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EXHIBIT 10.18
MEMORANDUM OF AGREEMENT
BETWEEN THE OFFICE OF MANAGEMENT AND BUDGET
AND THE UNITED STATES ENRICHMENT CORPORATION
RELATING TO POST-PRIVATIZATION LIABILITIES
THIS MEMORANDUM OF AGREEMENT is entered into as of the 6th day of April,
1998, by and between the OFFICE OF MANAGEMENT AND BUDGET ("OMB") and the UNITED
STATES ENRICHMENT CORPORATION ("USEC" or the "CORPORATION").
RECITALS
WHEREAS, the Energy Policy Act of 1992, Public Law 102-486 (the "Energy
Policy Act"), amended the Atomic Energy Act of 1954 by establishing USEC as a
wholly-owned government corporation to take over the operation of the United
States Department of Energy's uranium enrichment enterprise; and
WHEREAS, Subchapter A of Title III of Public Law 104-134, the USEC
Privatization Act, in Section 3103, authorized the Corporation's Board of
Directors, with approval of the Secretary of the Treasury, to transfer the
interest of the United States in the Corporation to the private sector in a
manner that provides for the long-term viability of the Corporation, provides
for the continuation by the Corporation of the operation of DOE's Gaseous
Diffusion Plants (the "GDP's"), provides for the protection of the public
interest in maintaining a reliable and economical domestic source of uranium
mining, enrichment and conversion services, and, to the extent not inconsistent
with such purposes, secures the maximum proceeds to the United States; and
WHEREAS, the USEC Privatization Act further provides, in Section 3109,
that except for certain specified liabilities which shall remain the direct
liabilities of the Secretary of Energy and except as otherwise provided in a
memorandum of agreement entered into by the Corporation and OMB prior to the
date on which the ownership of the Corporation is transferred to private
investors (the "Privatization Date"), all liabilities arising out of the
operation of the Corporation between July 1, 1993, and the Privatization Date
shall remain the direct liabilities of the United States; and
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WHEREAS, in order to fulfill the requirements of Section 3109 of the USEC
Privatization Act in a manner that is consistent with the purposes of the
Energy Policy Act and of the USEC Privatization Act, OMB and USEC have entered
into this Memorandum of Agreement;
NOW, THEREFORE, under the authority of the USEC Privatization Act, the
Energy Policy Act, the Atomic Energy Act and other law, OMB and USEC hereby
agree as follows:
ARTICLE 1 DEFINITIONS
The following terms when capitalized and used in this Agreement shall have the
meanings indicated below.
"Corporation" means the United States Enrichment Corporation or "USEC,"
as defined below.
"DOE" means the United States Department of Energy, any employee or
contractor thereof (other than USEC), or any authorized agent thereof (other
than USEC).
"EEI" means Electric Energy, Inc., which provides power to the Paducah,
Kentucky Gaseous Diffusion Plant under contract with DOE.
"Energy Policy Act" means the Energy Policy Act of 1992, Title IX of
Public Law 102-486.
"Gaseous Diffusion Plants" or "GDP's" means the gaseous diffusion plants
at Paducah, Kentucky and Portsmouth, Ohio owned by DOE, portions of which are
leased to USEC.
"LMUS" means Lockheed Xxxxxx Utility Services, Inc., a private
corporation which provides certain operation, maintenance and other services at
the GDP's under contract to USEC, and includes all its predecessors, successors
and assigns, including but not limited to Xxxxxx Xxxxxxxx Utility Services and
Xxxxxx Xxxxxxxx Energy Systems.
"OMB" means the Office of Management and Budget of the United States, any
employee or contractor thereof, or any authorized agent.
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"OVEC" means the Ohio Valley Electric Corporation, which provides power
to the Portsmouth, Ohio Gaseous Diffusion Plant under contract with DOE.
"Pre-privatization Period" means the period beginning on July 1, 1993,
and ending on the Privatization Date.
"Privatization Date" means the date on which 100 percent of the ownership
of the Corporation has been transferred to private investors pursuant to the
USEC Privatization Act.
"Secretary" means the Secretary of Energy.
"USEC" means the United States Enrichment Corporation and its successors
and assigns, including, but not limited to, the private company created
pursuant to Section 3105 of the USEC Privatization Act and to which the assets
of USEC will be transferred and the successors and assigns of such private
company.
"Waste" means solid, hazardous, low-level radioactive, and mixed waste
that was generated by USEC during the Pre-privatization period and that is
stored at the GDP's and identified as USEC's as of the Privatization Date.
"USEC Privatization Act" means Title III of Public Law 104-134.
ARTICLE 2 POST-PRIVATIZATION LIABILITIES
Section 2.1 Post-Privatization Liabilities of USEC. In accordance with
Section 3109 of the USEC Privatization Act, the following liabilities, as
described and defined below, shall remain with and continue to be the
liabilities of USEC subsequent to the Privatization Date, to the extent such
liabilities have not been paid or satisfied prior to that date:
(a) LMUS pension benefits: This liability shall consist of USEC's pro-rata
share, attributable to the Pre-privatization Period, of pension benefits for
LMUS employees to be paid under the terms of LMUS's Contract No. USEC-96-C-
0001 for the operation of the GDP's.
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(b) LMUS post-retirement health benefits: This liability shall consist of
USEC's pro-rata share, attributable to the Pre-privatization Period, of
post-retirement health benefits for LMUS employees to be paid under the terms
of LMUS's Contract No. USEC-96-C-0001 for the operation of the GDP's.
(c) LMUS severance benefits: This liability shall consist of USEC's pro-rata
share, attributable to the Pre-privatization Period, of LMUS severance program
costs under the terms of LMUS's Contract No. USEC-96-C-0001 for the operation
of the GDP's.
(d) OVEC plant post-retirement health benefits: This liability, based on
provisions in the power contracts negotiated by DOE with OVEC (Contract No.
DE-AC05-76ORO1530), shall consist of USEC's pro-rata share, attributable to
the Pre-privatization Period, of post-retirement health benefits for employees
working at the OVEC power plant.
(e) Power plant shutdown and demolition costs: This liability, based on
provisions in the power contracts negotiated by DOE with OVEC and EEI (Contract
No. DE-AC05-760R01530 and Contract No. DE-AC05-760R01312, respectively), shall
consist of USEC'S pro-rata share, attributable to the Pre-privatization Period,
of the shutdown and demolition costs for the OVEC and EEI power plants.
(f) Disposal of stored waste: Title to the Waste that was generated by USEC
during the Pre-privatization Period and that is stored at the GDP's as of the
Privatization Date shall be transferred with USEC. Nothing herein shall be
construed as transferring or limiting the liability of the Secretary as set
forth in Section 3109 (a) (3) of the USEC Privatization Act.
Section 2.2 Estimated Amount of USEC Post-Privatization Liabilities. In
order to further define and identify the liabilities set forth in Section 2.1
of this Agreement, OMB and USEC agree that the Schedule attached hereto as
Attachment 1 reflects the estimated amounts of the liabilities described in
Section 2.1 as of December 31, 1997. The amount of such liabilities at the
Privatization Date shall be determined at that time.
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Section 2.3 Other USEC Post-Privatization Liabilities. In accordance
with Section 3109 of the USEC Privatization Act, it is understood and agreed
that USEC shall have no liabilities attributable to its activities prior to the
Privatization Date, except as specified in Section 2.1 of this Agreement.
Section 2.4 Other Agreements. Nothing contained in this Agreement shall
modify or supersede the assignment of liabilities or other terms of other
agreements which have been entered into between USEC and other government
entities as of the Privatization Date including, but not limited to, those
agreements listed in Attachment 2, except insofar as such agreements assign to
USEC liabilities attributable to activities prior to the Privatization Date.
In accordance with Section 3109 of the Privatization Act, other than those
liabilities specified in Section 2.1, all such liabilities attributable to
activities prior to the Privatization Date shall remain the direct liabilities
of the United States.
ARTICLE 3 APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the
Federal laws of the United States of America.
IN WITNESS WHEREOF, OMB and USEC have caused this Agreement to be
executed and delivered as of the date first above written and hereby affix the
signatures of their duly authorized representatives:
OFFICE OF MANAGEMENT AND BUDGET
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
Director
AND
UNITED STATES ENRICHMENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
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