exv10w65



 




EXHIBIT 10.65




SETTLEMENT AGREEMENT




     This Settlement (the “ Settlement Agreement”) is entered into as of the
9th of February, 2004 (the “Settlement Date”), by and between United States
Enrichment Corporation, a Delaware Corporation with offices at 6903 Rockledge
Drive, Bethesda, Maryland 20817 (“USEC”) and the United States of America,
acting by and through the Secretary of Energy, the statutory head of the
Department of Energy (“DOE”), each of which is sometimes referred to herein as
a “Party” and collectively as the “Parties”.




Recitals




     A. Pursuant to Section 1403 of the Energy Policy Act of 1992, 42 USC
§2297c-2, on July 1, 1993, USEC’s predecessor, the United States Enrichment
Corporation, a wholly-owned U.S. Government corporation (“USEC-Federal”), and
DOE entered into a lease agreement (the “Lease Agreement”) pursuant to which
USEC-Federal leased portions of the Gaseous Diffusion Plants located at
Paducah, Kentucky and Portsmouth, Ohio (the “GDPs”).




     B. The Memorandum of Agreement for Electric Power between the United
States of America, represented by the Secretary of Energy, and USEC-Federal,
Exhibit E to the Lease Agreement (the “Power MOA”) establishes the working
relationships and responsibility for liabilities incident to the supply of
electric power to operate the GDPs.




     C. Article III.3 of the Power MOA provided, among other things, that
USEC-Federal would be responsible for providing the budgetary resources for any
and all costs associated with the “Power Purchase Agreements” (as that term is
defined in the Power MOA) except (a) prior service years post-retirement
benefit obligations pursuant to Section 6.04 of the Power Agreement between the
Ohio Valley Electric Corporation (“OVEC”) and the United States of America,
Contract No. DE-AC05-76OR01530 (the “OVEC Power Purchase Agreement”), and (b) a
share of DOE’s liability pursuant to Section 6.09 of the OVEC Power Purchase
Agreement calculated in accordance with a formula set forth in Article III.3.c
of the Power MOA.




     D. On July 28, 1998, USEC-Federal was privatized and the Lease Agreement
and Power MOA were transferred to USEC pursuant to Sections 3107 and 3108 of
the USEC Privatization Act, 42 USC §2297h-5 and 6.




     E. Pursuant to the Memorandum of Agreement between the Office of
Management and Budget and the United States Enrichment Corporation Relating to
Post-Privatization Liabilities, dated April 6, 1998 (the “OMB MOA”), upon
privatization, USEC continues to be responsible for the liabilities associated
with its pro rata share of post-retirement health benefits for employees
working at the OVEC power plants and shutdown and demolition costs for the OVEC
power plants attributable to the Pre-privatization Period (as that term is
defined in the OMB MOA).




     F. By letter dated September 29, 2000, DOE, based on USEC’s request and
with USEC’s consent, notified OVEC of its election to terminate the OVEC Power
Purchase Agreement, and as a result, the OVEC Power Purchase Agreement
terminated in accordance with its terms on April 30, 2003 and DOE was relieved
of its obligation and responsibility to provide electric power to the
Leased Premises at the Portsmouth Gaseous Diffusion Plant under Section 6.1 of
the Lease Agreement.




     G. On or about February 10, 2004, DOE, with USEC’s consent, expects to
enter into a Settlement Agreement which provides for a lump sum final payment
of one hundred and seven million dollars ($107,000,000.00) as a settlement, but
not an admission of liability, of amounts due to OVEC under Sections 6.04 and
6.09 of the OVEC Power Purchase Agreement (“Settlement Agreement between DOE
and OVEC”).




     H. By this Settlement Agreement, DOE and USEC agree on the portion of DOE’s
liability under Sections 6.04 and 6.09 of the OVEC Power Purchase Agreement for
which USEC is obliged to provide the budgetary resources under Article III of
the Power MOA; and DOE releases USEC and USEC releases DOE from any costs
associated with their respective pro rata shares of post-retirement benefit





 








 


obligations pursuant to Section 6.04 of the OVEC Power Purchase Agreement and
decommissioning, shutdown, demolition and closing costs pursuant to Section
6.09 of the OVEC Power Purchase Agreement.




Agreement




     In consideration of the payment to be made hereunder and the mutual
covenants and promises contained herein, said covenants and promises
constituting good and valuable consideration, the Parties intending to be
legally bound, enter into this Settlement Agreement as follows:




	1.	 	Within one business day after the Settlement Date, USEC will pay DOE the
amount of thirty-three million, two hundred thousand dollars ($33,200,000)
by electronic funds transfer in immediately available funds to an account
identified by DOE. Said monies shall by used to fund DOE’s obligations
under the Settlement Agreement between DOE and OVEC.





	2.	 	Subject to paragraphs 10 and 11 below, upon receipt by DOE of the payment
required under Paragraph 1 above, DOE releases USEC, its officers, board
members, shareholders, agents, and employees, from all liabilities,
obligations and claims arising from or relating to USEC’s obligation to
provide the budgetary resources for costs under Article III of the Power
MOA for its pro rata share of post-retirement benefit obligations under
Section 6.04 of the OVEC Power Purchase Agreement and decommissioning,
shutdown, demolition and closing costs pursuant to Section 6.09 of the
OVEC Power Purchase Agreement.





	3.	 	Upon receipt by OVEC of the payment required under the Settlement
Agreement between DOE and OVEC, USEC releases DOE, its contractors,
employees, and agents, from all liabilities, obligations and claims
arising from or relating to DOE’s obligation for costs associated with
Articles III.3.b. and c. of the Power MOA.





	4.	 	DOE and USEC each represent and warrant to the other Party that:





	 	a.	 	All requisite corporate or governmental power and authority
to execute, deliver and perform its obligations hereunder has been
obtained;






	 	b.	 	The execution, delivery and performance by it of its
obligations hereunder have been duly authorized by all necessary
corporate or governmental action;






	 	c.	 	This Settlement Agreement has been duly executed by an
authorized representative and so delivered and constitutes a legal,
valid and binding obligation, enforceable in accordance with its
terms;






	 	d.	 	The execution, delivery and performance of its obligations
hereunder does not require any consent or approval of any person or
entity (including any governmental body or agency) which has not
been obtained and each such consent or approval that has been
obtained has not been modified and is in full force and effect; and






	 	e.	 	The execution, delivery and performance of its obligations
hereunder do not conflict with, result in a breach of or constitute
a default under any applicable law, any provision of its
constituting documents or governmental rules or regulations, or any
other agreement, lease or instrument to which it is a party.






	5.	 	DOE shall cooperate with USEC and USEC with DOE (including taking all
action reasonably requested by USEC or DOE) in making filings with any
regulatory or other governmental authority that may be required to
implement any term or condition of this Settlement Agreement, as well as
executing any documents necessary to confirm the rights and obligations of
the Parties under this Settlement Agreement.






 








 



	6.	 	This Settlement Agreement may be executed in counterparts. Each shall be
deemed an original, but together shall constitute one and the same
instrument.





	7.	 	This Settlement Agreement is the sole and entire agreement between the
Parties regarding the portion of DOE’s liability under Sections 6.04 and
6.09 of the OVEC Power Purchase Agreement for which USEC is obliged to
provide the budgetary resources under the Power MOA. This Settlement
Agreement may not be modified, altered or amended in any way except in
writing signed by duly authorized representatives of the Parties. The
only parties to this Settlement Agreement are DOE and USEC. This
Settlement Agreement is not enforceable by, or for the benefit of, and
shall create no obligation to, any person or entity other than the
Parties.





	8.	 	Except as expressly set forth herein, this Settlement Agreement shall not
in any way extend, amend, supplement, waive or otherwise modify the Power
MOA in any manner.





	9.	 	This Agreement pertains exclusively to the portion of DOE’s liability
under Sections 6.04 and 6.09 of the OVEC Power Purchase Agreement for
which USEC is obliged to provide the budgetary resources under the Power
MOA. The Parties expressly reserve all rights, remedies and causes of
action that the Parties may have as to matters unrelated to that issue.





	10.	 	DOE and USEC believe and anticipate that the Settlement Agreement between
DOE and OVEC settles DOE’s liability under Sections 6.04 and 6.09 of the
OVEC Power Purchase Agreement for all time. If, however, the Settlement
Agreement between DOE and OVEC is challenged by any person or entity for
any reason, the Parties agree that they will cooperate with and assist
each other in addressing any such challenge and will allocate and
apportion any alteration of DOE’s liability under Section 6.04 or Section
6.09 in accordance with the terms of the Power MOA. Except for DOE costs
associated with the administration of the Electric Power MOA pursuant to
Section 8.1 of the Lease Agreement, and subject to Sections 5.2 and 5.3 of
the Lease Agreement, each Party will bear its own costs in addressing any
such challenge.





	11.	 	In the event that OVEC terminates the Settlement Agreement between DOE
and OVEC pursuant to paragraph 10 of said Agreement, DOE and USEC agree to
terminate this Settlement Agreement and DOE agrees to return to USEC
within three business days the amount transferred by USEC to DOE under
this Agreement, the sum of thirty-three million, two hundred thousand
dollars ($33,200,000).





     IN WITNESS WHEREOF, the Parties hereto have caused this Settlement
Agreement to be duly executed and delivered as of the date first above written.




	 	 	 	 	 
	 	 	UNITED STATES DEPARTMENT

OF ENERGY
	 	 	 	 	 
	 	 	
By:
	 	/s/ J. Dale Jackson


Name: J. Dale Jackson

Title: Lease Administrator
	 	 	 	 	 
	 	 	UNITED STATES ENRICHMENT CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael T. Woo


Name: Michael T. Woo

Title: Vice President, Strategic Development







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