SMART Sustainable Moulding of Articles from Recycled Tyres

1. SMART Sustainable Moulding of Articles from Recycled Tyres Administrative & Contractual Issues KICK-OFF MEETING Brusselles, 21 MARCH 2012

2. EC ContractualFramework • Grant Agreement n°286608 (Main Contract): • Annex I – The Descriptionof Work: SpecialClausesapply (EthicalReview) • Annex II – General Conditions • Annex III – Specific provision related to “RESEARCH FOR SMES” or “RESEARCH FOR SME ASSOCIATIONS” • Annex IV - Form A – Accession of beneficiaries to the grant agreement • Annex V - Form B – Request for accession of a new beneficiary to the grant agreement • Annex VI - Form C – Financial statement per funding scheme • Annex VII - Form D – Terms of reference for the certificate on the financial statements and Form E - Terms of reference for the certificate on the methodology

3. Start date, duration and ReportingPeriods Grant Agreement art. 3 & 4 • Project Duration: 36 months • Start date:1st of March 2012 • End date: 30th of March 2015 • Reporting Periods: • RP1: M0 – M15(1st March 2012– 30th June 2013) • RP2: M16- M36 (1st July 2013 – 30th March 2015)

4. Periodic Reports • Eligible and Non-Eligible Costs • Cost Claiming Project Reporting

5. Project Reporting • Annex II – Art. II.4 • The consortium shall submit a periodic report to the Commission for each reporting period. • The report shall contain: • A publishable summary • An overview of the progress of work towards the objectives of the project, description of the work carried out, milestones and deliverables. This report should also include the differences between work expected to be carried out in accordance with Annex I. • an explanation of the use of the resources, and • a financial statement - Form C (Annex VI) for each beneficiary Submission of the Reports to the EC within 60 days after the end of each period.

6. EligibleCosts ANNEX II - SECTION 1 – GENERAL FINANCIAL PROVISIONS II.14. Eligible costs of the project • To be considered ‘eligible’, costs claimed must : • Have been incurred during the project lifetime, • Be ACTUAL, ECONOMIC and NECESSARY for the project • Find in accordance with ACCOUNTING principles of the contractor • Be recorded in the accounts of the contractor • they must be indicated in the estimated overall budget in Annex I.

7. Eligible and noneligiblecosts • ANNEX II Art.II.14 – you will find all the details of what are considered ‘eligible’ and ‘non eligible’ costs. • As an example of ELIGIBLE COSTs : • Personnel, • Travels, • Consumables, • Equipment, • Services of other kind of subcontracting, • Subcontracting for RTD Services – TRANSACTION COSTS • As an example of NON ELIGIBLE COSTs : VAT, interest paid, cost sustained out of the project timeframe or for another project, etc.

8. IdentificationofCosts - Personnel • Personnel costs are identified by indicating the Full Name of the employee , the actual hourly rate and the n° of hours worked on the project. • HOURLY RATE: Actual monthly labor cost (paid by the organization) for the given employee (pay roll) / the hours worked in a month (160 hours for example). • N° of hours worked on EC projects: the hours must be proved with timesheets. Timesheets can be made “at project level” indicating the hours on the project and the remaining in other activities (like in the model below).

9. CostClaiming – Supportingdocuments and controls No supporting document to the cost declared has to be sent to the EC with the reports BUT…the Commission may, at any time during the implementation of the project and up to five years after the end of the project, arrange for financial audits (see Annex II – Art. II.22. Financial audits and controls). It is important to correctly report the costs in order to be able, in case of audit, to show the supporting documents if needed (i.e. timesheet, payroll, invoices, travel tickets, etc.). No specific formats are requested as supporting documents for your costs Details and concrete examples can be found in the Guidelines to financial issue: ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf

10. CostClaiming – Documents and Information • Financial Statements • FORM C: official EC form to be signed and sent in original copy containing a summary of the cost sustained during the period. • Progress Report: • Table indicating the details for Personnel, Travel, Consumables, equipment, etc.; with an explanation of their use during the project period. • Description of the work carried out at task level, with specific indication of the personnel efforts provided. • Audit Certificate: • when total ( cumulative) FORM C submitted per the partners exceeds € 375.000. • ( Applicable to ETRA, IASLIM, ADRIA and GRP)

11. Form C • Financial statement

12. Table 3.1 of the progress report

13. Consortium Agreement and Payments • The Consortium Agreement • EC Payments • Invoicing

14. ConsortiumContractualframework – The Consortium Agreement (CA) The Consortium Agreement is a MANDATORY deliverable of the project and it is supposed to be agreed and signed by the end of M2 of the project (for SMART project this means by 31stApril 2012). The purpose of the Consortium Agreement is: “to specify with respect to the Project the relationship among the Parties, in particular concerning the organization of the work between the Parties, the management of the Project and the rights and obligations of the Parties concerning inter alia liability, Access Rights and dispute resolution”.

15. The Consortium Agreement TableofContents • SECTION 1: DEFINITIONS • SECTION 2 : PURPOSE OF THE CONSORTIUM AGREEMENT • SECTION 3: ENTRY INTO FORCE, DURATION AND TERMINATION • SECTION 4: RESPONSIBILITY OF PARTIES • SECTION 5: LIABILITY TOWARDS EACH OTHER • SECTION 6: GOVERNANCE STRUCTURE • SECTION 7: FINANCIAL PROVISIONS • SECTION 8: FOREGROUND • SECTION 9: ACCESS RIGHTS • SECTION 10: NON-DISCLOSURE OF INFORMATION • SECTION 11: MISCELLANEOUS • SECTION 12: SIGNATURES

16. Fundingprinciples and PaymentModalities • In “Research for SMEs Associations-like projects, the basic principle is that the Associations subcontract the research and development work to the RTD Performers, called by the EC : TRANSACTION COSTS. • As in any other commercial relationship, the RTD Performers have to emit proper invoices for the TRANSACTION COSTS. • The SME will report their internal costs and these transaction costs to the EC and will receive the EC Grant. • The Commission Grant (calculated as max. 110% of the Transaction costs) has been conceived to: • fully cover all the subcontracted research and development costs (INVOICES) • leave some money in the SMEs’ pockets to partially refund the INTERNAL COSTS

17. EC Grant Sharing – Consortium Agreement Art. 7

18. EC PaymentModalities – Grant Agreement Art. 6 Pre-financing for SMART project equals to € 1,380,470.00(70% of the total grant), and contractually paid within 45 days after the date of entry into force of the Contract. Note:€ 98,605.00out of the pre-financing (5% of the total grant) is retained by the Commission and transferred to the Guarantee Fund. Further payments: at each reporting period, the Commission shall evaluate project reports and deliverables and disburse the corresponding payments (calculated on the actual costs claimed) within 105 days of their receipt. The total pre-financing may not exceed 90%of the Community financial contribution (85% considering the Guarantee Fund).

19. Payment Schedule forRTDs – proposalof the CA Art. 7 • In order to maintain a prudent approach, we usually propose to distribute the funds according to the following time schedule: • TRANSACTION COSTS PAYMENT • 1st Advance payment : 35% of total transaction costs at the beginning of the project (M0). • 2nd Advance Payment: an additional 15 % of total transaction costs at M12 provided the finalization of all the M0-M12 due deliverables. • P1Balance Payment:the balance amount is calculated as the difference between the Advance payments received and the actual transaction costs declared in the P1 report, provided the appropriate reporting of costs and activities (M17). • 3rd Advance payment : cumulativelyup to the limit of what transferred by the EC ( usually 85%) of the total transaction, provided the approval of the first reporting period (P1) and the reception of the 2nd pre-financing by the Coordinator ( usually M20). • Balance: calculated as the difference between the Total actual Transaction costs approved by the EC and the amounts already transferred provided the reception of the final payment made by the EC to the Coordinator

20. Payment Schedule forAssociations/SMEs – proposalof the CA Art. 7 • INTERNAL COSTS PAYMENT • 1stAdvance payment : 50% of total internal costs at the beginning of the project (M0). • 2nd rd Advance payment : cumulativelyup to the limit of what transferred by the EC ( usually 85%) provided the approval of the first reporting period (P1) and the reception of the 2nd pre-financing by the Coordinator . • Balance Payment : calculated as the difference between what already transferred and the actual remaining funding calculated as the total funding approved by the EC and the actual total transaction costs approved by the EC provided the reception of the final payment made by the EC to the Coordinator

21. PaymentofInvoices – proposalof the CA Art. 7 • The Coordinator will proceed with the payment of invoices on behalf of the Associations/SMEs according to the following procedure: • Step1: all payments shall be made by the Coordinator in accordance with the payment schedule described in the Consortium Agreement and ONLY following to the reception of the explicit Payment Authorization/Request from the Associations/SME to the Coordinator. • Step2: the Coordinator will send to the Associations/SME the bank statement of the reference payment. • Step3: the RTDP will send the Acquaintance Letter to the Associations/SME confirming the payment of the invoice.

22. PaymentsScheme

23. Paymentmechanism and company books INCOME • The incomefor the project is the Fundinggenerated • Youhavetoregister a project incomeeverytimeyousendus a Paymentrequestfor the amountindicatedas Total ( invoices + internalcosts) COSTS • Invoices + internalcosts

24. Paymentmechanism and company books CREDIT/DEBT Example: 1 SME, 1 RTDP , 1 invoicefor €10K, internalcostfor €1K The SME sendsto the Coordinator a paymentrequestfor 11keuro The SME registers a CREDIT for €11K towards the EC ( FYI - In Italy wesendaninvoiceto the EC for the fundingreceivedsince, according the Italian law, the objective of these kind of contracts is considered a regular “services provision” between each contractor of the Consortium and the EC.) The SME receives the invcoicefrom the RTDP for €10K registers the DEBT The Coordinatorpay the RTD on behalfof the SME for €10K The Coodinatorpays €1K to the SME The SME balance the debt and the credit The CA, the paymentrequest and the bankstatements are the supportingdocumentsforthistriangulation.

25. Issuingof INVOICES RTD performers are free to send invoice for advance payment ( according to the national legislation) RTD have to invoice the actual transaction costs for each period, within 60 day from the end of the reporting period (M15 – M36). In case the date is beyond the date of the period it must be explicitly indicated that the invoice refers to the work performed in the reference period ( M0-M15 or M16-M36) Note: In case of problems with the national legislation each Partner have to timely inform the coordinator of the national legislation constraints in order to find a solution

26. VAT issue • VAT is NOT an eligible cost • All SME-AGs and SMEs hereby explicitly acknowledge that all invoices are subject to VAT and that VAT is not an eligible cost under the Grant Agreement (Annex II, Art. II.14.3 a). Accordingly, all RTD performers’ invoices will be subject to VAT, to be charged in accordance with the national laws applicable and following the reverse charge mechanism for intra-communitarian operations.

27. TRANSACTION ALLOCATION per partner tominimize VAT impact – Attachment 6 of the CA

28. Thankyou! Labor s.r.l. Via Giacomo Peroni 386 00131 Roma C/O Tecnopolo Tiburtino For any questions regarding contractual and financial issues you can contact Cristina Torrisi: c.torrisi@labor-roma.it