1
EXHIBIT 10.18
KINGSVILLE DOME AND XXXXXX XXXXX AGREEMENT
This Kingsville Dome and Xxxxxx Xxxxx Agreement ("Agreement") is
entered by and among the Texas Natural Resource Conservation Commission
("TNRCC"), the Texas Department of Health ("TDH"), URI, Inc. ("URI"), and the
United States Fidelity & Guaranty Company ("USF&G").
RECITALS
A. URI is the owner and operator of the Kingsville Dome and Xxxxxx Xxxxx located
in Kleberg and Xxxxx Counties, Texas, respectively.
B . The following are the outstanding Bonds issued by USF&G on behalf of the
Kingsville Dome and Xxxxxx Xxxxx to provide assurance that funds will be
available when needed for groundwater restoration, decommissioning, and, if
applicable, for the long term care of the facility. By this Agreement, the
Agencies agree that they cannot enforce in excess of the amounts set forth below
against USF&G:
On June 23, 2000, USF&G issued to TDH on behalf of the Kingsville Dome
Mine the Surety Bond Rider to Performance Guarantee Bond (Bond No.
41-0130-40028-96-6) that has been in effect since December 2. 1996, in the penal
sum of One Million Seven Hundred Forty One Thousand Five Hundred Forty Two
Dollars ($1,741,542.00).
On June 23, 2000, USF&G issued to TDH on behalf of the Xxxxxx Mine the
Surety Bond Rider to Performance Guarantee Bond (Bond No. 41-0130-40040-96-6)
that has been in effect since November 26, 1996, in the penal sum of One Million
Nine Hundred Nine Thousand Six Hundred Forty Three Dollars ($1,909,643.00).
C. URI, to induce USF&G, as Surety, to execute the Bonds on behalf of URI,
executed and delivered a Master Surety Agreement for the benefit of Surety,
dated November 25, 1996, pursuant to which URI, agreed to exonerate, hold
harmless, indemnify and keep indemnified USF&G from and against any and all
demands, claims, liabilities, losses and expenses of whatsoever kind or nature
(including but not limited to, interest, court costs and counsel fees) imposed
upon, sustained, or incurred by USF&G by reason of: (1) USF&G having executed,
provided or procured Bonds in behalf of URI, Inc., or (2) URI, Inc.'s failure to
perform or comply with any of the provisions of the Master Surety Agreement. By
this document, URI, Inc. reaffirms its indemnity obligations under the Master
Surety Agreement.
D. This Agreement is entered by USF&G and Agencies at the request of URI, which
has acknowledged that it is financially unable to meet its obligations to
continue groundwater restoration of the Kingsville Dome and Xxxxxx Xxxxx without
this Agreement. This agreement does not replace or supersede any licenses,
permits, or regulatory requirements already in place.
E. USF&G may have certain defenses to claims made under the Bonds, and it
expressly reserves any and all defenses it may have or hereinafter acquire.
F. The purpose of this Agreement is, variously, to (1) facilitate the
implementation and continuation of groundwater restoration of the Mines; (2)
provide a mechanism for USF&G to receive an equivalent reduction in the penal
sum of its liability under the Bonds in consideration of USF&G's funding of
groundwater restoration costs of the Mines.
Now, therefore, the parties agree as follows:
1. INCORPORATION. The above Recitals are hereby incorporated into this
Agreement.
2. DEFINITIONS. The following terms shall have the meanings defined below:
1.1 "Agencies" means collectively TNRCC and TDH.
2
1.2 "Bonds" means the Bonds described in Recital B.
1.3 "Restoration Costs" means any reasonable costs directly associated
with or necessary for groundwater restoration activities at the Mines. Costs
that would not be allowed for bond reduction include, but are not limited to:
salaries of personnel for time not directly relating to groundwater restoration
at the Kingsville Dome and Xxxxxx xxxxx; travel to or activities regarding other
URI sites; general and administrative costs; other holding costs; legal costs;
costs of contesting TNRCC or TDH actions; and/or costs for the resumption of
production operations.
1.4 "Effective Date" means the date on which this Agreement has been
executed by all of the parties.
1.5 "Mines" means the Kingsville Dome Mine and the Xxxxxx Mine.
1.6 "Surety" means United States Fidelity & Guaranty Company.
1.7 "TDH" means the Texas Department of Health.
1.8 "TNRCC" means the Texas Natural Resource Conservation Commission.
1.9 "URI" means URI, Inc.
1.10 "USF&G" means the United States Fidelity & Guaranty Company.
3. FUNDING OF OPERATIONS. USF&G agrees, subject to the provisions contained
herein, to fund reasonable restoration costs at the Kingsville Dome Mine and
Xxxxxx Mine as enumerated in Appendix A attached to and by this reference
incorporated in this Agreement. In the event that
2
3
URI is able to secure funds outside of USF&G, other than funds provided by URI's
investor group that are specifically designated for general and administrative
costs, other holding costs and/or for the resumption of production operations,
URI will notify the TDH and TNRCC for a determination if these funds should be
used to substitute or supplement funding by USF&G.
4. PERIOD OF FUNDING/TERM OF AGREEMENT. This agreement shall remain in force and
effect from its effective date until December 31, 2001. In the event URI fails
to meet the Performance Criteria set forth in Appendix B for a specific
quarterly period and such Performance Criteria are not waived by the Agencies,
the Agencies may terminate the Agreement with 10 days notice to URI. If the
Agencies terminate the Agreement they shall notify USF&G of such action. This
notification shall occur within 24 hours upon termination of the Agreement, and
will be effective upon receipt by USF&G.
5. FORCE MAJEURE. URI shall not be deemed as failing to meet the Performance
Criteria for a specific quarter due to any Act of God, war, strike, riot,
electrical outage, accident, fire, explosion, flood, blockade, or other
catastrophe hereafter "force majeure," beyond URI's reasonable-control. In the
event of such force majeure, URI shall notify the Agencies of the event within
24 hours. Should such force majeure prevent or reduce groundwater restoration
activities for the subsequent quarter, then the Agencies may terminate the
Agreement with 10 days notice to URI.
6. RECORD KEEPING. URI shall include a summary of all reasonable restoration
costs incurred during a quarter in the quarterly performance reports to the
Agencies. URI will maintain complete records of reasonable expenditures made
during the term of this Agreement and will make those records available upon
request from the Agencies for auditing purposes.
7. INITIAL PAYMENT BY USF&G. USF&G is to pay the sum of $451,750 for groundwater
restoration cost expenses and for capital expense for the reverse osmosis unit
equipment at the Xxxxxx Mine to be incurred during the period from July 1, 2000
through September 30, 2000, as shown in Appendix A. Such payment is to be made
to URI on a periodic basis. TDH and TNRCC stipulate and agree that USF&G's
obligations under the Bonds shall be reduced, dollar for dollar on October 2,
2000 for each amount USF&G has paid to URI, up to $451,750 during the period
from July 1, 2000 through September 30, 2000 at the Kingsville Dome and Xxxxxx
Xxxxx.
8. PROGRESS REPORTS, BOND REDUCTION AND FUTURE PAYMENTS TO URI, INC. On
September 30, 2000 and each calendar quarter thereafter as set forth in Appendix
C, TDH will provide USF&G with a written bond reduction notice ("bond reduction
notice") in the format attached hereto as Appendix D. It is agreed by TDH that
it will issue the bond notice reduction within 10 working days following the end
of the calendar quarter contingent upon receiving USF&G's certification of
quarterly advances to URI by the end of the calendar quarter, and the failure to
do so shall constitute a material breach of this Agreement for which USF&G would
thereafter have no further obligation to provide any further funding pursuant to
this Agreement.
3
4
The bond reduction notice will reduce the penal amount of the bonds on a dollar
for dollar basis for restoration costs paid during the previous period. Penal
sum reductions will be allocated to the appropriate bonds for the appropriate
projects. Under no circumstance will the bond reduction for a preceding quarter
exceed the reasonable restoration cost projections in Appendix A. URI shall
provide a monthly groundwater restoration progress report in accordance with
Appendix B, to the Agencies for each of the first two months of each quarter no
later than the 10th working day of the following month. Commencing on September
30, 2000 and every three months thereafter until December 31, 2001, or by the
amendment and extension of this Agreement by the parties, URI shall provide
within 10 working days of the end of each calendar quarter to all parties, a
quarterly report documenting groundwater restoration activities conducted and
costs associated therewith that have occurred during that quarter. The TDH shall
notify URI and USF&G of the appropriate quarterly bond adjustment. Failure to
perform on the part of URI shall mean the failure to operate within agreed upon
reasonable restoration cost projections within Appendix A or the failure to meet
the Performance Criteria in Appendix B. If the Agencies, with good cause,
disapprove URI's performance, or reasonable restoration costs, the TDH may
adjust the next quarter's bond reduction amount. At the conclusion of the last
quarter, the Agencies shall not reduce the bond amount until they have completed
the performance and financial reviews of the last quarter's data.
9. RECONCILIATION OF EXTRAORDINARY EXPENSES. Upon receipt of a quarterly
performance or progress report, the Agencies may review all costs and
expenditures. The Agencies may require additional information from URI regarding
extraordinary expenses. Although USF&G will receive a reduction in the bonds'
penal sum, dollar for dollar, for costs paid during the previous period, upon
identification and validation of these extraordinary expenses by the Agencies,
the bond reductions will be adjusted in a following quarter for expenses
disallowed by the Agencies.
10. PERIODIC REPORTING BY USF&G. Contemporaneously with funding, USF&G will
provide to TNRCC and TDH a certification of quarterly advances under this
Agreement to URI by the end of each calendar quarter.
11. SURETY NOT AN OWNER OR OPERATOR. USF&G shall not be an "owner" or "operator"
of the Mines by virtue of execution and delivery of and performance of its
obligations under this Agreement. The parties' execution and delivery of this
Agreement is not intended to make USF&G an "owner" or "operator." USF&G's role
as Surety will not in any way make it responsible for any operation of the
Mines, nor will it own any part of the Mines.
12. RESERVATION OF DEFENSES. USF&G's execution, delivery and performance under
this Agreement shall not constitute, nor be deemed to constitute, an admission
of liability or a waiver of any claims or defenses which USF&G may assert or
have against URI, Inc., any indemnitors, or against claims made against USF&G
under the Bond. The Agencies' execution, delivery or performance under this
Agreement shall not constitute, nor be deemed to constitute, an admission of
liability or waiver of any claims or defenses which the Agencies may assert or
have against URI, Inc. relative to the Kingsville Dome and/or Xxxxxx Xxxxx, or
USF&G.
4
5
13. BANKRUPTCY OF URI.
13.1 It is the express desire, intent, and agreement of the parties
(TNRCC/TDH, URI and USF&G) that in the event URI shall become a Debtor in a
bankruptcy proceeding (by virtue of either the commencement of a voluntary or an
involuntary petition) the rights of TNRCC/TDH and USF&G shall remain as
unaffected as possible with respect to their mutual obligations under these
Bonds. Accordingly, as a material element of this Agreement, the parties
expressly agree and covenant as follows:
13.2. URI will enter into a Stipulation satisfactory to TNRCC/TDH and
USF&G setting forth sufficient facts to demonstrate its acknowledgment that the
parties would not have entered into this Agreement absent such stipulation. The
Stipulation shall further recite that, should URI become a Debtor in a Chapter
11 bankruptcy proceeding, it shall elect at the earliest of (1) sixty (60) days
from the Petition date or (2) thirty (30) days from the entry of the Order for
Relief in the instance where an involuntary petition is commenced to assume or
reject this Agreement as an executory contract.
13.3. URI and USF&G further agree that they shall take no action
directly or indirectly to prevent the Bankruptcy Court from ordering URI to make
such an accelerated election regarding assumption or rejection of this Agreement
in accordance with the time frame set forth above in paragraph 13.2.
13.4. In the event URI elects to assume this executory contract, URI
shall cure any pending defaults within 30 days of the date it makes said
election to assume (irrespective of the date of the entry of the Order approving
assumption). In the event the Bonds are called, USF&G shall be entitled to a
full credit against the face amount of the Bonds for any partial payments
distributed previously to URI in accordance with this Agreement.
13.5. In the event URI elects to reject this executory contract, the
parties agree that each will have whatever rights and obligations they have
under this Agreement, the Bonds, and applicable law.
13.6. All parties further acknowledge that the obligation of USF&G
under these Bonds constitutes an independent obligation of USF&G as a surety in
favor of TNRCC/TDH. URI further covenants that in its legal opinion, should URI
become a debtor in a bankruptcy proceeding, that these Bonds constitute
independent obligations of USF&G and would not constitute assets of URI's
bankruptcy estate. URI further covenants that it shall take no action either
directly or indirectly to controvert any position taken in the Bankruptcy Court
by TNRCC/TDH that these Bonds are not property of URI's bankruptcy estate.
13.7. URI and USF&G acknowledge that there have been extensive
confidential settlement communications, privileged under Federal Rule of
Evidence 408, leading up to the
5
6
execution of this Agreement. URI, USF&G, and TNRCC/TDH further covenant that
they shall never seek to introduce evidence of any prior negotiations that led
up to this Agreement (by way of example but not by limitation, introduction of
previous drafts of this settlement agreement as parole evidence).
14. NOTICES. Any notices required or authorized to be given by this Agreement
shall be in written form. Any notices required or authorized to be given by this
Agreement must be sent by: (a) registered or certified delivery mail, postage
prepaid and return receipt requested, addressed to the proper party at the
following address or such address as the party shall have designated to the
other parties in accordance with this Section; or (b) personal delivery. Mailed
notice shall be effective on the third (3rd) day following the date of mailing.
Personal delivery shall be effective on the date of receipt. Notices shall be
mailed to the following:
Texas Natural Resource Conservation Commission
c/o Xxxxx Xxxxxx, Manager
UIC and Radioactive Waste Section
MC 131
XX Xxx 00000
XXXXXX, XX 00000-0000
or at
00000 XXXX 00 XXXXXX, XXXX 000, XXXX. X
Xxxxxx XX 00000
Texas Department of Health
c/o Xxxxxxx Xxxxxxx, P.E., Chief
Bureau of Radiation Control
0000 Xxxx 00xx Xxxxxx
Xxxxxx, XX 00000
Xxxxxx Xxxxxx Fidelity & Guaranty Company
c/o St. Xxxx Surety-Claim (MC41)
Xxxxxxx X. Xxxxxxxxxxx, Esquire
0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxxx
URI, Inc.
00000 Xxxxx Xx., Xxx. 000
XX 00
Xxxxxx, Xxxxx 00000
6
7
Xxxxxx X. Xxxxxxxxx-Corporate Counsel
c/o Baker & Xxxxxxxxx
000 X. 00xx Xxx., Xxx. 0000
Xxxxxx, Xxxxxxxx 00000-0000
and copy to: X. Xxxxxx Xxxxxxx
Xxxxx XxXxxxxxx & Oaks Xxxxxxxx, L.L.P.
000 Xxxxxxxx Xxx., Xxx. 0000
Xxxxxx, Xxxxx 00000-0000
15. BINDING EFFECT OF OBLIGATIONS. This Agreement shall be binding upon and
inure to the benefit of the respective parties and their successors and assigns.
16. WHOLE AGREEMENT. There are no terms or conditions of this Agreement, express
or implied, other than expressly stated in this Agreement. This Agreement may be
amended or modified only by an instrument in writing, signed by the parties with
the same formality as this Agreement. This Agreement shall not be construed or
interpreted to be for the benefit of any third party, and no third party shall
have the right to enforce this Agreement without the consent of all of the
parties.
17. MULTIPLE COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute the same Agreement. Delivery of an executed copy of this
Agreement via facsimile or other electronic transmission shall be deemed
effective delivery.
18. SEVERABILITY. If any part, term or provision of this Agreement is held by a
court of competent jurisdiction to be illegal or in conflict with any law of the
United States or the State of Texas, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be invalid.
19. GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the United States and the State of Texas to the
extent that such laws do not conflict with the laws of the United States.
Nothing in this Agreement shall relieve URI of its obligations under the rules
and regulations of TNRCC or TDH or from the requirements of TNRCC Permits
UR02827, XXX 000, XX00000, XXX 000, xx XXX License L03653.
20. DATES. Any date that falls on a weekend or a State of Texas holiday shall
mean the next regular State of Texas business day following that date.
7
8
The parties have executed this Agreement effective as of October 11, 2000.
/s/ Xxxxxxx X. Xxxxxx, P.E., Executive Director /s/ Xxxxxxx Xxxxxxx, P.E., Chief
Texas Natural Resource Conservation Commission Bureau of Radiation Control
Texas Department of Health
/s/ Xxxx X. Xxxxxxxx, President and /s/ Xxxxxxx X. Xxxxxxxxxxx, Surety Attorney
Chief Executive Officer, URI, Inc. United States Fidelity and Guaranty
8