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EXHIBIT 10.16
JOINT DEVELOPMENT, DEMONSTRATION
AND DEPLOYMENT AGREEMENT
between
CAMECO CORPORATION
and
THE UNITED STATES ENRICHMENT
CORPORATION
CONTRACT NO. 70031
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
ARTICLE II - OBJECTIVES
ARTICLE III - DEMONSTRATION PHASE
ARTICLE IV - CONDITIONS SUBSEQUENT
ARTICLE V - FUNDING AND COMMERCIAL TERMS
ARTICLE VI - [INTENTIONALLY BLANK]
ARTICLE VII - REPORTING
ARTICLE VIII - INTELLECTUAL PROPERTY
ARTICLE IX - DEPLOYMENT PHASE
ARTICLE X - REPRESENTATIONS AND WARRANTIES
ARTICLE XI - INDEMNIFICATION AND LIMITATION OF LIABILITY
ARTICLE XII - INCORPORATION OF ADDITIONAL CLAUSES
ARTICLE XIII - PROPRIETARY INFORMATION
ARTICLE XIV - NOTICES
ARTICLE XV - INSURANCE
ARTICLE XVI - MISCELLANEOUS
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SCHEDULE 1 - DEMONSTRATION PHASE DETAILED SCOPE OF WORK
SCHEDULE 2 - DEMONSTRATION PHASE PROJECT BUDGET
SCHEDULE 3 - DEMONSTRATION PHASE ALLOWABLE RATES, COSTS
AND EXPENSES
SCHEDULE 4 - CAMECO TECHNOLOGY
SCHEDULE 5 - USEC TECHNOLOGY
SCHEDULE 6 - URANIUM TRIOXIDE (UO-3) REFINING AGREEMENT TERM
SHEET
SCHEDULE 7 - AVLIS FEEDSTOCK SALE AND PURCHASE AGREEMENT
TERM SHEET
SCHEDULE 8 - DEPLOYMENT AGREEMENT TERM SHEET
SCHEDULE 9 - OPERATING AGREEMENT TERM SHEET
SCHEDULE 10 - PRICE OF UF4 CONVERSION SERVICES FOR DEMONSTRATION PHASE
APPENDIX A - ADDITIONAL CONTRACT CLAUSES..........................A-1
APPENDIX B - REPRESENTATIONS AND CERTIFICATIONS...................B-1
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JOINT DEVELOPMENT, DEMONSTRATION AND DEPLOYMENT
AGREEMENT
This Joint Development, Demonstration and Deployment Agreement (this
"Agreement"), dated and effective as of the 26th day of July, 1996 ("Effective
Date"), is entered into by and between Cameco Corporation ("Cameco") and the
United States Enrichment Corporation, ("USEC"), each hereinafter being referred
to individually as a "Party" and, collectively, as the "Parties."
RECITALS
WHEREAS, USEC is developing a new process for uranium enrichment called
Atomic Vapor Laser Isotope Separation ("AVLIS") and desires to develop a
process for converting natural uranium into a uranium/iron alloy that is
suitable for use as a feedstock in the commercial AVLIS uranium enrichment
plant being designed by USEC; and
WHEREAS, USEC has certain technical expertise and know-how, and related
research and development capabilities suitable for undertaking the development
and demonstration of a commercial process for converting natural uranium into a
uranium/iron alloy that will be an acceptable feedstock for the commercial
AVLIS uranium enrichment plant; and
WHEREAS, Cameco has certain technical expertise and know-how, and related
research and development capabilities and existing facilities suitable for
undertaking the development and demonstration of a commercial process for
converting natural uranium into a uranium/iron alloy that will be an
acceptable feedstock for the commercial AVLIS uranium enrichment plant; and
WHEREAS, Cameco has the required regulatory licenses which allow it to
receive, handle, process and convert natural uranium at Cameco's facilities in
Port Hope and Xxxxx Xxxxx, Xxxxxxx, Xxxxxx and anticipates that it can obtain
the required regulatory licenses, permits and approvals to allow it to conduct
the development and demonstration activities contemplated by this Agreement;
and
WHEREAS, the Parties are interested in jointly developing and
demonstrating the Conversion Process (as defined herein) and anticipate that
upon the successful demonstration of the Conversion Process, the Parties shall
negotiate and enter into the Definitive Documents (as defined herein) necessary
to construct and operate
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a jointly owned Conversion Facility (as defined herein), all as provided for in
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
obligations set forth herein, and intending to be legally bound, the Parties
hereby agree as follows:
ARTICLE I - DEFINITIONS
1.1 General. As used herein, the following terms shall have the
meanings given below, unless a different meaning is expressly stated:
"Affiliate" shall mean, with respect to any Party, any Person
which, directly or indirectly, (i) controls such Party, (ii) is
controlled by such Party, or (iii) is under common control with such
Party, for purposes of this definition, "control" shall mean the power
to direct the management or policies of such Person or Party, whether
through the ownership of voting securities, by contract or otherwise.
"Agreed Rate" shall mean an annual interest rate equal to the
Prime Rate plus 1.5% existing as of the date interest commences to
accrue.
"Allowable Costs" shall mean those costs and expenses of the type
described in Schedule 3 incurred by a Party in accordance with the
approved annual budgets adopted by the Management Committee pursuant to
the project budget in Schedule 2, and the work plans specified by
Schedule l. In-kind contributions shall only be considered an Allowable
Cost to the extent, and in the amount, that such contribution is
authorized by the Management Committee in the approved annual budgets.
"Applicable Law" shall mean any law, statute, code, rule,
regulation, ordinance, order, decree, injunction, license, permit,
approval, interpretation, judgment, directive, guideline, policy, or
agreement or similar form of decision of any Governmental Authority
having jurisdiction over the matter in question, including without
limitation, any and all Environmental Laws.
"AVLIS" shall have the meaning as provided in the first Recital
hereto.
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"AVLIS Feedstock" shall mean uranium/iron alloy rods suitable for
use as feedstock for the commercial AVLIS uranium enrichment plant being
designed by USEC.
"Business Day" shall mean a day that is not a Saturday, Sunday or
legal holiday in the United States or Canada. Unless qualified by the
term "Business", references in this Agreement to "day" or "days" refer to
a calendar day or calendar days, respectively.
"Cameco Restricted Proprietary Information" shall have the meaning
as provided in Article XIII hereto.
"Cameco Technology" shall mean Technology and related Intellectual
Property owned or controlled by Cameco or its Affiliates that was or is
acquired by Cameco or its Affiliates independent of the Demonstration
Phase and that is useful in the Conversion Process or in the
construction, operation and/or maintenance of the Conversion Facility
including, but without limitation, the Technology (and related
Intellectual Property) described in Schedule 4 attached.
"Conversion Facility" shall have the meaning as provided in Section
9.1 hereto.
"Conversion Process" shall mean the process for converting natural
uranium (in the form as determined by the Parties during the
Demonstration Phase) into AVLIS Feedstock.
"Definitive Documents" shall have the meaning as provided in
Section 9.1(b) hereto.
"Demonstration Phase" shall mean the first phase of the joint
activities of the Parties to select and develop a suitable Conversion
Process, and to evaluate the technical and economic feasibility of
constructing and operating a Conversion Facility.
"Deployment Phase" shall mean the second phase of the joint
activities of the Parties, which shall include the process for
financing, design, construction, testing, acceptance and operation of, the
Conversion Facility.
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"Environmental Law" shall mean any and all applicable laws,
ordinances, rules, regulations, judgments, orders or other official acts
of any Governmental Authority (now or in the future) pertaining to
protection of health, safety, or the environment, including without
limitation in the United States the following: (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) the Solid Waste Disposal Act, as amended by the Resources
Conservation and Recovery Act of 1976, the Hazardous & Solid Waste
Amendments Act of 1984 and any other amendments, (iii) the Clean Air Act,
as amended, (iv) the Toxic Substances Control Act, as amended, (v) the
Safe Drinking Water Act, as amended, (vi) the Federal Water Pollution
Control Act, as amended, (vii) the Occupational Safety and Health Act of
1970, as amended, (viii) the Hazardous Materials Transportation Act, as
amended, (ix) the Rivers and Harbors Act of 1899, as amended, (x) the
National Environmental Policy Act, as amended and (xi) the Atomic Energy
Act of 1954, as amended, and including in Canada the following: (i) the
Canadian Environmental Protection Act (Canada), (ii) the Atomic Energy Act
(Canada), (iii) the Fisheries Act (Canada), (iv) the Transportation of
Dangerous Goods Act, 1992 (Canada), (v) the Environmental Protection Act
(Ontario), (vi) the Occupational Health and Safety Act (Ontario), (vii)
the Ontario Water Resources Act and (viii) the Canadian Environmental
Assessment Act.
"F.O.B." shall have the meaning as provided in the New York
Uniform Commercial Code Law Section 2-319 (Consolidated 1995).
"Governmental Authority" shall mean any federal (except USEC),
state, provincial or local government, or any political subdivision
thereof or any other governmental, judicial, public or statutory
instrumentality, authority, board, agency, bureau or entity with
authority to bind a Party pursuant to Applicable Law.
"Improvements" shall mean the Technology developed, in performing
activities under this Agreement, by (a) one or both Parties (including
the employees, officers or agents of either), or (b) a contractor or
subcontractor of either Party.
"Intellectual Property" shall be a collective reference to all
statutory or other rights available under Applicable Law to protect or
enhance a Person's right to own (or otherwise assert property rights),
make, use, license
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or sell Technology, including, without limitation, patents, patent
applications, copyrights and trade secrets.
"JVC" shall have the meaning as provided in Section 9.l hereto.
"Management Committee" shall have the meaning as provided in
Section 3.2(a) hereto.
"Milestone" shall mean the completion of an activity specified in
Section III of Schedule 1 by the completion date set forth in such
Section for such activity.
"Person" shall mean any natural person, corporation, partnership,
firm, association, Governmental Authority or any other entity whether
acting in an individual, fiduciary or other capacity.
"Preliminary Feasibility Study" shall mean a study regarding the
Conversion Process prepared in accordance with Section 7.2 which shall
evaluate the technical and economic feasibility of constructing and
operating a Conversion Facility.
"Prime Rate" means the prime rate of interest per annum announced
by Chase Manhattan Bank at New York, New York, as its prime rate of
interest for US dollar commercial loans.
"Restricted Proprietary Information" shall mean Cameco Restricted
Proprietary Information and USEC Restricted Proprietary Information.
"Specified Substances" shall mean any pollutant, toxic substance,
asbestos, hazardous waste, nuclear material (including, but not limited
to, any source, special nuclear, by-product, low-level radioactive waste
or mixed waste) or any constituent of any such substance, waste or
product, whether solid, liquid or gaseous in form, described in, or
regulated under, any Environmental Law.
"Target Cost" shall mean the cost determined by agreement of the
Parties in accordance with Section II of Schedule l, as such cost is
modified by the Parties from time to time.
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"Technology" shall mean inventions, discoveries, processes,
improvements, modifications, know-how, composition of matter, machines,
technical literature, drawings, pictures, technical information, computer
software, operating systems, manuals, and the like.
"USEC Restricted Proprietary Information" shall have the meaning as
provided in Article XIII hereto.
"USEC Technology" shall mean Technology (and related Intellectual
Property) owned or controlled by USEC or its Affiliates that was or is
acquired by USEC or its Affiliates independent of the Demonstration Phase
and that is useful in the Conversion Process or in the construction,
operation and/or maintenance of the Conversion Facility including, but
without limitation, the Technology (and related Intellectual Property)
described in Schedule 5 attached.
ARTICLE II - OBJECTIVES
2.1 Objectives. The Parties have the following objectives in entering
into this Agreement:
(a) Demonstration Phase Objective. The Parties intend to
demonstrate, through their joint activities the technical and economic
feasibility of the Conversion Process as specified in Paragraphs I and II of
Schedule l for the production of a suitable AVLIS Feedstock for the commercial
AVLIS uranium enrichment plant being designed by USEC. The activities
contemplated to achieve this objective are generally described in Schedule 1,
and the provisions for funding this phase are described in Article V.
(b) Deployment Phase Objective. Upon the successful completion of
the Demonstration Phase, the Parties intend to jointly design, construct,
finance, license, own and operate a Conversion Facility. Certain commercial
terms for a joint venture to pursue the Deployment Phase shall be as set forth
in the Term Sheets attached hereto as Schedules 6, 7, 8, and 9, but the
decision to proceed with the joint venture shall be made, and the definitive
terms established, pursuant to the terms of Article IX.
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ARTICLE III - DEMONSTRATION PHASE
3.1 Conduct of Activities during the Demonstration Phase.
(a) The Parties shall perform the activities described in
Schedule I in accordance with the terms and conditions of this Agreement. The
Parties hereby appoint Cameco as manager with responsibility for the day-to-day
conduct of the activities required for the Demonstration Phase subject to the
oversight and direction of the Management Committee. Cameco agrees to serve as
manager of the Demonstration Phase and to carry out the activities required by
this Agreement in accordance with Applicable Law and, to the extent not
inconsistent with Applicable Law, Schedules 1 and 2, the work plans and annual
budgets approved by the Management Committee, any directions or requirements of
the Management Committee, and the terms of any final resolution of a dispute
under Section 16.7.
(b) Cameco agrees to appoint one of its employees as the project
manager for purposes of fulfilling its obligations as the manager of the
Demonstration Phase. The appointment of the project manager by Cameco shall be
subject to the approval of the Management Committee. If the project manager
ends his or her employment with Cameco, or Cameco is directed by the Management
Committee to replace the project manager, the project manager shall be replaced
by another Cameco employee approved by the Management Committee. Either Party
can request that the Management Committee direct Cameco to replace the project
manager.
3.2 Management Committee.
(a) The Parties hereby establish a four (4) member Management
Committee (the "Management Committee") composed of two (2) representatives of
Cameco and two (2) representatives of USEC, which shall meet at least quarterly
during the term of this Agreement. Within thirty (30) days of the Effective
Date, each Party shall give notice in writing to the other Party of the names,
addresses, phone numbers and fax numbers of its representatives. A Party may
replace any of its representatives at any time by giving written notice of such
replacement to the other Party and its representatives. Replacement of a
representative shall not invalidate prior decisions of the Management Committee
in which such representative participated.
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(b) Each representative of a Party shall have only one vote in
any decisions made by the Management Committee. Except as provided in Section
16.7, the Management Committee shall have the power and authority: (i) to
review, modify and approve the (A) annual budgets, consistent with the project
budget in Schedule 2 and within the funding authorized by Section 5.1, and (B)
the work plans proposed by Cameco or USEC; (ii) to review, comment and approve
all reports and studies submitted pursuant to this Agreement including, but
without limitation, the Preliminary Feasibility Study; (iii) in accordance with
Sections 3.2(c) and 16.7, to resolve any disputes that may arise in connection
with this Agreement, including, without limitation, those disputes regarding
activities to be carried out during the Demonstration Phase; and (iv) to
provide oversight and direction to Cameco in its performance as the manager of
the Demonstration Phase. Nothing in this Agreement shall be construed as
providing the Management Committee or a Party with the authority to control,
direct or influence the operation of any facility owned, operated or used by
the other Party, including but not limited to, Xxxxxxxx Livermore National
Laboratory (LLNL) and Cameco's Port Hope and Blind River facilities.
(c) All decisions, approvals and other actions of the Management
Committee shall require a unanimous vote of the representatives on the
Management Committee. In the event a decision on an issue cannot be reached by
the Management Committee within ten (10) Business Days after the first
Management Committee meeting at which the issue is raised, the Parties shall
resolve the issue in accordance with Section 16.7 (without the necessity of
first resubmitting the issue to the Management Committee).
(d) A representative of USEC shall chair the Management
Committee. The chair shall give prior written notice of the time, date,
location and agenda of any meeting of the Management Committee to each member
of the Management Committee at least ten (10) Business Days in advance of such
meeting unless otherwise agreed to by the members of the Management Committee.
The chair shall call a meeting of the Management Committee upon the written
request of either USEC or Cameco.
(e) Attendance at meetings of the Management Committee by a
Party's representatives may include attendance by phone. In the event one of
the Party's representatives is unable to attend a Management Committee meeting,
such Party may appoint an alternative representative to attend and participate
in such meeting, so long as such Party provides prior written notice to the
other Party and the other Party's representatives of its intent to appoint an
alternative representative.
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ARTICLE IV - CONDITIONS SUBSEQUENT
4.1 Cameco License.
(a) To the extent permitted by Applicable Law, the Parties shall
commence performance under this Agreement immediately upon execution of this
Agreement. The obligation of each of Cameco and USEC to perform any of its
obligations under this Agreement after November 30, 1996 is subject to the
satisfaction of the following condition on or prior to that date Cameco shall
obtain an amendment to its license, as required, to permit it to conduct the
applicable Demonstration Phase activities at Cameco's facilities located at
Xxxx Xxxx, Xxxxxxx, Xxxxxx.
(b) Cameco shall use its best efforts to satisfy the condition in
Section 4.1(a) on or prior to November 30, 1996 Cameco shall provide notice to
USEC when such condition is satisfied. In the event the foregoing condition is
not satisfied on or prior to November 30, 1996, this Agreement shall, unless
otherwise agreed by the Parties, automatically terminate as of November 30,
1996, and the provisions of Section 16.3 shall apply, except that Cameco shall
have no obligation to grant USEC a license to Cameco Technology and related
Intellectual Property.
ARTICLE V - FUNDING AND COMMERCIAL TERMS
5.1 Funding. Schedule 2 sets forth the project budget for the
Demonstration Phase. Pursuant to this budget, the Parties agree to share
equally the Allowable Costs related to completing the Demonstration Phase up to
the aggregate amount of $8,000,000. The maximum amount that USEC may be
required to expend pursuant to this Article V shall not exceed $4,000,000 and
the maximum amount that Cameco may be required to expend pursuant to this
Article V shall not exceed $4,000,000. In the event the aggregate amount of
costs and expenses required to complete the Demonstration Phase exceed
$8,000,000, the amount in excess may be funded as provided in Section 5.4.
Only Allowable Costs shall be credited against the funding obligations of the
Parties.
5.2 Third-Party Contracts. Pursuant to annual budgets to be adopted by
the Management Committee, certain contracts with third-parties shall be
required to complete the Demonstration Phase. Cameco shall develop the
requirements and
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schedule for such contracts and shall submit them to the Management Committee
for review and approval. Each Party shall enter into contracts as designated
by the Management Committee with third parties for the requirements established
and pursuant to the schedule approved by the Management Committee. The award
and terms of any third party contract by a Party for purposes of carrying out
the Demonstration Phase must be approved in advance by the Management
Committee if the total price or potential liability under such contract exceeds
$25,000.
5.3 Personnel.
(a) In accordance with the annual budgets adopted by the
Management Committee and the rates set forth in Schedule 3, each Party shall be
given credit, as an Allowable Cost, for the costs and expenses associated with
the work efforts of certain Cameco and USEC personnel (which include but are not
limited to, employees, contractors, subcontractors, agents and representatives
of a Party). No credit shall be given to a Party for the costs and expenses of
work performed as a member of the Management Committee.
(b) Subject to the Applicable Laws and the procedures governing
access and protection of information, each Party shall provide access to its
facilities that are used for the Demonstration Phase activities to the other
Party. Employees, contractors, subcontractors, agents and representatives of a
Party who perform work pursuant to this Agreement at the other Party's
facilities shall adhere to the rules and procedures established by such
facilities while located at such facilities.
5.4 Cost Overruns. Schedule 2 sets forth the Parties' best estimates
of the total funds required to complete the Demonstration Phase. As soon as it
is evident to either of the Parties that the aggregate amount of funding
specified in Section 5.1 may not be sufficient to complete the Schedule 1
activities, such Party shall bring the potential shortfall and the reasons
therefore to the immediate attention of the Management Committee. The project
manager shall be directed to submit a proposed revised budget to the Management
Committee to cover the potential shortfall in funding. The Parties shall no
later than the ninetieth (90th) day after submission of the proposed revised
budget to the Management Committee agree on the amount of funding ("Revised
Fund") that both Parties are willing to commit to pay for the Demonstration
Phase (which amount shall be no less than the amount set forth in Section 5.l),
and shall thereupon revise Schedule 1, Schedule 2 and Section 5.1 accordingly.
If one Party is unwilling to fund its share of the shortfall, the other Party
shall have the option to pay all or any part of the funding shortfall. If the
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Revised Fund is different than the amount in the proposed revised budget
submitted to the Management Committee pursuant to this Section 5.4, the project
manager shall be instructed to further revise the budget to provide for a
budget that does not exceed the Revised Fund, even if doing so requires a
reduction in the scope of the Demonstration Phase.
5.5 Funding Mechanics.
(a) Each Party shall submit to the Management Committee a
statement ("Quarterly Statement") detailing all Allowable Costs (including any
approved in-kind contributions) to be credited against its funding obligation
under this Agreement, within fifteen (15) days after the last day of each
calendar quarter ending after the Effective Date of this Agreement. The
statement shall cover the immediately preceding calendar quarter (the
"Reporting Period"), but any cost or expense attributable to a Party after the
Effective Date and prior to the Reporting Period that has not been previously
accounted for under this Article V may also be included by the Party in the
statement and shall be considered as being incurred in the Reporting Period.
No later than thirty (30) days after receipt of the Quarterly Statements from
both Parties the Management Committee shall provide to the Parties a
consolidated statement detailing the Allowable Costs to be credited against
each Party's funding obligation. At the request of either Party the Management
Committee shall provide a full explanation of its determination of the
Allowable Costs. Either Party may dispute the Management Committee's
determination of Allowable Costs pursuant to Section l6.7.
(b) Based on the Management Committee's consolidated statement
the Party that incurred more than one-half of the total Allowable Costs
incurred by the end of Reporting Period ("Requesting Party") may submit a
request ("Funding Request") to the other Party ("Receiving Party") for payment
of the difference between one-half of such total Allowable Costs and the
portion of such Allowable Costs incurred by the Requesting Party. If the
Requesting Party does not submit a Funding Request within thirty (30) days of
its receipt of the Management Committee's consolidated statement then the
amount of overpayment by the Requesting Party shall be credited against the
Requesting Party's future funding obligations.
(c) Within fifteen (15) Business Days of its receipt of a Funding
Request, the Receiving Party shall pay the Requesting Party the amount set
forth in the Funding Request, in accordance with directions contained in the
funding request. If the Receiving Party disputes all or part of the Funding
Request, the Receiving
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Party shall pay the undisputed amount and the dispute shall be resolved in
accordance with Section 16.7. Any dispute concerning the Funding Request that
is not resolved by the SEOs pursuant to Section 16.7 shall be resolved by an
independent auditor selected by the Party disputing the Funding Request. In
the event that a Party is delinquent for greater than thirty (30) days after
the date payment is due (the "Delinquent Party") for any undisputed amounts,
or, in the case of an amount that is subject to dispute, the amounts due as
determined by the SEOs or independent auditor, that in the aggregate total more
than five percent (5%) of the total amount that the Delinquent Party should
have funded, the Delinquent Party's representatives on the Management Committee
shall no longer be entitled to vote on any matters until the Delinquent Party
has paid all amounts due at the time of the vote. In such event, the unanimous
vote by the other Party's representatives shall be deemed to be a unanimous
vote of the representatives of the Management Committee pursuant to Section
3.2(c).
(d) Subject to Sections 5.6 and 5.7, the proceeds received by
either Party in connection with the sale of any equipment, material or other
property acquired at joint expense shall be credited equally to the Parties.
No such sales shall take place without the prior approval of the Management
Committee.
(e) All payments between the Parties shall be made by wire
transfer of immediately available U.S. funds to a bank in the United States or
Canada designated by the Requesting Party. Interest on late payments shall be
paid at 3% above the Prime Rate. Each Party shall bear any fees charged by
its own bank in connection with effecting such transfer.
(f) At any time during normal business hours, a Party shall make
available to an independent auditor selected by the requesting Party all books,
records or other documents reasonably deemed necessary by the auditor to verify
the Allowable Costs incurred by such Party in connection with the Demonstration
Phase. The cost involved in such independent audit shall remain the liability
of the Party requesting the audit and shall not be credited to such Party's
funding obligation unless as a result of such audit, the independent auditor
determines that the Party being audited has overstated its Allowable Costs in
the aggregate by $25,000 or more. In such case, the Parties shall make any
necessary adjustments to their respective Allowable Costs, and the Party
audited shall be responsible for the costs of such audit.
5.6 Ownership of Equipment and Material.
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(a) Except as provided in Section 5.7, Cameco in its capacity as
manager of the Demonstration Phase shall take title to all equipment and
material purchased for the Demonstration Phase activities at joint expense and
shall hold title to such equipment and material for the benefit of Cameco and
USEC in equal shares. The risk of loss of such equipment and material shall be
shared equally. Cameco shall insure such equipment and material in the amounts
and manner directed by the Management Committee (the additional costs, if any,
of such insurance shall be a credit against Cameco's funding obligations
pursuant to an approved budget and Schedule 3).
(b) Except as provided in Section 5.7, any equipment or material
not consumed in the conduct of the Demonstration Phase shall be disposed of as
follows:
(i) If the Parties form a JVC to pursue the Deployment
Phase, the JVC shall have the right to acquire the equipment and materials
without charge, except the JVC shall bear any cost or expense associated with
the removal and transportation of such equipment or materials to the JVC.
(ii) Any equipment or material that the JVC elects not to
acquire shall either be retained by Cameco or be disposed of by Cameco in its
discretion in accordance with Applicable Law. Within sixty (60) days after the
completion of the Demonstration Phase, Cameco shall provide USEC with its plan
for the disposition of such equipment and material. The proceeds from the sale
of any equipment or material shall be credited equally towards the Parties'
funding obligations. The costs and expenses of disposal of any equipment and
material shall be equally shared by the Parties in accordance with the approved
budget. Cameco shall retain title to, assume all risks and be solely
responsible for all costs (including decontamination, decommissioning and
disposal costs) associated with any equipment or material that has not been
sold or disposed of within one (1) year after the completion of the
Demonstration Phase.
5.7 Uranium. Cameco shall be the importer of record of any natural
uranium shipped by USEC to Canada, with Cameco taking title and risk of loss on
arrival of the uranium at the U S - Canadian border. USEC shall provide and
pay transportation (including insurance) costs to deliver to Cameco's facility
located at Xxxx Xxxx, Xxxxxxx, Xxxxxx, the uranium required to conduct the
activities for the Demonstration Phase specified in Schedule 1 in the
quantities, form and at the times
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directed by the Management Committee. At USEC's request, Cameco shall provide
USEC with the UO-3 or UF4 refining services necessary for USEC to meet USEC's
obligation to provide uranium under this Agreement. The price and other terms
and conditions for providing UO3 refining services are set forth in Schedule 6.
The price for providing UF4 refining services are set forth in Schedule 10.
Cameco shall deliver AVLIS Feedstock F.O.B the facilities designated by USEC.
All costs, expenses and liabilities associated with the transportation of the
uranium and AVLIS Feedstock shall remain the sole responsibility of the Party
responsible for transporting the material, consistent with the above terms.
USEC shall acquire title to all AVLIS Feedstock produced from the activities
during the Demonstration Phase specified in Schedule 1 at no cost and without
need to account to Cameco for its disposition.
5.8 Depleted Uranium. Unless the Parties agree otherwise, depleted
uranium shall not be used in the Demonstration Phase.
5.9 Taxes. To minimize administrative costs in connection with the
Demonstration Phase, both Parties agree that they will join in applying to the
Department of Finance and Revenue Canada for prescribed status for the joint
venture activities of the Parties, for the purposes of accounting for Canadian
Goods and Services Tax ("Canadian GST"). If prescribed status is obtained, a
GST section 273 election will be made, allowing Cameco to account for all
Canadian GST relating to the Demonstration Phase. The Parties further agree
that, for the purposes of the Ontario retail sales tax, they will take all
necessary steps to have Cameco act as the agent for the joint venture and
account for all Ontario retail sales tax on any purchases or imports of items
not exempt from such tax during the Demonstration Phase. For any property or
equipment of any description to be imported from the U.S. into Canada in
connection with the Demonstration Phase activities, title and risk of loss for
such items shall be transferred to Cameco not later than arrival of such items
at the U.S. - Canadian border and such items shall be imported into Canada by
Cameco. Cameco shall include its accounting of Canadian GST and retail sales
tax along with its other reports of expenditures under Sections 5.5 and 7.1. If
for any reason Cameco and USEC do not enter into a joint venture election for
Canadian GST, both Parties will separately account for and report Canadian GST
with respect to their individual interests in Demonstration Phase activities.
In any event Cameco and USEC agree to supply each other with all required
documentation, invoices, copies of agreements and registration numbers, as
applicable, in order that each may, if required, properly account for and
report Canadian taxes.
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ARTICLE VI - [INTENTIONALLY BLANK]
ARTICLE VII - REPORTING
7.1 Monthly Progress Reports. On or before the sixth (6th) Business
Day of each calendar month, each Party shall submit to the project manager a
report of its activities pertaining to the Demonstration Phase during the
preceding calendar month and all costs and expenses that such Party intends to
claim as Allowable Costs for such month. Based on these reports, the project
manager shall prepare and submit, on or before the fifteenth (15th) Business
Day of each calendar month, to each Party and to each representative on the
Management Committee a monthly consolidated progress report which shall contain
the following information at a minimum:
(a) A detailed summary of all activities related to and progress
made on the Demonstration Phase during the immediately preceding calendar
month;
(b) An accounting of the Allowable Costs of each Party during the
calendar month period and cumulatively on the Demonstration Phase; and
(c) A material balance of uranium received, processed and
shipped.
7.2 Demonstration Phase Preliminary Feasibility Study.
(a) Schedule 1 attached hereto sets forth the schedule for
preparing the Preliminary Feasibility Study. Such Schedule may be revised by
the Management Committee.
(b) The Preliminary Feasibility Study shall include the
following:
(i) process flow diagrams, material balance sheets, and
preliminary designs for the Conversion Process building and key full scale
process equipment such as the reduction reactors; casting system; reactor
feeder; reactor feeding and product withdrawal systems; and the salt treatment
system;
(ii) estimates of the capital costs for the design,
engineering and construction of the Conversion Facility which shall include
estimates of the following: (1) expenditures for designing and constructing all
facilities and neces-
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sary infrastructure; (2) expenditures for engineering, purchasing and installing
all machinery, equipment and other components; (3) expenditures associated with
obtaining all necessary regulatory approvals (including but not limited to costs
associated with preparing all applications and supporting documentation); and
(4) expenditures required to perform all other related work required to commence
commercial production of AVLIS Feedstock;
(iii) a start up plan for the Conversion Facility;
(iv) an estimate of the costs to operate the Conversion
Facility for the following periods: (1) the start up; (2) the first full year
of production by the Conversion Facility; and (3) each subsequent year of
production. The estimate for each such period shall include estimates of
annual production; personnel required; expenditures for administration,
consumables, and maintenance materials; utilities; waste disposal; operating
and maintenance labor; taxes, working capital funding requirements; work
commitments; environmental compliance costs; reserves for shut down (including
decontamination and decommissioning costs); and any other anticipated costs of
operation;
(v) a schedule of the dates when required capital costs
will be incurred and the anticipated cash flow requirements during the design
and construction of the Conversion Facility and the start up and operation of
the Conversion facility; and
(vi) a determination as to whether the Conversion Facility
will be capable of meeting the technical and economic objectives set forth in
Schedule 1.
If the Management Committee determines that the Conversion Facility will
be capable of meeting the technical and economic objectives set forth in
Schedule 1 then the Preliminary Feasibility Study shall also include the
following:
(vii) recommendations and supporting analyses on the
preferred capacity of the Conversion Facility and whether it should be located
within the United States or Canada;
(viii) proposed criteria for evaluating potential sites for
the Conversion Facility;
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(ix) any other information that may be required by the
Management Committee for proper evaluation of the deployment of the Conversion
Facility; and
(x) an updated Target Cost.
ARTICLE VIII - INTELLECTUAL PROPERTY
8.1 Notification of Proprietary Rights. The Demonstration Phase
contemplates the use of Cameco Technology listed in Schedule 4 and the use of
USEC Technology listed in Schedule 5. Each Party agrees to notify the Management
Committee of its intent to utilize Cameco Technology or USEC Technology, as the
case may be, in the conduct of the Demonstration Phase activities that the Party
has not listed on Schedules 4 and 5, as applicable, prior to use of such
Technology during the Demonstration Phase. If the Management Committee agrees to
the use of such Technology, the Parties shall modify Schedules 4 and 5, as
applicable.
8.2 Technology Rights.
(a) Subject to the provisions of this Agreement that in certain
circumstances require a Party to transfer or license its interest in Technology
or Intellectual Property to the other Party, all Improvements (and related
Intellectual Property) shall be jointly owned by the Parties as tenants in
common. Neither Party shall transfer, sell, assign, license, or encumber its
interest in the Improvements or in the Intellectual Property covering the
Improvements without the prior written consent of the other Party, except as
otherwise provided in this Agreement. Nor shall either Party use any
Improvements or the Intellectual Property covering the Improvements without the
consent of the other Party except in the Demonstration Phase or in connection
with the development of the AVLIS uranium enrichment facility, or as otherwise
provided in this Agreement.
(b) With regard to Improvements made by a Party's employees,
officers, agents, or contractors, such Party (the "Inventing Party") shall:
(i) promptly disclose such Improvements to the other Party
in writing;
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(ii) take whatever steps are reasonably prudent to promptly
establish, if so directed by the Management Committee, Intellectual Property
rights in such Improvements under Applicable Law in the United States and
Canada. If the Inventing Party fails to take such steps, the other Party as
the joint owner may, regardless of the instructions of the Management
Committee, take reasonable steps to establish Intellectual Property rights in
such Improvements under Applicable Law. If such other Party is successful in
obtaining Intellectual Property rights in such Improvements, the Inventing
Party shall, within sixty (60) days after the Parties both give notice pursuant
Section 9.1(b) of their decision to proceed with the Deployment Phase, pay such
other Party one-half of the costs reasonably incurred by such other Party in
obtaining such Intellectual Property rights. If the Inventing Party fails to
pay the other Party in accordance with the above, the Inventing Party shall,
upon demand of the other Party, assign all of its rights, title and interest in
and to such Intellectual Property, and the Improvements on which such
Intellectual Property is based, to such other Party; and in such case, if USEC
is the Inventing Party, the Intellectual Property and the Improvements on which
such Intellectual Property is based shall thereafter, for all purposes other
than Section 8.5 of this Agreement, be deemed to be Cameco Technology, and if
Cameco is the Inventing Party, the Intellectual Property and the Improvements
on which such Intellectual Properly is based shall thereafter be deemed to be
USEC Technology;
(iii) promptly transfer or otherwise provide the other Party
with joint ownership in the Intellectual Property covering such Improvement;
(iv) with respect to Improvements which are inventions that
are or may be patentable but for which the Inventing Party does not desire to
seek patent coverage in a particular country, the other Party may, but is not
obligated, to file for a patent with respect to such country, and the Inventing
Party shall cooperate with the other Party in its efforts to obtain patent
coverage in such country and sign (or to cause its employees or subcontractor's
employees to sign) any documents necessary for the filing or prosecution of one
or more patent applications in such country by the requesting Party; and
(v) keep complete and accurate records with respect to each
Improvement.
A Party's costs and expenses in establishing Intellectual Property rights and
in providing technical documentation for Improvements shall be an Allowable
Cost of the Demonstration Phase funded by the Parties in accordance with
Schedules 1, 2
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and 3 of Article V. Any disputes concerning the Improvements or the
Intellectual Property in them shall be submitted for resolution in accordance
with Section 16.7.
(c) Upon the formation of the JVC pursuant to Article IX, each
Party shall contribute, license or otherwise provide to the JVC sufficient
Intellectual Property rights in all Improvements necessary or useful for the
JVC to carry out the purposes for which it was formed.
(d) In the event either Party obtains information concerning the
alleged infringement of a patent or of any Intellectual Property right that is
related to Improvements, or misappropriation of Improvements jointly owned by
the Parties, the Party obtaining such information shall promptly notify the
other Party in writing. Unless both Parties agree that the information is
insufficient to warrant seeking an injunction and damages against the alleged
infringement or misappropriation, the Parties shall take the following action:
(i) The Inventing Party, if it deems it to be warranted,
shall initiate an infringement, trade secret or other action and shall promptly
notify and keep the other Party informed about such action. If the Inventing
Party does not initiate suit, the other Party shall have the option to bring
such suit. Upon notification by a Party that it has elected to bring an
infringement action hereunder, the other Party shall cooperate to the extent
necessary for the Party to bring such action, including joining such action as
a party, if necessary and including any action initiated in third countries.
(ii) If a Party agrees to jointly share in the cost of an
action undertaken pursuant to this Section, the resulting damage award, if any,
shall be shared equally by the Parties. Otherwise, the costs (both external
and internal) of the action shall be the sole responsibility of the Party
bringing the action and the damage award, if any, shall belong solely to such
Party.
(e) In the event that any infringement action is brought by a
third party against a Party or its Affiliate during the performance of the
Demonstration Phase, the Parties shall jointly determine how to proceed and how
the cost of defending such action shall be allocated to the Parties. If the
third party infringement action is not related to the joint activities of the
Parties hereunder, the Party receiving notice of its alleged infringement shall
promptly notify the other Party and shall keep the other Party informed of the
progress of any such action.
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8.3 Nondisclosure of Improvements. Except to the extent that
disclosure is required by Applicable Law or as may be necessary to obtain
patent coverage for an item of Technology, all Improvements shall be kept
confidential by the Parties and shall not be disclosed to any third party
unless (i) such disclosure is necessary to perform this Agreement, (ii) the
disclosure is approved by the Management Commit tee, and (iii) the Party
disclosing such Improvements (x) obtains from such third party a written
agreement to abide by the terms of this in the same manner, and to the same
extent, that the Parties are bound hereunder and to assign all rights to any
Improvements to the Parties and (y) provides the other Party with a copy of
such written agreement. The above restrictions on the disclosure of
Improvements shall not include information that was or becomes generally
available to the public other than through the breach of this Agreement and
shall not apply to a Party acquiring all rights in such Technology.
8.4 Transfer of Background Technology to JVC. If the Parties proceed
with the Deployment Phase:
(a) Cameco agrees to: (i) disclose to the JVC all Cameco
Technology; (ii) license to the JVC, upon the JVC's request, Cameco Technology
for use in the design, construction, operation or maintenance of the Conversion
Facility; (iii) grant a license in the Intellectual Property covering Cameco
Technology for a period covering the useful life of the Conversion Facility or
Conversion Facilities constructed and operated by the JVC; and (iv) provide,
upon request from the JVC, technical assistance to the JVC in the design and
operation of such Conversion Facilities upon the payment of reasonable costs and
expenses for this service.
(b) USEC agrees to: (i) disclose to the JVC all USEC
Technology; (ii) license to the JVC, upon the JVC's request, USEC Technology
for use in the design, construction, operation or maintenance of the Conversion
Facility; (iii) grant a license in the Intellectual Property covering USEC
Technology for a period covering the useful life of the Conversion Facility or
Conversion Facilities constructed and operated by the JVC; and (iv) provide,
upon request from the JVC, technical assistance to the JVC in the design and
operation of such Conversion Facilities upon the payment of reasonable costs and
expenses for this service.
8.5 Export Restriction. Notwithstanding anything in this Agreement to
the contrary, Cameco shall not export, disclose, assign, license or otherwise
transfer any rights or interest in or to any Improvements or USEC Technology,
or to any Intellectual Property related either to Improvements or to USEC
Technology, to any
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third party outside of the United States, or for use outside of the United
States, without USEC's prior written consent, which consent shall not be
withheld if such disposition has been authorized by the appropriate
Governmental Authorities under Applicable Law. The restrictions in this
Section 8.5 shall survive any termination or expiration of this Agreement and
shall apply to Improvements and related Intellectual Property regardless of
whether USEC has transferred and assigned to Cameco, pursuant to Section 9.1(e)
or otherwise, all of USEC's right, title and interest in and to the
Improvements and related Intellectual Property.
ARTICLE IX - DEPLOYMENT PHASE
9.1 Decision Whether to Proceed With Deployment Phase.
(a) Within thirty (30) days after the receipt of the final
Preliminary Feasibility Study, the Management Committee shall assess and
evaluate whether the Preliminary Feasibility Study and the results of the
Demonstration Phase meet the objectives specified in Section 2.1(a) and report
in writing to the Parties its recommendation.
(i) If the Management Committee determines that the results
of the final Preliminary Feasibility Study and the Demonstration Phase do not
meet the objectives specified in Section 2.1(a) and do not otherwise justify
proceeding with the Deployment Phase, then the Management Committee shall
recommend that the Parties terminate this Agreement.
(ii) If the Management Committee decides that the final
Preliminary Feasibility Study and the results of the Demonstration Phase meet
the objectives specified in Section 2.1(a) or otherwise justify proceeding
with the Deployment Phase, then the Management Committee shall notify the
Parties that the Management Committee recommends proceeding with the Deployment
Phase (the date that the Parties are so notified being referred to herein as
the "Deployment Decision Date").
(b) The Parties, in their sole discretion, may accept or reject
the Management Committee's recommendation under Section 9.1(a). Within sixty
(60) days of the Deployment Decision Date, each Party shall provide the other
Party with written notice of its decision whether to proceed with the
Deployment Phase. If a Party has not paid for one-half of the total Allowable
Costs incurred by the end of the
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Reporting Period which ended immediately prior to the receipt by the Management
Committee of the final Preliminary Feasibility Study (the "Deficient Party"),
it shall not be eligible to elect to proceed with the Deployment Phase until it
has paid the other Party two hundred percent (200%) of the difference between
the amount actually paid by the Deficient Party and one-half of such total
Allowable Costs on or before the date that the Deficient Party executes the
Definitive Documents. In the event that the Deficient Party fails to pay the
full amount owed to the other Party on or before the day the Deficient Party
executes the Definitive Documents, then the Deficient Party shall be deemed to
have withdrawn, and the Agreement shall be terminated in accordance with
Section 16.3 if Cameco is the Deficient Party, and under Section 9.1(e) if USEC
is the Deficient Party. A Party that fails to provide written notice of its
decision whether to proceed shall be deemed to have elected not to proceed. If
both Parties elect not to proceed, or if USEC elects to proceed but Cameco
elects not to proceed, then Cameco shall be deemed to have withdrawn, and this
Agreement shall be terminated in accordance with Section 16.3. If Cameco elects
to proceed but USEC elects not to proceed, then USEC shall be deemed to have
withdrawn from the project, and Cameco shall have the termination options set
forth in Section 9.1(d). If both Parties elect to proceed, then the Parties
shall negotiate, in good faith, the following agreements (collectively, the
"Definitive Documents"):
(i) a deployment agreement between USEC and Cameco
incorporating the terms in Schedule 8 hereto and providing for the solicitation
of proposals for the construction and financing of a facility (the "Conversion
Facility") that incorporates Cameco Technology, and/or USEC Technology and the
Improvements (if any) to convert uranium into AVLIS Feedstock using all or
part of the Conversion Process; the selection of a mutually agreed site in the
United States or Canada for the Conversion Facility; and the formation of a
joint venture company, partnership or other entity or arrangement as mutually
agreed by the Parties ("JVC") which shall own and undertake the construction,
financing and operation of the Conversion Facility;
(ii) a UO-3 refining services agreement incorporating the
terms in Schedule 6 hereto;
(iii) an AVLIS Feedstock sales agreement incorporating the
terms in Schedule 7 hereto;
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(iv) a Technology agreement between the JVC, USEC and Cameco
providing for the transfer of Technology in accordance with Sections 8.2 and
8.4;
(v) an operating agreement between the JVC and Cameco
providing for the operation of the Conversion Facility and incorporating the
terms in Schedule 9 hereto; and
(vi) such other agreements as the Parties deem necessary or
desirable.
(c) If the Parties, acting in good faith, are unable to agree
upon the provisions of any of the Definitive Documents within a period of 120
days after the Deployment Decision Date, such disagreement(s) shall be resolved
by USEC developing, in good faith, its final position in regard to such
provision or provisions, consistent with the terms in Schedules 6, 7, 8, and 9
("Final Position"), and advising Cameco thereof in writing within 150 days
after the Deployment Decision Date. Cameco shall have thirty (30) days from
and after receipt of USEC's Final Position to advise USEC whether it accepts
USEC's Final Position. If Cameco notifies USEC that Cameco accepts USEC's
Final Position within said thirty (30) day period, the Parties shall execute
the Definitive Documents incorporating such Final Position within thirty (30)
days after Cameco's acceptance. If Cameco notifies USEC that Cameco rejects
USEC's Final Position, or if Cameco fails to give USEC notice of acceptance
within thirty (30) days after receipt of USEC's Final Position, or if Cameco
fails to execute the Definitive Documents within sixty (60) days after receipt
of USEC's Final Position, this Agreement shall be terminated in accordance with
Section 16.3. If USEC fails to advise Cameco of USEC's Final Position within
150 days after the Deployment Decision Date, or if Cameco accepts USEC's Final
Position within thirty (30) days of receipt thereof but USEC refuses to execute
the Definitive Documents which incorporate its Final Position within thirty
(30) days after receiving Cameco's notice of acceptance of USEC's Final
Position, USEC shall be deemed to have withdrawn from the project, and Cameco
shall have the termination options set forth in Section 9.1(e).
(d) If USEC is deemed to have withdrawn from the project pursuant
to Section 9.1(b), Cameco shall have the option of (i) terminating this
Agreement in accordance with Section 16.3, or (ii) terminating this Agreement,
paying USEC a lump sum equal to the aggregate of all Allowable Costs funded by
USEC requiring USEC to grant Cameco an irrevocable and transferrable (including
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the right to sublicense) license to the USEC Technology and related
Intellectual Property incorporated into or necessary to use the Improvements
for the purpose of constructing, operating and maintaining a Conversion
Facility to supply AVLIS Feedstock, provided that for Cameco's use of the USEC
Technology, Cameco pays USEC a royalty at one percent (1%) of the cash-based
disbursements for operation of the Conversion Facility, including payroll,
reagents, utility expenses and property taxes, excluding depreciation, indirect
overhead and financing costs, and any UO-3 or UF4 refining costs for USEC
Technology. If Cameco elects option (ii) above, USEC shall, subject to Section
8.6, concurrent with its receipt of the lump sum payment transfer and assign to
Cameco all of USEC's right, title and interest in and to the Improvements and
related Intellectual Property free and clear of any encumbrances arising
through USEC and this Agreement shall be terminated in accordance with Sections
16.3(a), (c) and (d). Cameco shall give USEC notice of its election of option
(i) or (ii) above within ninety (90) days after USEC's failure to provide
Cameco with USEC's Final Position or USEC's refusal to execute the Definitive
Documents incorporating the Final Position whichever is later, or shall
otherwise be deemed to have elected option (i) above.
(e) If USEC is deemed to have withdrawn from the project pursuant
to Section 9.1(c), this Agreement shall be terminated in accordance with
Section 16.3 and USEC shall, in addition to its obligations under Section 16.3,
pay Cameco a royalty on the first 100,000 metric tons of uranium ("MTU")
contained in all AVLIS Feedstock, produced for use in an AVLIS enrichment
facility, whether produced by USEC or its affiliates, licensees, assignees or
contractors ("Royalty"). The Royalty shall be in lieu of the 1% cash operating
royalty stipulated in Section 16.3. The license referred to in Section 16.3 to
the Cameco Technology and related Intellectual Property shall become fully paid
up once the Royalty is paid. The Royalty rate and its method of payment shall
be determined as follows:
(i) The initial amount of the Royalty shall be fifty cents
($0.50) per kilogram of uranium contained in all AVLIS Feedstock produced for
use in an AVLIS enrichment facility whether produced by USEC or its affiliates,
licensees, assignees or contractors, payable annually in arrears.
(ii) Within ninety (90) days after the end of each year,
USEC shall provide Cameco (or will cause its affiliates, licensees, assignees
or contractors, as the case may be, to provide Cameco) with a certificate
signed by a senior financial officer of USEC confirming the quantity of AVLIS
Feedstock produced in such year, expressed in kilograms of uranium contained
therein, and the
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amount of the Royalty payment due to Cameco. Payment of the amount due shall
accompany such statement.
(iii) Cameco may retain an independent auditor to conduct an
audit of USEC, or the affiliate, licensee, assignee or contractor producing the
AVLIS Feedstock, to verify the amount of Royalty payable. The costs of any
such audit shall be borne by Cameco unless such audit results in an adjustment
of the amount of the Royalty payment due in favor of Cameco in an amount equal
to or greater than $25,000.
(iv) The initial amount of the Royalty of fifty cents
($0.50) per kilogram of uranium contained shall be adjusted for each year
following the first year in which such Royalty accrues using the Implicit Price
Deflator for the U X. Xxxxx Domestic Product ("IPD-GDP") as published by the
U.S. Department of Commerce in accordance with the formula set forth below:
R = R1 + (R1)(IN - IBASE), where
-----------
IBASE
R = The Royalty rate to be determined for a year following the first
year in which the Royalty accrues
R1 = The initial amount of the Royalty rate, which is U.S. $0.50
IN = The first final index of the Implicit Price Deflator for the U X.
Xxxxx Domestic Product ("IPD-GDP") published by the U.S. Department
of Commerce for the last calendar quarter of the year immediately
preceding the year for which the Royalty rate is being determined
IBASE = The first final IPD-GDP for the first quarter of 1996.
(f) The Parties may decide that it is necessary or desirable to
commence a more definitive feasibility study prior to the execution of the
Definitive Documents, and if both Parties agree, this Agreement shall be
modified as appropriate to provide for such a study.
9.2 Definitive Documents.
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(a) This Agreement does not include all of the terms and
conditions regarding the implementation of the Deployment Phase. Such terms and
conditions shall be contained in the Definitive Documents. The Definitive
Documents and any other agreements relating to implementation of the Deployment
Phase shall be subject in all respects to the approval of each of the Parties in
its sole discretion.
(b) Each Party shall be responsible for its own costs of
negotiating the Definitive Documents.
9.3 Cancellation of AVLIS Enrichment Plant.
(a) If, prior to the execution and delivery of the Definitive
Documents referred to in Section 9.l, USEC decides to cancel its planned
commercial AVLIS uranium enrichment plant, USEC shall promptly notify Cameco of
such decision (the "Cancellation Notice") and this Agreement shall be terminated
in accordance with Section 16.3.
(b) If, within ten (10) years after the date of the Cancellation
Notice, USEC decides to deploy a commercial AVLIS uranium enrichment plant, it
shall notify Cameco that it intends to do so (the "Deployment Notice"). If,
within thirty (30) days of the date of the Deployment Notice, Cameco notifies
USEC that it wishes to proceed with the Deployment Phase for the Conversion
Facility, then the Parties shall negotiate in good faith the Definitive
Documents in accordance with Section 9.1 except that the time periods specified
in Section 9.1 shall commence on the date of the Deployment Notice.
(c) If Cameco does not notify USEC that it wishes to proceed with
the Deployment Phase for the Conversion Facility pursuant to Section 9.3(b),
the obligations of the Parties under this Section 9.3 shall be terminated.
9.4 Delay of AVLIS Enrichment Plant.
(a) If, prior to the execution and delivery of the Definitive
Documents referred to in Section 9.1, USEC decides to delay the date on which
the commercial AVLIS uranium enrichment plant is expected to commence operation
(the "Estimated Start-Up Date") beyond January 1, 2005, USEC shall so notify
Cameco (the "Delay Notice"). At any time, Cameco may request USEC to provide
Cameco with USEC's most current Estimated Start-Up Date, and USEC shall do so
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within thirty (30) days of such request. To the extent a delay is due, in
whole or in part, to a Force Majeure, the Estimated Start-Up Date shall be
extended as provided in Section 16.8. The Delay Notice shall include USEC's
then current Estimated Start-Up Date. USEC may update its estimate at any time
thereafter. During the period (the "Delay Period") from the date of the Delay
Notice to the date that is four (4) years before the Estimated Start-Up Date
set forth in the Delay Notice or the most recent update, this Agreement shall
not be terminated but rather the obligations of the Parties under this Article
IX shall be suspended. USEC shall pay Cameco interest for the Delay Period at
the Agreed Rate on the aggregate of all Allowable Costs funded by Cameco as of
the beginning of the Delay Period. Such interest shall be payable monthly in
arrears. The obligations of the Parties under this Article IX shall thereafter
resume as of the last day of the Delay Period.
(b) At any time during the Delay Period, Cameco may provide a
Cancellation Notice to USEC of its election to terminate this Agreement. Upon
receipt of Cameco's Cancellation Notice, this Agreement shall terminate in
accordance with Section 16.3. USEC shall notify Cameco at least thirty (30)
days, but no more than one-hundred and eighty (180) days prior to the end of
the Delay Period of its intent to deploy a commercial AVLIS uranium enrichment
plant and the current Estimated Start-Up Date. If, within thirty (30) days of
the date of the Deployment Notice, Cameco notifies USEC that it wishes to
proceed with the Deployment Phase for the Conversion Facility then the Parties
shall negotiate in good faith the Definitive Documents as specified in Section
9.1 except that the time periods specified in Section 9.l shall commence on the
date of the Deployment Notice.
9.5 Transition.
As of the execution of this Agreement, Cameco sells UF6 and provides
uranium concentrates to UF6 conversion services. Cameco's customers for UF6
and uranium concentrates to UF6 conversion services consist of entities that
operate nuclear electrical generating facilities. Such customers typically
contract for their UF6 and UF6 conversion services requirements three to five
years in advance. A number of Cameco's customers for UF6 and UF6 conversion
services have contracts with USEC for the provision of enrichment services. As
contemplated by this Agreement, USEC plans to construct and operate an
enrichment facility based on AVLIS technology to replace existing enrichment
facilities which are based on gaseous diffusion technology. As a consequence
of this, USEC will be asking its enrichment services customers to switch from
obtaining enrichment services from USEC's gaseous diffusion enrichment
facilities to USEC's proposed AVLIS enrich-
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ment facility. Customers of USEC that decide to obtain enrichment services from
USEC's proposed AVLIS enrichment facility will no longer need to provide USEC
with UF6 but will only have to provide USEC with uranium concentrates. Cameco
recognizes that USEC's prospective customers for enrichment services from the
proposed AVLIS enrichment facility will be concerned about the risks of not
having a sufficient supply of UF6 under contract should USEC not proceed with
the proposed AVLIS enrichment facility, and the corresponding risk of entering
into contracts for the supply of UF6 where such UF6 supply may become redundant.
In order to assist USEC's enrichment services customers in making the
transition, Cameco and USEC will cooperate in identifying and implementing
mechanisms that will alleviate the potential risks to such customers described
above. Such cooperation may consist, by way of example only, of allowing
prospective AVLIS enrichment services customers to withdraw, on favorable terms,
from UF6 conversion services agreements concurrent with such customers receiving
enrichment service under the AVLIS enrichment service contracts for
corresponding quantities of uranium.
ARTICLE X - REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of Cameco. Cameco represents and
warrants to USEC as follows:
(a) Cameco is organized, validly existing and in good standing
under the laws of Canada with full power and authority to execute, deliver and
perform this Agreement, to consummate the transactions contemplated herein, to
take all actions required to be taken by it pursuant to the provisions hereof,
to own and lease its properties and to conduct its business as the same exists.
(b) This Agreement constitutes the valid and binding obligation
of Cameco and is enforceable against Cameco in accordance with its terms,
except to the extent such enforceability is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other law
affecting or relating to creditors' rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) This Agreement has been duly authorized by all necessary
action on the part of Cameco.
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(d) Cameco has not hired, retained or dealt with any broker or
finder in connection with the transactions contemplated by this Agreement.
(e) Neither Cameco's execution and delivery of this Agreement or
any documents executed in connection herewith, nor Cameco's consummation of the
transactions contemplated herein, does or shall violate, conflict with, result
in breach of, or require notice or consent under any law, judgment, writ,
decree, order, permit, certificate, license, regulation, certificate of
incorporation, bylaw, certificate of limited partnership or limited partnership
agreement or under any provision of any agreement or instrument to which Cameco
is a party or to which it or any of its properties is subject.
(f) To its knowledge the Intellectual Property covering Cameco
Technology does not infringe any third party's patent rights and ownership
rights. Cameco is not aware of any third party interests in any of the
Intellectual Property associated with any of the Cameco Technology necessary
for the performance of the transactions contemplated by this Agreement, and has
not received notice of any allegations that Cameco is infringing or has
misappropriated the Intellectual Property covering Cameco Technology necessary
for the construction, operation and/or maintenance of a Conversion Facility.
(g) Subject to Article IV, Cameco has, or shall obtain prior to
commencing operations, all government approvals, permits, licenses and
clearances necessary for the conduct of the Demonstration Phase activities at
Cameco's facilities.
(h) The representations and certificates submitted by Cameco to
USEC pursuant to the clauses set forth in Appendix B have been duly authorized,
made and executed and are true, correct and complete as if made herein and as
of the date hereof.
10.2 Representations and Warranties of USEC. USEC represents and
warrants to Cameco as follows:
(a) USEC is organized, validly existing and in good standing
under the laws of the United States of America, with full power and authority
to execute, deliver and perform this Agreement, to consummate the transactions
contemplated herein, to take all actions required to be taken by it pursuant to
the
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provisions hereof, to own and lease its properties and to conduct its business
as the same exists.
(b) This Agreement constitutes the valid and binding obligation
of USEC and is enforceable against USEC in accordance with its terms, except to
the extent such enforceability is subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other law affecting or
relating to creditors' rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) This Agreement has been duly authorized by all necessary
corporate action on the part of USEC.
(d) USEC has not hired, retained or dealt with any broker or
finder in connection with the transactions contemplated by this Agreement.
(e) Neither USEC's execution and delivery of this Agreement or
any documents executed in connection herewith, nor USEC's consummation of the
transactions contemplated herein, does or shall violate, conflict with, result
in breach of, or require notice or consent under any law, judgment, writ,
decree, order, permit, certificate, license or regulation or under any
provisions of any agreement or instrument to which USEC is a party or to which
it or any of its properties is subject.
(f) To its knowledge the Intellectual Property covering USEC
Technology does not infringe any third party's patent rights and ownership
rights. USEC is not aware of any third party claims on any Intellectual
Property associated with any of the USEC Technology necessary for the
performance of the transactions contemplated by this Agreement, and has not
received notice of any allegations that USEC is infringing or has
misappropriated the Intellectual Property covering USEC Technology necessary
for the construction, operation and/or maintenance of a Conversion Facility.
ARTICLE XI - INDEMNIFICATION AND LIMITATION OF LIABILITY
11.1 General Indemnity.
(a) Cameco shall indemnify USEC (and its Affiliates, employees,
officers and directors) against, and hold each of them harmless from, any and
all
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claims, actions, causes of action, arbitrations, proceedings, losses, damages,
liabilities, fines, judgments and expenses (including, without limitation,
reasonable attorneys' fees) sustained by such Person, arising out of or
resulting from: (i) acts or omissions by Cameco (or any of its Affiliates,
employees officers, directors, contractors, subcontractors, agents or vendors)
during the Demonstration Phase at a Cameco owned, operated or controlled site;
(ii) the transport of uranium from a Cameco owned or controlled site or the
transport of uranium contrary to decisions of the Management Committee or
without the knowledge and consent of the Management Committee, and (iii) the
failure by Cameco (or any of its Affiliates, employees, officers, directors,
contractors, subcontractors, agents or vendors) to comply with any
Environmental Law with respect to the subject matter of this Agreement or the
past, present or future presence, remediation or clean-up of, or exposure to,
any Specified Substances at any facility owned, operated or controlled by
Cameco or any of its Affiliates, contractors, subcontractors or vendors.
(b) USEC shall indemnify Cameco (and its respective Affiliates,
employees, officers and directors) against, and hold each of them harmless
from, any and all claims, actions, causes of action, arbitrations, proceedings,
losses, damages, liabilities, fines, judgments and expenses (including, without
limitation, reasonable attorneys' fees) sustained by any such Person and
arising out of or resulting from: (i) acts or omissions by USEC (or any of its
Affiliates, employees, officers, directors, contractors, subcontractors, agents
or vendors) during the Demonstration Phase at a USEC owned, operated or
controlled site; (ii) the transport of uranium from a USEC owned or controlled
site or the transport of uranium contrary to decisions of the Management
Committee or without the knowledge and consent of the Management Committee, and
(iii) the failure by USEC (or any of its Affiliates, employees, officers,
directors, contractors, subcontractors, agents or vendors) to comply with any
Environmental Law with respect to the subject matter of this Agreement or the
past, present or future presence, remediation or clean-up of, or exposure to,
any Specified Substances at any facility owned, operated or controlled by USEC
or any of its Affiliates, contractors, subcontractors or vendors; provided,
however, that for as long as USEC is an executive agency of the United States
Government, USEC's obligations under this Section 11.1(b) shall be subject to
the availability of appropriated funds.
11.2 Consequential and Indirect Damages. In no event shall USEC or
Cameco (or any of their Affiliates, employees, officers, directors,
contractors, subcontractors, agents or vendors) by reason of their respective
acts or omissions be liable whether in contract, tort, warranty, negligence,
strict liability or otherwise for
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any special, indirect, incidental, consequential, or punitive damages arising
out of or in connection with this Agreement; provided, however, that this
provision shall in no way limit any indemnity provided by either Cameco or USEC
under this Agreement.
11.3 Waiver of Nuclear Liability. Neither Party (nor any of its
Affiliates, employees, officers, directors, contractors, subcontractors, agents
or vendors) shall have any liability to the other Party (or any of its
Affiliates, employees, officers, directors, contractors, subcontractors, agents
or vendors) for Nuclear Damage resulting from activities pursuant to this
Agreement to any property located at a site owned by the other Party. "Nuclear
Damage" means any loss, damage, or loss of use, which in whole or in part is
caused by, arises out of, results from or is in any way related, directly or
indirectly, to the hazardous properties of source, special nuclear or byproduct
material.
11.4 Survival. The provision of this Article and of the other Articles
of this Agreement providing for limitation of or protection against liability
shall apply to the full extent permitted by law and regardless of fault and
shall survive either termination pursuant to this Agreement or cancellation, as
well as completion of the work hereunder.
ARTICLE XII - INCORPORATION OF ADDITIONAL CLAUSES
12.1 Pre-Privatization.
(a) Additional Clauses and Provisions. The additional contract
clauses set forth in Appendix A are incorporated herein by reference and, to
the extent inconsistent with the provisions of Articles I through XVI hereof,
shall take precedence over such provisions during the period prior to the
privatization of USEC, as contemplated by the Atomic Energy Act of 1954, as
amended. After the privatization of USEC, the additional contract clauses set
forth in Appendix A shall be deemed to be deleted and shall thereafter no
longer apply to this Agreement.
(b) References in the clauses listed in Appendix A and Appendix B
to the contracting Party shall be deemed to refer to Cameco, references to
Contracting Officer shall be deemed to refer to USEC's representative,
references to the Contracting agency shall be deemed to be references to USEC,
and references to the Government or the U.S. Government shall be deemed to
include USEC, except if the context in such clause indicates otherwise. Except
for the clauses in Appendix A and
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Appendix B, the Federal Acquisition Regulations at 48 C.F.R. Chap. 1 ("FAR")
shall not apply to this Agreement.
12.2 Adjustments. To the extent any change in the applicability of the
additional clauses set forth and incorporated into this Agreement by Article
XII materially varies the obligations or risks of either Party, requires
expenditures not included in the budget, or obviates the need for expenditures
included in the budget, such change in applicability shall permit either Party
to propose to the Management Committee an amendment to the budget, as set forth
in Schedule 2.
ARTICLE XIII - PROPRIETARY INFORMATION
13.1 USEC Restricted Proprietary Information. Except as required by
Applicable Law, or this Agreement, any information that Cameco or its
representative acquires or to which otherwise gains access from USEC, during
performance of this Agreement, that has been specifically identified by an
appropriate marking or stamp as being confidential, proprietary or business
sensitive by USEC or of which Cameco has been otherwise notified pursuant to
Section 13.11 by USEC that any further use or disclosure of such information is
restricted, as well as any analyses, findings or conclusions made by any Cameco
Representative (written or oral) in connection with or related to the
Demonstration Phase that discloses such information from USEC ("USEC
Restricted Proprietary Information"), shall be kept confidential and shall not
be:
(a) used for any purpose not related directly to this Agreement;
(b) disclosed to any employee of Cameco, unless (i) disclosure is
necessary to perform this Agreement and (ii) disclosure is limited to only the
specific information that is necessary to perform the activities contemplated
herein; or
(c) disclosed to any third party or provided to any agent or
representative of Cameco, unless (i) disclosure is necessary to perform under
this Agreement, (ii) disclosure is limited to only the specific information
that is necessary to perform the activities contemplated herein and (iii) to
the extent such disclosure is to a third party, prior to disclosure, Cameco (x)
obtains from such third party a written agreement to abide by the terms of this
Article XIII in the same manner as, and to the same extent that, Cameco is
bound hereunder, (y) provides USEC with a
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copy of such written agreement between Cameco and the third party, and (z)
receives USEC's written consent to such disclosure.
13.2 Exceptions to USEC Restricted Proprietary Information.
USEC Restricted Proprietary Information shall not include information
that:
(a) at the time of its disclosure to Cameco is generally
available in the public domain;
(b) enters the public domain and becomes generally available at
any time after its disclosure to Cameco other than through an act or omission
of Cameco;
(c) Cameco can demonstrate, by written records, was already known
to it prior to its disclosure by USEC; or
(d) after its disclosure to Cameco by USEC, is disclosed to
Cameco by a third Party if such third Party has the right to make such
disclosure.
Cameco shall bear the burden of proof of establishing that any
information that Cameco or its representative acquires, receives or otherwise
gains access to during the performance hereof is not USEC Restricted
Proprietary information.
13.3 Relinquishment of USEC Restricted Proprietary Information. Unless
otherwise instructed by USEC in writing, Cameco shall turn over to USEC all
USEC Restricted Proprietary Information within thirty (30) days of the date of
termination of this Agreement; provided, however, that if Cameco has no
obligation to license Cameco Technology or related Intellectual Property to
USEC under the terms of this Agreement, Cameco may retain copies of the
Preliminary Feasibility Study, the monthly progress reports delivered pursuant
to Section 7.1 and other documents prepared under this Agreement.
13.4 Government Ordered Disclosure. In the event Cameco receives a
judicia1, congressional or administrative order, request, subpoena or similar
legal inquiry to disclose USEC Restricted Proprietary Information, Cameco shall
immediately notify and consult with USEC. In the event USEC determines that
such information, or any portion thereof, should not be disclosed, Cameco and
any
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Cameco representatives shall cooperate with USEC's legal counsel to seek relief
from the requested disclosure or to secure confidential treatment and
minimization of any such information that ultimately must be disclosed to the
governmental authority.
13.5 No License. Except as may be expressly provided in this Article or
Article VIII, nothing contained in this Agreement shall be construed as
granting or conferring to Cameco, any Cameco representative or any other Person
any rights by license or otherwise to any USEC Restricted Proprietary
Information.
13.6 Cameco Restricted Proprietary Information. Except as required by
Applicable Law, or this Agreement, any information that USEC or its
representative acquires or to which otherwise gains access from Cameco, during
performance of this Agreement, that has been specifically identified by an
appropriate marking or stamp as being confidential, proprietary or business
sensitive by Cameco or of which USEC has been otherwise notified pursuant to
Section 13.11 by Cameco that any further use or disclosure of such information
is restricted, as well as any analyses, findings or conclusions made by any
USEC representative (written or oral) in connection with or related to the
Demonstration Phase that discloses such information from Cameco ("Cameco
Restricted Proprietary Information"), shall be kept confidential and shall not
be:
(a) used for any purpose not related directly to this Agreement;
(b) disclosed to any employee, agent or representative of USEC,
unless (i) disclosure is necessary to perform this Agreement and (ii)
disclosure is limited to only the specific information that is necessary to
perform the activities contemplated herein; or
(c) disclosed to any third party or provided to any other USEC
Representative, unless (i) disclosure is necessary to perform under this
Agreement, (ii) disclosure is limited to only the specific information that is
necessary to perform the activities contemplated herein and (iii) to the extent
such disclosure is to a third party, prior to disclosure, USEC (x) obtains from
such third party a written agreement to abide by the terms of this Article
XIII in the same manner as, and to the same extent that, USEC is bound
hereunder, (y) provides Cameco with a copy of such written agreement between
USEC and the third party, and (z) receives Cameco's written consent to such
disclosure.
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13.7 Exceptions to Cameco Restricted Proprietary Information.
Cameco Restricted Proprietary Information shall not include information
that:
(a) at the time of its disclosure to USEC is generally available
in the public domain;
(b) enters the public domain and becomes generally available at
any time after its disclosure to USEC other than through an act or omission of
USEC;
(c) USEC can demonstrate, by written records, was already known
to it prior to its disclosure by Cameco; or
(d) after its disclosure to USEC by Cameco, is disclosed to USEC
by a third Party if such third Party has the right to make such disclosure.
USEC shall bear the burden of proof of establishing that any
information that USEC or a USEC representative acquires, receives or otherwise
gains access to during the performance hereof is not Cameco Restricted
Proprietary Information.
13.8 Relinquishment of Cameco Restricted Proprietary Information.
Unless otherwise instructed by Cameco in writing, USEC shall turn over to
Cameco all Cameco Restricted Proprietary Information within thirty (30) days of
the date of termination of this Agreement, except for the Preliminary
Feasibility Study, the monthly progress reports delivered pursuant to Section
7.l or any other documents prepared under this Agreement.
13.9 Government Ordered Disclosure. In the event USEC receives a
judicial, congressional or administrative order, request, subpoena or similar
legal inquiry to disclose Cameco Restricted Proprietary Information, USEC shall
immediately notify and consult with Cameco. In the event Cameco determines
that such information, or any portion thereof, should not be disclosed, USEC
and any USEC representatives shall cooperate with Cameco's legal counsel to
seek relief from the requested disclosure or to secure confidential treatment
and minimization of any such information that ultimately must be disclosed to
the governmental authority.
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13.10 No License. Except as may be expressly provided in this Article or
Article VIII, nothing contained in this Agreement shall be construed as
granting or conferring to USEC, any USEC representative or any other Person any
rights by license or otherwise to any Cameco Restricted Proprietary
Information.
13.11 Oral Disclosure. If Restricted Proprietary Information of a Party
is initially disclosed orally or by demonstration by such Party (including its
employees, agents, contractors or subcontractors) to the other Party, the
disclosing Party shall, at the time of disclosure, identify such information as
confidential, proprietary or business sensitive information, or otherwise
indicate that use or disclosure should be restricted by the receiving Party.
Within thirty (30) days thereafter the contents of the disclosure shall be
recorded in written or tangible form by the disclosing Party, and identified
by an appropriate marking or stamp as being confidential, proprietary or
business sensitive to the disclosing Party. The recorded disclosure shall
specify the date of the disclosure and a copy thereof shall be provided to the
receiving Party within such thirty (30) day period. All protections of this
Agreement for Restricted Proprietary Information shall apply during such thirty
(30) day period and thereafter upon the receipt of the recorded disclosure. If
at any time, the receiving Party is informed that any previously furnished
information of the disclosing Party is Restricted Proprietary Information but
was not appropriately marked or identified as such, the receiving Party shall
permit the disclosing Party to provide appropriately marked copies of such
information and the receiving Party shall maintain it in accordance with this
Agreement, except there shall be no liability to a Party or any release or
disclosure made prior to receipt of notice that the information was not
appropriately marked or identified.
13.12 Relationship to Article VIII. The provisions of Article VIII shall
take precedence over the provisions of this Article XIII.
ARTICLE XIV - NOTICES
14.1 Notices. Notices or other communication between the Parties shall
be in writing and be deemed properly delivered when duly sent by registered or
certified mail, express mail (or other overnight courier service) to a Party at
its address indicated below, or by facsimile transmission at the number
indicated below, or to such other address or number as either of the Parties
may, by a similar written notice, designate to the other Party.
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If to Cameco:
Cameco Corporation
0000 00xx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx X0X0X0
Xxxxxx
Attn: Xxxxxx X. Xxxxxxx, Senior VP, Marketing and Corporate Development
Phone:(000) 000-0000
Fax: (000) 000-0000
If to USEC:
United States Enrichment Corp.
Two Democracy Center
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
X.X.X.
Attn: J. Xxxxxxx Xxxxxxx, VP Advanced Technology
Phone:(000)000-0000
Fax: (30l) 000-0000
ARTICLE XV - INSURANCE
15.1 Nuclear Liability Insurance. Cameco shall carry Nuclear Liability
Insurance covering nuclear liability resulting from operations at its facility
in an amount of Can. $41 million, and while material is in transport from its
facility, in the amount of Can. $25 million.
15.2 Other Insurance. Cameco shall obtain and maintain the following
types of insurance:
(a) General liability insurance in the amount of Can. $1 million
combined single limit.
(b) Auto liability insurance in the amount of Can. $1 million
combined single limit.
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(c) Workers' compensation and employer's liability in the amount
required by statute for workers' compensation and Can. $1 million per
occurrence for contingent employer's liability.
(d) Umbrella liability covering above general, auto, and
contingent employer's liability in the amount of Can. $45 million.
(e) Environmental impairment liability in the amount of Can. $5
million.
(f) Property insurance on an "all risk" form and replacement cost
basis covering feedstock while in the possession of Cameco and during
transportation from Cameco. Cameco agrees to have its insurer waive all
rights of subrogation against USEC.
15.3 Certificates of Insurance. Cameco shall cause the insurers under
the policies of insurance required by this Article to issue to USEC
certificates evidencing that such policies are in effect. Such certificates
shall provide that USEC shall be notified at least thirty (30) days in advance
of any termination or suspension of much policies or any material decrease in
coverage under such policies. Without regard to whether notice is given to
USEC, in the event the insurance required by this Article is not obtained, or,
if obtained, is terminated or suspended, or the coverage of such insurance is
materially reduced, Cameco shall indemnify and hold harmless USEC for any loss
that it would not have suffered if such insurance had been in effect to the
full extent required hereunder; provided, however, that if the insurance
policies required hereunder are in effect at all relevant times but through no
fault of Cameco an insurer is unable to pay a claim in accordance with such
policy. Cameco shall not be liable for the amount that the insurer is obligated
but unable to pay under the policy.
15.4 Additional Insured. Cameco shall use its best efforts to cause
USEC to be named as an additional insured on all policies of insurance required
hereunder. To the extent USEC is not insured under such a policy, Cameco shall
use its best efforts to obtain a waiver of all rights of recourse and
subrogation against USEC from the insurer.
15.5 Responsibility for Costs. The cost of any insurance obtained
pursuant to Section 15.1 and 15.2 that was not in effect as of the Effective
Date and that Cameco can establish would not otherwise have been obtained by
Cameco had this
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Agreement not been executed, shall be included in the budget in Schedule 2.
USEC shall solely bear the full cost of any fee charged to Cameco by an insurer
to comply with Section 15.3 or Section 15.4.
ARTICLE XVI - MISCELLANEOUS
16.1 Public Statements. Subject to Applicable Law, neither Party shall
issue any press release or make any public statement regarding this Agreement
or the performance hereof without the prior written consent of the other Party.
16.2 Relationship of the Parties. Nothing contained in this Agreement
shall constitute either Party as the partner of the other Party nor, except as
otherwise herein expressly provided, constitute either Party as the agent or
legal representative of the other Party, nor create any fiduciary relationship
between or among the Parties. It is not the intention of the Parties to
create, nor shall this Agreement be construed as creating, a general
partnership. Neither Party shall have any authority to act for or to assume
any obligation or responsibility on behalf of the other Party. The rights,
duties, obligations and liabilities of the Parties shall be several and not
joint or collective. Each Party shall be responsible only for its obligations
as herein set forth and shall be liable only for its share of the costs and
expenses as provided in this Agreement.
16.3 Termination of Agreement.
Except as otherwise provided in this Agreement, the following provisions
shall apply to any termination of this Agreement:
(a) No later than thirty (30) days after termination, each Party
shall submit to the other Party its final statement of all previously
unreported Allowable Costs incurred during the term of the Agreement prior to
termination and all Allowable Costs incurred in connection with termination
that are payable under Section 16.3(c). No later than sixty (60) days after
termination, the Parties shall agree upon a final accounting of Allowable Costs
funded by each.
(b) Cameco shall transfer and assign to USEC all of Cameco's
right, title and interest in and to the Improvements and related Intellectual
Property free and clear of any encumbrances arising through Cameco. Concurrent
with receipt of Cameco's right, title and interest in and to the Improvements
and related Intellectual Property, USEC shall pay Cameco a lump sum equal to
the aggregate of
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all Allowable Costs funded by Cameco, without interest. Cameco shall grant USEC
an irrevocable and transferable (including the right to sublicense) license to
the Cameco Technology and related Intellectual Property incorporated into or
necessary to use the Improvements for any purpose; provided USEC pays Cameco
for such license a royalty at one percent (1%) of the of the cash-based
disbursements for operation of the Conversion Facility, including payroll,
reagents, utility expenses and property taxes, excluding depreciation, indirect
overhead and financing costs, and any UO-3 or UF4 refining costs.
(c) Promptly after termination, Cameco, as the manager, shall
take all action necessary to wind up the Demonstration Phase activities in
accordance with the approved work plans and budget, if applicable, and all
costs and expenses incurred in accordance with the approved work plan and
budget in connection with termination of the Demonstration Phase shall be an
Allowable Cost chargeable to the Parties. The equipment, materials, uranium and
any other assets acquired for the Demonstration Phase shall be disposed of
pursuant to Sections 5.6 and 5.7 as applicable.
(d) Upon termination of this Agreement, neither Party shall have
any further obligation to the other Party with respect to the subject matter
hereof, except as may be set forth in the Definitive Documents, if executed,
and except as provided in Articles VIII, IX, XI, and XIII and Sections 16.7 and
16.10, each of which shall survive termination.
16.4 Milestones. Notwithstanding any other provision to the contrary,
in the event that Cameco fails to meet any Milestone set forth in Section III
of Schedule l by the Completion Date set forth therein and fails to cure within
thirty (30) days of its receipt of a notice from USEC specifying the failure to
meet a Milestone, USEC may terminate this Agreement at any time. Upon receipt
of USEC's notice to terminate, this Agreement shall terminate in accordance
with Section 16.3.
16.5 Appendices. The appendices and schedules hereto are hereby
incorporated by reference into this Agreement. In the event of an inconsistency
between the contents of the Schedules and the provisions of Articles I through
XVI of this Agreement, the provisions of Articles I through XVI shall govern
and control the interpretation of the Parties' rights, obligations, and
liabilities. The additional contract clauses set forth in Appendix A and
Appendix B shall be interpreted according to the terms of Article XII.
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16.6 Governing Law. This Agreement shall be governed by the federal
laws of the United States and, to the extent not superseded by the federal law,
the laws of the State of New York. Cameco and USEC each consent to venue and
personal jurisdiction in the courts of the State of New York in the County of
New York or of the United States for the Southern District of New York, should
any dispute relating to this Agreement occur; provided, however that nothing
herein shall be deemed to limit jurisdiction of the Court of Federal Claims
over claims against USEC for as long as USEC is an executive agency of the
United States government. Each Party hereby irrevocably waives its rights to a
trial by jury.
16.7 Dispute Resolution. All disputes among the Parties in connection
with this Agreement shall first be presented to the Management Committee for
resolution and shall be considered by the Management Committee at the first
meeting held by the Management Committee after receiving notification of the
dispute. If the Management Committee fails to resolve the dispute within ten
(10) Business Days after such meeting, each Party shall notify its Senior
Executive Officer ("SEO") of the nature of the dispute; the SEOs, or their
authorized representatives, shall meet within two (2) weeks to attempt to
resolve the dispute. If the SEOs or their authorized representatives fail to
resolve the dispute, at USEC's option, the activities in the Demonstration
Phase shall continue, but any continuation of activities disputed by Cameco
shall be at USEC's sole expense, shall be carried out as directed by USEC and
shall not be subject to the Management Committee's authority. For purposes of
this Section, Cameco designates its Senior Vice President, Marketing and
Corporate Development as its SEO; and USEC designates its Vice President,
Advanced Technology as its SEO.
16.8 Force Majeure. Neither Party shall be liable for any delay in, or
prevention of, performance of its obligations under this Agreement to the
extent due to a "Force Majeure". For purposes of this Agreement "Force
Majeure" is defined as any event arising from causes beyond the control of a
Party that could not be overcome by the Party using reasonable efforts and that
delays or prevents the performance of any obligation hereunder, including but
not limited to fires, floods, adverse weather conditions, natural disasters or
other acts of God; strikes, labor actions, work stoppages or transportation
delays; acts of war, civil unrest, or sabotage; acts or failures to act of
Governmental Authority, and acts or failures to act of the other Party or third
parties. In the event of a delay due to a Force Majeure, the applicable
schedule, deadline, date or period of performance, shall be extended by a
period equal to the period of delay due to the Force Majeure. A Party which
experiences a delay due to a Force Majeure shall notify the other Party in
writing no later
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than Ten (10) Business Days after the beginning of a delay caused by an event
that the Party contends constitutes a Force Majeure. Such notice shall provide
a description of the Force Majeure event, an explanation and description of
the delay including its anticipated duration, all actions taken or to be taken
to prevent or minimize the delay, and a revision to any affected schedule,
deadline, date or period of performance.
16.9 Entire Agreement. This Agreement embodies the entire agreement
between the Parties in relation to the subject matter herein and supersedes all
prior understandings or agreements, oral or written, between the Parties and,
upon satisfaction of the conditions in Article IV, supersedes the
Confidentiality Agreement dated May 2, 1995, between the Parties.
16.10 No Oral Modifications. This Agreement may not be amended or
modified except by written agreement of the Parties.
16.11 Assignment. Neither Party may assign this Agreement without the
prior written consent of the other Party, such consent not to be unreasonably
with held, provided, however, that no such consent shall be required in
connection with any such assignment made in connection with the privatization
of USEC, nor shall consent be required in connection with an assignment by
either Party to an Affiliate of the Assigning Party if the Assigning Party
guarantees the performance of all obligations of the Affi1iate-assignee.
16.12 Effect of Privatization. In the event USEC is privatized as
contemplated by the Atomic Energy Act of 1954, as amended, and the duties and
obligations of USEC are assumed by a private corporation or other entity
pursuant to such privatization or transfer: (a) this Agreement shall survive
such privatization and be transferred to such private corporation or other
entity without the need for Cameco or USEC to take any further action under this
Agreement or otherwise, (b) the name of such private corporation shall be
substituted for that of USEC in this Contract and (c) Cameco and USEC shall take
whatever further action is required to transfer to such private corporation or
other entity any agreements, instruments or documents related to this Agreement
and entered into by Cameco and USEC on or after the date hereof which cannot be
transferred to such private corporation by the operation of their terms.
16.13 USEC Privatization. Cameco recognizes that USEC may need to
disclose Cameco Restricted Proprietary Information or other information
developed
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under or concerning this Agreement to prospective investors, their
representatives and other parties in connection with the privatization of USEC
pursuant to 42 U.S.C. Sections 2297d & 2297d-1, or otherwise. Accordingly,
Cameco agrees that, notwithstanding Article XIII, USEC may disclose this
Agreement and any Cameco Restricted Proprietary Information or other
information developed under or concerning this Agreement (a) to a third party
in connection with such privatization, provided that USEC takes reasonable
precautions to protect the confidentiality of the Cameco Restricted Proprietary
Information, or (b) to the extent required by law, including in connection with
an offering of its securities or sale of its business.
16.14 U.S. Funds. All monetary units in this Agreement and in any related
document (including all Schedules and Appendices hereto) shall be denominated
in United States dollars unless specifically stated otherwise. Accordingly,
all references in this Agreement and related documents to the term "dollar" or
the symbol "$" shall be deemed to refer to United States dollars, unless
specified as Canadian (or as "Can."), in which case such references shall be to
Canadian dollars.
16.15 Conversion. Cameco shall convert Allowable Costs incurred in
Canadian or other non-U.S. currency into U.S. dollars for the purpose of
invoicing hereunder at the conversion rate published in The Wall Street
Journal's "World Value of the Dollar," on Monday of the week (or if The Wall
Street Journal is not published on such Monday, the first day of such week on
which such World Value of the Dollar is published) immediately preceding the
week (Monday through Sunday) in which the expense was incurred.
16.16 Severability. If any provision of this Agreement is held invalid
by a court of competent jurisdiction, such provision shall be severed from this
Agreement and, to the extent possible, this Agreement shall continue without
affecting the remaining provisions.
16.17 Counterparts. This Agreement may be signed in two or more counter
parts, each of which shall be treated as an original but all of which, when
taken together, shall constitute one and the same instrument.
16.18 Disclosure of Audit Information. Either Party's right under this
Agreement to have an independent auditor review books, records or other
documents relating to the activity undertaken pursuant to this Agreement shall
be subject to the execution of a satisfactory confidentiality agreement between
the auditor and both
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Parties hereto limiting disclosure of the information obtained through such
audit without the prior written consent of both Parties hereto.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
CAMECO CORPORATION
By /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
Human Resources & Corporate Relations
By /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Fuel Services Division
UNITED STATES ENRICHMENT CORPORATION
By /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
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