH&S Requirements as specified in the SOW. When specified in the SOW, TerraPower, through its designated representatives or agents, may access the Contractor’s and any permitted lower-tier Contractor’s facilities and records for Q&A and EH&S surveillance, inspection, or audit during normal business hours.
10.3. Hold Points and Stop Work.
Without limiting any more stringent applicable QA Requirements or EH&S Requirements:
a. Any portion of the Work may be subject to certain mandatory hold or notification points (each, a “Hold Point”), which may require witnessing by an authorized representative of TerraPower. Any Hold Points applicable to the Work shall be set forth in the applicable SOW or otherwise agreed between the Parties in writing. Applicable Work may not proceed beyond a Hold Point without either
i. inspection or review by an authorized representative of TerraPower, or
Page 20 of SECTIONPAGES 39
ii. TerraPower’s express written authorization for the applicable Work to proceed. Contractor shall provide TerraPower at least fourteen (14) business days’ advance written notice of each Hold Point to allow the Parties to schedule the Work related to the applicable Hold Point.
b. TerraPower may, at any time, direct Contractor to stop performing Work if in the judgment of TerraPower’s quality representative the Work:
i. is not being materially performed in accordance with QA Requirements or EH&S Requirements, or
ii. has material quality control deficiencies. If such direction is given, Contractor and its subcontractors shall cease operations, including shipments, on any Work within the scope of the direction. Resumption of Work shall not be undertaken until Contractor has obtained TerraPower’s written authorization.
11. Warranty; Delay and Performance Remedies.
11.1. Compliance with Agreement and Purchase Order; Duration.
The Contractor warrants that any and all Work provided under this Agreement will conform to and comply with each and every provision of the Agreement and PO, will be performed using competent professional knowledge and judgment in accordance with Prudent Industry Practices, will be suited for the intended application and function, will perform correctly in accordance with any performance guarantees and specifications, will be in accordance with Applicable Laws, and will be complete, correct and otherwise free from errors, omissions, faults or defects in design, workmanship and materials.
The Contractor further warrants that all Product Material provided or furnished by the Contractor must be new, original, unrefurbished and of the kind, make and quality specified by TerraPower in the SOW.
The warranties provided will begin upon, as applicable with respect to each specific item of Work, Supplies, materials, or Product Material, delivery and TerraPower acceptance of the Work, Supplies, materials, or Product Material, and will expire, (i) with respect to Work, Supplies, or materials, twenty-four (24) months after TerraPower acceptance of the Work, Supplies, or materials; and, (ii) with respect to Product Material, on the earlier of: (y) twenty-four (24) months after TerraPower acceptance of Product Material; or (z) metallization of the Product Material by TerraPower’s Deconverter (the “Warranty Period”).
Should any of the Work, Supplies, materials, or Product Material not meet the standards specified in this subsection 11.1 during the Warranty Period, the Contractor, at its own expense, will correct such nonconformity in consultation with TerraPower by re-performing, resupplying, disassembling, reassembling, removing, re-installing, or repairing, as applicable, the nonconforming Work, Supplies, materials, and/or Product Material.
The Contractor further warrants that each item of Work re-performed or Supplies, materials, and/or Product Material repaired or replaced to correct a nonconformance will carry the warranty prescribed by this section, and the Warranty Period for such Work, Supplies, materials and/or Product Material will begin upon, as applicable with respect to each specific item of Work, Supplies, materials, or Product Material, delivery and TerraPower acceptance of the Work, Supplies, materials, or Product Material, and will expire, (i) with respect to Work, Supplies, or materials, twenty-four (24) months after TerraPower acceptance of the Work, Supplies, or materials; and, (ii) with respect to Product Material, on the earlier of: (y) twenty-four (24) months after TerraPower acceptance of Product Material; or (z) metallization of the Product Material by TerraPower’s Deconverter.
Page 21 of SECTIONPAGES 39
11.2. TerraPower Testing.
TerraPower may, in its sole discretion and at its expense, conduct such additional reasonable tests as it deems proper or necessary to determine that Work, Supplies, materials, and Product Material provided under the Agreement meet the warranties.
11.3. TerraPower Right to Remedy Contractor Failure to Meet Warranties.
If the Contractor, after notice, fails to proceed promptly to remedy any failure to meet any of the warranties set forth herein, TerraPower may remedy such failure, or have such failure remedied by others, and the Contractor will be liable for all reasonable expenses so incurred.
11.4. Warranty Beneficiaries; Assignment.
All warranties will benefit both TerraPower and the Project owner, USO. In the event TerraPower, USO, or their successors or assigns transfer ownership of all or part of the Project to a third-party purchaser prior to the expiration of the applicable warranty period, all warranties provided by Contractor under this Agreement shall be assignable to said third-party purchaser by TerraPower, USO or their successors or assigns, as applicable.
11.5. Liquidated Damages.
a. Except in the case of Contractor delay or failure in performance as a result of a Force Majeure Event or a termination of this Agreement by TerraPower as a result of a Force Majeure Event or pursuant to subsection 6.3, in which case this subsection 11.5 will not apply, Contractor shall be responsible for the following liquidated damages, in each case beginning on the day after the expiration of a grace period of thirty (30) days from the date specified within the agreed and approved schedule:
i. For any delay in delivery of Deliverables by the date guaranteed for such delivery as set forth in the applicable SOW, $10,000 per day of delay, subject to the limitation in Section 17.1 (Limitation of Liability);
ii. For any delay in delivery of Product Material by the date guaranteed for such delivery as set forth in the applicable SOW, $100,000 per week of delay, subject to the limitation in Section 17.1 (Limitation of Liability);
iii. For any delay in achieving commercial operation of the Project by the date guaranteed for such commercial operation set forth in the applicable SOW, to the extent attributable to a Contractor-caused delay, $100,000 per week of delay, subject to the limitation in Section 17.1 (Limitation of Liability);
b. The Parties intend that any liquidated damages required pursuant to this subsection 11.5 constitute compensation, and not a penalty. The Parties acknowledge and agree that the harm to TerraPower and USO caused by Contractor delays would be impossible or very difficult to accurately estimate as of the Effective Date, and that such liquidated damages are a reasonable estimate of the anticipated or actual harm that might arise from delays. Contractor’s payment of such liquidated damages is Contractor’s sole liability and entire obligation and TerraPower’s exclusive remedy for such delays.
Page 22 of SECTIONPAGES 39
12. Proprietary Rights and Confidentiality.
12.1. Background and Foreground Intellectual Property.
TerraPower reserves all legal rights and retains exclusive ownership in its Background Intellectual Property.
Contractor reserves all legal rights and retains exclusive ownership of the Work Product (except for Product Material), Contractor Background Intellectual Property, and Contractor Foreground Intellectual Property, (altogether, “Contractor IP”). If Contractor incorporates any Contractor IP into a Deliverable or any such Contractor IP is reasonably necessary for use of the Deliverable, Contractor hereby grants to TerraPower and its affiliates a perpetual, irrevocable, personal, nonexclusive, worldwide, royalty-free, fully paid up license to use and exploit such Contractor IP solely to the extent such Contractor IP is tangibly embodied by the Deliverable and reasonably necessary to use the Deliverable for the Project. The Contractor shall identify and mark (in accordance with TerraPower’s marking requirements) all Contractor IP prior to disclosure to TerraPower or any of its representatives.
The License Agreement, dated as of February 16, 2024, among ASP Isotopes UK Limited, as licensor, and Contractor and Quantum Leap Energy Limited, as licensees, constitutes, and upon the consummation thereof the Sublicence Agreement to be entered into by among QLE, as sublicensor, and QLE TP Funding SPE, LLC and K2025267858 (South Africa) (Pty) Ltd., as sublicensees, will constitute, the legal, valid and binding obligations of the parties to such agreements, enforceable against the licensor in accordance with their respective terms, and the Sublicense Agreement shall remain in effect throughout the Term.
12.2. [Reserved]
12.3. [Reserved]
12.4. Compliance with Confidential Information Obligations.
At all times during the Term of this Agreement and after termination of this Agreement, the respective receiving Party shall keep the Confidential Information in the strictest confidence and shall not disclose it by any means to any third party except with the other Party’s prior written approval and only to the extent necessary to perform the Work under this Agreement. The receiving Party may not use Confidential Information for any reason except to perform its obligations under this Agreement. This prohibition also applies to the receiving Party’s employees, agents and subcontractors, and the receiving Party has in place agreements with the foregoing to ensure compliance with this sub-Section 12.4. The limitations in subsections 9.2 and 9.3 (Prohibition on Disclosure of Deliverables or Confidential Information; Non-Solicitation) are in addition to the limitations and commitments in this subsection 12.4.
12.5. Exclusions from Confidentiality Obligations.
Confidential Information does not include any information that:
a. is or subsequently becomes publicly available without the receiving party's breach of any obligation owed to the disclosing Party;
b. became known to the receiving Party prior to the disclosing Party’s disclosure of such information to the receiving Party without receiving Party’s breach of any obligation owed to the disclosing Party;
c. became known to the receiving party from a source other than the disclosing Party and other than by the breach of an obligation of confidentiality owed to the disclosing Party;
Page 23 of SECTIONPAGES 39
d. is independently developed by the receiving party without reference to Confidential Information; or
e. is disclosed in response to a valid law, regulation, subpoena or other court order, provided that, prior to making such disclosure, the receiving Party shall give the disclosing Party notice and an opportunity to object to or limit the disclosure. In all cases where the receiving Party is required to disclose Confidential Information as set out in subsection 12.5.e., the receiving Party shall make all reasonable efforts to protect the Confidential Information from public disclosure.
12.6. Ownership of Confidential Information.
The receiving Party must destroy or return to the disclosing Party all Confidential Information and materials containing or excerpting Confidential Information upon the expiration or earlier termination of this Agreement, or promptly upon the disclosing Party’s request made at any time during the term of this Agreement; provided that the receiving Party is entitled to retain one (1) copy of same for archival purposes to be used for the limited purpose of proving compliance with the terms of this Agreement. The confidentiality obligations of this Section 12 will continue to apply to any retained Confidential Information and materials.
12.7. Markings.
Contractor will comply with markings requirements as may be requested by TerraPower in connection with the Supplies, Submittals and documents provided to TerraPower, including the marking guidance in Exhibit F, which may be updated by TerraPower from time to time.
12.8. Injunctive Relief.
The Contractor and TerraPower each acknowledge the unique nature of the Work provided hereunder and of Contractor and TerraPower's businesses, and further that any breach by either Party of this Section 12 or of subsections 9.2 or 9.3 (Prohibition on Disclosure of Deliverables or Confidential Information; Non-Solicitation) will result in irreparable and continuing damage to the other Party for which there may be no adequate remedy at law, and the Parties agrees that the other Party will be entitled to injunctive relief in addition to any other remedies it may have in the event of such breach.
12.9. Use of Confidential Information.
Without limitation, both the specific terms of, and the very fact of, the relationship between the Contractor and TerraPower is considered Confidential Information. The Parties will not use that information for marketing or otherwise disclose it (with or without a Party’s name) without the other Party’s prior written consent. Either Party may disclose the existence and specific terms (including any exhibits, attachments, SOW, and amendments) of this Agreement to investors, potential investors, finance providers, potential finance providers, advisors, joint venture partners, potential joint venture partners and others (including the legal and financial advisors of such parties), who have been informed that the confidential information belongs to the other Party and have agreed in writing to obligations of confidentiality and limitations of use substantially equivalent to those contained in this subsection 12.9 or are otherwise subject to professional obligations of confidentiality.
12.10. Statutory Protections.
The protections afforded to the Confidential Information under this Agreement are in addition to, and not in lieu of, the protections afforded under any applicable trade secrets laws, including the Washington Uniform Trade Secrets Act (Wash. Rev. Code Ann. §19.108 et seq.) and the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1836) (“DTSA”).
NOTICE: Notwithstanding any other provision of this Agreement to the contrary, Contractor understands that pursuant to the DTSA, they cannot be held criminally or
Page 24 of SECTIONPAGES 39
civilly liable under Federal or State trade secret law for disclosing a trade secret in the following situations: (1) Contractor makes the disclosure in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and the disclosure is solely for the purpose of reporting or investigating a suspected violation of law; (2) Contractor makes the disclosure in a legal document filed in a lawsuit or other legal proceeding if the filing is made under seal; or (3) Contractor makes the disclosure to its attorney for use in a lawsuit against its employer for retaliation for reporting a suspected violation of law if, in court proceedings, any document containing the trade secret is filed under seal, and Contractor does not disclose the trade secret, except pursuant to a court order.
12.11. Relationship with U.S. Government Requirements.
The foregoing rights in Deliverables, including Intellectual Property therein and any licenses thereto, shall be subject to DOE rights under the Cooperative Agreement. The U.S. Government Flowdown Requirements relating to Intellectual Property of the Deliverables are set forth in Exhibit D to this Agreement are incorporated into and form an integral part of this Agreement and Contractor shall comply with the same in all respects as though set forth herein.
12.12. Ownership of Patentable Inventions and Contractor Support.
This Agreement is directed toward the supply of Product Material and the Parties do not anticipate SOWs specifying research and development. However, to the extent that patentable inventions are conceived, created or developed under the Agreement, Contractor will retain ownership, in accordance with subsection 12.1 above.
13. Title; Risk of Loss; TerraPower-Provided Equipment
13.1. Title, Risk of Loss.
Title to any property (real, personal, or intangible and including the Product Material)
a. to be supplied to TerraPower by Contractor or
b. unless TerraPower otherwise directs, that is acquired by Contractor for the performance of any Work and for which it receives payment hereunder (as a direct cost, rather than properly included in any indirect rate, pursuant to the Cost Principles set forth in 48 CFR 31.2),
shall (in any case contemplated by the foregoing clauses (a) or (b)) transfer to TerraPower free and clear of any liens upon the earlier of:
i. payment for such property pursuant to the terms and conditions hereof or
ii. delivery of such property to TerraPower (whether at its ultimately required location or otherwise, including (if elected by TerraPower) pursuant to subsection a).
Notwithstanding the passage of title to such property, Contractor shall bear the risk of loss with respect to such property to be supplied by Contractor or so acquired by Contractor until delivery of such property to TerraPower. With respect to such property, Contractor shall make, retain, and provide to TerraPower all property records as described in 2 CFR 200 and shall ensure that any Contractor use (including packaging, transportation, handling, storage, delivery and related administrative matters) of such property is consistent with the contractual flowdown provisions set forth in Exhibit D and any specific directions of TerraPower or DOE that are shared by TerraPower with Contractor, including any requirements of TerraPower, in its sole discretion, in respect of insurance or payment of any costs, expenses, fees or other amounts, or performance of any actions (including preparation, execution and delivery of documents), in each case in connection with such packaging, transportation, handling, storage, delivery or related administrative matters. The terms of
Page 25 of SECTIONPAGES 39
this subsection 13.1 shall not be subject to modification in any SOW, including by use of “Incoterms” rules published by the International Chamber of Commerce.
13.2. TerraPower-Provided Equipment.
TerraPower retains ownership of all TerraPower-Provided equipment. The Contractor shall hold the TerraPower-Provided equipment in trust, and while the TerraPower-Provided equipment is in the Contractor’s care, custody, and control, the Contractor shall insure the TerraPower-Provided equipment at the Contractor’s expense in an amount equal to replacement costs of the TerraPower-Provided equipment with loss payable to TerraPower. The Contractor shall use the TerraPower-Provided equipment solely for performing Work in accordance with this Agreement. The Contractor shall return the TerraPower-Provided equipment to TerraPower in the same condition as received, except for ordinary wear and tear, upon termination of this Agreement, unless TerraPower agrees otherwise in writing prior to the termination of this Agreement.
14. Indemnification.
14.1. Indemnification.
Except to the extent arising from a nuclear incident or precautionary accident, as defined by the Price Anderson Act, at the Project site, the Contractor shall indemnify, defend (if requested by TerraPower) and hold harmless TerraPower and its affiliates (and its and their respective directors, officers, employees, representatives, agents, vendors, suppliers, subrecipients, successors and permitted assigns) (each such person or entity, a “TerraPower Indemnified Person”) from and against all damages, liabilities, claims, costs, losses and expenses of any nature (including attorneys’ fees and other costs of enforcement and defense), including claims based on death, bodily injury or loss of or damage to property or the environment, in any such case arising out of, or resulting in any way from:
a. any defect in the Work purchased hereunder;
b. any actual or alleged infringement, misappropriation or other violation of third-party Intellectual Property embodied by the Deliverables or practiced by Contractor in the performance of the Work. Notwithstanding the foregoing, this paragraph does not apply to the extent the Deliverables are modified, altered, or combined with other materials or processes and infringement would not have occurred but for the modification, alteration or combination;
c. any failure by the Contractor to comply with any provision of this Agreement or any related contract (including any breach, violation or failure to perform any covenant or agreement, or any breach of or inaccuracy in any representation and warranty made by Contractor),
d. any act or omission of the Contractor, its agents, employees (including, for purposes of this clause d., contingent, leased, temporary or co-employees, or other similar individuals, of Contractor or its affiliates or lower-tier contractors, seconded to or otherwise staffed with TerraPower, USO or any third party in connection with the Project (each such individual Person, a “Co-Employee”)) or permitted lower-tier contractors;
e. any claims, demands, actions, disputes or other legal or administrative procedures made or asserted by any Co-Employee;
f. claims of the United States government and its officers, agents or employees to the extent resulting from the acts or omissions of Contractor related to the Project or
g. without limiting the foregoing obligations, any failure by the Contractor to comply with its obligations pursuant to Section 8.
Page 26 of SECTIONPAGES 39
14.2. Notification, Rights, and Cooperation.
TerraPower shall give the Contractor reasonably prompt written notice of any claim subject to indemnification hereunder; provided, however, TerraPower’s failure to so notify the Contractor shall not affect the Contractor’s obligations hereunder except to the extent that TerraPower’s delay materially prejudices the Contractor’s ability to defend such claim. If requested by TerraPower, Contractor shall have the right to defend against any such claim with counsel of its own choosing and to settle such claim as the Contractor deems appropriate, provided that the Contractor shall not enter into any settlement that adversely affects any Indemnified Person rights without such Indemnified Person’s prior written consent. TerraPower shall reasonably cooperate with the Contractor in the defense and settlement of any such claim, at the Contractor’s expense. Each Indemnified Person shall have the option to retain its own counsel, at the Indemnified Person’s own and sole expense, to participate in the defense and settlement of any claim or other matter subject to indemnification under this Section 14; provided, that if TerraPower does not request the Contractor defend any Indemnified Person, then TerraPower or such Indemnified Person shall have the right to retain its own counsel for the defense and settlement of any claim or other matter subject to indemnification under this Section 14, with the costs, fees and expenses of such counsel to be at the expense of Contractor.
14.3. Investigations.
Contractor will fully cooperate with any Indemnified Person in any investigation of any actual or potential claims, investigations or other proceedings made or asserted against or into such Indemnified Person. Such cooperation will include (without limitation) making employees available for interviews and depositions, providing requested documentation and otherwise being responsive to requests for information concerning such claim, investigation or other proceeding. This obligation to cooperate will survive the completion, expiration, cancellation or termination of this Agreement. This obligation will exist regardless of whether any indemnification obligations have been or will be triggered by the circumstances on which the claim, investigation or other proceeding is based and regardless of whether any Indemnified Person is named as a party in any lawsuit, arbitration or other action.
14.4. Indemnification by TerraPower.
In accordance with subsection 19.16, TerraPower shall use its commercially reasonable efforts to, or to cause applicable third parties to (i) maintain financial protection and an indemnification agreement as required by the Price-Anderson Act and 10 CFR Part 140, under which Contractor and its subcontractors shall be included as insureds, and (ii) obtain and maintain nuclear property damage insurance to the extent required under 10 CFR Part 140.
Except to the extent arising from a nuclear incident or precautionary accident, as defined by the Price Anderson Act, and arising from nuclear damage, as defined by the National Nuclear Regulator Act 1999 and its Regulations, pursuant to which all nuclear liability will be channeled to the licensed entity, TerraPower shall indemnify, defend (if requested by Contractor) and hold harmless Contractor and its affiliates (and its and their respective directors, officers, employees, representatives, agents, vendors, suppliers, subrecipients, successors and permitted assigns) (each such person or entity, an “Contractor Indemnified Person”) from and against all damages, liabilities, claims, costs, losses and expenses of any nature (including attorneys’ fees and other costs of enforcement and defense), including claims based on death, bodily injury or loss of or damage to property or the environment, in any such case arising out of, or resulting in any way from any claim, dispute or other proceeding relating to the Project (separate and apart from the Deliverables), the Natrium reactor technology, or any part, combination or process thereof, including any claim for actual or alleged infringement, misappropriation or other violation of third party Intellectual Property.
Page 27 of SECTIONPAGES 39
15. Insurance.
15.1. Coverage Requirements.
During the Term of this Agreement and for ten (10) years after this Agreement is terminated, the Contractor shall, at its own expense, maintain each of the following minimum insurance coverages; provided, that Contractor shall not be permitted (without the advance written consent of TerraPower) to satisfy any of its obligations in this Section 15 by utilizing any self-insurance. The coverage limits referenced in Section 15 may be provided in equivalent amounts converted from USD to local currency:
a. All insurance coverage required by federal, state, or local law, including the Compensation for Occupational Injuries and Diseases Act, and including any additional statutory workers’ compensation insurance in the minimum statutory amount. With respect to workers’ compensation insurance:
i. To the extent permitted by law, Contractor specifically and expressly waives any immunity that it may be granted under the local law in an applicable jurisdiction and
ii. the indemnification obligation under this Agreement shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to or for any third party;
b. Commercial General Liability insurance written on an occurrence policy form which includes, but is not limited to, coverage for bodily injury, wrongful death, personal and advertising injury, property damage, contractual liability, and independent contractors with limits of not less than the following:
i. $1,000,000 Per Occurrence Limit;
ii. $1,000,000 Personal and Advertising Injury Limit;
iii. $2,000,000 General Annual Aggregate Limit;
iv. $2,000,000 Products-Completed Operations Aggregate Limit;
c. Employer’s Liability insurance with limits of not less than $1,000,000 bodily injury by accident, and $1,000,000 bodily injury by disease;
d. Automobile Liability insurance (including liability for hired and non-owned vehicles) with combined single limits of not less than $1,000,000 per occurrence. Such insurance shall cover injury or death and property damage arising out of ownership, maintenance or use of any private passenger or commercial vehicles and of any other equipment required to be licensed for road use. If hazardous materials are to be transported by Contractor to accomplish the work, then Contractor shall provide pollution auto coverage equivalent to that provided under the ISO pollution liability-broadened coverage for covered autos endorsement (CA 99 48);
e. Umbrella/Excess Liability insurance – on an occurrence basis in excess of the underlying insurance identified in in this Section 15, and which follows form of the underlying policies. The amounts of insurance required in this Section 15 may be satisfied by Contractor purchasing coverage for the limits specified or by any combination of underlying and umbrella/excess limits, so long as the total amount of insurance meets the limits specified in this Section 15 for the applicable types when added to the applicable limits for this paragraph. The umbrella/excess liability insurance limits shall have limits of $10,000,000 any one occurrence and in the aggregate;
Page 28 of SECTIONPAGES 39
f. Professional Liability insurance, insuring against professional errors and omissions arising from the Work on the Project by architects, engineers, landscape engineers, surveyors, and any other professional, with limits of $2,000,000 per claim and $2,000,000 annual aggregate. Such policy shall not contain any exclusions directed toward any types of projects, materials, services or processes involved in the Work. Coverage shall include but not be limited to: (i) insured’s interest in joint ventures, if applicable, and (ii) limited contractual liability. The retroactive date for coverage will be no later than the commencement date of design and will state that in the event of cancellation or non-renewal the discovery period for insurance claims will be at least 5 years or otherwise as by agreement with TerraPower; and
g. Commercial Property and Transit insurance: Contractor will maintain commercial property insurance covering physical loss or damage to all real and personal property, including for any equipment or materials purchased in connection with the Work or supplied by TerraPower. Coverage shall be provided for the Work Product until delivery and acceptance of Work Product by TerraPower. Such insurance shall be on a full replacement cost basis and include perils for earthquake, flood, and wind. Deductibles will be borne by Contractor. Contractor will hold harmless TerraPower, LLC and US SFR Owner, LLC and each of their affiliates, subsidiaries, officers, employees, consultants, and agents, for loss or damage to such property. TerraPower shall approve the Commercial Property insurer and shall have the right to review the Commercial Property insurance policy wording prior to binding or inception of the insurance policy. The policy shall name TerraPower as a loss payee.
15.2. Additional Requirements.
a. All liability policies, with the exception of workers compensation and professional liability, shall include as additional insured: TerraPower, LLC, and US SFR Owner, LLC, and their affiliates, subsidiaries, officers, directors, employees, consultants and agents. Prior to commencing any Work, Contractor shall provide TerraPower with certificate(s) of insurance and a copy of any applicable Additional Insured endorsement evidencing the coverages and terms required by this Section 15. Contractor liability policies shall contain provisions for cross liability and severability of interests of the insureds.
b. Contractor agrees and will cause their insurers to waive all rights of subrogation against TerraPower, LLC and US SFR Owner, LLC and their officers, directors, employees, consultants and agents to the extent covered by insurance required to be provided by Contractor and further waives all rights of recovery which are not covered by insurance because of deductible or self-insurance obligations relating to such insurance.
c. All policies under this Section 15 shall be primary and non-contributory with any similar insurance coverage (primary or excess) maintained by TerraPower.
d. All polices will be written by companies authorized to do business in the location where the Work is performed and have a rating by Best’s Key Rating Guide of at least A-VIII.
e. The insurance requirements contained herein shall not in any manner be deemed to limit or qualify the liability or obligations assumed by Contractor elsewhere in this Agreement.
TerraPower reserves the option to amend the required insurance of this Section 15, including insurance for related agreements required to complete the Work. Any such higher limits shall be identified in the SOW or PO.
15.3. Nuclear Liability.
a. Indemnity. To the extent permitted by law, and notwithstanding Section 14.1 of this Agreement, Contractor shall indemnify, defend, and hold harmless TerraPower from claims for Liability for Nuclear Damages arising from the Work, including but not limited to
Page 29 of SECTIONPAGES 39
damages claimed under the National Nuclear Regulator Act (Act No.47 of 1999), the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No.130 of 1993), or common law, including any law amendatory thereof. Notwithstanding TerraPower’s ownership of Product Material pursuant to subsection 13.1, Contractor and its affiliated entities that are performing HALEU Enrichment Services shall, pursuant to Section 30.(1) of the National Nuclear Regulator Act (Act No.47 of 1999), as the nuclear installation license as that term is defined in be National Nuclear Regulator Act (Act No.47 of 1999), be deemed to be in possession and control of the radioactive material (i.e., HALEU Product Material) that governs the liabilities arising from such radioactive material.
b. Regulatory Requirements. Contractor shall obtain authorizations from the South African Nuclear Energy Corporation Ltd. (“NECSA”) and the Republic of South Africa Department of Mineral Resources and Energy (“DMRE”) as required by the Nuclear Energy Act (Act No. 46 of 1999), National Nuclear Regulator Act (Act No.47 of 1999) (the “South Africa Nuclear Acts”), and regulations implementing the South Africa Nuclear Acts, or any amendatory Act thereof, including Licenses, Certificates, Registrations, or Exemptions, as required to accomplish the Work.
c. Insurance. Contractor shall procure and maintain, or shall cause to be procured and maintained, insurance covering Liability for Nuclear Damage in such form and amount required by the South Africa Nuclear Acts. TerraPower shall be named as an additional insured under the insurance policy. Contractor shall provide evidence of insurance coverage to the TerraPower prior to the start of Work, annually thereafter, and upon request from TerraPower. In addition to insurance required by the South African Nuclear Acts, Contractor shall also maintain additional Nuclear Liability insurance with a limit of not less than $200,000,000 (or, if less, the maximum amount of coverage that is commercially available and approved by TerraPower) covering third-party bodily injury, property damage, environmental clean-up, and other costs and damages arising from the hazardous properties of nuclear material, including during transit.
d. Waiver of Subrogation. Contractor waives and will require its insurers to waive all rights of recovery against TerraPower, LLC and US SFR Owner, LLC and their affiliates, subsidiaries, officers, directors, employees, consultants and agents for Liability for Nuclear Damage arising from the Work. In addition, Contractor waives and will require insurers to waive all rights of recovery against TerraPower, LLC and US SFR Owner, LLC and their affiliates, subsidiaries, officers, directors, employees, consultants and agents for any and all costs or expenses arising out of or in connection with the investigation, defense, and settlement of claims or suits for Liability for Nuclear Damage.
e. Survival. Contractor acknowledges that this Exhibit shall survive any termination, expiration or cancellation of the Agreement, as well as the completion of work under the Agreement, for a period of not less than 30 years following such termination, expiration, cancellation, or completion, and shall apply notwithstanding any other provision of this Agreement or any other contract between the Parties.
f. Definitions.
i. Liability for Nuclear Damage means any liability for Nuclear Damage (as such term is defined in Chapter 1, Section 1(xv) of the National Nuclear Regulator Act) of any kind, whether based on contract, warranty, indemnity, tort (including negligence of whatever degree), strict liability, or otherwise. Contractor shall indemnify TerraPower for TerraPower’s liabilities notwithstanding the exceptions to Nuclear Liability in Chapter 4, Sections 30(5), 30(6), 30(7), 30(8), 30(9), and 32(1) of the National Nuclear Regulator Act.
Page 30 of SECTIONPAGES 39
16. Force Majeure Event.
16.1. Suspension of Performance.
If a Force Majeure Event occurs, the Nonperforming Party is excused from (i) whatever performance is prevented by the Force Majeure Event to the extent and for the duration so prevented; and (ii) satisfying whatever conditions precedent to the Performing Party’s obligations that cannot be satisfied, to the extent and for the duration they cannot be satisfied due to such Force Majeure Event; provided, that the Nonperforming Party complies in full with its obligations pursuant to this Section 16. Despite the preceding sentence, a Force Majeure Event does not exclude any obligation by either the Performing Party or the Nonperforming Party to make any payment required under this Agreement. In allocating the risk of delay or failure of performance of their respective obligations under this Agreement, the Parties have not taken into account the possible occurrence of any of the events listed in the definition of “Force Majeure Event” or any similar or dissimilar events beyond their control.
16.2. Obligation of the Nonperforming Party.
The Nonperforming Party shall provide the Performing Party with written notice of the Force Majeure Event and a report detailing how its obligation under this Agreement is affected by the Force Majeure Event as promptly as practicable under the circumstances (and in no event later than thirty (30) days of the occurrence of the Force Majeure Event); provided, however, the failure to give such prompt written notice shall not affect the rights of the Nonperforming Party under this Section. During the continuation of the Force Majeure Event, the Nonperforming Party shall exercise diligent efforts to remedy the cause of such Force Majeure Event and mitigate or limit damages to the Performing Party. As soon as commercially reasonable, the Nonperforming Party shall resume its obligations and use diligent efforts to make up any lost time.
16.3. Right of the Performing Party.
Notwithstanding Section 6 (Term and Termination; Suspension), if the Performing Party is TerraPower and in the Performing Party’s sole and absolute discretion, it determines that the delay caused by the Force Majeure Event is unacceptable, it may terminate this Agreement at any time after receiving the Nonperforming Party’s notice of the Force Majeure Event.
Page 31 of SECTIONPAGES 39
17. Limitation of Liability
17.1. LIABILITY CAP.
EXCEPT AS EXPRESSLY PERMITTED IN SECTION 6 AND SECTION 11, AND NOTWITHSTANDING ANYTHING TO THE CONTRARY OTHERWISE IN THIS AGREEMENT, THE TOTAL AGGREGATE LIABILITY OF EITHER PARTY (INCLUDING THEIR SUBCONTRACTORS AND VENDORS), WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), WARRANTY, STRICT LIABILITY OR OTHER LEGAL THEORY, ARISING OUT OF OR IN CONNECTION WITH SUPPLY OF THE EQUIPMENT OR THE PERFORMANCE, NON-PERFORMANCE OR BREACH OF THIS AGREEMENT OR ANY OTHER OBLIGATIONS HEREUNDER SHALL IN NO EVENT EXCEED AN AMOUNT EQUAL TO ONE HUNDRED (100%) PERCENT OF THE TOTAL AMOUNTS ACTUALLY PAID TO CONTRACTOR PURSUANT TO THIS AGREEMENT PRECEDING THE EVENT GIVING RISE TO THE CLAIM (SUCH AMOUNT, THE “AGGREGATE LIABILITY CAP”); PROVIDED, THAT CONTRACTOR’S OBLIGATIONS UNDER (W) SECTION 6.4.b SHALL NOT EXCEED AN AMOUNT THAT IS EQUAL TO FIFTEEN PERCENT (15%) OF THE AGGREGATE LIABILITY CAP, (X) SECTIONS 11.5(a.)(i.) AND 11.5(a.)(ii.) SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT THAT IS EQUAL TO FIFTEEN PERCENT (15%) OF THE AGGREGATE LIABILITY CAP, (Y) SECTION 11.5(a.)(iii.) SHALL NOT EXCEED AN AMOUNT THAT IS EQUAL TO FIFTEEN PERCENT (15%) OF THE AGGREGATE LIABILITY CAP, AND (Z) SECTION 6.4.b, AND SECTIONS 11.5(a.)(i.), 11.5(a.)(ii.), AND 11.5(a.)(iii.) SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT THAT IS EQUAL TO TWENTY-FIVE PERCENT (25%) OF THE AGGREGATE LIABILITY CAP; PROVIDED, FURTHER, THE FOLLOWING SHALL BE EXCLUDED FROM ANY SUCH LIMITATIONS OF AGGREGATE LIABILITY: (I) CONTRACTOR’S INDEMNITY OBLIGATIONS UNDER SECTION 14.1(b), (II) GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR ACTUAL FRAUD, (III) LIABILITY FOR VIOLATIONS OF APPLICABLE ENVIRONMENTAL, HEALTH AND SAFETY LAW BY CONTRACTOR; (IV) CLAIMS TO THE EXTENT CONTRACTOR HAS RECEIVED THE PROCEEDS OF INSURANCE WITH RESPECT TO SUCH CLAIMS UNDER THE INSURANCE POLICIES REQUIRED TO BE MAINTAINED BY CONTRACTOR UNDER THIS AGREEMENT; (V) THE COST OF PERFORMING CONTRACTOR’S OBLIGATIONS UNDER SECTION 11 (WARRANTY) (EXCEPT TO THE EXTENT SET FORTH IN THIS SECTION 17.1 WITH SPECIFIC REFERENCE TO ANY OF SECTIONS 11.5.(a.)(i.), 11.5.(a.ii.), OR 11.5.(a.iii.) AND (VI) LIABILITY FOR BREACHES BY CONTRACTOR OF THE INTELLECTUAL PROPERTY AND CONFIDENTIALITY TERMS AND CONDITIONS HEREIN.
17.2. NO LIABILITY FOR CERTAIN DAMAGES; EXCEPTIONS.
EXCEPT AS EXPRESSLY PERMITTED IN SECTION 6 AND SECTION 11, NEITHER PARTY SHALL HAVE ANY LIABILITY WHATSOEVER FOR INDIRECT, CONSEQUENTIAL, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT APPLY TO (I) GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR ACTUAL FRAUD OR (II) LIABILITY FOR BREACHES BY CONTRACTOR OF THE INTELLECTUAL PROPERTY AND CONFIDENTIALITY TERMS AND CONDITIONS HEREIN.
Page 32 of SECTIONPAGES 39
18. Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities.
18.1. Recordkeeping Requirements.
During the Term of this Agreement and for three (3) years after the termination, cancelation, completion or expiration of the “Project Period” pursuant to the Cooperative Agreement, extended for any longer period during which Contractor retains any of TerraPower’s Confidential Information (unless, in any such case, a longer period is otherwise specified by Applicable Law,) (such period, the “Recordkeeping Period”), the Contractor shall maintain complete, accurate, and organized books and records as well as a reasonable accounting and cost tracking system, supporting the fees and expenses charged to TerraPower in connection with the Work.
18.2. Onsite Inspections.
During the Recordkeeping Period, TerraPower, DOE, NRC and the internal and external auditors of TerraPower, DOE or NRC may conduct onsite and/or offsite inspections and audits, at all reasonable times and with advance written notice to Contractor, of the Contractor’s business, operations, books and records, data security reports and systems that relate to the Contractor’s functions, operations and services provided under this Agreement as well as the pricing and fee requirements hereunder for the purpose of confirming compliance with the provisions of this Agreement, verifying payments or requests for payment when costs are the basis of such payment or evaluating the reasonableness of proposed Price adjustments and claims. If TerraPower establishes uniform codes of accounts for the project the subject of this Agreement, Contractor shall use such codes in identifying its records and accounts.
18.3. Entering Contractor Facilities to Verify Compliance.
TerraPower, DOE, NRC and their designees shall have the right, at reasonable times and upon advance notice, to enter the facilities of the Contractor and its sub-tier subcontractors or permitted subcontractors (if any) for the purpose of verifying compliance with the requirements of this Agreement. Verification may include such activities as witnessing operations in progress, witnessing inspections and tests, performing product inspections and tests, reviewing quality assurance documents and records, and performing audits. Contractor agrees to cooperate, and to cause its subcontractors, vendors and suppliers to cooperate, with TerraPower, DOE or NRC, as applicable, with respect to such activities, including by providing reasonable access to facilities, office space, resources, and assistance for the safety and convenience of any representatives or TerraPower, DOE or NRC in the performance of their duties. Upon request by TerraPower, DOE, NRC or any such designee, Contractor shall provide TerraPower, DOE, NRC or such designee with any and all quality assurance information, documents, and records related to this Agreement and the performance of Contractor's obligations under this Agreement.
18.4. Consequence of Failure to Comply.
If any inspection or audit under this Section 18 reveals that the Contractor has failed to comply with its obligations under this Agreement, then: (i) TerraPower shall notify the Contractor of the amount of such unsubstantiated charges or such overcharge and the Contractor shall promptly pay such amount to TerraPower; and (ii) TerraPower may terminate this Agreement if in effect upon written notice to the Contractor, effective as of the date set forth in such termination notice. The Contractor shall cause any of its subcontractors performing any of the Work to provide the same rights to TerraPower as set forth in this Section 18.
18.5. Retention of Records; Notification Prior to Destruction.
Notwithstanding anything to the contrary herein, Contractor shall not, and shall not permit any of its subcontractors, vendors or suppliers to, destroy or otherwise render unavailable or inaccessible any
Page 33 of SECTIONPAGES 39
documentation, books, records or other information, in each case whether in whole or in part, at any time following the expiration of the Recordkeeping Period without providing TerraPower at least ninety (90) days’ advance written notice (and, at any time after such written notice is received, TerraPower and its representatives shall be permitted, during normal business hours, to examine, make copies of and retrieve any such documentation, books, records or other information, and Contractor shall reasonably cooperate in furtherance thereof).
18.6. Electronic Records.
If any records or other documentation to which TerraPower or any other person or entity is granted access pursuant to this Section 18 are maintained in electronic format, Contractor will provide such records and documents in electronic data format that is reasonably acceptable to the recipient. Contractor agrees to cooperate fully with any inspections or audits under this Section 18.
18.7. TerraPower Inspection Rights.
TerraPower reserves the right, but shall not be obligated, to inspect (by any of its representatives) the performance by Contractor of the Work hereunder, including at Contractor’s sites, to:
a. follow the progress of the Work; or
b. exercise, or prepare to exercise, any of its rights to suspend Work pursuant to this Agreement.
Such inspection by TerraPower’s representatives will not be deemed to be supervision by TerraPower, its agents, servants, employees or subcontractors, but will be only for the purpose of ensuring that the Work complies with the terms and purpose of this Agreement. TerraPower may report to Contractor any unsafe or improper conditions or practices observed at any site at which Work occurs for corrective or enforcement action by Contractor. Contractor must provide reasonably sufficient, safe and proper facilities at all times for the inspection of the Work. The applicable TerraPower Representatives shall have free access to the Work and to all parts of Contractor’s premises engaged in the Work at reasonable times upon compliance with Contractor’s internal policies and security measures (in each case, to the extent made reasonably available to TerraPower) relating to site access and access to confidential information and networks of Contractor; provided, that any such access measures are no more stringent than those expressly provided in this Agreement. “Free access” includes, without limiting the generality of the term, the right of such TerraPower representatives to enter the premises of Contractor. Contractor will afford such TerraPower representatives, without charge, such reasonable facilities on Contractor’s premises as are appropriate for such TerraPower representatives to conveniently observe and inspect the Work in progress and will allow such TerraPower Representatives to have such other conveniences as would normally accompany such inspection. Nothing in this Section 18 shall limit any inspection, testing and related rights of TerraPower or its representatives set forth in the SOW applicable to any Work.
18.8. Contractor Assistance.
Contractor understands and acknowledges that as a result of its performance of this Agreement and the special knowledge it possesses, and in order to defend and explain the decisions, procedures and standards applicable to its furnishing or performing the Work, Contractor may be called upon to assist TerraPower in preparation and presentation of information to or before governmental authorities, including making personnel available to testify to factual matters relating to the Work at formal and informal government proceedings, and providing all documents and information reasonably requested by TerraPower, including review and comment to sections prepared by others, and any amendments thereto, to address formal NRC licensing questions on a schedule that supports the Project schedule and licensing support services. Contractor agrees that it will use its good faith and commercially reasonable efforts to assist TerraPower in the preparation of testimony, reports or other documents as may be necessary when requested by Company to provide such assistance. This
Page 34 of SECTIONPAGES 39
obligation to assist will survive the completion, expiration, cancellation or termination of this Agreement.
18.9. Contractor Assistance – DOE Requests.
Without limiting the foregoing subsection 18.8, Contractor acknowledges that TerraPower may receive requests and relevant communications from DOE regarding Contractor’s performance of the Work or Contractor’s obligations under the flowdown provisions set forth in Exhibit B. To the extent TerraPower provides a copy of any such request or communication to Contractor, Contractor shall respond and assist TerraPower in preparing its response (including in each case any oral or written communications and actions required), with all reasonable promptness and thoroughness.
19. Miscellaneous.
19.1. Export Control.
The Contractor acknowledges that performance of this Agreement is subject to compliance with applicable United States laws, regulations, and/or orders, including those that relate to the export of nuclear materials, equipment, software, and technology, such as the U.S. Department of Energy regulations found in 10 CFR. Part 810, the U.S. Nuclear Regulatory Commission regulations in 10 CFR Part 110, and the U.S. Department of Commerce’s Export Administration Regulations (EAR) found in 15 CFR Part 730 et seq., as may be amended (collectively, “Export Control Laws”). The Contractor agrees to comply with all Export Control Laws, including as they are updated or amended.
The Contractor shall not export, re-export, transfer or retransfer, directly or indirectly, any Confidential Information, except as permitted by such Export Control Laws. Notwithstanding anything to the contrary in this Agreement, and in order to ensure compliance with Export Control Laws,
a. Contractor shall not, absent prior written approval by TerraPower use, directly or indirectly, Confidential Information or materials in any application involving a military use, missile technology, nuclear proliferation/nuclear explosive device, chemical and biological weapons proliferation; and,
b. Contractor shall not, absent prior written approval by TerraPower, disclose or furnish Confidential Information or materials that are controlled for export under Export Control Laws to any Foreign Nationals (including any of its employees, agents or other representatives) who are of a different nationality than the Contractor. Contractor further acknowledges and agrees
that it assumes full responsibility for the accuracy of any self-attestation of citizenship or other status provided by its employees, agents and other representatives in connection with any disclosure or furnishing by or on behalf of TerraPower of Confidential Information that is controlled for export under Export Control Laws to such employees, agents and other representatives.
TerraPower and Contractor respectively shall identify and mark (in accordance with TerraPower’s marking requirements) all documents that contain information controlled for export under Export Control Laws, with appropriate and conspicuous export control markings, prior to transmittal to TerraPower or Contractor respectively, as the case may be. TerraPower and Contractor respectively also shall provide to the other party export control classification numbers (ECCNs) for any items, technology, or software, controlled for export under the EAR, that TerraPower or Contractor delivers or transmits to the other party under this Agreement.
Page 35 of SECTIONPAGES 39
The Contractor:
a. recognizes that the products and/or technology transferred to the Contractor, or that the Contractor is given access to, under this Agreement, may remain subject to Export Control Laws and regulations even after they are exported from the United States;
b. certifies that such products or technology will not be diverted, transshipped, re-exported or otherwise transferred in contravention to Export Control Laws, including in particular disclosure or transfer to any Foreign National or country requiring a “specific authorization” (see 10 CFR § 810.7) without prior written approval from the designated U.S. Government department or agency; and,
c. affirms that such products or technology will not be used, directly or indirectly, in any application involving military use, missile technology, nuclear proliferation, nuclear explosive devices, and/or chemical or biological weapons proliferation. The Contractor agrees to comply with all Export Control Laws as they are updated or amended.
In the event of any noncompliance with this subsection 19.1, TerraPower shall be entitled to immediately terminate the Agreement and take such other actions as are permitted or required to be taken under Applicable Law.
19.2. [Reserved.]
19.3. Communication and Protection of Data
Contractor will comply with the methods of communication invoked by TerraPower to transmit and receive information that is deemed to be sensitive or might be subject to subsection 19.1 (Export Control). TerraPower has established a secure electronic information transfer system that will be used by TerraPower, Contractor and any TerraPower-authorized third parties to transfer data and other information. The CA will work with the Contractor to establish the methods and access for secure file transfer.
19.4. Counterparts
This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, and all such counterparts when taken together will be deemed to be but one and the same instrument. Original signatures transmitted by facsimile or electronic mail will be effective to create such counterparts.
19.5. Amendments; Modifications
The Parties may amend this Agreement to modify any terms in this Agreement as well as any terms in the exhibits. No revision, amendment, modification or termination (other than any change or termination by TerraPower expressly permitted herein), or waiver of any provision in this Agreement will be valid unless made in accordance with Section 5 (Changes), or otherwise in writing and signed by both the Contractor and TerraPower, and then only in the specific instance and for the specific purpose given.
19.6. Notices
Any written notice required or permitted under this Agreement will be effective:
a. on the date it is personally delivered (with a signed acknowledgement by the receiving Party memorializing the date of delivery);
b. on the date when the notice is transmitted by electronic facsimile or e-mail (with a confirmation copy to be sent by mail);
c. the day after the notice is sent by overnight air courier service; or,
Page 36 of SECTIONPAGES 39
d. five (5) days after the date of mailing.
Notice to TerraPower must be addressed to: 15800 Northup Way, Bellevue, WA 98008. Notices and communications relating to commercial matters and this Agreement generally must be sent to the CA’s attention. Communications relating to technical matters must be sent to the TR’s attention, with a copy to the CA. Notices and communications to the Contractor must be addressed to the Contractor at the address appearing on the signature page of this Agreement and Contractor shall identify, prior to commencement of the Work, to whom TerraPower should direct notices and communications. TerraPower or the Contractor may change their address only by notice given to the other in the manner set out in this subsection 19.6.
19.7. Binding Effect; Assignment; Security
a. This Agreement will be binding upon and inure to the benefit of the Contractor and TerraPower and their respective permitted successors and assigns. This Agreement, including the rights and obligations hereunder, may not be assigned or transferred by the Contractor without the prior written consent of TerraPower, which consent is within TerraPower’s sole discretion. Contractor agrees that TerraPower may, in its sole discretion, assign all or part of any right, title, and interest in this Agreement, delegate any obligations, or otherwise dispose of or encumber the whole or any part of either its benefits or obligations hereunder to US SFR Owner, LLC (“USO”) or any third-party purchaser of all or part of the Project, or any Natrium reactor owners.
b. Contractor’s obligations under this Agreement will be secured by a pledge of all of the equity interests and rights of any nature whatsoever in respect of the issued and outstanding stock of (a) QLE TP Funding SPE, LLC by its owner Quantum Leap Energy LLC, and (b) K2025267858 (South Africa) (Pty) Ltd. by its owner QLE TP Funding SPE, LLC, all pursuant to that certain Pledge Agreement of even date herewith made by the pledgors party thereto for the benefit of TerraPower, including all amendments, restatements and other modifications thereto.
19.8. Integration; Construction
This Agreement, including the PO, SOW, all Exhibits, and all supplemental or other incorporated terms and conditions and all other documents incorporated by reference into this Agreement, constitutes the complete and integrated agreement of TerraPower and the Contractor and supersedes all prior agreements, written or oral, on the subject matter of this Agreement. This Agreement will be deemed to be drafted by both Parties, and it may not be construed against TerraPower as the drafter of the document.
19.9. Governing Law; Dispute Resolution
a. This Agreement shall be interpreted and construed in accordance with the laws of the State of Washington, without regard to choice of law principles to the contrary. Contractor irrevocably consents to the exclusive jurisdiction of the state and federal courts located in King County, Washington.
b. Each of Contractor and TerraPower shall make good-faith efforts to initially resolve any dispute or claim that arises in connection with this Agreement through discussions and negotiations between the Parties within thirty (30) days. If such efforts fail to result in a mutually agreeable resolution, the Parties shall consider the use of alternative dispute resolution (“ADR”). In the event non-binding mediation or arbitration is agreed upon, the site of the proceedings shall be King County, Washington. The mediator or arbitrator shall allocate costs in accordance with subsection c. below as part of the final resolution or award.
Page 37 of SECTIONPAGES 39
In the event that ADR fails or is not pursued, either Party may bring a claim in the courts specified in subsection a. above; provided, however, this subsection b. is not intended to limit a Party’s right to seek relief directly to the courts specified in subsection (a) above in the event of a breach of Section 12 (Proprietary Rights and Confidentiality) of this Agreement.
c. In the event of any litigation or other dispute arising as a result of or by reason of this Agreement, the prevailing Party in any such litigation or other dispute will be entitled to, in addition to any other damages assessed, its reasonable attorneys' fees, and all other costs and expenses incurred in connection with settling or resolving such dispute. The attorneys' fees that the prevailing Party is entitled to recover will include fees for prosecuting or defending any appeal and will be awarded for any supplemental proceedings until the final judgment is satisfied in full. In addition to the foregoing award of attorneys' fees to the prevailing Party, the prevailing Party in any lawsuit on this Agreement will be entitled to its reasonable attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This attorneys' fees provision is separate and several and will survive the merger of this Agreement into any judgment.
19.10. Severability of Provisions
Any provision in this Agreement that is held to be invalid in any jurisdiction will be, as to that jurisdiction only, invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of those provisions in any other jurisdiction, and to this end the provisions of this Agreement will be severable; provided, that if any such provision is so held to be invalid in any jurisdiction, the Parties shall promptly and with reasonable diligence negotiate in good faith to agree to a replacement provision therefor that provides the closest intended effect of the invalidated provision.
19.11. Waiver; Rights and Remedies
Neither the Contractor's nor TerraPower's failure to exercise any right under this Agreement will constitute a waiver of any term or condition of this Agreement with respect to any other preceding, concurrent, or subsequent breach, nor will it constitute a waiver by TerraPower or the Contractor of its rights at any time thereafter to require exact and strict compliance with any of the terms of this Agreement. The rights and remedies specified in this Agreement are in addition to any other rights or remedies that may be granted by law.
19.12. Order of Precedence
If any term of this Agreement conflicts with any other of its terms, the Parties shall apply the following order of precedence: (a) the terms of the PO; provided, that any term within the PO that purports to change a term or condition of this Agreement shall clearly and specifically indicate that it is modifying a specific term of the Agreement and identify the specific term; (b) the contractual flowdown provisions set forth in Exhibit B, (c) the terms and conditions of this Agreement, as amended pursuant hereto, in reverse chronological order of such amendments; (d) SOW; and (e) documents referenced in the SOW with amendments thereto ranking in precedent in reverse chronological order. TerraPower shall not be bound by, and specifically objects to, any term, condition or other provision contained in or presented on any quotation, invoice, shipping document, acceptance, confirmation, correspondence or other documents from Contractor that purport to amend, modify or supplement this this Agreement.
19.13. Interpretation
In this Agreement, the singular includes the plural and the plural the singular; the terms “including” and “include” will mean “including but not limited to”; and references to a “Section” will mean a
Page 38 of SECTIONPAGES 39
section of this Agreement, unless otherwise expressly stated. All section titles in this Agreement are for convenience or reference purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. The terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms used and not defined herein have the respective meanings given to them under generally accepted accounting principles in effect from time to time in the applicable jurisdiction. Any event, the scheduled occurrence of which would fall on a day that is not a business day, shall be deferred until the next succeeding business day. Reference to any law, permit or contract means such law as in effect from time to time and such permit or contract as may be amended, modified or supplemented from time to time (respectively). The word “or” shall not be exclusive. The Parties hereto have participated jointly in the negotiation and drafting of this Agreement, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party by virtue of the authorship of this Agreement shall not apply to the construction and interpretation hereof.
19.14. Independent Contractor
TerraPower retains the Contractor only for the purposes and to the extent set forth in this Agreement, and the Contractor's relation to TerraPower during the term of this Agreement is that of an independent contractor and not an employee. The Contractor will control the methods, details, and means in which the Work is performed. Notwithstanding the foregoing, TerraPower retains the right to review and provide oversight of the performance of the Work so as to ensure that such Work conforms to the requirements of this Agreement.
19.15. Survival
Obligations under this Agreement of a continuing nature, including without limitation subsections 6.3–6.4 (Term and Termination; Suspension), (if applicable) subsections 7.3.3(a)–(b) (Reimbursable Costs), Section 9 (Competitors; Non-Solicitation; Publicity) Section 11 (Warranty; Delay and Performance Remedies), Section 12 (Proprietary Rights and Confidentiality), Section 14 (Indemnity), Section 15 (Insurance), Section 17 (Limitation of Liability), Section 18 (Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities) and subsection 19.9 (Governing Law; Dispute Resolution), shall survive the completion, termination or cancellation of this Agreement.
19.16. Nuclear Liability
TerraPower shall use its commercially reasonable efforts to, or to cause applicable third parties to (i) maintain financial protection and an indemnification agreement as required by the Price-Anderson Act and 10 CFR Part 140, under which Contractor and its subcontractors shall be included as insureds, and (ii) obtain and maintain nuclear property damage insurance to the extent required under 10 CFR 50.54(w) to cover applicable onsite property, and waive any right of recovery and any rights of subrogation against Contractor and it subcontractors for any damage to applicable onsite property resulting from a nuclear incident.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS
Page 39 of SECTIONPAGES 39
IN WITNESS WHEREOF, the Parties have executed or caused their respective duly authorized officer to execute this Agreement as of the Effective Date.
ASP Isotopes Inc. TerraPower, LLC
By: /s/ Paul Mann By: /s/ Jeff Miller
Name: Paul Mann Name: Jeff Miller
Title: CEO Title: Vice President
Address: 601 Pennsylvania Avenue NW Address: 15800 Northup Way
South Building, Suite 900 Bellevue, Washington 98008
Washington, D.C. 20004
HALEU LONG-TERM SUPPLY AGREEMENT
BY AND BETWEEN
TERRAPOWER, llc
AND
ASP ISOTOPES INC.
DATED AS OF
MAY 16, 2025
TABLE OF CONTENTS
|
|
|
1. |
Definitions. |
1 |
2. |
Work Authorization - Purchase Order. |
7 |
2.1. |
Issuance of Purchase Order. |
7 |
2.2. |
Base Line Item. |
7 |
2.3. |
[Reserved]. |
7 |
2.4. |
Price; Price Basis. |
7 |
2.5. |
Quantity; Delivery Quantity Annual Estimate; Committed Quantity. |
7 |
2.6. |
Additional Capacity; Enrichment of Tails Material. |
8 |
3. |
Performance of the Work. |
9 |
3.1. |
Statement of Work Contents. |
9 |
3.2. |
Compliance with the Order, Purchase Order, and Statement of Work. |
9 |
3.3. |
Purchase Order to Authorize Work. |
10 |
3.4. |
Use of Subcontractors. |
10 |
3.5. |
Submittals. |
10 |
3.6. |
Acceptance. |
10 |
3.7. |
Contractor Requests. |
10 |
4. |
Representations, Certifications. |
11 |
4.1. |
[Reserved.] |
11 |
4.2. |
Parties’ Authority and Capacity to Contract. |
11 |
4.3. |
Contractor Authority and Capacity to Contract. |
11 |
5. |
Changes. |
13 |
5.1. |
TerraPower Changes. |
13 |
5.2. |
Contractor Identified Change Conditions. |
13 |
5.3. |
Change Conditions – Equitable Adjustments. |
13 |
5.4. |
Content of Change Requests. |
14 |
|
|
|
5.5. |
Change Requests – Effectiveness. |
14 |
6. |
Term and Termination; Suspension. |
14 |
6.1. |
Term. |
14 |
6.2. |
Breach; Default. |
14 |
6.3. |
Convenience. |
16 |
6.4. |
Effect of Termination. |
16 |
6.5. |
Suspension, Shipment to Storage. |
17 |
7. |
Compensation/Payment/Project Controls. |
18 |
7.1. |
Compensation. |
18 |
7.2. |
[Reserved]. |
19 |
7.3. |
[Reserved]. |
19 |
7.4. |
Firm Fixed Price Basis Invoice and Project Control. |
20 |
8. |
Taxes; [Reserved]. |
20 |
8.1. |
Co-Employment. |
20 |
8.2. |
Compliance with Tax Laws. |
20 |
8.3. |
Tax Exemptions; Cooperation. |
21 |
8.4. |
Location of Performance of Work. |
21 |
8.5. |
[Reserved]. |
21 |
9. |
Competitors; Non-Solicitation; Publicity. |
21 |
9.1. |
Prohibition on Interference with TerraPower Activities. |
21 |
9.2. |
Prohibition on Disclosure of Deliverables or Confidential Information. |
21 |
9.3. |
Non-solicitation. |
21 |
9.4. |
Use of TerraPower Name or Logo. |
21 |
10. |
Quality Assurance; Environmental, Health & Safety. |
22 |
10.1. |
Quality Assurance and Environmental Health & Safety Requirements. |
22 |
10.2. |
Incorporation of Quality Assurance and Environmental Health & Safety Requirements Into Subcontracts. |
22 |
|
|
|
10.3. |
Hold Points and Stop Work. |
22 |
11. |
Warranty; Delay and Performance Remedies. |
22 |
11.1. |
Compliance with Agreement and Purchase Order; Duration. |
22 |
11.2. |
TerraPower Testing. |
23 |
11.3. |
TerraPower Right to Remedy Contractor Failure to Meet Warranties. |
23 |
11.4. |
Warranty Beneficiaries; Assignment. |
23 |
11.5. |
Liquidated Damages. |
24 |
12. |
Proprietary Rights and Confidentiality. |
24 |
12.1. |
Background and Foreground Intellectual Property. |
24 |
12.2. |
[Reserved]. |
24 |
12.3. |
[Reserved]. |
25 |
12.4. |
Compliance with Confidential Information Obligations. |
25 |
12.5. |
Exclusions from Confidentiality Obligations. |
25 |
12.6. |
Ownership of Confidential Information. |
25 |
12.7. |
Markings. |
25 |
12.8. |
Injunctive Relief. |
26 |
12.9. |
Use of Confidential Information. |
26 |
12.10. |
Statutory Protections. |
26 |
12.11. |
[Reserved]. |
26 |
12.12. |
Ownership of Patentable Inventions and Contractor Support. |
26 |
13. |
Title; Risk of Loss; TerraPower-Provided Equipment |
27 |
13.1. |
Title, Risk of Loss. |
27 |
13.2. |
TerraPower-Provided Equipment. |
27 |
14. |
Indemnification. |
27 |
14.1. |
Indemnification by Contractor. |
27 |
14.2. |
Notification, Rights, and Cooperation. |
28 |
14.3. |
Investigations. |
28 |
|
|
|
14.4. |
Indemnification by TerraPower. |
29 |
15. |
Insurance. |
29 |
15.1. |
Coverage Requirements. |
29 |
15.2. |
Additional Requirements. |
30 |
15.3. |
Nuclear Liability. |
31 |
16. |
Force Majeure Event. |
32 |
16.1. |
Suspension of Performance. |
32 |
16.2. |
Obligation of the Nonperforming Party. |
32 |
16.3. |
Right of the Performing Party. |
32 |
17. |
Limitation of Liability |
33 |
17.1. |
LIABILITY CAP. |
33 |
17.2. |
NO LIABILITY FOR CERTAIN DAMAGES; EXCEPTIONS. |
33 |
18. |
Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities. |
34 |
18.1. |
Recordkeeping Requirements. |
34 |
18.2. |
Onsite Inspections. |
34 |
18.3. |
Entering Contractor Facilities to Verify Compliance. |
34 |
18.4. |
Consequence of Failure to Comply. |
34 |
18.5. |
Retention of Records; Notification Prior to Destruction. |
35 |
18.6. |
Electronic Records. |
35 |
18.7. |
TerraPower Inspection Rights. |
35 |
18.8. |
Contractor Assistance. |
35 |
18.9. |
[Reserved]. |
36 |
19. |
Miscellaneous. |
36 |
19.1. |
Export Control. |
36 |
19.2. |
[Reserved]. |
37 |
19.3. |
Communication and Protection of Data |
37 |
|
|
|
19.4. |
Counterparts |
37 |
19.5. |
Amendments; Modifications |
37 |
19.6. |
Notices |
37 |
19.7. |
Binding Effect; Assignment; Security |
38 |
19.8. |
Integration; Construction |
38 |
19.9. |
Governing Law; Dispute Resolution |
38 |
19.10. |
Severability of Provisions |
39 |
19.11. |
Waiver; Rights and Remedies |
39 |
19.12. |
Order of Precedence |
39 |
19.13. |
Interpretation |
40 |
19.14. |
Independent Contractor |
40 |
19.15. |
Survival |
40 |
19.16. |
Nuclear Liability |
40 |
Exhibit A: Statement of Work
Exhibit B: Form of Order
HALEU Long-Term Supply Agreement
This HALEU Long-Term Supply Agreement (this “Agreement”), effective as of May 16, 2025 (“Effective Date”) is made and entered into by and between TerraPower, LLC, a Delaware limited liability company, on behalf of itself and US SFR Owner, LLC, a Delaware limited liability company (collectively, “TerraPower”), and ASP Isotopes Inc., a Delaware corporation (“Contractor”) (each of TerraPower and Contractor a “Party” and collectively “the Parties”). The Parties agree as follows:
1. Definitions.
For purposes of this Agreement, the following terms shall have the meanings assigned to them below:
“Additional Commercial Supply” has the meaning given to it in subsection 2.6.b.ii (Additional Capacity).
“Agreement” means this HALEU Long-Term Supply Agreement and any schedules, attachments, annexes and exhibits hereto (including the Statement of Work and any attachments thereto), the Purchase Order(s) and any schedules, attachments, annexes and exhibits thereto and any modifications agreed to in writing by the Parties in accordance with the terms set forth herein.
“Applicable Laws” means all laws, ordinances, rules, regulations, orders, licenses, permits and other requirements, now or hereafter in effect, of any governmental or regulatory authority applicable to a Party.
“Assay” means the total weight of 235U isotope divided by the total weight of all uranium isotopes expressed as weight percent (w/o).
“Background Intellectual Property” means any Intellectual Property, that is owned (or sub-licensable by a Party) before, or created independently of, performance of the Work.
“Change Condition” means any of the following circumstances:
i. Any change required by TerraPower pursuant to subsection 5.1, except to the extent such change arises from the acts or omissions of Contractor; provided, no Work performed on a Firm Fixed Price Basis shall be eligible for any adjustment to compensation due to any circumstances described in this clause (i) except to the extent TerraPower required such change pursuant to subsection 5.1 materially modifies the schedule for performance of the Work or adds material Submittals, Deliverables, or Supplies to be provided hereunder that has not been at such time agreed in a Statement of Work;
ii. Any change in Applicable Laws that was not foreseeable as of the Effective Date of this Agreement or the date of the relevant SOW that results, or is reasonably likely to result, in a material adverse effect on the Work, provided, that Contractor has used its reasonably diligent efforts to identify and describe in reasonable detail such change in Applicable Laws and its effects on the Project or performance of Work hereunder as early as possible to TerraPower (including in advance of its effectiveness) and to mitigate any such adverse effects;
iii. Any change in the cost or availability of Feedstock or energy (vs. the costs of Feedstock and energy set forth in the formula for the calculation of the Price per MTU set forth in Section 2.4); or
iv. Any other circumstances expressly described in this Agreement or a Statement of Work as enabling Contractor to submit an SCR for an adjustment; provided, that, except as set forth herein (including in clause (iii) above), under no circumstances shall any changes in the cost or availability of underlying supplies, commodities, materials, labor or other inputs give rise to or be considered in connection with any Change Condition with respect to Work performed on a Firm Fixed Price Basis.
“Co-Employee” has the meaning given in subsection 14.1 (Indemnification).
“Contractor Affiliates” means ASP Isotopes Inc. and any current or future subsidiaries of ASP Isotopes Inc. or Contractor.
Page 1 of SECTIONPAGES 40
“Committed Quantity” has the meaning given in subsection 2.5.c. (Quantity; Delivery Quantity Annual Estimate; Committed Quantity).
“Confidential Information” means all designs, drawings, diagrams, plans, reports, equipment, specifications, operations, products, services, research, prices, pricing policies, processes and inventions, samples, prototypes, software, source code, object code, passwords, customer lists, customer documents and requirements, financial information, employee lists, business strategies and business plans and information and marketing and advertising information made known to the receiving Party by the disclosing Party or any of the disclosing Party’s officers, managers, independent contractors or employees, or learned by the Receiving Party from the disclosing Party or any of the disclosing Party’s officers, managers, independent contractors or employees during the Term, or developed by pursuant to this Agreement, whether or not marked or identified as confidential or proprietary. Confidential Information includes written, graphic and electronically or magnetically recorded information furnished by disclosing Party for the receiving Party’s use, as well as archival copies maintained by the receiving Party under this Agreement. Unless otherwise identified in writing by the Parties, Deliverables are considered Confidential Information.
“Consignee” (the recipient) and “Consignor” (the sender) mean Contractor or TerraPower, as the case may be, or their authorized representatives.
“Contract Administrator” or “CA” means TerraPower’s contract administrator and sole point-of-contact who will interface directly with the Contractor on commercial matters related to this Agreement. TerraPower may change the CA upon written notice delivered to Contractor.
“Contractor Indemnified Person” has the meaning given in subsection 14.4 (Indemnification by TerraPower).
“Control” means the holding or possession of the beneficial interest in, or the ability to exercise the voting rights applicable to, shares or other securities in any corporation (whether directly or indirectly) which confer in aggregate on the holders thereof fifty percent (50%) or more of the total voting rights exercisable in relation to all, or substantially all, matters relating to that corporation.
“Correction” means the elimination of a defect.
“Deconverter” means the uranium deconversion and metallization facility operated by Framatome Inc., at Richland, Washington, United States of America.
“Deliverables” means Product Material, Supplies, and Submittals delivered by Contractor to TerraPower.
“Delivery Quantity” means the mutually agreed quantities of Product Material to be purchased and received by TerraPower in accordance with the schedule set forth in the SOW, to be specified in an Order and memorialized in a Purchase Order, and as may be increased or decreased pursuant to the express terms of this Agreement.
“Delivery Quantity Annual Estimate” means the established annual quantities of Product Material estimated by TerraPower to be purchased and received in a Delivery Year in accordance with the schedule set forth in the SOW, and as may be increased or decreased pursuant to the express terms of this Agreement.
“Delivery Year” means the relevant Year set forth in the SOW.
“EH&S Requirements” has the meaning given in Section 10 (Quality Assurance; Environmental, Health & Safety).
“Enriched Uranium Product” or “EUP” means uranium having an Assay higher than that of the Feed Material.
“Enrichment Service” means the production from Feed Material of: (i) Product Material and (ii) Tails Material and is expressed in Separative Work Units (SWU).
“Estimated PO Total Cost” has the meaning given in subsection 2.4 (if appliable).
Page 2 of SECTIONPAGES 40
“Export Control Laws” has the meaning given in subsection 19.1(Export Control).
“Feed Material” means any form of uranium required for the Enrichment Service, including natural uranium as a metal, enriched uranium hexafluoride, or natural uranium in the form of uranium hexafluoride (UF6) supplied for the enrichment process which shall conform to the definition of “commercial natural uranium hexafluoride” in the latest version of ASTM International’s “Standard Specification for Uranium Hexafluoride for Enrichment,” Designation: C787. No re-processed uranium shall be used as part of the Feed Material.
“Feedstock” means Feed Material that may, at Contractor’s discretion, be Enriched Uranium Product.
“Formation Event” has the meaning given to it in subsection 2.6.b.i (Additional Capacity).
“Firm Fixed Price Basis” or “FFP” means for any line item so identified the Work shall be performed for a fixed price as identified in the Purchase Order, subject to adjustment only as provided in Section 5 (Changes) or as otherwise mutually agreed by the Parties in writing.
“Foreground Intellectual Property” means any Intellectual Property, created by a Party in in its performance of this Agreement.
“Foreign National” means any person who is neither a U.S. citizen or U.S. national nor a “Lawful Permanent Resident” (Green Card holder, 8 U.S.C. § 1101(a)(20)) or other “Protected Individual” under the Immigration and Naturalization Act (8 U.S.C. §1324b(a)(3)) designated an asylee, refugee, or a temporary resident under amnesty provisions. A Foreign National also means any corporation, business association, partnership or any other entity or group that is not incorporated to do business in the United States.
“Force Majeure Event” means:
For the period beginning on the Effective Date and ending on September 30, 2025, an act or event, not reasonably foreseeable with the exercise of due diligence, that (a) prevents a Party (the “Nonperforming Party”) in whole or in part from performing its obligations under this Agreement or satisfying any conditions to the Performing Party’s obligations under this Agreement; (b) is beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party, and (c) is not avoidable or able to be overcome by the Nonperforming Party by the exercise of due diligence. Notwithstanding the generality of the foregoing definition, Force Majeure Events during such period shall specifically include the following acts, events or circumstances: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or actions; (e) embargoes or blockades in effect on or after the date of this Agreement; (f) national or regional emergency; (g) strikes, labor stoppages or slowdowns, or other industrial disturbances; (h) failure of Contractor’s research and development activities to demonstrate the capabilities of Contractor’s designs, structures, systems, components, and processes necessary to enrich uranium to HALEU Assay; (i) Contractor’s inability to establish business relationships with third parties that are necessary to enable construction of its Enrichment Service facility, including, but not limited to, the South African Nuclear Energy Corporation; (j) Contractor’s inability to establish Feed Material supplies; and, (k) other events beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party.
For the period beginning on October 1, 2025, an act or event, not reasonably foreseeable with the exercise of due diligence, that (a) prevents a Party (the “Nonperforming Party”) in whole or in part from performing its obligations under this Agreement or satisfying any conditions to the Performing Party’s obligations under this Agreement; (b) is beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party, and (c) is not avoidable or able to be overcome by the Nonperforming Party by the exercise of due diligence. Force Majeure Events include: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or actions; (e) embargoes or blockades in effect on or after the date of this Agreement; (f) national or regional emergency; (g) strikes, labor
Page 3 of SECTIONPAGES 40
stoppages or slowdowns, or other industrial disturbances; and (h) other events beyond the control of and not the result of the fault (including negligence) of the Nonperforming Party. Despite the preceding definition of a Force Majeure Event, a Force Majeure Event excludes (i) economic hardship, changes in market conditions, or insufficiency of funds; (ii) changes in the cost or availability of underlying supplies, commodities, materials, labor or other inputs; (iii) facts, events or circumstances arising due to the COVID-19 pandemic and outbreaks, except (and subject to the other criteria in this definition of “Force Majeure Event”) to the extent any governmental order, law or action announced and promulgated after the Effective Date materially and adversely affects the performance of the Work. The “Performing Party” means the Party who is unaffected by a Force Majeure Event and whose performance is in accordance with this Agreement.
“High Assay Low Enriched Uranium” or “HALEU” means uranium enriched to 19.75% in the isotope 235U.
“Intellectual Property” means all intellectual property rights of any kind, worldwide, including without limitation, utility patents, design patents, and all applications for the foregoing; registered and unregistered trademarks, service marks, trade dress, logos, domain names, and other source identifiers, and all applications and registrations for the foregoing, and all goodwill associated with the foregoing; published and unpublished works of authorship, registered and unregistered copyrights, database rights, moral rights, and all registrations and applications for the foregoing; software, firmware, computer programs, source code, object code, logic, models, diagrams, technology, and documentation; and trade secrets, know-how, ideas, inventions, improvements, data, and other confidential and proprietary information, in whatever form.
“Kemmerer Power Station Unit 1 First Fuel Load Contract” has the meaning given in subsection 2.6.a. (Additional Capacity).
“Kilograms Uranium” or “kgU” means the quantity of HALEU measured in kilograms.
“MTU” means Metric Tons Uranium.
“New HALEU Project Company” means any Person whose securities have been acquired, directly or indirectly, in whole or in part, by Contractor or any affiliate of Contractor (including a Person formed by Contractor or any affiliate of Contractor, with or without any third party), in each case, after the Effective Date, with the objective of producing HALEU on a commercial scale.
“Nuclear Incident” shall have the meaning given in the United States Atomic Energy Act of 1954, as amended, 42 U.S.C. §§ 2210, et seq., as amended.
“Nuclear Regulatory Commission” or “NRC” means the United States Nuclear Regulatory Commission.
“Nuclear Risk” means all risks arising out of or resulting from a Nuclear Incident.
“Order” means a request by TerraPower placed with Contractor to purchase, and for Contractor to sell, a specified quantity of Product Material to be delivered on a date certain at a Price certain for Product Material, such Order to be requested in the form found at Exhibit B.
“Parallel HALEU Project Company” means a Person established for TerraPower (or any of its affiliates) to be used, in TerraPower’s discretion, to fund, invest in or otherwise participate in any opportunity to obtain a supply of HALEU in connection with a Formation Event, as further described in subsection 2.6.b.i.
“Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, or a government or any agency or political subdivision thereof.
“Price” means the total compensation to be paid to Contractor on a Firm Fixed Price Basis for the Work as set forth in the Statement of Work and the applicable Purchase Order.
“Price Quote” means Contractor’s price for fulfillment of an Order, which shall be on Firm Fixed Price Basis.
Page 4 of SECTIONPAGES 40
“Price Anderson Act” means United States Public Law 85-256, Section 170 of the United States Atomic Energy Act of 1954, as amended, 42 U.S.C. §§ 2210, et seq., as amended, and related provisions of Section 11 of the United States Atomic Energy Act.
“Product Material” means Enriched Uranium Product in the form of uranium hexafluoride (UF6) resulting from the enrichment process which shall conform to the definition of “enriched commercial grade UF6” in the latest version of ASTM International’s “Standard Specification for Uranium Hexafluoride Enriched to Less Than 20% 235U,” Designation: C996.
“Project” means the Natrium sodium reactor technology facility that is in development by TerraPower (together with all auxiliary equipment, ancillary and associated facilities and equipment, electrical transformers, interconnection and metering facilities and all other improvements and assets and rights related thereto), to be owned and operated by US SFR Owner, LLC, which facility is also known as Kemmerer Power Station, Unit 1.
“Prudent Industry Practices” means that degree of skill and judgment and the utilization of practices, methods, and techniques and standards that are generally expected of skilled and experienced engineering firms by a significant portion of the nuclear power industry in the United States of America in light of the facts known or ought to have been known at the time the decision was made, could reasonably have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, safety, reliability, expedition, and Applicable Laws. Prudent Industry Practice is not limited to the optimum practice, method or act to the exclusion of all others, but rather to a spectrum of reasonable and prudent practices, methods, standards and procedures.
“Purchase Order” or “PO” means the purchase order document included with this Agreement, including the signature page, all parts referenced on the signature page and all attachments thereto, and a Contractor-completed and countersigned Order, each of which is incorporated therein, as may be amended from time to time.
“QA Requirements” has the meaning given in Section 10 (Quality Assurance; Environmental, Health & Safety).
“Quantum Enrichment Facility(-ies)” has the meaning given in subsection 2.6.b (Additional Capacity).
“Quantum Enrichment Product Material” has the meaning given in subsection 2.6.b (Additional Capacity).
“Recordkeeping Period” has the meaning given in subsection 18.1 (Recordkeeping Requirements).
“Sanctions” means any economic or trade sanctions or restrictive measures enacted, administered, imposed or enforced by a Sanctions Authority.
“Sanctions Authority” means the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the European Union, His Majesty’s Treasury of the United Kingdom, or any other relevant sanctions authority.
“Separative Work Unit” or “SWU” means the unit of measure of the work required to enrich Feed Material. The quantity of SWU is calculated in accordance with the formula in the SOW.
“Services” means the services to be provided by the Contractor to TerraPower under this Agreement, as authorized by the PO and detailed in the Statement of Work, including, as applicable, supplying the Deliverables.
“Specification” means the formal applicable technical description, requirements and acceptance criteria as defined and/or referenced in a Statement of Work.
Page 5 of SECTIONPAGES 40
“Statement of Work” or “SOW” means the description of requirements pertaining to the Work, including Services, Supplies, and Submittals, based on the form and/or requirements attached hereto as Exhibit A, and including any documents incorporated therein by reference.
“Sublicence Agreement” has the meaning given in subsection12.1 (Background and Foreground Intellectual Property).
“Submittals” means the documentation and data, furnished by the Contractor to TerraPower under this Agreement associated with the Product Material, as specifically identified in the applicable SOW and/or PO.
“Supplier” means, as the context indicates, Contractor.
“Supplier Coordination Request” or “SCR” means a Contractor coordination request submitted by Contractor to TerraPower for disposition and response. SCR may be used to request information or clarification, request deviation from a contract requirement and/or a technical requirement, or to disposition a Contractor non-conformance to technical requirements.
“Supplier Project Engineer” or “SPE” means TerraPower’s liaison between Contractor and TerraPower stakeholders. The SPE is Contractor’s main point of contact. The SPE role includes responsibility for the coordination and approvals of supplier documents, conducting regularly scheduled supplier progress meetings, overseeing supplier performance, as well as facilitating efforts to resolve technical issues. The SPE works in conjunction with the CA and TR throughout the Term. TerraPower may change the SPE upon written notice delivered to Contractor from time to time.
“Supplies” means the end items or products, including supporting related documentation and data, specified in the applicable Purchase Order(s) and Statement(s) of Work, and furnished by the Contractor to TerraPower under this Agreement. Supplies may be referred to as “products” in the applicable PO or SOW.
“Suspension” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Suspension Notice” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Suspension Period” has the meaning given in subsection 6.5 (Suspension, Shipment to Storage).
“Tails Material” means uranium in the form of uranium hexafluoride (UF6) which, as a result of the Enrichment Service, has an Assay lower than that produced from Feed Material by Contractor.
“Technical Representative” or “TR” means TerraPower’s point of contact who will interface with the Contractor on technical matters related to the Agreement. TerraPower may change the TR upon written notice delivered to Contractor from time to time.
“Term” means the period described in Section 6.1 beginning from the Effective Date of this Agreement and expiring on the completion/delivery date(s) for all Deliverables as set forth in a PO or SOW, unless extended or earlier terminated in accordance with this Agreement.
“TerraPower Indemnified Person” has the meaning given in subsection 14.1 (Indemnification by Contractor).
“US SFR Owner” or USO” means US SFR Owner, LLC, a wholly owned subsidiary of TerraPower, LLC; US SFR Owner is the Project owner.
“Warranty Period” has the meaning given in subsection 11.1 (Compliance with Agreement and Purchase Order; Duration).
“Work” means all obligations of Contractor under this Agreement for the production and delivery of the Services and Deliverables, and satisfaction of all warranty obligations, all in accordance with the requirements of this Agreement.
“Work Product” means all Deliverables, including any documents, reports, materials, techniques, ideas, algorithms, software, source code, object code, specifications, plans, drawings, designs, inventions, data,
Page 6 of SECTIONPAGES 40
information and other items or materials that are authored, conceived, created, or developed, by or on behalf of Contractor in connection with the Work, together with any and all Intellectual Property rights (other than Contractor Background Intellectual Property) in the foregoing.
2. Work Authorization - Purchase Order.
2.1. Issuance of Purchase Order.
Work shall be authorized only by issuance of the PO, which may be amended, and that shall be performed during the Term. The cumulative Price for an Order may not exceed the Price Quote without prior written approval from TerraPower. Contractor acknowledges and agrees that TerraPower will not be liable to pay any amounts in excess of the Price Quote unless the Price Quote has been increased pursuant to Section 5 (Changes).
2.2. Base Line Item.
The PO and SOW identify Work that is delineated by line item as the Base Line Item. Issuance of the PO shall authorize Contractor to perform the Work identified as Base Line Item only.
2.3. [Reserved].
2.4. Price; Price Basis.
a. The PO shall specify its Price basis as Firm Fixed Price. The Price per MTU (P at the applicable Product Material Delivery Date in the formula below) will be determined by adjusting the base price (PBase) in accordance with the following formula:
P = PBase x (IPDDelivery/IPD2024)
Where:
PBase = PFeedstock + PEnrichment; and,
PFeedstock = $20,000 / kgU; and,
PEnrichment = $5,000 / kgU; and,
IPDDelivery = the then-most recently reported Implicit Price Deflator for Gross Domestic Product as determined quarterly and reported monthly by the United States Department of Commerce Bureau of Economic Analysis in effect at the applicable Product Material Delivery Date; and
IPD2024 = the Implicit Price Deflator for United States Gross Domestic Product for the 4th quarter of 2024.
The Price includes the cost of withdrawing (including weighing, sampling, and assaying) and packaging of Product Material into cylinders provided by TerraPower. The Price does not include any repackaging required as a consequence of no nuclear regulatory licensing approval for storage and transportation being available on the Delivery Date.
Tails Assay shall be 0.711% 235U unless mutually agreed by the Parties. Contractor shall re-enrich the Tails Material to reduce Feedstock procurement costs. The Parties may also agree that Contractor would place the Tails Material in the market and agree on a profit share from such sales.
b. In the event that Contractor’s Price Quote is five percent (5%) greater than or less than the Price determined using the formula in Section 2.4.a, above, Contractor shall submit to TerraPower a Change Request in accordance with Section 5.2.b.
2.5. Quantity; Delivery Quantity Annual Estimate; Committed Quantity.
Page 7 of SECTIONPAGES 40
a. The quantity of HALEU Product Material that Contractor shall sell, and TerraPower shall purchase, during the Term is one hundred fifty (150) MTU, estimated at fifteen (15) MTU per year. The total quantity shall be delivered to TerraPower during the period beginning on or after January 1, 2028 and ending not later than December 31, 2037, subject to TerraPower’s notice of its actual purchases pursuant to Section 2.5.c.
b. Beginning on January 15, 2026, and annually on each January 15 thereafter during the Term, TerraPower shall provide to Contractor its Delivery Quantity Annual Estimate.
c. Not later than one hundred twenty (120) days) prior to the date that TerraPower requires delivery of HALEU Product Material, TerraPower shall provide written notice of the actual quantity of HALEU Product Material that it is purchasing on the Delivery Date. Such notice shall be provided pursuant to TerraPower’s transmittal of an Order, Contractor’s completed Order, and TerraPower’s PO (the “Committed Quantity”), which, upon Contractor’s completed Order, and TerraPower’s issuance of a PO, shall become the Delivery Quantity for that year.
d. TerraPower shall have the right to assign its purchase obligations to its Natrium Demonstration Reactor (also known as Kemmerer Power Station Unit 1) owner and operator, and to its Natrium commercial reactor customers, and to resell excess Product Material.
2.6. Additional Capacity.
a. Contractor will supply TerraPower with Product Material for its first fuel load for TerraPower’s Kemmerer Power Station Unit 1 pursuant to that certain Natrium Project Procurement Terms and Conditions - Enrichment Services by and between TerraPower, LLC, and ASP Isotopes Inc., dated as of even date herewith (the “Kemmerer Power Station Unit 1 First Fuel Load Contract”), from a facility at Pelindaba, Republic of South Africa, produced using its proprietary technology.
b. In the event that Contactor or any Contractor Affiliate, concurrently or subsequently with execution of Contractor’s performance of the Kemmerer Power Station Unit 1 First Fuel Load Contract:
i. causes the formation of any New HALEU Project Company or enters into any agreements with respect to the formation of any New HALEU Project Company outside South Africa, pursuant to which any third party receives or is expected to receive the right to commercial supply of HALEU produced by such New HALEU Project Company (or any other material benefits) (a “Formation Event”), Contractor shall:
(A) provide at least twenty (20) business days’ prior written notice to TerraPower of the applicable Formation Event, which notice shall include the material terms for the Formation Event as well as the material terms for any related commercial agreements, and
(B) provide TerraPower, or cause TerraPower to be provided, with the opportunity for TerraPower and any of its affiliates to fund, invest in or otherwise participate in a Parallel HALEU Project Company in the same jurisdiction outside South Africa as the New HALEU Project Company with substantially the same rights, benefits and obligations established in favor of the third party involved in such New HALEU Project Company that was the subject of the Formation Event (including with respect to any related commercial
Page 8 of SECTIONPAGES 40
agreements, including regarding supply volumes, schedules, price, and other material terms); or
ii. enters into any agreements with respect to the establishment or use of any uranium enrichment facility designed to produce HALEU outside of South Africa, pursuant to which any third party receives or is expected to receive rights to any commercial supply of HALEU produced by such facility in a jurisdiction outside of South Africa (“Additional Commercial Supply”), Contractor shall:
(A) provide at least twenty (20) business days’ prior written notice to TerraPower with written notice of such Additional Commercial Supply, which notice shall include the material terms for any related commercial agreements (including with respect to supply volumes, schedules, price, and other material terms), and
(B) provide TerraPower, or cause TerraPower to be provided, with the opportunity for TerraPower and any of its affiliates to enter into commercial agreements with Contractor or any Contractor Affiliate with respect to such Additional Commercial Supply, which agreements shall include substantially the same rights, benefits and obligations established in favor of any applicable third party that receives or is expected to receive any rights related to such Additional Commercial Supply.
c. If there is a Formation Event as described in subsection 2.6.b.i, Contractor shall ensure that the governing documents of any Parallel HALEU Project Company shall contain terms substantially the same as those contained in the governing documents of any applicable New HALEU Project Company, except to the extent reasonably necessary or desirable to address specific legal, tax, regulatory or other considerations relevant to TerraPower (or any of its affiliates).
d. If TerraPower (including any of its affiliates) elects, in its sole discretion, to take action with respect to an opportunity provided pursuant to subsection 2.6.b.i or subsection 2.6.b.ii, TerraPower shall notify Contractor of such election, and Contractor shall work with TerraPower in good faith to, as applicable: (i) establish a Parallel HALEU Project Company with TerraPower and enter into any commercial agreements related thereto as described in subsection 2.6.b.i; and (ii) enter into applicable commercial agreements as described in subsection 2.6.b.ii.
e. The rights granted to TerraPower (including its affiliates) under this Section 2.6 may be exercised in TerraPower’s sole discretion. Nothing in this Agreement obligates TerraPower to take any action with respect to an opportunity provided to TerraPower in connection with any Formation Event or Additional Commercial Supply under this Section 2.6.
3. Performance of the Work.
3.1. Statement of Work Contents.
The SOW shall specify the Deliverables, the CA, the TR, the SPE, technical requirements, QA Requirements, EH&S Requirements, schedule, and period of performance (including, as applicable, by identifying separate documents by number and description, which shall be deemed to be incorporated in their entirety within such SOW as though set forth therein).
3.2. Compliance with the Order, Purchase Order, and Statement of Work.
Contractor shall complete the Work in accordance with any deadlines and other scheduling requirements set forth in the applicable Order, PO and SOW. The Contractor shall devote the time, energy, interest, ability and skill that are necessary to satisfactorily perform the Work, including
Page 9 of SECTIONPAGES 40
utilizing personnel of appropriate levels of skill, experience and qualifications (including, as applicable, any professional certifications, licenses and other credentials required by Applicable Laws or any applicable SOW). With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. Contractor shall perform the Work in accordance with Prudent Industry Practices and Applicable Law and in compliance with the material rules, regulations and policies of TerraPower (to the extent made known to Contractor).
3.3. Purchase Order to Authorize Work.
The Contractor shall provide Work for TerraPower as authorized by the PO, including any amendments thereto, according to the terms of this Agreement and the SOW. The CA has the authority to provide written direction on behalf of TerraPower to the Contractor for matters of clarification, provided that any such direction that increases or decreases the Work, schedule, or compensation shall be subject to Section 5 (Changes). The SPE and/or TR will interface with the Contractor concerning technical matters. TerraPower and the Contractor shall, on a regular basis, but not less than monthly, as specified by the CA, SPE, and TR, communicate to discuss the status of the Work (including any changes), cost (as appropriate), schedule and Work performance as outlined in the SOW. Communication may be in the form of in-person meetings, teleconferences and/or written status reports.
3.4. Use of Subcontractors.
The Contractor shall not engage lower-tier Contractors to provide all or any portion of the Work without TerraPower’s written consent (which may be provided in the PO), except for the Contractor’s wholly owned subsidiaries. If the Contractor utilizes the services of permitted lower-tier contractors or acquires any products in order to provide the Work, (i) the Contractor will be solely responsible for the payment to such permitted lower-tier Contractors and for the compliance and conformity with this Agreement of any such services and products and (ii) Contractor shall bind any such lower-tier contractors, suppliers or vendors to the applicable terms and conditions of this Agreement to the portion of the Work subcontracted.
3.5. Submittals.
The Contractor shall deliver Submittals to TerraPower for review, information or approval. Submittals shall be provided via secure electronic information transfer system in accordance with subsection 19.3 (Communication and Protection of Data) and with a separate notification to submittals@terrapower.com, unless otherwise specified by TerraPower in the SOW. Administrative items (i.e., not Confidential Information) may be provided by email to submittals@terrapower.com only. The CA and SOW will provide any specific additional guidance and other submittal methods as required by this Agreement. Contractor shall appropriately mark (in accordance with TerraPower’s marking requirements) all Submittals to allow processing and control of the Submittals, in accordance with this Agreement.
3.6. Acceptance.
The SOW will provide specific guidance regarding data/document Submittals and other Supplies, and their Acceptance, as applicable. All Work performed under this Agreement shall be subject to Acceptance by TerraPower and inspection by TerraPower or its designee in connection therewith. Notwithstanding anything to the contrary herein, under no circumstances shall Acceptance by TerraPower or the performance of any inspection in connection therewith constitute or be deemed a waiver of any rights, remedies or interests of TerraPower in this Agreement, including those pursuant to Section 11 (Warranty; Delay and Performance Remedies).
3.7. Contractor Requests.
Page 10 of SECTIONPAGES 40
The Contractor may request information or contractual direction from TerraPower using an SCR. The CA will make the SCR Form, with instructions, available to the Contractor. The SCR will formally document Contractor requests, and TerraPower’s responses. If the disposition of an SCR requires a change to this Agreement, or to a PO, then the CA will initiate the change in accordance with Section 5 (Changes).
4. Representations, Certifications.
4.1. [Reserved.]
4.2. Parties’ Authority and Capacity to Contract.
Each Party represents and warrants to the other that it has the full right and authority to enter into and to perform its obligations under this Agreement and that its performance of its obligations under this Agreement will not conflict with any other obligation it may have to any third party.
4.3. Contractor Authority and Capacity to Contract.
The Contractor represents and warrants (or certifies, as applicable) to TerraPower, and agrees, that:
a. Contractor
i. is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization;
ii. is duly qualified to do business and is in good standing in each jurisdiction in which its respective ownership or lease of property or the conduct of its business requires such qualification;
iii. has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged; and
b. Contractor
i. and its affiliates and sub-tier contractors, and their respective employees, agents, vendors, consultants or other representatives shall comply with all Applicable Laws, obtain (where required and as specified in the PO and/or SOW), maintain and comply with all authorizations, licenses, professional certifications, permits, and other certifications (provided that such additional regulatory authorizations, licenses and permits in South Africa will be required to enrich uranium) as may be required in connection with the Work and the performance of Contractor's obligations under this Agreement and Contractor shall ensure that the Work and its permitted sub-tier subcontractors comply with all Applicable Laws; and
ii. is aware of, understands and shall comply with, and will ensure that any permitted sub-tier subcontractors are aware of, understand and shall comply with, all applicable U.S. and foreign anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, as such laws may be amended from time to time;
c. Contractor, its affiliates, and their respective employees, agents, vendors, consultants or other representatives
i. have not been excluded, debarred, declared ineligible or suspended from (or proposed for debarment or suspension from) participation in, or is otherwise ineligible to participate in, any Federal program, any transaction with any Federal department or agency or any Federal procurement or non-procurement programs; and
Page 11 of SECTIONPAGES 40
ii. are not the subject of any pending action, suit, claim, investigation or proceeding that could result in the foregoing. Contractor agrees to promptly inform TerraPower in writing of any debarment, exclusion, suspension, conviction, ineligibility or other event addressed by the above with respect to Contractor, its affiliates, and their respective employees, agents, vendors, consultants or other representatives. Should Contractor, its affiliates, or any of their respective employees, agents, vendors, consultants or other representatives become subject to any of the foregoing, upon receipt of such notification, such entity or individual shall immediately become ineligible to perform the services contemplated by this Agreement and TerraPower shall have the right to immediately terminate this Agreement;
d. Contractor is currently, and will remain, in compliance with the regulations of the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce (BIS), the Directorate of Defense Trade Controls of the U.S. Department of States (DDTC), NRC and DOE, and any other applicable governmental requirements administered by governmental authorities with jurisdiction over the Parties to this Agreement relating thereto;
e. Contractor and its principals are not designated on any lists of sanctioned individuals or entities maintained by the United Nations, the United Kingdom, the United States, the European Union, and any other relevant jurisdiction including but not limited to the following lists: the Specially Designated National and Blocked Persons (SDN) List, the Sectoral Sanctions Identifications (SSI) List, or the Foreign Sanctions Evaders (FSE) List, the Non-SDN Communist Chinese Military-Industrial Complex Companies List and any other lists administered by OFAC, as amended from time to time; the U.S. Denied Persons List, the U.S. Entity List, the U.S. Unverified List, and the Military End User List, administered by BIS; the consolidated list of Persons, Groups and Entities Subject to EU Financial Sanctions, as implemented by the EU Common Foreign & Security Policy; and similar lists of restricted parties maintained under applicable law;
f. Contractor and its principals are not organized under the laws of, located or ordinarily resident in, a country or territory subject to comprehensive sanctions (as of the date of this Agreement, Iran, Syria, Cuba, North Korea, the Crimea region of Ukraine, Donetsk and Luhansk)(“Embargoed Territory”);
g. Contractor is not directly or indirectly owned or controlled by any of the foregoing parties described in clauses e and f above, or otherwise the target of sanctions or export control restrictions (collectively “Restricted Parties”);
h. Contractor and its principals are not directly or indirectly acting or purporting to act on behalf of one or more Restricted Parties in performance of the Work under this Agreement;
i. Contractor will not provide to TerraPower any service, good, software or technology under this Agreement that has been sourced, procured, manufactured, produced or transported in or from an Embargoed Territory;
j. [Reserved];
k. [Reserved];
l. [Reserved];
m. [Reserved];
n. Contractor shall ensure that the Work performed by sub-tier subcontractors comply with all requirements set forth in this subsection 4.3, as applicable;
Page 12 of SECTIONPAGES 40
o. Contractor represents and warrants to TerraPower as of the Effective Date and (except as otherwise specified in this clause o below) at all times during the Term that:
i. it has not received notice from any third party alleging that the use of its technology, services, products, Intellectual Property or components thereof as contemplated to be used in the performance of this Agreement infringes, misappropriates or otherwise violates, or requires a license to use, any Intellectual Property of any third party;
ii. it has enforceable written agreements with all of its employees (and shall cause any contractors that are working for it on a contractor basis, as applicable) who receive Confidential Information and/or perform activities under this Agreement that contain confidentiality obligations no less restrictive than those in this Agreement and that assign ownership of all Intellectual Property rights created in the course of their employment to Contractor; and
iii. the use, commercialization or other exploitation of its technology, services, Work Product, Intellectual Property and components thereof as contemplated to be used, provided, commercialized, and/or otherwise exploited in connection with or as permitted by this Agreement does not infringe, misappropriate or otherwise violate any Intellectual Property right of any third party;
p. In the event of any noncompliance with, or breach of, or inaccuracy in any representation and warranty in, any of subsections d–i, TerraPower shall be entitled to immediately terminate the Agreement and take such other actions as are permitted or required to be taken under Applicable Law.
5. Changes.
5.1. TerraPower Changes.
TerraPower shall have the right from time to time, upon written notice to Contractor, to make changes to the scope or contents of this Agreement, including changes to: (i) specifications; (ii) schedule; (iii) additions to or deletions from quantities ordered; (iv) the method of delivery, shipment or packaging of Supplies; (v) Price; or (vi) the date or delivery destination specified in the SOW or PO (as applicable); provided, however, no such change to the scope or contents of this Agreement shall materially or adversely affect the rights or obligations of Contractor hereunder or create additional rights or obligations of Contractor or any Contractor Affiliate without Contractor’s prior written consent.
5.2. Contractor Identified Change Conditions.
a. The Contractor shall promptly notify the CA in writing (but in any event within twenty (20) days) after Contractor becomes aware of any Change Condition that could justify changes under this Agreement; provided, however, the failure to give such prompt written notice shall not relieve TerraPower of its obligation to consider the request for a change hereunder. Subject to the foregoing, if there has been a Change Condition, Contractor may make, via SCR, a change request or non-conformance request to TerraPower relating to the Agreement.
b. In any Price Quote, Contractor shall notify TerraPower if its Price Quote is five percent (5%) greater than or less than the Price determined using the formula in Section 2.4.a, above. The Parties shall thereafter meet and confer to renegotiate the Price for that particular Order, and, based upon the renegotiated mutually agreed Price, Contractor shall resubmit its Price Quote reflecting the mutually agreed Price.
5.3. Change Conditions – Equitable Adjustments.
Page 13 of SECTIONPAGES 40
If any change made by TerraPower under subsection 5.1 (to the extent it comprises a Change Condition), or Change Condition pursuant to subsection 5.2, causes an increase or decrease in the cost or timing required to perform the Work or certain portions of the Work, then Contractor may request an equitable adjustment in (a) the Price Quote or (b) the schedule, or both, and, as applicable, this Agreement or the PO shall be modified by a written amendment to this Agreement or a revision to the PO executed by an authorized representative of each Party; provided, that (i) such changes shall be subject to mutual agreement after reasonable consideration of all relevant facts and circumstances, including any adjustments requested for any increases in Contractor’s production costs based on the cost or availability of Feedstock or energy, and (ii) Change Conditions shall not, in and of itself, enable adjustments to the Price Quote, Price where prohibited or otherwise limited in the definition of “Change Conditions”.
5.4. Content of Change Requests.
With respect to any request for a change pursuant to subsection 5.2, the Contractor shall provide the following information, as applicable to any particular Change Condition:
a. a description of the change;
b. a timetable for implementation;
c. any relevant Acceptance criteria;
d. options to mitigate the costs or delays associated with the change;
e. any associated infrastructure requirements;
f. effect on subcontracts and other third-party agreements, if any;
g. proposed amendments to the applicable SOW;
h. proposed changes to the Price Quote, if any;
i. proposed amendments to this Agreement, if any; and
j. any other matter reasonably requested by TerraPower or reasonably considered by Contractor to be relevant.
5.5. Change Requests – Effectiveness.
Changes requested by Contractor shall not violate, conflict with or breach any terms or conditions in this Agreement, including any SOW, and shall not become effective except if approved in writing by TerraPower and Contractor. In the event that Contractor and TerraPower disagree on any equitable adjustment in connection with this Section 5, such disagreement shall not excuse Contractor from performing its obligations with respect to any authorized Work and the Work as changed under this Agreement.
6. Term and Termination; Suspension.
6.1. Term.
a. Duration.
This Agreement shall be in effect starting on the Effective Date and, until and unless extended or terminated earlier in accordance with this Agreement, expire on December 31, 2037.
b. [Reserved].
6.2. Breach; Default.
a. The Parties hereto agree that irreparable damage, for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any Services
Page 14 of SECTIONPAGES 40
under this Agreement are not performed by Contractor in accordance with its specific terms or if this Agreement is otherwise breached. It is accordingly agreed that in addition to any and all other rights and remedies that may be available to it at law, at equity or otherwise in respect of such breach, (a) TerraPower will be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of actual damages, this being in addition to any other remedy to which they are entitled under this Agreement, (b) the other remedies under this Agreement are not intended to and do not adequately compensate for the harm that would result from a breach of this Agreement by Contractor and will not be construed to diminish or otherwise impair in any respect TerraPower’s right to specific performance or other equitable relief, and (c) the right of specific performance and other equitable relief is an integral part of the transactions under this Agreement and without that right TerraPower would not have entered into this Agreement. Contractor agrees not to assert that a remedy of specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that TerraPower otherwise has an adequate remedy at law. The Parties acknowledge and agree that TerraPower pursuing an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 6 will not be required to provide any bond or other security in connection with any such court order.
The rights and remedies under this Agreement are cumulative and not exclusive of any rights or remedies which a Party would otherwise have under this Agreement, at law or in equity. The failure or forbearance by a Party to exercise any of its rights or remedies with respect to any default or breach of this Agreement by the other Party will not operate as a waiver of any such default or breach, or other or subsequent non-performance.
b. TerraPower may terminate this Agreement, or any part thereof, by written notice:
i. in the event of any breach or default by Contractor of any of its obligations under this Agreement,
ii. if, following request by TerraPower, Contractor fails to provide timely and acceptable assurance of Contractor’s ability to meet all applicable QA Requirements and EH&S Requirements or the delivery date(s) of this Agreement,
iii. if Contractor fails to comply with Applicable Laws; or
iv. if Contractor becomes insolvent, does not pay its debts as due, or makes a general assignment for the benefit of creditors or reasonable grounds for insecurity arise with respect to Contractor’s ability to perform. Contractor shall immediately notify TerraPower of the occurrence of any of the events described in this subsection iv.
In the event of any occurrence of subsection b.i above, TerraPower will provide Contractor with written notice of the nature of the default and TerraPower’s intention to terminate for default. TerraPower may by written notice terminate this Agreement in the event Contractor does not correct the default within ten (10) days of such notice or such longer period of time if specified in such notice of default to Contractor.
Upon the occurrence of any of subsections b.ii., b.iii., or b.iv., TerraPower may terminate this Agreement immediately upon written notice without any cure period.
c. Contractor may terminate this Agreement, or any part thereof, by written notice:
i. in the event of any breach or default by TerraPower of any of its obligations under this Agreement,
Page 15 of SECTIONPAGES 40
ii. if TerraPower fails to comply with Applicable Laws; or
iii. if TerraPower becomes insolvent, does not pay its debts as due, or makes a general assignment for the benefit of creditors or reasonable grounds for insecurity arise with respect to TerraPower’s ability to perform. TerraPower shall immediately notify Contractor of the occurrence of any of the events described in this subsection iii.
In the event of any occurrence of subsection c.i above, Contractor will provide TerraPower with written notice of the nature of the default and Contractor’s intention to terminate for default. Contractor may by written notice terminate this Agreement in the event TerraPower does not correct the default within ten (10) days of such notice or such longer period of time if specified in such notice of default to TerraPower.
Upon the occurrence of any of subsections c.ii. or c.iii., Contractor may terminate this Agreement immediately upon written notice without any cure period.
6.3. Convenience.
TerraPower may terminate this Agreement, or any part thereof, at any time for its convenience by giving written notice to Contractor. Upon termination pursuant to this subsection 6.3, Contractor may claim reasonable costs incurred for the Work completed prior to the effective date of such termination based on the percentage of Work complete, but not previously paid, and a reasonable amount for any Supplies then in production (other than for Supplies which are Contractor’s standard stock); provided, however, that the total sum payable to Contractor upon termination shall not exceed the Price had all Work been completed under this Agreement. The amounts to be paid to Contractor shall be set out in a written PO revision signed by TerraPower’s authorized representative. The payment will not include any consideration for loss of anticipated profits on the terminated Work, all claims for which Contractor agrees to waive. Furthermore, the total sum to be paid to Contractor for termination shall be subject to adjustment to the extent any Work contains defects as of the termination date. Contractor shall dispose of or transfer all partially completed Work or raw material in accordance with TerraPower’s instructions.
6.4. Effect of Termination.
Upon the completion, termination or cancellation of this Agreement pursuant to subsections 6.2 or 6.3 above, the Parties shall cooperate to execute an orderly, efficient, and expeditious termination of the Parties’ respective activities under this Agreement.
a. Upon receipt of any notice of termination, or any other expiration of the term of this Agreement, pursuant to this Section 6, Contractor shall, unless the notice requires otherwise:
i. immediately discontinue the Work on the date and to the extent specified in the notice,
ii. place no further orders for Supplies, Services, or TerraPower-Provided equipment other than as may be necessarily required for completion of any portion of the Work that is not terminated;
iii. obtain cancellation on terms satisfactory to TerraPower of all subcontracts with sub-tier subcontractors unless Contractor is directed by TerraPower to take other actions with respect to the same, which may include assignment of all or some of those contracts to TerraPower or TerraPower’s designee on terms satisfactory to such assignee;
Page 16 of SECTIONPAGES 40
iv. within ten (10) days of the effective termination date, return to TerraPower or destroy all Confidential Information pursuant to Section 12 (Proprietary Rights and Confidentiality); and
v. assist TerraPower upon request in the maintenance, protection, and disposition of property acquired by Contractor under this Agreement (including any transportation, delivery and storage, to TerraPower, its designee or any storage site designated by TerraPower, of Supplies and other Work Product).
b. Except to the extent there is a Contractor delay or failure in performance as a result of a Force Majeure Event or in the case of a termination of this Agreement by TerraPower as a result of a Force Majeure Event or pursuant to subsection 6.3 above, in which case this subsection 6.4.b will not apply, in addition to the requirements of subsection 6.4.a, in the event of a notice of termination pursuant to subsection 6.2, TerraPower may procure, or TerraPower may request Contractor to procure, under such terms and in such manner as TerraPower may deem appropriate, items of the Work that are the items so terminated, and Contractor shall be liable to TerraPower for:
i. any additional costs for such similar items of Work that exceed the amounts that TerraPower would have paid Contractor for the terminated items of Work pursuant to this Agreement; and
ii. any other costs incurred by TerraPower for Contractor’s non-delivery, repudiation and breach of this Agreement or any SOW or PO, including all fees and costs in exercising any remedy. TerraPower may exercise any other rights or remedies available to TerraPower at law or in equity.
Contractor’s liability for costs specified in this Section 6.4.b. shall be subject to the limitations specified in Section 17.1
c. If this Agreement is not terminated in its entirety, Contractor shall continue the performance of this Agreement to the extent not terminated by TerraPower.
6.5. Suspension, Shipment to Storage.
a. TerraPower may at any time suspend performance of the Work or any portion thereof (a “Suspension”) by giving written notice, at least fourteen (14) days in advance, to Contractor (a “Suspension Notice”). Contractor shall promptly thereafter take all reasonable measures to implement such Suspension and to mitigate the effects of such Suspension. Such Suspension shall continue for the period (the “Suspension Period”) specified in the Suspension Notice. At any time after the effective date of the Suspension, TerraPower may require Contractor to resume performance. In the case of any Suspension at TerraPower’s request (other than one arising out of acts, omissions or delays of Contractor or its subcontractors, suppliers or vendors, and to the extent Contractor has not otherwise breached or violated its obligations pursuant to this Agreement), Contractor may submit an SCR pursuant to subsection 5.2 to request any required equitable relief.
b. If Contractor elects to deliver Product Material more than ninety (90) days in advance of the date for such delivery in the applicable SOW, Contractor must provide TerraPower with advanced notice of such shipment and delivery at least ninety (90) days prior to such early delivery and TerraPower shall have the option to either accept such early delivery or to request that such Product Material be shipped to storage at a site selected by TerraPower. Whether or not in connection with any election by Contractor pursuant to the foregoing sentence, TerraPower may at its sole discretion elect to require that any Product Material comprising part of the Work hereunder be placed into storage at such location as TerraPower
Page 17 of SECTIONPAGES 40
may direct rather than delivered to the location set out in the applicable SOW or PO. If TerraPower so elects to have any Product Material placed into storage, then
i. Contractor will remain responsible for the risk of loss with respect to such items while they are in storage and at all times until they are delivered to TerraPower at the location required pursuant to the applicable SOW or PO and otherwise in accordance with this Agreement;
ii. subject to Contractor’s right to submit an SCR under subsection 5.2 hereof, Contractor shall bear all costs associated with such storage (including preparation for, transportation to and from and placement into storage, handling, preservation, insurance, inspections, removal charges, and additional taxes attributable to storage, etc.); and,
iii. Contractor shall resume transportation and normal delivery as and when instructed by TerraPower. In the case of any early delivery or shipment to storage at TerraPower’s request (other than one arising out of acts, omissions or delays of Contractor (including any election made by Contractor pursuant to the first sentence of this subsection a) or its subcontractors, suppliers or vendors, and to the extent Contractor has not otherwise breached or violated its obligations pursuant to this Agreement), Contractor may submit an SCR pursuant to subsection 5.2 to request any required relief.
6.6. Failure to Order.
a. If, in any given calendar year during the Term, (i) TerraPower fails to purchase a Committed Quantity of at least ten (10) MTU pursuant to Section 2.5.c and (ii) there is HALEU remaining available for sale by Contractor in such calendar year (the “Excess Quantity”), TerraPower’s exclusivity with respect to purchasing the Excess Quantity during such applicable calendar year shall not apply, and Contractor may market and sell such Excess Quantity to other potential purchasers. For clarity, the terms of this Section 6.6 apply only to Excess Quantity in the applicable calendar year during which the conditions under foregoing clauses (i) and (ii) are satisfied.
7. Compensation/Payment/Project Controls.
7.1. Compensation.
TerraPower shall compensate the Contractor for Work on a FFP Basis in accordance with the provisions set forth in this Agreement. The following is also applicable:
a. The Price is reflected and payable in United States Dollars. All payments to the Contractor will be made by check or, at TerraPower’s sole discretion, wire transfer.
b. Contemporaneous with submittal of any invoice by Contractor with regard to the purchase of Feedstock and contemporaneous with submittal of any Contractor invoice for Product Material, Contractor shall:
i. provide TerraPower with sufficient information and copies of all documentation that specifically identifies in an objectively determinable manner exact identifying information and the exact location of the Feedstock or Product Material (e.g., specific shipping/storage containers), and
ii. if required by TerraPower and at TerraPower’s reasonable cost (by advance on an as-incurred basis of all costs and expenses incurred by Contractor), procure and ensure that, as security for the performance by Contractor of all its obligations
Page 18 of SECTIONPAGES 40
under this Agreement, TerraPower is granted (by the owner of the Feedstock) special notarial bonds or general notarial bonds, or both, over all the Feedstock on terms and conditions acceptable to TerraPower. In addition, Contractor shall assist and cooperate with (and procure and ensure that the owner of the Feedstock assists and cooperates with) TerraPower to ensure that:
i. such bonds are registered in favor of TerraPower in the relevant Deeds Registry Office in the Republic of South Africa by or on behalf of TerraPower and in accordance with all applicable South African laws and regulations;
ii. all regulatory approvals for such bonds and/or their enforcement (including all approvals from the Financial Surveillance Department of the South African Reserve Bank) are obtained and maintained.
TerraPower will advance, on an as-incurred basis, any and all costs and expenses which are incurred by Contractor in connection with obtaining security for the performance by Contractor of all its obligations under this Agreement, including special notarial bonds or general notarial bonds, or both.
Contractor shall also procure and ensure that:
i. TerraPower is given all information reasonably required by TerraPower from time to time regarding the storage and/or usage of the Feedstock; and
ii. TerraPower, its representatives, agents and/or contractors is given access to the Feedstock to verify and/or inspect the Feedstock,
to enable TerraPower to perfect a security interest in the Feedstock upon payment of the respective invoice(s) for such Feedstock.
c. TerraPower agrees to pay all undisputed amounts due to the Contractor for Work before the later of (i) thirty (30) days after receipt of the Contractor’s invoice or (ii) any other date applicable in the SOW or PO. TerraPower shall notify the Contractor of any disputed amounts within thirty (30) days of receipt of an invoice from Contractor. TerraPower is not obligated to pay any disputed amounts. During the pendency of a dispute described in this subsection 7.1, Contractor shall continue performing Work hereunder and shall have no right to suspend performance or otherwise withhold any Work.
d. If Contractor fails to deliver an invoice within ninety (90) days after any Work is performed hereunder (including, after any specific Supplies are shipped), then TerraPower shall have no obligation to pay such invoices, and Contractor’s right to payment shall be deemed conclusively waived; provided, that this sentence shall be subject to any modification to the frequency of invoicing (including any applicable milestones) agreed in writing between the Parties, including pursuant to any applicable SOW or PO.
e. Payment represents full compensation to Contractor for performance by Contractor of the Work and includes all of Contractor’s costs, expenses, taxes, duties, fees, insurance, overhead and profit for performance of the Work, compliance with all terms and conditions of this Agreement, and for Contractor’s payment of all obligations incurred in, or applicable to the performance of the Work.
7.2. [Reserved].
7.3. [Reserved].
Page 19 of SECTIONPAGES 40
7.4. Firm Fixed Price Basis Invoice and Project Control.
a. The Contractor shall submit to the CA an invoice within twenty (20) days after the completion of each milestone or in accordance with the payment schedule identified in the PO.
b. Project Controls.
i. Contractor shall implement project controls and reporting with respect to the Work, including: (A) the cost and schedule reporting necessary to support TerraPower’s project management plan; (B) any relevant project controls plan(s)/instruction(s) that are created for Project use by TerraPower; and, (C) that are set forth in the SOW.
ii. Contractor shall provide the names of the Contractor’s key employees (including, if applicable, permitted Contractors).
iii. In a progress report (“Progress Report”) to be delivered to TerraPower not later than the ninth (9th) business day of each calendar month, in a form to be provided by TerraPower, Contractor shall describe in writing: (A) status of key Contractor tasks; (B) key accomplishments; (C) risks and opportunities; (D) Project issues and commentary; (E) the status of Contractor’s Deliverables relative to the expected date for delivery thereof, including variance explanations; (F) Contractor’s plans to use commercially reasonable efforts to recover from any delays or forecasted cost increases associated with the Deliverables; and, (G) the status of the Work in respect of the milestones set forth in any applicable SOW, among other content to be mutually agreed upon.
iv. [Reserved].
v. [Reserved].
8. Taxes; [Reserved].
8.1. Co-Employment.
Neither the Contractor nor those performing Work on behalf of the Contractor will be deemed an employee of TerraPower within the meaning or the applications of any federal, state or local laws or regulations including, but not limited to, laws or regulations covering unemployment insurance, old age benefits, worker's compensation, industrial accident, labor or taxes of any kind. The Contractor and those performing the Work on behalf of Contractor will not be entitled to benefits that may be afforded from time to time to TerraPower's officers, managers or employees including, without limitation, options or awards, bonuses or other discretionary payments, health insurance, vacation time, holidays, sick leave, worker's compensation or unemployment insurance. Contractor shall be responsible to comply with all Applicable Laws, and for payment of all applicable amounts, in respect of the foregoing matters.
8.2. Compliance with Tax Laws.
The Contractor shall comply with all Applicable Laws related to taxes and is responsible for paying when due all income taxes, including estimated taxes, incurred as a result of the compensation paid by TerraPower to the Contractor for the Work and for providing all benefits required to those performing Work on its behalf. On request, the Contractor will provide TerraPower with proof of timely payment. The Contractor acknowledges that TerraPower will not withhold or make any payment for payroll or unemployment taxes of any kind that may be due from payments to the Contractor hereunder. The payroll or employment taxes referred to in this Section 8 include, but are not limited to, FICA, FUTA, federal personal income tax, state personal income tax, state disability insurance tax, and state unemployment insurance tax. Contractor shall be responsible for (i) all taxes
Page 20 of SECTIONPAGES 40
that may be assessed against or in connection with the Work, and (ii) any penalties, fines or assessments that result from the late or insufficient payment of taxes for which Contractor is obligated to pay to the applicable taxing authority.
8.3. Tax Exemptions; Cooperation.
Notwithstanding anything the contrary herein, Contractor shall provide assistance as reasonably requested by TerraPower or its tax consultant(s) in identifying, confirming eligibility for and claiming exemptions from taxes.
8.4. Location of Performance of Work.
Contractor shall not perform any Work outside of the United States, or if Contractor is located outside the United Sates, the country in which Contractor is located, including any purchases of Supplies, without TerraPower’s prior written consent. TerraPower hereby grants consent for the Work to be performed in the Republic of South Africa.
8.5. [Reserved].
9. Competitors; Non-Solicitation; Publicity.
9.1. Prohibition on Interference with TerraPower Activities.
The Contractor shall not, during the Term , directly or indirectly, (i) promote, participate, or engage in any business activity that would materially interfere with the performance of the Contractor's duties under this Agreement or(ii) willfully take (or fail to take) any action that materially interferes with the performance of the Contractor's duties under this Agreement or results in, or could reasonably be expected to result in, a failure to perform the Contractor's duties under this Agreement.
9.2. Prohibition on Disclosure of Deliverables or Confidential Information.
The Contractor shall not, under any circumstances, use or disclose any of TerraPower’s Confidential Information while working for, on behalf of, or with, a company that competes with the current or anticipated business of TerraPower. The limitation in this subsection 9.2 applies irrespective of whether the Contractor is allowed by virtue of this Section 9 to work for a company that competes with the current or anticipated business of TerraPower.
9.3. Non-solicitation.
During the term of this Agreement and for a period of one (1) year after the expiration or earlier termination of this Agreement, the Contractor shall not solicit, attempt to solicit, or cause to be solicited any customers of TerraPower for purposes of promoting or selling products or services that are the subject of the Work provided hereunder.
9.4. Use of TerraPower Name or Logo.
Contractor shall submit to TerraPower prior to use all advertising, sales promotion, papers, presentations, or other publicity material relating to this Agreement or the Cooperative Agreement wherein TerraPower’s name or logo or the name or logo any of its affiliates or the Project is mentioned, and Contractor shall not use or publish such advertising, sales promotion, paper, presentation, or publicity material without the prior written consent of TerraPower.
Page 21 of SECTIONPAGES 40
10. Quality Assurance; Environmental, Health & Safety.
10.1. Quality Assurance and Environmental Health & Safety Requirements.
If any quality assurance requirements (“QA Requirements”) and/or environmental, health and safety requirements (“EH&S Requirements”) apply to the Work, TerraPower shall provide the QA Requirements and/or EH&S Requirements in the SOW. Specific tasks associated with the Work may be subject to different QA Requirements and EH&S requirements. Contractor shall perform Work in conformance with all QA Requirements and EH&S Requirements, as applicable. In the event that the Contractor does not have a TerraPower-approved Quality Assurance Program, at TerraPower’s discretion and if stated in the applicable SOW, the Contractor may perform Work under TerraPower’s Quality Assurance Program.
10.2. Incorporation of Quality Assurance and Environmental Health & Safety Requirements Into Subcontracts.
The Contractor shall incorporate this Section 10 (Quality Assurance; Environmental Health & Safety) in its subcontracts with any permitted lower-tier Contractors and lower-tier supply agreements, including any technical, QA Requirements and EH&S Requirements as specified in the SOW. When specified in the SOW, TerraPower, through its designated representatives or agents, may access the Contractor’s and any permitted lower-tier Contractor’s facilities and records for Q&A and EH&S surveillance, inspection, or audit during normal business hours.
10.3. Hold Points and Stop Work.
Without limiting any more stringent applicable QA Requirements or EH&S Requirements:
a. Any portion of the Work may be subject to certain mandatory hold or notification points (each, a “Hold Point”), which may require witnessing by an authorized representative of TerraPower. Any Hold Points applicable to the Work shall be set forth in the applicable SOW or otherwise agreed between the Parties in writing. Applicable Work may not proceed beyond a Hold Point without either
i. inspection or review by an authorized representative of TerraPower, or
ii. TerraPower’s express written authorization for the applicable Work to proceed. Contractor shall provide TerraPower at least fourteen (14) business days’ advance written notice of each Hold Point to allow the Parties to schedule the Work related to the applicable Hold Point.
b. TerraPower may, at any time, direct Contractor to stop performing Work if in the judgment of TerraPower’s quality representative the Work:
i. is not being materially performed in accordance with QA Requirements or EH&S Requirements, or
ii. has material quality control deficiencies. If such direction is given, Contractor and its subcontractors shall cease operations, including shipments, on any Work within the scope of the direction. Resumption of Work shall not be undertaken until Contractor has obtained TerraPower’s written authorization.
11. Warranty; Delay and Performance Remedies.
11.1. Compliance with Agreement and Purchase Order; Duration.
The Contractor warrants that any and all Work provided under this Agreement will conform to and comply with each and every provision of the Agreement, Order, PO, and SOW, and will be performed using competent professional knowledge and judgment in accordance with Prudent Industry Practices, will be suited for the intended application and function, will perform correctly in
Page 22 of SECTIONPAGES 40
accordance with any performance guarantees and specifications, will be in accordance with Applicable Laws, and will be complete, correct and otherwise free from errors, omissions, faults or defects in design, workmanship and materials.
The Contractor further warrants that all Product Material provided or furnished by the Contractor must be new, original, unrefurbished and of the kind, make and quality specified by TerraPower in the SOW.
The warranties provided will begin upon, as applicable with respect to each specific item of Work, Supplies, materials, or Product Material, delivery and TerraPower acceptance of the Work, Supplies, materials, or Product Material, and will expire, (i) with respect to Work, Supplies, or materials, twenty-four (24) months after TerraPower acceptance of the Work, Supplies, or materials; and, (ii) with respect to Product Material, on the earlier of: (y) twenty-four (24) months after TerraPower acceptance of Product Material; or (z) metallization of the Product Material by TerraPower’s Deconverter (the “Warranty Period”).
Should any of the Work, Supplies, materials, or Product Material not meet the standards specified in this subsection 11.1 during the Warranty Period, the Contractor, at its own expense, will correct such nonconformity in consultation with TerraPower by re-performing, resupplying, disassembling, reassembling, removing, re-installing, or repairing, as applicable, the nonconforming Work, Supplies, materials, and/or Product Material.
The Contractor further warrants that each item of Work re-performed or Supplies, materials, and/or Product Material repaired or replaced to correct a nonconformance will carry the warranty prescribed by this section, and the Warranty Period for such Work, Supplies, materials and/or Product Material will begin upon, as applicable with respect to each specific item of Work, Supplies, materials, or Product Material, delivery and TerraPower acceptance of the Work, Supplies, materials, or Product Material, and will expire, (i) with respect to Work, Supplies, or materials, twenty-four (24) months after TerraPower acceptance of the Work, Supplies, or materials; and, (ii) with respect to Product Material, on the earlier of: (y) twenty-four (24) months after TerraPower acceptance of Product Material; or (z) metallization of the Product Material by TerraPower’s Deconverter.
11.2. TerraPower Testing.
TerraPower may, in its sole discretion and at its expense, conduct such additional reasonable tests as it deems proper or necessary to determine that Work, Supplies, materials, and Product Material provided under the Agreement meet the warranties.
11.3. TerraPower Right to Remedy Contractor Failure to Meet Warranties.
If the Contractor, after notice, fails to proceed promptly to remedy any failure to meet any of the warranties set forth herein, TerraPower may remedy such failure, or have such failure remedied by others, and the Contractor will be liable for all reasonable expenses so incurred.
11.4. Warranty Beneficiaries; Assignment.
All warranties will benefit both TerraPower and the Project owner, USO. In the event TerraPower, USO, or their successors or assigns transfer ownership of all or part of the Project to a third-party purchaser prior to the expiration of the applicable Warranty Period, all warranties provided by Contractor under this Agreement shall be assignable to said third-party purchaser by TerraPower, USO or their successors or assigns, as applicable.
Page 23 of SECTIONPAGES 40
11.5. Liquidated Damages.
a. Except in the case of Contractor delay or failure in performance as a result of a Force Majeure Event or a termination of this Agreement by TerraPower as a result of a Force Majeure Event or pursuant to subsection 6.3, in which case this subsection 11.5 will not apply, Contractor shall be responsible for the following liquidated damages, in each case beginning on the day after the expiration of a grace period of thirty (30) days from the date specified within the agreed and approved schedule:
i. [Reserved];
ii. For any delay in delivery of Product Material by the date guaranteed for such delivery as set forth in the applicable SOW, $100,000 per week of delay, subject to the limitation in Section 17.1(Limitation of Liability);
iii. [Reserved];
b. The Parties intend that any liquidated damages required pursuant to this subsection 11.5 constitute compensation, and not a penalty. The Parties acknowledge and agree that the harm to TerraPower and USO caused by Contractor delays would be impossible or very difficult to accurately estimate as of the Effective Date, and that such liquidated damages are a reasonable estimate of the anticipated or actual harm that might arise from delays. Contractor’s payment of such liquidated damages is Contractor’s sole liability and entire obligation and TerraPower’s exclusive remedy for such delays.
12. Proprietary Rights and Confidentiality.
12.1. Background and Foreground Intellectual Property.
TerraPower reserves all legal rights and retains exclusive ownership in its Background Intellectual Property.
Contractor reserves all legal rights and retains exclusive ownership of the Work Product (except for Product Material and Submittals required in conformance with the SOW), Contractor Background Intellectual Property, and Contractor Foreground Intellectual Property, (altogether, “Contractor IP”). If Contractor incorporates any Contractor IP into a Deliverable or any such Contractor IP is reasonably necessary for use of the Deliverable, Contractor hereby grants to TerraPower and its affiliates a perpetual, irrevocable, personal, nonexclusive, worldwide, royalty-free, fully paid up license to use and exploit such Contractor IP solely to the extent such Contractor IP is tangibly embodied by the Deliverable and reasonably necessary to use the Deliverable for the Project. The Contractor shall identify and mark (in accordance with TerraPower’s marking requirements) all Contractor IP prior to disclosure to TerraPower or any of its representatives.
The License Agreement, dated as of February 16, 2024, among ASP Isotopes UK Limited, as licensor, and Contractor and Quantum Leap Energy Limited, as licensees, constitutes, and upon the consummation thereof the Sublicence Agreement to be entered into by among QLE, as sublicensor, and QLE TP Funding SPE, LLC and K2025267858 (South Africa) (Pty) Ltd., as sublicensees, will constitute, the legal, valid and binding obligations of the parties to such agreements, enforceable against the licensor in accordance with their respective terms, and the Sublicense Agreement shall remain in effect throughout the Term.
12.2. [Reserved].
12.3. [Reserved].
Page 24 of SECTIONPAGES 40
12.4. Compliance with Confidential Information Obligations.
At all times during the Term of this Agreement and after termination of this Agreement, the respective receiving Party shall keep the Confidential Information in the strictest confidence and shall not disclose it by any means to any third party except with the other Party’s prior written approval and only to the extent necessary to perform the Work under this Agreement. The receiving Party may not use Confidential Information for any reason except to perform its obligations under this Agreement. This prohibition also applies to the receiving Party’s employees, agents and subcontractors, and the receiving Party has in place agreements with the foregoing to ensure compliance with this sub-Section 12.4. The limitations in subsections 9.2 and 9.3 (Prohibition on Disclosure of Deliverables or Confidential Information; Non-Solicitation) are in addition to the limitations and commitments in this subsection 12.4.
12.5. Exclusions from Confidentiality Obligations.
Confidential Information does not include any information that:
a. is or subsequently becomes publicly available without the receiving party's breach of any obligation owed to the disclosing Party;
b. became known to the receiving Party prior to the disclosing Party’s disclosure of such information to the receiving Party without receiving Party’s breach of any obligation owed to the disclosing Party;
c. became known to the receiving party from a source other than the disclosing Party and other than by the breach of an obligation of confidentiality owed to the disclosing Party;
d. is independently developed by the receiving party without reference to Confidential Information; or
e. is disclosed in response to a valid law, regulation, subpoena or other court order, provided that, prior to making such disclosure, the receiving Party shall give the disclosing Party notice and an opportunity to object to or limit the disclosure. In all cases where the receiving Party is required to disclose Confidential Information as set out in subsection 12.5.e., the receiving Party shall make all reasonable efforts to protect the Confidential Information from public disclosure.
12.6. Ownership of Confidential Information.
The receiving Party must destroy or return to the disclosing Party all Confidential Information and materials containing or excerpting Confidential Information upon the expiration or earlier termination of this Agreement, or promptly upon the disclosing Party’s request made at any time during the term of this Agreement; provided that the receiving Party is entitled to retain one (1) copy of same for archival purposes to be used for the limited purpose of proving compliance with the terms of this Agreement. The confidentiality obligations of this Section 12 will continue to apply to any retained Confidential Information and materials.
12.7. Markings.
Contractor will comply with markings requirements as may be requested by TerraPower in connection with the Supplies, Submittals and documents provided to TerraPower.
Page 25 of SECTIONPAGES 40
12.8. Injunctive Relief.
The Contractor and TerraPower each acknowledge the unique nature of the Work provided hereunder and of Contractor and TerraPower's businesses, and further that any breach by either Party of this Section 12 or of subsections 9.2 or 9.3 (Prohibition on Disclosure of Deliverables or Confidential Information; Non-Solicitation) will result in irreparable and continuing damage to the other Party for which there may be no adequate remedy at law, and the Parties agrees that the other Party will be entitled to injunctive relief in addition to any other remedies it may have in the event of such breach.
12.9. Use of Confidential Information.
Without limitation, both the specific terms of, and the very fact of, the relationship between the Contractor and TerraPower is considered Confidential Information. The Parties will not use that information for marketing or otherwise disclose it (with or without a Party’s name) without the other Party’s prior written consent. Either Party may disclose the existence and specific terms (including any exhibits, attachments, SOW, and amendments) of this Agreement to investors, potential investors, finance providers, potential finance providers, advisors, joint venture partners, potential joint venture partners and others (including the legal and financial advisors of such parties), who have been informed that the confidential information belongs to the other Party and have agreed in writing to obligations of confidentiality and limitations of use substantially equivalent to those contained in this subsection 12.9 or are otherwise subject to professional obligations of confidentiality.
12.10. Statutory Protections.
The protections afforded to the Confidential Information under this Agreement are in addition to, and not in lieu of, the protections afforded under any applicable trade secrets laws, including the Washington Uniform Trade Secrets Act (Wash. Rev. Code Ann. §19.108 et seq.) and the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1836) (“DTSA”).
NOTICE: Notwithstanding any other provision of this Agreement to the contrary, Contractor understands that pursuant to the DTSA, they cannot be held criminally or civilly liable under Federal or State trade secret law for disclosing a trade secret in the following situations: (1) Contractor makes the disclosure in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and the disclosure is solely for the purpose of reporting or investigating a suspected violation of law; (2) Contractor makes the disclosure in a legal document filed in a lawsuit or other legal proceeding if the filing is made under seal; or (3) Contractor makes the disclosure to its attorney for use in a lawsuit against its employer for retaliation for reporting a suspected violation of law if, in court proceedings, any document containing the trade secret is filed under seal, and Contractor does not disclose the trade secret, except pursuant to a court order.
12.11. [Reserved].
12.12. Ownership of Patentable Inventions and Contractor Support.
This Agreement is directed toward the supply of Product Material and the Parties do not anticipate SOWs specifying research and development. However, to the extent that patentable inventions are conceived, created or developed under the Agreement, Contractor will retain ownership, in accordance with subsection 12.1 above.
13. Title; Risk of Loss; TerraPower-Provided Equipment
13.1. Title, Risk of Loss.
Title to any property (real, personal, or intangible and including the Product Material)
a. to be supplied to TerraPower by Contractor or
Page 26 of SECTIONPAGES 40
b. unless TerraPower otherwise directs, that is acquired by Contractor for the performance of any Work and for which it receives payment hereunder (excluding Feedstock),
shall (in any case contemplated by the foregoing clauses (a) or (b)) transfer to TerraPower free and clear of any liens upon the earlier of:
i. payment for such property pursuant to the terms and conditions hereof or
ii. delivery of such property to TerraPower (whether at its ultimately required location or otherwise, including (if elected by TerraPower) pursuant to subsection a).
Notwithstanding the passage of title to such property, Contractor shall bear the risk of loss with respect to such property to be supplied by Contractor or so acquired by Contractor until delivery of such property to TerraPower. The terms of this subsection 13.1 shall not be subject to modification in any SOW, including by use of “Incoterms” rules published by the International Chamber of Commerce.
13.2. TerraPower-Provided Equipment.
TerraPower retains ownership of all TerraPower-Provided equipment. The Contractor shall hold the TerraPower-Provided equipment in trust, and while the TerraPower-Provided equipment is in the Contractor’s care, custody, and control, the Contractor shall insure the TerraPower-Provided equipment at the Contractor’s expense in an amount equal to replacement costs of the TerraPower-Provided equipment with loss payable to TerraPower. The Contractor shall use the TerraPower-Provided equipment solely for performing Work in accordance with this Agreement. The Contractor shall return the TerraPower-Provided equipment to TerraPower in the same condition as received, except for ordinary wear and tear, upon termination of this Agreement, unless TerraPower agrees otherwise in writing prior to the termination of this Agreement.
14. Indemnification.
14.1. Indemnification by Contractor.
Except to the extent arising from a nuclear incident or precautionary accident, as defined by the Price Anderson Act, at the Project site, the Contractor shall indemnify, defend (if requested by TerraPower) and hold harmless TerraPower and its affiliates (and its and their respective directors, officers, employees, representatives, agents, vendors, suppliers, subrecipients, successors and permitted assigns) (each such person or entity, a “TerraPower Indemnified Person”) from and against all damages, liabilities, claims, costs, losses and expenses of any nature (including attorneys’ fees and other costs of enforcement and defense), including claims based on death, bodily injury or loss of or damage to property or the environment, in any such case arising out of, or resulting in any way from:
a. any defect in the Work purchased hereunder;
b. any actual or alleged infringement, misappropriation or other violation of third-party Intellectual Property embodied by the Deliverables or practiced by Contractor in the performance of the Work. Notwithstanding the foregoing, this paragraph does not apply to the extent the Deliverables are modified, altered, or combined with other materials or processes and infringement would not have occurred but for the modification, alteration or combination;
c. any failure by the Contractor to comply with any provision of this Agreement or any related contract (including any breach, violation or failure to perform any covenant or agreement, or any breach of or inaccuracy in any representation and warranty made by Contractor),
d. any act or omission of the Contractor, its agents, employees (including, for purposes of this clause d., contingent, leased, temporary or co-employees, or other similar individuals, of Contractor or its affiliates or lower-tier contractors, seconded to or otherwise staffed with
Page 27 of SECTIONPAGES 40
TerraPower, USO or any third party in connection with the Project (each such individual Person, a “Co-Employee”)) or permitted lower-tier contractors;
e. any claims, demands, actions, disputes or other legal or administrative procedures made or asserted by any Co-Employee;
f. claims of the United States government and its officers, agents or employees to the extent resulting from the acts or omissions of Contractor related to the Project or
g. without limiting the foregoing obligations, any failure by the Contractor to comply with its obligations pursuant to Section 8.
14.2. Notification, Rights, and Cooperation.
TerraPower shall give the Contractor reasonably prompt written notice of any claim subject to indemnification hereunder; provided, however, TerraPower’s failure to so notify the Contractor shall not affect the Contractor’s obligations hereunder except to the extent that TerraPower’s delay materially prejudices the Contractor’s ability to defend such claim. If requested by TerraPower, Contractor shall have the right to defend against any such claim with counsel of its own choosing and to settle such claim as the Contractor deems appropriate, provided that the Contractor shall not enter into any settlement that adversely affects any Indemnified Person rights without such Indemnified Person’s prior written consent. TerraPower shall reasonably cooperate with the Contractor in the defense and settlement of any such claim, at the Contractor’s expense. Each Indemnified Person shall have the option to retain its own counsel, at the Indemnified Person’s own and sole expense, to participate in the defense and settlement of any claim or other matter subject to indemnification under this Section 14; provided, that if TerraPower does not request the Contractor defend any Indemnified Person, then TerraPower or such Indemnified Person shall have the right to retain its own counsel for the defense and settlement of any claim or other matter subject to indemnification under this Section 14, with the costs, fees and expenses of such counsel to be at the expense of Contractor.
14.3. Investigations.
Contractor will fully cooperate with any Indemnified Person in any investigation of any actual or potential claims, investigations or other proceedings made or asserted against or into such Indemnified Person. Such cooperation will include (without limitation) making employees available for interviews and depositions, providing requested documentation and otherwise being responsive to requests for information concerning such claim, investigation or other proceeding. This obligation to cooperate will survive the completion, expiration, cancellation or termination of this Agreement. This obligation will exist regardless of whether any indemnification obligations have been or will be triggered by the circumstances on which the claim, investigation or other proceeding is based and regardless of whether any Indemnified Person is named as a party in any lawsuit, arbitration or other action.
14.4. Indemnification by TerraPower.
In accordance with subsection 19.16, TerraPower shall use its commercially reasonable efforts to, or to cause applicable third parties to (i) maintain financial protection and an indemnification agreement as required by the Price-Anderson Act and 10 CFR Part 140, under which Contractor and its subcontractors shall be included as insureds, and (ii) obtain and maintain nuclear property damage insurance to the extent required under 10 CFR Part 140.
Except to the extent arising from a nuclear incident or precautionary accident, as defined by the Price Anderson Act, and arising from nuclear damage, as defined by the National Nuclear Regulator Act 1999 and its Regulations, pursuant to which all nuclear liability will be channeled to the licensed entity, TerraPower shall indemnify, defend (if requested by Contractor) and hold harmless Contractor and its affiliates (and its and their respective directors, officers, employees, representatives, agents,
Page 28 of SECTIONPAGES 40
vendors, suppliers, subrecipients, successors and permitted assigns) (each such person or entity, an “Contractor Indemnified Person”) from and against all damages, liabilities, claims, costs, losses and expenses of any nature (including attorneys’ fees and other costs of enforcement and defense), including claims based on death, bodily injury or loss of or damage to property or the environment, in any such case arising out of, or resulting in any way from any claim, dispute or other proceeding relating to the Project (separate and apart from the Deliverables), the Natrium reactor technology, or any part, combination or process thereof, including any claim for actual or alleged infringement, misappropriation or other violation of third party Intellectual Property.
15. Insurance.
15.1. Coverage Requirements.
During the Term of this Agreement and for ten (10) years after this Agreement is terminated, the Contractor shall, at its own expense, maintain each of the following minimum insurance coverages; provided, that Contractor shall not be permitted (without the advance written consent of TerraPower) to satisfy any of its obligations in this Section 15 by utilizing any self-insurance. The coverage limits referenced in Section 15 may be provided in equivalent amounts converted from USD to local currency:
a. All insurance coverage required by federal, state, or local law, including the Compensation for Occupational Injuries and Diseases Act, and including any additional statutory workers’ compensation insurance in the minimum statutory amount. With respect to workers’ compensation insurance:
i. To the extent permitted by law, Contractor specifically and expressly waives any immunity that it may be granted under the local law in an applicable jurisdiction and
ii. the indemnification obligation under this Agreement shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to or for any third party;
b. Commercial General Liability insurance written on an occurrence policy form which includes, but is not limited to, coverage for bodily injury, wrongful death, personal and advertising injury, property damage, contractual liability, and independent contractors with limits of not less than the following:
i. $1,000,000 Per Occurrence Limit;
ii. $1,000,000 Personal and Advertising Injury Limit;
iii. $2,000,000 General Annual Aggregate Limit;
iv. $2,000,000 Products-Completed Operations Aggregate Limit;
c. Employer’s Liability insurance with limits of not less than $1,000,000 bodily injury by accident, and $1,000,000 bodily injury by disease;
d. Automobile Liability insurance (including liability for hired and non-owned vehicles) with combined single limits of not less than $1,000,000 per occurrence. Such insurance shall cover injury or death and property damage arising out of ownership, maintenance or use of any private passenger or commercial vehicles and of any other equipment required to be licensed for road use. If hazardous materials are to be transported by Contractor to accomplish the work, then Contractor shall provide pollution auto coverage equivalent to that provided under the ISO pollution liability-broadened coverage for covered autos endorsement (CA 99 48);
Page 29 of SECTIONPAGES 40
e. Umbrella/Excess Liability insurance – on an occurrence basis in excess of the underlying insurance identified in in this Section 15, and which follows form of the underlying policies. The amounts of insurance required in this Section 15 may be satisfied by Contractor purchasing coverage for the limits specified or by any combination of underlying and umbrella/excess limits, so long as the total amount of insurance meets the limits specified in this Section 15 for the applicable types when added to the applicable limits for this paragraph. The umbrella/excess liability insurance limits shall have limits of $10,000,000 any one occurrence and in the aggregate;
f. Professional Liability insurance, insuring against professional errors and omissions arising from the Work on the Project by architects, engineers, landscape engineers, surveyors, and any other professional, with limits of $2,000,000 per claim and $2,000,000 annual aggregate. Such policy shall not contain any exclusions directed toward any types of projects, materials, services or processes involved in the Work. Coverage shall include but not be limited to: (i) insured’s interest in joint ventures, if applicable, and (ii) limited contractual liability. The retroactive date for coverage will be no later than the commencement date of design and will state that in the event of cancellation or non-renewal the discovery period for insurance claims will be at least 5 years or otherwise as by agreement with TerraPower; and
g. Commercial Property and Transit insurance: Contractor will maintain commercial property insurance covering physical loss or damage to all real and personal property, including for any equipment or materials purchased in connection with the Work or supplied by TerraPower. Coverage shall be provided for the Work Product until delivery and acceptance of Work Product by TerraPower. Such insurance shall be on a full replacement cost basis and include perils for earthquake, flood, and wind. Deductibles will be borne by Contractor. Contractor will hold harmless TerraPower, LLC and US SFR Owner, LLC and each of their affiliates, subsidiaries, officers, employees, consultants, and agents, for loss or damage to such property. TerraPower shall approve the Commercial Property insurer and shall have the right to review the Commercial Property insurance policy wording prior to binding or inception of the insurance policy. The policy shall name TerraPower as a loss payee.
15.2. Additional Requirements.
a. All liability policies, with the exception of workers compensation and professional liability, shall include as additional insured: TerraPower, LLC, and US SFR Owner, LLC, and their affiliates, subsidiaries, officers, directors, employees, consultants and agents. Prior to commencing any Work, Contractor shall provide TerraPower with certificate(s) of insurance and a copy of any applicable Additional Insured endorsement evidencing the coverages and terms required by this Section 15. Contractor liability policies shall contain provisions for cross liability and severability of interests of the insureds.
b. Contractor agrees and will cause their insurers to waive all rights of subrogation against TerraPower, LLC and US SFR Owner, LLC and their officers, directors, employees, consultants and agents to the extent covered by insurance required to be provided by Contractor and further waives all rights of recovery which are not covered by insurance because of deductible or self-insurance obligations relating to such insurance.
c. All policies under this Section 15 shall be primary and non-contributory with any similar insurance coverage (primary or excess) maintained by TerraPower.
d. All polices will be written by companies authorized to do business in the location where the Work is performed and have a rating by Best’s Key Rating Guide of at least A-VIII.
e. The insurance requirements contained herein shall not in any manner be deemed to limit or qualify the liability or obligations assumed by Contractor elsewhere in this Agreement.
Page 30 of SECTIONPAGES 40
f. TerraPower reserves the option to amend the required insurance of this Section 15, including insurance for related agreements required to complete the Work. Any such higher limits shall be identified in the SOW or PO.
15.3. Nuclear Liability.
a. Indemnity. To the extent permitted by law, and notwithstanding Section 14.1 of this Agreement, Contractor shall indemnify, defend, and hold harmless TerraPower from claims for Liability for Nuclear Damages arising from the Work, including but not limited to damages claimed under the National Nuclear Regulator Act (Act No.47 of 1999), the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No.130 of 1993), or common law, including any law amendatory thereof. Notwithstanding TerraPower’s ownership of Product Material pursuant to subsection 13.1, Contractor and its affiliated entities that are performing HALEU Enrichment Services shall, pursuant to Section 30.(1) of the National Nuclear Regulator Act (Act No.47 of 1999), as the nuclear installation license as that term is defined in be National Nuclear Regulator Act (Act No.47 of 1999), be deemed to be in possession and control of the radioactive material (i.e., HALEU Product Material) that governs the liabilities arising from such radioactive material.
b. Regulatory Requirements. Contractor shall obtain authorizations from the South African Nuclear Energy Corporation Ltd. (“NECSA”) and the Republic of South Africa Department of Mineral Resources and Energy (“DMRE”) as required by the Nuclear Energy Act (Act No. 46 of 1999), National Nuclear Regulator Act (Act No.47 of 1999) (the “South Africa Nuclear Acts”), and regulations implementing the South Africa Nuclear Acts, or any amendatory Act thereof, including Licenses, Certificates, Registrations, or Exemptions, as required to accomplish the Work.
c. Insurance. Contractor shall procure and maintain, or shall cause to be procured and maintained, insurance covering Liability for Nuclear Damage in such form and amount required by the South Africa Nuclear Acts. TerraPower shall be named as an additional insured under the insurance policy. Contractor shall provide evidence of insurance coverage to the TerraPower prior to the start of Work, annually thereafter, and upon request from TerraPower. In addition to insurance required by the South African Nuclear Acts, Contractor shall also maintain additional Nuclear Liability insurance with a limit of not less than $200,000,000 (or, if less, the maximum amount of coverage that is commercially available and approved by TerraPower) covering third-party bodily injury, property damage, environmental clean-up, and other costs and damages arising from the hazardous properties of nuclear material, including during transit.
d. Waiver of Subrogation. Contractor waives and will require its insurers to waive all rights of recovery against TerraPower, LLC and US SFR Owner, LLC and their affiliates, subsidiaries, officers, directors, employees, consultants and agents for Liability for Nuclear Damage arising from the Work. In addition, Contractor waives and will require insurers to waive all rights of recovery against TerraPower, LLC and US SFR Owner, LLC and their affiliates, subsidiaries, officers, directors, employees, consultants and agents for any and all costs or expenses arising out of or in connection with the investigation, defense, and settlement of claims or suits for Liability for Nuclear Damage.
e. Survival. Contractor acknowledges that this Exhibit shall survive any termination, expiration or cancellation of the Agreement, as well as the completion of work under the Agreement, for a period of not less than 30 years following such termination, expiration, cancellation, or completion, and shall apply notwithstanding any other provision of this Agreement or any other contract between the Parties.
Page 31 of SECTIONPAGES 40
f. Definitions.
i. Liability for Nuclear Damage means any liability for Nuclear Damage (as such term is defined in Chapter 1, Section 1(xv) of the National Nuclear Regulator Act) of any kind, whether based on contract, warranty, indemnity, tort (including negligence of whatever degree), strict liability, or otherwise. Contractor shall indemnify TerraPower for TerraPower’s liabilities notwithstanding the exceptions to Nuclear Liability in Chapter 4, Sections 30(5), 30(6), 30(7), 30(8), 30(9), and 32(1) of the National Nuclear Regulator Act.
16. Force Majeure Event.
16.1. Suspension of Performance.
If a Force Majeure Event occurs, the Nonperforming Party is excused from (i) whatever performance is prevented by the Force Majeure Event to the extent and for the duration so prevented; and (ii) satisfying whatever conditions precedent to the Performing Party’s obligations that cannot be satisfied, to the extent and for the duration they cannot be satisfied due to such Force Majeure Event; provided, that the Nonperforming Party complies in full with its obligations pursuant to this Section 16. Despite the preceding sentence, a Force Majeure Event does not exclude any obligation by either the Performing Party or the Nonperforming Party to make any payment required under this Agreement. In allocating the risk of delay or failure of performance of their respective obligations under this Agreement, the Parties have not taken into account the possible occurrence of any of the events listed in the definition of “Force Majeure Event” or any similar or dissimilar events beyond their control.
16.2. Obligation of the Nonperforming Party.
The Nonperforming Party shall provide the Performing Party with written notice of the Force Majeure Event and a report detailing how its obligation under this Agreement is affected by the Force Majeure Event as promptly as practicable under the circumstances (and in no event later than thirty (30) days of the occurrence of the Force Majeure Event); provided, however, the failure to give such prompt written notice shall not affect the rights of the Nonperforming Party under this Section. During the continuation of the Force Majeure Event, the Nonperforming Party shall exercise diligent efforts to remedy the cause of such Force Majeure Event and mitigate or limit damages to the Performing Party. As soon as commercially reasonable, the Nonperforming Party shall resume its obligations and use diligent efforts to make up any lost time.
16.3. Right of the Performing Party.
Notwithstanding Section 6 (Term and Termination; Suspension), if the Performing Party is TerraPower and in the Performing Party’s sole and absolute discretion, it determines that the delay caused by the Force Majeure Event is unacceptable, it may terminate this Agreement at any time after receiving the Nonperforming Party’s notice of the Force Majeure Event.
17. Limitation of Liability
17.1. LIABILITY CAP.
EXCEPT AS EXPRESSLY PERMITTED IN SECTION 6 AND SECTION 11, AND NOTWITHSTANDING ANYTHING TO THE CONTRARY OTHERWISE IN THIS AGREEMENT, THE TOTAL AGGREGATE LIABILITY OF EITHER PARTY (INCLUDING THEIR SUBCONTRACTORS AND VENDORS), WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), WARRANTY, STRICT LIABILITY OR OTHER LEGAL THEORY, ARISING OUT OF OR IN CONNECTION WITH SUPPLY OF THE EQUIPMENT OR THE PERFORMANCE, NON-PERFORMANCE OR BREACH OF THIS AGREEMENT OR ANY OTHER OBLIGATIONS HEREUNDER SHALL IN NO EVENT EXCEED AN AMOUNT
Page 32 of SECTIONPAGES 40
EQUAL TO (x) IN THE FIRST YEAR OF THE TERM ONLY, FIFTY (50%) PERCENT OF CONTRACTOR’S PROFIT UNDER THE KEMMERER POWER STATION UNIT 1 FIRST FUEL LOAD CONTRACT, AND (y) DURING THE REMAINDER OF THE TERM AFTER THE FIRST YEAR, ONE HUNDRED (100%) PERCENT OF THE TOTAL AMOUNTS ACTUALLY PAID TO CONTRACTOR PURSUANT TO THIS AGREEMENT IN THE 12 MONTHS PERIOD PRECEDING THE EVENT GIVING RISE TO THE CLAIM (SUCH AMOUNT, AS APPLICABLE, THE “AGGREGATE LIABILITY CAP”); PROVIDED, THAT CONTRACTOR’S OBLIGATIONS UNDER (X) SECTION 6.4.b SHALL NOT EXCEED AN AMOUNT THAT IS EQUAL TO FIFTEEN PERCENT (15%) OF THE AGGREGATE LIABILITY CAP, (Y) SECTION 11.5(a.)(ii.) SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT THAT IS EQUAL TO FIFTEEN PERCENT (15%) OF THE AGGREGATE LIABILITY CAP, AND (Z) THE TOTAL OF SECTION 6.4.b, AND SECTION 11.5(a.)(ii.) SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT THAT IS EQUAL TO TWENTY-FIVE PERCENT (25%) OF THE AGGREGATE LIABILITY CAP; PROVIDED, FURTHER, THE FOLLOWING SHALL BE EXCLUDED FROM ANY SUCH LIMITATIONS OF AGGREGATE LIABILITY: (I) CONTRACTOR’S INDEMNITY OBLIGATIONS UNDER SECTION 14.1(b), (II) GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR ACTUAL FRAUD, (III) LIABILITY FOR VIOLATIONS OF APPLICABLE ENVIRONMENTAL, HEALTH AND SAFETY LAW BY CONTRACTOR; (IV) CLAIMS TO THE EXTENT CONTRACTOR HAS RECEIVED THE PROCEEDS OF INSURANCE WITH RESPECT TO SUCH CLAIMS UNDER THE INSURANCE POLICIES REQUIRED TO BE MAINTAINED BY CONTRACTOR UNDER THIS AGREEMENT; (V) THE COST OF PERFORMING CONTRACTOR’S OBLIGATIONS UNDER SECTION 11 (WARRANTY) (EXCEPT TO THE EXTENT SET FORTH IN THIS SECTION 17.1 WITH SPECIFIC REFERENCE TO 11.5.(a.ii.); (VI) LIABILITY FOR BREACHES BY CONTRACTOR OF THE INTELLECTUAL PROPERTY AND CONFIDENTIALITY TERMS AND CONDITIONS HEREIN; AND (VII) LIABILITY FOR BREACHES BY CONTRACTOR OF ITS OBLIGATIONS IN SECTION 2.6.
17.2. NO LIABILITY FOR CERTAIN DAMAGES; EXCEPTIONS.
EXCEPT AS EXPRESSLY PERMITTED IN SECTION 6 AND SECTION 11, NEITHER PARTY SHALL HAVE ANY LIABILITY WHATSOEVER FOR INDIRECT, CONSEQUENTIAL, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT APPLY TO (I) GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR ACTUAL FRAUD OR (II) LIABILITY FOR BREACHES BY CONTRACTOR OF THE INTELLECTUAL PROPERTY AND CONFIDENTIALITY TERMS AND CONDITIONS HEREIN.
18. Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities.
18.1. Recordkeeping Requirements.
During the Term of this Agreement and for three (3) years after its termination, extended for any longer period during which Contractor retains any of TerraPower’s Confidential Information (unless, in any such case, a longer period is otherwise specified by Applicable Law,) (such period, the “Recordkeeping Period”), the Contractor shall maintain complete, accurate, and organized books and records as well as a reasonable accounting and cost tracking system, supporting the costs charged to TerraPower in connection with the Work.
18.2. Onsite Inspections.
During the Recordkeeping Period, TerraPower may conduct onsite and/or offsite inspections and audits, at all reasonable times and with advance written notice to Contractor, of the Contractor’s
Page 33 of SECTIONPAGES 40
business, operations, books and records, data security reports and systems that relate to the Contractor’s functions, operations and services provided under this Agreement as well as the cost requirements hereunder for the purpose of confirming compliance with the provisions of this Agreement, verifying payments or requests for payment when costs are the basis of such payment or evaluating the reasonableness of proposed Price adjustments and claims. If TerraPower establishes uniform codes of accounts for the project the subject of this Agreement, Contractor shall use such codes in identifying its records and accounts.
18.3. Entering Contractor Facilities to Verify Compliance.
TerraPower and its designees shall have the right, at reasonable times and upon advance notice, to enter the facilities of the Contractor and its sub-tier subcontractors or permitted subcontractors (if any) for the purpose of verifying compliance with the requirements of this Agreement. Verification may include such activities as witnessing operations in progress, witnessing inspections and tests, performing product inspections and tests, reviewing quality assurance documents and records, and performing audits. Contractor agrees to cooperate, and to cause its subcontractors, vendors and suppliers to cooperate, with TerraPower with respect to such activities, including by providing reasonable access to facilities, office space, resources, and assistance for the safety and convenience of any TerraPower representatives in the performance of their duties. Upon request by TerraPower, Contractor shall provide TerraPower or its designee with any and all quality assurance information, documents, and records related to this Agreement and the performance of Contractor's obligations under this Agreement.
18.4. Consequence of Failure to Comply.
If any inspection or audit under this Section 18 reveals that the Contractor has failed to comply with its obligations under this Agreement, then: (i) TerraPower shall notify the Contractor of the amount of such unsubstantiated charges or such overcharge and the Contractor shall promptly pay such amount to TerraPower; and (ii) TerraPower may terminate this Agreement if in effect upon written notice to the Contractor, effective as of the date set forth in such termination notice. The Contractor shall cause any of its subcontractors performing any of the Work to provide the same rights to TerraPower as set forth in this Section 18.
18.5. Retention of Records; Notification Prior to Destruction.
Notwithstanding anything to the contrary herein, Contractor shall not, and shall not permit any of its subcontractors, vendors or suppliers to, destroy or otherwise render unavailable or inaccessible any documentation, books, records or other information, in each case whether in whole or in part, at any time following the expiration of the Recordkeeping Period without providing TerraPower at least ninety (90) days’ advance written notice (and, at any time after such written notice is received, TerraPower and its representatives shall be permitted, during normal business hours, to examine, make copies of and retrieve any such documentation, books, records or other information, and Contractor shall reasonably cooperate in furtherance thereof).
18.6. Electronic Records.
If any records or other documentation to which TerraPower or any other person or entity is granted access pursuant to this Section 18 are maintained in electronic format, Contractor will provide such records and documents in electronic data format that is reasonably acceptable to the recipient. Contractor agrees to cooperate fully with any inspections or audits under this Section 18.
18.7. TerraPower Inspection Rights.
TerraPower reserves the right, but shall not be obligated, to inspect (by any of its representatives) the performance by Contractor of the Work hereunder, including at Contractor’s sites, to:
a. follow the progress of the Work; or
Page 34 of SECTIONPAGES 40
b. exercise, or prepare to exercise, any of its rights to suspend Work pursuant to this Agreement.
Such inspection by TerraPower’s representatives will not be deemed to be supervision by TerraPower, its agents, servants, employees or subcontractors, but will be only for the purpose of ensuring that the Work complies with the terms and purpose of this Agreement. TerraPower may report to Contractor any unsafe or improper conditions or practices observed at any site at which Work occurs for corrective or enforcement action by Contractor. Contractor must provide reasonably sufficient, safe and proper facilities at all times for the inspection of the Work. The applicable TerraPower Representatives shall have free access to the Work and to all parts of Contractor’s premises engaged in the Work at reasonable times upon compliance with Contractor’s internal policies and security measures (in each case, to the extent made reasonably available to TerraPower) relating to site access and access to confidential information and networks of Contractor; provided, that any such access measures are no more stringent than those expressly provided in this Agreement. “Free access” includes, without limiting the generality of the term, the right of such TerraPower representatives to enter the premises of Contractor. Contractor will afford such TerraPower representatives, without charge, such reasonable facilities on Contractor’s premises as are appropriate for such TerraPower representatives to conveniently observe and inspect the Work in progress and will allow such TerraPower Representatives to have such other conveniences as would normally accompany such inspection. Nothing in this Section 18 shall limit any inspection, testing and related rights of TerraPower or its representatives set forth in the SOW applicable to any Work.
18.8. Contractor Assistance.
Contractor understands and acknowledges that as a result of its performance of this Agreement and the special knowledge it possesses, and in order to defend and explain the decisions, procedures and standards applicable to its furnishing or performing the Work, Contractor may be called upon to assist TerraPower in preparation and presentation of information to or before governmental authorities, including making personnel available to testify to factual matters relating to the Work at formal and informal government proceedings, and providing all documents and information reasonably requested by TerraPower, including review and comment to sections prepared by others, and any amendments thereto, to address formal NRC licensing questions on a schedule that supports the Project schedule and licensing support services. Contractor agrees that it will use its good faith and commercially reasonable efforts to assist TerraPower in the preparation of testimony, reports or other documents as may be necessary when requested by Company to provide such assistance. This obligation to assist will survive the completion, expiration, cancellation or termination of this Agreement.
18.9. [Reserved].
19. Miscellaneous.
19.1. Export Control.
The Contractor acknowledges that performance of this Agreement is subject to compliance with applicable United States laws, regulations, and/or orders, including those that relate to the export of nuclear materials, equipment, software, and technology, such as the U.S. Department of Energy regulations found in 10 CFR. Part 810, the U.S. Nuclear Regulatory Commission regulations in 10 CFR Part 110, and the U.S. Department of Commerce’s Export Administration Regulations (EAR) found in 15 CFR Part 730 et seq., as may be amended (collectively, “Export Control Laws”). The Contractor agrees to comply with all Export Control Laws, including as they are updated or amended.
The Contractor shall not export, re-export, transfer or retransfer, directly or indirectly, any Confidential Information, except as permitted by such Export Control Laws. Notwithstanding anything to the contrary in this Agreement, and in order to ensure compliance with Export Control Laws,
Page 35 of SECTIONPAGES 40
a. Contractor shall not, absent prior written approval by TerraPower use, directly or indirectly, Confidential Information or materials in any application involving a military use, missile technology, nuclear proliferation/nuclear explosive device, chemical and biological weapons proliferation; and,
b. Contractor shall not, absent prior written approval by TerraPower, disclose or furnish Confidential Information or materials that are controlled for export under Export Control Laws to any Foreign Nationals (including any of its employees, agents or other representatives) who are of a different nationality than the Contractor. Contractor further acknowledges and agrees
that it assumes full responsibility for the accuracy of any self-attestation of citizenship or other status provided by its employees, agents and other representatives in connection with any disclosure or furnishing by or on behalf of TerraPower of Confidential Information that is controlled for export under Export Control Laws to such employees, agents and other representatives.
TerraPower and Contractor respectively shall identify and mark (in accordance with TerraPower’s marking requirements) all documents that contain information controlled for export under Export Control Laws, with appropriate and conspicuous export control markings, prior to transmittal to TerraPower or Contractor respectively, as the case may be. TerraPower and Contractor respectively also shall provide to the other party export control classification numbers (ECCNs) for any items, technology, or software, controlled for export under the EAR, that TerraPower or Contractor delivers or transmits to the other party under this Agreement.
The Contractor:
a. recognizes that the products and/or technology transferred to the Contractor, or that the Contractor is given access to, under this Agreement, may remain subject to Export Control Laws and regulations even after they are exported from the United States;
b. certifies that such products or technology will not be diverted, transshipped, re-exported or otherwise transferred in contravention to Export Control Laws, including in particular disclosure or transfer to any Foreign National or country requiring a “specific authorization” (see 10 CFR § 810.7) without prior written approval from the designated U.S. Government department or agency; and,
c. affirms that such products or technology will not be used, directly or indirectly, in any application involving military use, missile technology, nuclear proliferation, nuclear explosive devices, and/or chemical or biological weapons proliferation. The Contractor agrees to comply with all Export Control Laws as they are updated or amended.
In the event of any noncompliance with this subsection 19.1, TerraPower shall be entitled to immediately terminate the Agreement and take such other actions as are permitted or required to be taken under Applicable Law.
19.2. [Reserved].
19.3. Communication and Protection of Data
Contractor will comply with the methods of communication invoked by TerraPower to transmit and receive information that is deemed to be sensitive or might be subject to subsection 19.1 (Export Control). TerraPower has established a secure electronic information transfer system that will be used by TerraPower, Contractor and any TerraPower-authorized third parties to transfer data and other information. The CA will work with the Contractor to establish the methods and access for secure file transfer.
Page 36 of SECTIONPAGES 40
19.4. Counterparts
This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, and all such counterparts when taken together will be deemed to be but one and the same instrument. Original signatures transmitted by facsimile or electronic mail will be effective to create such counterparts.
19.5. Amendments; Modifications
The Parties may amend this Agreement to modify any terms in this Agreement as well as any terms in the exhibits. No revision, amendment, modification or termination (other than any change or termination by TerraPower expressly permitted herein), or waiver of any provision in this Agreement will be valid unless made in accordance with Section 5 (Changes), or otherwise in writing and signed by both the Contractor and TerraPower, and then only in the specific instance and for the specific purpose given.
19.6. Notices
Any written notice required or permitted under this Agreement will be effective:
a. on the date it is personally delivered (with a signed acknowledgement by the receiving Party memorializing the date of delivery);
b. on the date when the notice is transmitted by electronic facsimile or e-mail (with a confirmation copy to be sent by mail);
c. the day after the notice is sent by overnight air courier service; or,
d. five (5) days after the date of mailing.
Notice to TerraPower must be addressed to: 15800 Northup Way, Bellevue, WA 98008. Notices and communications relating to commercial matters and this Agreement generally must be sent to the CA’s attention. Communications relating to technical matters must be sent to the TR’s attention, with a copy to the CA. Notices and communications to the Contractor must be addressed to the Contractor at the address appearing on the signature page of this Agreement and Contractor shall identify, prior to commencement of the Work, to whom TerraPower should direct notices and communications. TerraPower or the Contractor may change their address only by notice given to the other in the manner set out in this subsection 19.6.
19.7. Binding Effect; Assignment; Security
a. This Agreement will be binding upon and inure to the benefit of the Contractor and TerraPower and their respective permitted successors and assigns. This Agreement, including the rights and obligations hereunder, may not be assigned or transferred by the Contractor without the prior written consent of TerraPower, which consent is within TerraPower’s sole discretion. Contractor agrees that TerraPower may, in its sole discretion, assign all or part of any right, title, and interest in this Agreement, delegate any obligations, or otherwise dispose of or encumber the whole or any part of either its benefits or obligations hereunder to US SFR Owner, LLC (“USO”) or any third-party purchaser of all or part of the Project, or any Natrium reactor owners.
b. Contractor’s obligations under this Agreement will be secured by a pledge of all of the equity interests and rights of any nature whatsoever in respect of the issued and outstanding stock of (a) QLE TP Funding SPE, LLC by its owner Quantum Leap Energy LLC, and (b) K2025267858 (South Africa) (Pty) Ltd. by its owner QLE TP Funding SPE, LLC, all pursuant to that certain Pledge Agreement of even date herewith made by the pledgors party
Page 37 of SECTIONPAGES 40
thereto for the benefit of TerraPower, including all amendments, restatements and other modifications thereto.
19.8. Integration; Construction
This Agreement, including the PO, SOW, all Exhibits, and all supplemental or other incorporated terms and conditions and all other documents incorporated by reference into this Agreement, constitutes the complete and integrated agreement of TerraPower and the Contractor and supersedes all prior agreements, written or oral, on the subject matter of this Agreement. This Agreement will be deemed to be drafted by both Parties, and it may not be construed against TerraPower as the drafter of the document.
19.9. Governing Law; Dispute Resolution
a. This Agreement shall be interpreted and construed in accordance with the laws of the State of Washington, without regard to choice of law principles to the contrary. Contractor irrevocably consents to the exclusive jurisdiction of the state and federal courts located in King County, Washington.
b. Each of Contractor and TerraPower shall make good-faith efforts to initially resolve any dispute or claim that arises in connection with this Agreement through discussions and negotiations between the Parties within thirty (30) days. If such efforts fail to result in a mutually agreeable resolution, the Parties shall consider the use of alternative dispute resolution (“ADR”). In the event non-binding mediation or arbitration is agreed upon, the site of the proceedings shall be King County, Washington. The mediator or arbitrator shall allocate costs in accordance with subsection c. below as part of the final resolution or award. In the event that ADR fails or is not pursued, either Party may bring a claim in the courts specified in subsection a. above; provided, however, this subsection b. is not intended to limit a Party’s right to seek relief directly to the courts specified in subsection (a) above in the event of a breach of Section 12 (Proprietary Rights and Confidentiality) of this Agreement.
c. In the event of any litigation or other dispute arising as a result of or by reason of this Agreement, the prevailing Party in any such litigation or other dispute will be entitled to, in addition to any other damages assessed, its reasonable attorneys' fees, and all other costs and expenses incurred in connection with settling or resolving such dispute. The attorneys' fees that the prevailing Party is entitled to recover will include fees for prosecuting or defending any appeal and will be awarded for any supplemental proceedings until the final judgment is satisfied in full. In addition to the foregoing award of attorneys' fees to the prevailing Party, the prevailing Party in any lawsuit on this Agreement will be entitled to its reasonable attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This attorneys' fees provision is separate and several and will survive the merger of this Agreement into any judgment.
19.10. Severability of Provisions
Any provision in this Agreement that is held to be invalid in any jurisdiction will be, as to that jurisdiction only, invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of those provisions in any other jurisdiction, and to this end the provisions of this Agreement will be severable; provided, that if any such provision is so held to be invalid in any jurisdiction, the Parties shall promptly and with reasonable diligence negotiate in good faith to agree to a replacement provision therefor that provides the closest intended effect of the invalidated provision.
19.11. Waiver; Rights and Remedies
Page 38 of SECTIONPAGES 40
Neither the Contractor's nor TerraPower's failure to exercise any right under this Agreement will constitute a waiver of any term or condition of this Agreement with respect to any other preceding, concurrent, or subsequent breach, nor will it constitute a waiver by TerraPower or the Contractor of its rights at any time thereafter to require exact and strict compliance with any of the terms of this Agreement. The rights and remedies specified in this Agreement are in addition to any other rights or remedies that may be granted by law.
19.12. Order of Precedence
If any term of this Agreement conflicts with any other of its terms, the Parties shall apply the following order of precedence: (a) the terms of the PO; provided, that any term within the PO that purports to change a term or condition of this Agreement shall clearly and specifically indicate that it is modifying a specific term of the Agreement and identify the specific term; (b) the terms and conditions of this Agreement, as amended pursuant hereto, in reverse chronological order of such amendments; (c) SOW; and (d) documents referenced in the SOW with amendments thereto ranking in precedent in reverse chronological order. TerraPower shall not be bound by, and specifically objects to, any term, condition or other provision contained in or presented on any quotation, invoice, shipping document, acceptance, confirmation, correspondence or other documents from Contractor that purport to amend, modify or supplement this this Agreement.
19.13. Interpretation
In this Agreement, the singular includes the plural and the plural the singular; the terms “including” and “include” will mean “including but not limited to”; and references to a “Section” will mean a section of this Agreement, unless otherwise expressly stated. All section titles in this Agreement are for convenience or reference purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. The terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. All accounting terms used and not defined herein have the respective meanings given to them under generally accepted accounting principles in effect from time to time in the applicable jurisdiction. Any event, the scheduled occurrence of which would fall on a day that is not a business day, shall be deferred until the next succeeding business day. Reference to any law, permit or contract means such law as in effect from time to time and such permit or contract as may be amended, modified or supplemented from time to time (respectively). The word “or” shall not be exclusive. The Parties hereto have participated jointly in the negotiation and drafting of this Agreement, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party by virtue of the authorship of this Agreement shall not apply to the construction and interpretation hereof.
19.14. Independent Contractor
TerraPower retains the Contractor only for the purposes and to the extent set forth in this Agreement, and the Contractor's relation to TerraPower during the term of this Agreement is that of an independent contractor and not an employee. The Contractor will control the methods, details, and means in which the Work is performed. Notwithstanding the foregoing, TerraPower retains the right to review and provide oversight of the performance of the Work so as to ensure that such Work conforms to the requirements of this Agreement.
19.15. Survival
Obligations under this Agreement of a continuing nature, including without limitation subsections 6.3–6.4 (Term and Termination; Suspension), (if applicable) Section 9 (Competitors; Non-Solicitation; Publicity) Section 11 (Warranty; Delay and Performance Remedies), Section 12 (Proprietary Rights and Confidentiality), Section 14 (Indemnity), Section 15 (Insurance), Section 17
Page 39 of SECTIONPAGES 40
(Limitation of Liability), Section 18 (Books and Records; Audits; Inspection Rights; Cooperation with TerraPower and Governmental Authorities) and subsection 19.9 (Governing Law; Dispute Resolution), shall survive the completion, termination or cancellation of this Agreement.
19.16. Nuclear Liability
TerraPower shall use its commercially reasonable efforts to, or to cause applicable third parties to (i) maintain financial protection and an indemnification agreement as required by the Price-Anderson Act and 10 CFR Part 140, under which Contractor and its subcontractors shall be included as insureds, and (ii) obtain and maintain nuclear property damage insurance to the extent required under 10 CFR 50.54(w) to cover applicable onsite property, and waive any right of recovery and any rights of subrogation against Contractor and it subcontractors for any damage to applicable onsite property resulting from a nuclear incident.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS
Page 40 of SECTIONPAGES 40
IN WITNESS WHEREOF, the Parties have executed or caused their respective duly authorized officer to execute this Agreement as of the Effective Date.
ASP Isotopes Inc. TerraPower, LLC
By: /s/ Paul Mann By: /s/ Jeff Miller
Name: Paul Mann Name: Jeff Miller
Title: CEO Title: Vice President
Address: 601 Pennsylvania Avenue NW Address: 15800 Northup Way
South Building, Suite 900 Bellevue, Washington 98008
Washington, D.C. 20004