<PAGE> 1
EXHIBIT 10.45
EXECUTION COPY
Proprietary Information
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS.
THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH REDACTIONS.
TV-05356W
POWER CONTRACT
BETWEEN
TENNESSEE VALLEY AUTHORITY
AND
UNITED STATES ENRICHMENT CORPORATION
This Contract, made and entered into as of July 11, 2000, between
the United States Enrichment Corporation ("USEC" or the "Company"), a
corporation organized under the laws of Delaware, and the Tennessee Valley
Authority, a corporation created and existing by virtue of the Tennessee Valley
Authority Act of 1933, as amended ("TVA"), for the sale and purchase of power,
and transfer of UF6, as defined herein. USEC and TVA are referred to herein
individually as a "Party" and collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, USEC, the sole domestic enricher of uranium used to produce fuel
for nuclear power reactors, desires to secure a long-term supply of firm and
interruptible power for use at its uranium enrichment facilities located at
Paducah, Kentucky ("Paducah Facility"), that USEC has leased from the United
States Department of Energy ("DOE"); and
WHEREAS, USEC has been purchasing power from TVA under Power Contract
TV-99015U, dated October 12, 1995, as amended ("1995 Agreement"), providing for
a portion of the supply of electric power for the operation of the Paducah
Facility; and
WHEREAS, the Parties wish to replace the 1995 Agreement with a new contract
under which TVA will make firm and interruptible power available for the
operation of the Paducah Facility ("Contract");
<PAGE> 2
EXECUTION COPY
Proprietary Information
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
"Additional Energy" has the meaning set forth in section 2.2 (e).
"Assay" means the total weight of U235 per kilogram of material divided by the
total weight of all uranium isotopes per kilogram of material, the quotient of
which is multiplied by 100 and expressed as a weight percent.
"Average Short Term Interest Rate" has the meaning set forth in Attachment 4.
"Baseline Buyback" has the meaning set forth in section 2.2 (e).
"Baseline Energy" means the total of Firm Baseline Energy and Interruptible
Baseline Energy.
"Baseline Energy Price" means the price for Baseline Energy.
"BFN Enrichment Agreement" means an agreement under which TVA would buy
enrichment services from USEC on a requirements basis for Browns Ferry Nuclear
Plant which TVA and USEC anticipate will be entered into pursuant to TVA's RFP
dated May 3, 2000.
"Billing Month" has the meaning set forth in Attachment 4.
"business day" has the meaning set forth in Attachment 4.
"day" has the meaning set forth in Attachment 4.
"Firm Baseline Energy" means firm energy provided under section 2.2 (b).
"Force Majeure" has the meaning set forth in section 5.1 (a).
"Interruptible Baseline Energy" has the meaning set forth in section 2.2 (c).
"NRC" means the United States Nuclear Regulatory Commission.
"Paducah Facility" has the meaning set forth in the recitals.
-2-
<PAGE> 3
EXECUTION COPY
Proprietary Information
"Period One" has the meaning set forth in section 2.2 (b).
"Period Two" has the meaning set forth in section 2.2 (b).
"TVA Energy" means the sum of Baseline Energy and Additional Energy sales.
"TVA UF6 Material" has the meaning set forth in section 3.2 (a).
"UF6" means non-enriched uranium hexafluoride which shall be of United States
origin and shall meet ASTM Specification C-787-96.
ARTICLE II
POWER SUPPLY ARRANGEMENTS
SECTION 2.1 TERM.
This Contract shall become effective as of the date first above
written and shall continue in effect through the Billing Month of May 2010.
SECTION 2.2 POWER SALES AND PURCHASES.
(a) Baseline Energy. Subject to the other provisions of this
Contract, TVA shall make available and sell, and USEC shall purchase, Firm
Baseline Energy and Interruptible Baseline Energy in the quantities set out
below on an hourly basis, twenty-four (24) hours per day and seven (7) days per
week throughout the term of this Contract.
(b) Firm Baseline Energy. During the first sixty-nine (69) month
period beginning with the Billing Month of September 2000, and continuing
through the Billing Month of May 2006 ("Period One"), TVA shall make available
and USEC shall purchase 300 MW of Firm Baseline Energy. During the next
forty-eight (48) month period, beginning with the Billing Month of June 2006
and continuing through the Billing Month of May 2010 ("Period Two"), TVA and
USEC shall determine the quantity and price of Firm Baseline Energy according
to section 2.4.
(c) Interruptible Baseline Energy. TVA shall make available and
sell, and USEC shall purchase, interruptible baseline energy during Period One
in an amount that is the difference between Baseline Energy specified in
Attachment 1 and Firm Baseline Energy ("Interruptible Baseline Energy"). TVA
and USEC shall determine the quantity and price of Interruptible Baseline
Energy during Period Two according to section 2.4.
-3-
<PAGE> 4
EXECUTION COPY
Proprietary Information
(d) Suspension of Interruptible Baseline Energy. The conditions under
which the availability of Interruptible Baseline Energy may be suspended by TVA
are defined in Attachment 2. In the event that (1) USEC does not suspend
Interruptible Baseline Energy when requested by TVA in accordance with this
Contract and (2) TVA determines that continuing to supply Interruptible Baseline
Energy to USEC could represent a threat to the security of TVA's power system,
then TVA may terminate the availability of Interruptible Baseline Energy at any
time upon at least seven (7) days' written notice.
(e) Baseline Buyback and Additional Energy. USEC may release and TVA
may buy back Baseline Energy ("Baseline Buyback"), and/or TVA may sell and USEC
may buy additional energy ("Additional Energy") above the amounts set forth in
Attachment 1. TVA will periodically post market-based prices for each. Baseline
Buybacks and Additional Energy sales may be entered into at any time and cover
periods as mutually agreed. For purposes of interruption, unless otherwise
agreed, Additional Energy will be suspended along with any suspension of
Interruptible Baseline Energy.
(f) Operating Procedures. By August 15, 2000, the Parties will jointly
develop operating procedures which will address:
(i) processes for implementation of Baseline Buybacks and
Additional Energy sales.
(ii) procedures for the change in monthly Interruptible Baseline
Energy amounts consistent with Paducah Facility ramp-up and
ramp-down rates and the determination of any Unscheduled
Energy.
(iii) other operational processes, as mutually agreed.
SECTION 2.3 BASELINE ENERGY PRICE.
* * * *
-4-
<PAGE> 5
EXECUTION COPY
Proprietary Information
SECTION 2.4 PERIOD TWO QUANTITY AND PRICING OF BASELINE ENERGY.
* * * *
SECTION 2.5 CONDITIONS OF DELIVERY.
(a) Delivery Point. The delivery point for Baseline Energy
shall be the interconnection of TVA's 161-kV facilities and the 161-kV
facilities leased by USEC in DOE's 161-kV substations, except as otherwise
agreed from time to time ("Delivery Point"). Each Party shall be responsible for
providing, or causing to be provided, at its own expense all facilities on each
Party's respective side of the Delivery Point, except as otherwise provided in
the Terms and Conditions set forth in Attachment 4, or as otherwise agreed.
(b) Title. USEC agrees to take title to TVA Energy delivered by
TVA under this Contract at the Delivery Point.
(c) Delivery of TVA Energy. TVA shall deliver TVA Energy under
this Contract to the Delivery Point according to good utility practice.
(d) Delivery Voltage. The TVA Energy made available under this
Contract shall be delivered at a nominal voltage of 161,000 volts, subject to
the provisions of section 1 of the attached Terms and Conditions, set forth in
Attachment 4.
(e) Metering. TVA shall, at its expense, own and maintain
metering equipment to measure the power and flow of energy between TVA and USEC
as provided in section 3 of the attached Terms and Conditions, set forth in
Attachment 4. In addition, USEC shall (i) own (or lease) and maintain (or cause
to be maintained) the necessary metering current and voltage transformers with
conduit, secondary wiring, and auxiliary devices; (ii) own (or lease) and
maintain (or cause to be maintained) the metering panels and furnish suitable
space thereon for TVA's equipment; and (iii) make available to TVA certified
copies of calibration and test data on each instrument transformer.
If USEC requests additional tests under the second paragraph of
section 3 of the Terms and Conditions set forth in Attachment 4, TVA will bear
the expense of those tests if they do not show that the measurements are
accurate within one percent (1%) fast or slow at the average load during the
preceding thirty (30) days. The replacement, repair, or readjustment of metering
equipment provided for under section 3 of the Terms and Conditions set forth in
Attachment 4 shall be at TVA's sole expense.
(f) Interconnection and Load Coordination. It is recognized
that in addition to TVA, Electric Energy, Inc. ("EEI") can provide power for the
Paducah Facility. The 161-kV facilities through which USEC takes delivery of
power and energy for the Paducah Facility are electrically connected to TVA's
and EEI's 161-kV transmission facilities through DOE's buses and operated in
parallel. TVA's obligation under this Article of the Contract shall be
contingent upon (i) USEC providing or causing to be provided, without expense to
TVA, any special facilities which, in TVA's judgment, and consistent with
-5-
<PAGE> 6
EXECUTION COPY
Proprietary Information
good utility practice, are necessary to permit efficient parallel operation and
which TVA would not otherwise be justified in providing and (ii) the existence
of adequate contractual arrangements, mutually satisfactory to the Parties and
EEI, for such parallel operation, including, without limitation, procedures for
TVA and EEI to account for and settle any differences (resulting from scheduled
transfers between them, from the physical characteristics of interconnected
operations, or otherwise) between the amounts of power, energy, and reactive
power physically delivered to USEC over TVA's own facilities and the amounts
scheduled by USEC in accordance with this Contract.
It is further recognized that in accordance with the contractual
arrangements between TVA and EEI, TVA and EEI will regulate their hourly pro
rata portion of USEC's total load. Under this Contract, USEC will schedule TVA
Energy and, regardless of anything which may be construed to the contrary, TVA's
obligation to supply the USEC load in any clock hour will be limited to the
amount of TVA Energy scheduled for that hour. In the event that TVA reduces a
schedule for TVA Energy, during the period of that reduction, TVA's obligation
regarding power supply to the USEC load shall be limited to that portion of the
TVA Energy schedule not reduced. Similarly, if TVA suspends a schedule for TVA
Energy, TVA has no obligation regarding power supply to the USEC load from TVA's
system for that particular schedule during the period of suspension.
(g) Unscheduled Energy. Any energy deemed to be taken by USEC
during a Billing Month in excess of the required quantities of Baseline Energy
for that month as set out in Attachment 1, determined in accordance with the
operating procedures established under 2.2 (f) (adjusted to reflect any (i)
Baseline Buyback(s), (ii) Additional Energy sale(s), (iii) suspension(s) of
Interruptible Baseline Energy, and/or (iv) any schedule reductions by TVA),
shall be unscheduled energy ("Unscheduled Energy"). The price for each MWh of
Unscheduled Energy shall be the higher of (a) one hundred ten percent (110%) of
TVA's highest incremental cost for any hour during that Billing Month or (b)
$100/MWh.
SECTION 2.6 PAYMENT.
(a) USEC shall pay TVA for Baseline Energy on a Billing Month
basis ("Power Bill"), according to section 2 of the Terms and Conditions set
forth in Attachment 4, except as provided for in this section.
(b) The Power Bill due and owing for each Billing Month shall
be the Baseline Energy Price applied to the Baseline Energy (as adjusted to
reflect any (i) suspensions of Interruptible Baseline Energy and/or (ii)
reduction as provided for in section 5.1), decreased to reflect any Baseline
Buyback credits, and increased by the amounts due for any Additional Energy and
Unscheduled Energy.
(c) For the Billing Month of September 2000, USEC shall pay an
estimated Power Bill. The Power Bill for that Billing Month shall be estimated
to be $* * * *, and the date of such Power Bill shall be deemed to be September
5, 2000. Adjustments to reflect the difference, if any, between this estimated
bill and an actual bill, if it had been calculated in accordance with section
2.6 (b) above for September 2000, will be included in the October 2000 Power
Bill.
-6-
<PAGE> 7
EXECUTION COPY
Proprietary Information
(d) For the Billing Months from * * * *, the Power Bill shall
be * * * * (the "Deferred Payment").
SECTION 2.7 NEW PROJECT - SUMMER OPTION.
The Parties recognize that USEC, TVA, and * * * * presently are
discussing possible arrangements for the supply of power, or the construction of
generating facilities, for principal use during the peak summer periods
(approximately June 1 to August 31) ("Summer Option"). Further, the Parties
recognize that the execution and implementation of a Summer Option among USEC,
TVA, and * * * * may impact the Parties' rights and responsibilities under this
Contract. As of the date hereof, USEC, TVA, and * * * * have not finalized an
agreement for the Summer Option. If the Summer Option is entered into subsequent
to the date hereof, the Parties agree to modify this Contract to the extent
necessary to effectuate the Summer Option.
SECTION 2.8 CONDITION OF NRC APPROVAL.
(a) The Parties recognize that USEC has an application pending
before the NRC to amend USEC's currently effective operating certificate for the
Paducah Facility to upgrade the ability of the Paducah Facility to enrich UF6 up
to an Assay of at least five and one-half percent (5.5%) ("Paducah Assay Upgrade
Project"). Although the Parties recognize that it is unlikely that the NRC will
delay, significantly modify, or deny the approval of the Paducah Assay Upgrade
Project, the Parties recognize that this Contract contemplates completion of the
Paducah Assay Upgrade Project.
(b) In the event the NRC rejects, significantly modifies, or
unreasonably delays the approval of USEC's application for the Paducah Assay
Upgrade Project, the Parties agree to negotiate an equitable modification to
this Contract, provided that USEC has acted in good faith and in a commercially
reasonable manner to obtain NRC approval of the Paducah Assay Upgrade Project.
(c) The above provisions regarding NRC approval of the Paducah
Assay Upgrade Project shall not apply to, or have any impact upon, the BFN
Enrichment Agreement.
SECTION 2.9 OPERATION OF DOE'S FACILITIES LEASED BY USEC.
USEC's operation of DOE's 161-kV facilities will be in accordance
with written operating procedures which are mutually satisfactory to TVA and
USEC, and all of DOE's circuit breakers, relays, communication and telemetering
facilities, and related equipment connected directly or indirectly to TVA's
system will at all times be operated and maintained in coordination with said
system. All tests, settings, and adjustments on such equipment shall be subject
to the approval of TVA. TVA shall have the privilege of having its engineers
present when such tests, adjustments, or settings are made, or TVA, upon the
request of USEC and at the expense of USEC, shall make the necessary tests,
adjustments, or settings.
-7-
<PAGE> 8
EXECUTION COPY
Proprietary Information
-----------------------
USEC agrees that TVA shall be permitted to use the DOE 161-kV
lines and buses leased by USEC which interconnect parts of TVA's system,
together with associated facilities, for the purposes of delivering power under
this Contract and transferring other power between said parts of TVA's system.
SECTION 2.10 RIGHTS-OF-ACCESS.
USEC shall cooperate with TVA in obtaining all easements and
rights of access (at agreed upon locations) in, over, and across DOE property,
including DOE property leased by USEC, which are necessary for TVA to install,
operate, protect, maintain, repair, replace, and remove any of its facilities
constructed for supplying power to the Delivery Point provided for under this
Contract or for transferring power between any of TVA's facilities and other
facilities of TVA or those of other electric systems. However, USEC reserves the
right to refuse access to restricted process areas and agrees to perform at its
own expense any work which TVA is unable to perform because of lack of such
access.
USEC shall exercise reasonable care to avoid damaging TVA
facilities and shall pay the cost of any necessary repairs or replacements in
the event of loss or damage to such facilities arising from its failure to
exercise such reasonable care. Upon termination of this Contract, TVA may, at
its option and expense, remove any of its facilities.
TVA shall exercise reasonable care in the exercise of its rights
under this section to avoid damaging any USEC property (including DOE property
leased to USEC) and shall pay the cost of any necessary repairs or replacements
in the event of loss of or damage to any such property arising from its failure
to exercise such reasonable care.
SECTION 2.11 RESALE OF POWER.
The TVA Energy supplied under this Contract is for the use of USEC
or any wholly owned subsidiary of USEC or its parent company in the operation of
the Paducah Facility and shall not be resold or otherwise disposed of directly
or indirectly, for any other purpose; provided, however, that USEC may furnish
limited amounts of power to contractors and subcontractors performing work for
USEC and/or DOE at the Paducah Facility.
ARTICLE III
TRANSFER OF UF6
SECTION 3.1 INITIAL QUANTITY OF UF6.
The initial quantity of UF6 transferred to TVA under section 3.2
of this Contract shall be * * * * kgU as UF6.
-8-
<PAGE> 9
EXECUTION COPY
Proprietary Information
-----------------------
SECTION 3.2 UF6 TRANSFER.
(a) The initial transfer of title and ownership of UF6 from
USEC to TVA under section 3.1 shall occur on or before October 1, 2000.
Subsequent transfers of title and ownership of UF6 from USEC to TVA and from TVA
to USEC shall occur as required by section 3.3 and, if applicable, section 3.2
(e) of this Contract. Any UF6 transferred to TVA shall be deemed "TVA UF6
Material."
(b) Any UF6, the title to and ownership of which is transferred
to TVA, shall, at the time TVA takes title thereto, be free and clear of any
lien, pledge, encumbrance, security interest or other similar claim that could
impair TVA's right to take good and marketable title to such material. USEC
shall retain risk of loss for all TVA UF6 Material.
(c) In a manner acceptable to TVA and without cost to TVA, USEC
shall identify, segregate, and store all the TVA UF6 Material at the Paducah
Facility, or, subject to TVA's approval, at another location. Subject to USEC's
controlled access area requirements, TVA shall have the right, during business
hours, to enter into the location where the TVA UF6 Material is stored to verify
compliance with the requirements of this section. USEC shall retain possession
of all TVA UF6 Material, and TVA shall have no right to possess the TVA UF6
Material, except as provided in subsection (d) below.
(d) Upon the occurrence of any one of the following events, TVA
has the immediate right to possess the TVA UF6 Material and any USEC right that
is contrary to TVA's right to possess and control the TVA UF6 Material shall
immediately cease:
(i) USEC's failure to pay TVA for TVA Energy when it is
due and such failure is not cured within ten (10)
days, or
(ii) USEC uses TVA UF6 Material without the written
approval of TVA, or
(iii) USEC fails to perform any of its material
obligations hereunder and USEC fails to initiate
corrective action within thirty (30) days of the
date of receipt of written notice of such failure to
perform, unless such failure is excused by a Force
Majeure, as defined in section 5.1 (a), or
(iv) USEC enters into any voluntary or involuntary
receivership, bankruptcy, or insolvency proceeding,
with the exception of reorganization under Chapter
11 of the Federal Bankruptcy Act.
(e) In the event TVA is in default, as defined below, of the
power supply arrangements of this Contract, TVA shall transfer to USEC all TVA
UF6 Material except for an amount, the market value of which is equal to one
hundred ten percent (110%) of the Outstanding Deferred Payment. For purposes of
this section, a default shall exist only if (i) TVA is prohibited by legislation
-9-
<PAGE> 10
EXECUTION COPY
Proprietary Information
from performing the power supply arrangements of this Contract or (ii) TVA is
determined by a court of competent jurisdiction to be in default of the power
supply arrangements of this Contract.
SECTION 3.3 TVA UF6 MATERIAL ADJUSTMENT.
As used in this Article, the term "Outstanding Deferred Payment"
means the total of the cumulative Deferred Payment(s) and interest at an
effective annual rate of * * * *. The quantity of TVA UF6 Material shall, from
time to time, be adjusted such that its market value based on unit values
determined in accordance with subsection (b) below, shall be equal to or greater
than one hundred ten percent (110%) of the Outstanding Deferred Payment;
provided, however, that this adjustment only shall be made upward until such
time as the Work Off as defined in section 3.4 of this Contract begins. The time
and method of such adjustments shall be as follows:
(a) Subject to the limitation described above with respect to
downward adjustments, within ten (10) days after the end of each calendar
quarter, starting with the quarter ending December 31, 2000, USEC shall (i)
adjust the quantity of TVA UF6 Material using then-current market values
obtained from the source provided below in subsection (b) such that the market
value of such material shall remain equal to or greater than one hundred ten
percent (110%) of the then currently Outstanding Deferred Payment as of the date
of adjustment or (ii) if USEC may not under applicable agreements and provisions
of law transfer additional UF6 material, then USEC shall reduce the currently
Outstanding Deferred Payment by a cash payment to TVA so that the value of the
TVA UF6 Material, using the then-current market values obtained from the source
provided below in subsection (b), is equal to or greater than one hundred ten
percent (110%) of the Outstanding Deferred Payment as reduced by the cash
payment.
(b) The unit values to be used for calculating the market value
of such TVA UF6 Material shall be obtained from The Ux Weekly report published
for the week following the calendar quarter that just ended which contains the
month-end values for the last month of the quarter. The month-end values to be
used shall be taken from the table titled, "Industry Spot Prices," column
headed, "Avg.," from the section titled, "Month-end (x/xx/xx)" for natural UF6
($/kgU) for the "Restricted Market." In the event such average industry spot
price ceases to be published or the basis for such price is substantially
modified, an equivalent industry average UF6 price shall be determined by
averaging the other available trade publications that are currently included in
the above described average published in The Ux Weekly.
(c) As the Outstanding Deferred Payment is Worked Off pursuant
to section 3.4, TVA shall transfer to USEC an amount of UF6 having a market
value equal to one hundred ten percent (110%) of the reduction in the
Outstanding Deferred Payment.
(d) Upon transfer of UF6 from USEC to TVA or from TVA to USEC
as part of the quantity adjustment process, title to such material shall pass to
the receiving Party upon such transfer.
-10-
<PAGE> 11
EXECUTION COPY
Proprietary Information
SECTION 3.4 WORK OFF OF OUTSTANDING DEFERRED PAYMENT.
(a) The Outstanding Deferred Payment shall be worked-off
commencing with the initial delivery by USEC under the BFN Enrichment Agreement,
presently scheduled for the fourth quarter of calendar year 2001, and shall run
through the third quarter of calendar year 2004. The invoiced amounts for
enrichment services delivered by USEC under the BFN Enrichment Agreement shall
be credited against the Outstanding Deferred Payment ("Work Off" or "Worked
Off").
(b) TVA shall have no obligation to pay USEC for enrichment
services performed under the BFN Enrichment Agreement which are used to Work Off
the Outstanding Deferred Payment. USEC and TVA shall enter into a netting
arrangement as may be necessary to reflect this agreement.
SECTION 3.5 TRUE-UP MECHANISM.
In the event that there is any Outstanding Deferred Payment that
has not been Worked Off by the end of the third quarter of calendar 2004, such
remaining Outstanding Deferred Payment shall be settled by cash payment by USEC
to TVA; and TVA subsequently shall transfer all remaining TVA UF6 Material to
USEC.
SECTION 3.6 BUYBACK OPTION.
USEC may purchase from TVA and TVA shall sell UF6 from the TVA UF6
Material as needed by USEC for its operations. The price for UF6 shall be the
then-current market price for UF6, as determined under section 3.3, and the
Outstanding Deferred Payment shall be reduced accordingly. Upon such sale, title
to such UF6 shall pass to USEC.
SECTION 3.7 FURTHER COOPERATION.
The Parties recognize that the transfer of title to UF6 to TVA as
provided in this Contract is for the purpose of providing TVA security for the
Outstanding Deferred Payment. Therefore, the Parties agree to cooperate in good
faith to enter into any further agreements as are reasonably necessary, such as
a financing statement, to enable TVA to perfect a security interest in the TVA
UF6 Material under applicable law and to remove such security interest when
title to such UF6 is transferred back to USEC.
-11-
<PAGE> 12
EXECUTION COPY
Proprietary Information
ARTICLE IV
FINANCIAL RESPONSIBILITY AND INFORMATION
SECTION 4.1 SECURITY ARRANGEMENT.
(a) USEC shall provide credit support for its obligations under
this Contract under the standards of this Article in regard to: (i) USEC's
obligations to pay for TVA Energy delivered to USEC that are due and owing for
such energy but not yet paid ("Accounts Receivable") for the duration of the
Contract and (ii) mark to market of Baseline Energy during Period One ("Mark to
Market").
(b) TVA shall provide credit support for its obligations under
this Contract under the standards of this Article in regard to Mark to Market.
SECTION 4.2 ACCOUNTS RECEIVABLE.
(a) TVA may periodically appraise USEC's creditworthiness and
the credit support requirements described herein. USEC shall satisfy TVA's
credit standards based on USEC's independent bond/credit ratings and supplying
the credit support that may be found necessary to meet the credit rating
specified by TVA in section (b) below under the column entitled Credit Rating
Threshold. TVA may re-evaluate USEC's creditworthiness whenever it becomes aware
of an adverse change in the USEC's credit standing. As long as USEC continues to
meet TVA's standard for unsecured credit, no action will be taken. When an
adverse change in USEC's credit standing causes USEC to no longer qualify for
unsecured credit from TVA, TVA has the right to require credit support as
specified herein. If USEC neither tenders the required security or deposit nor
requests TVA to procure credit support on its behalf within five (5) calendar
days of TVA's request, TVA may begin taking actions to reduce its exposure.
(b) USEC shall enter into such security arrangement as
specified in section (c) below, at the request of TVA, when USEC's credit
appraisal does not meet the following threshold requirements using the lower of
Standard & Poor's or Moody's corporate rating ("Credit Rating Threshold"):
-12-
<PAGE> 13
EXECUTION COPY
Proprietary Information
<TABLE>
<CAPTION>
RATING: RATING:
STANDARD & POOR'S/MOODY'S STANDARD & POOR'S/MOODY'S CREDIT RATING THRESHOLD
<S> <C> <C> <C>
AAA $50,000,000
AA+/Aa1 to AA-/Aa3 $40,000,000
A+/A1 to A-/A3 $25,000,000
BBB+/Baa1 to BBB-/Baa3 $15,000,000
BB+/Ba1 to BB-/Ba3 $5,000,000
B+/B1 to B3 $500,000
All other ratings $0
</TABLE>
(c) USEC shall satisfy TVA's credit standards specified above
by entering into any of the forms of credit support below, reflecting the dollar
amount determined to be at risk and the period of time during which it remains
at risk:
(i) A cash collateral account; or
(ii) A standby irrevocable letter of credit issued by a
bank or other financial institution acceptable to
TVA; or
(iii) At USEC's expense, a surety bond or a credit
insurance policy or product procured by TVA, or at
USEC's option, USEC, from an insurance company or
other financial institution with at least an "A"
bond rating from AM Best, or an "A" bond rating from
Standard and Poor's, or a "B+" AM Best rating
combined with being included on the U.S. Treasury
List, with a copy provided by the insurance company
to the beneficiary; or
(iv) Security interest in collateral found to be
satisfactory to TVA; or
(v) A financial guarantee, acceptable to TVA, by another
party or entity with a satisfactory credit rating as
described above; or
(vi) Other mutually acceptable means of providing or
establishing adequate security.
-13-
<PAGE> 14
EXECUTION COPY
Proprietary Information
SECTION 4.3 MARK TO MARKET.
By March 1, 2001, USEC and TVA shall agree on a methodology to
establish what the high and low range of market value is for the remaining
Baseline Energy under Period One (this could include seeking a third party
estimate).
(a) The extent, if any, to which the value of the Baseline
Energy under Period One, priced at the high range of the market value, is less
than the remaining Period One contract value, shall be the dollar amount by
which TVA is at risk from USEC. If TVA is at risk from USEC by a dollar amount
which exceeds the requirements for the Credit Rating Threshold set out in the
table in section 4.2 (b) above, USEC shall satisfy TVA's credit requirements by
entering into any of the forms of credit support in section 4.2 (c), reflecting
the dollar amount determined to be at risk (minus the Credit Rating Threshold)
and the period of time during which it remains at risk.
(b) The extent, if any, to which the value of the Baseline
Energy under Period One, priced at the low end of the range of the market value,
is greater than the remaining Period One contract value, shall be the dollar
amount by which USEC is at risk from TVA. If USEC is at risk from TVA by a
dollar amount which exceeds the requirements for the Credit Rating Threshold set
out in the table in section 4.2 (b) above, TVA shall satisfy USEC's credit
requirements by entering into any of the forms of credit support below,
reflecting the dollar amount determined to be at risk (minus the Credit Rating
Threshold) and the period of time which it remains at risk:
(i) A cash collateral account; or
(ii) A standby irrevocable letter of credit issued by a
bank or other financial institution acceptable to
USEC; or
(iii) At TVA's expense, a surety bond or a credit
insurance policy or product procured by either USEC
or, at TVA's option, by TVA from an insurance
company or other financial institution with at least
an "A" bond rating from AM Best, or an "A" bond
rating from Standard and Poor's, or a "B+" AM Best
rating combined with being included on the U.S.
Treasury List, with a copy provided by the insurance
company to the beneficiary; or
(iv) Security interest in collateral found to be
satisfactory to USEC; or
(v) A financial guarantee, acceptable to USEC, by a
third party or entity with a satisfactory credit
rating as described above; or
(vi) Other mutually acceptable means of providing or
establishing adequate security.
-14-
<PAGE> 15
EXECUTION COPY
Proprietary Information
ARTICLE V
GENERAL TERMS
SECTION 5.1 INTERFERENCE WITH AVAILABILITY OR USE OF POWER.
(a) Force Majeure Defined. The term force majeure ("Force
Majeure") shall be deemed to be a cause reasonably beyond the control of the
Party affected, such as, but without limitation to, injunction, strike of the
Party's employees, war, invasion, fire accident, floods, backwater caused by
floods, acts of God, or inability to obtain or ship essential services,
materials, or equipment because of the effect of similar causes on the Party's
suppliers or carriers. Acts of God shall include the effects of drought if the
drought is of such severity as to have a probability of occurrence not more
often than an average of once in forty (40) years.
(b) Interference with Availability of Power. It is recognized
by the Parties that the availability of power to USEC may be interrupted or
curtailed from time to time during the term of this Contract because of Force
Majeure or otherwise. USEC shall be solely responsible for providing and
maintaining such equipment in the Paducah Facility and such emergency operating
procedures as may be required to safeguard persons on its property, its
property, and its operations from the effects of such interruptions or
curtailments. USEC assumes all risk of loss, injury, or damage to USEC resulting
from such interruptions or curtailments. If any such interruption or curtailment
lasts longer than thirty (30) consecutive minutes, TVA shall cancel or
proportionately reduce, as the case may be, the charges for service for the
period of such interruption or curtailment.
(c) Paducah Facility Force Majeure. In the event of a Force
Majeure at the Paducah Facility, the Baseline Energy schedule(s) to USEC may be
reduced as follows:
(i) Energy purchase commitments made by USEC prior to
the beginning of Period One would be curtailed after
any curtailment of Baseline Energy schedule(s) made
under this Contract.
(ii) Energy purchase commitments made by USEC subsequent
to the beginning of Period One would be curtailed
prior to curtailment of Baseline Energy schedule(s)
made under this Contract.
(iii) The Parties understand that best efforts will be
used to restore equipment as rapidly as practical in
order for USEC to resume its energy schedule
commitments with all suppliers.
-15-
<PAGE> 16
EXECUTION COPY
Proprietary Information
(d) Force Majeure Documentation. Upon request from TVA or USEC,
the other Party will provide documentation concerning the circumstances
resulting in the Force Majeure to the other Party.
SECTION 5.2 MUTUAL LIABILITY.
USEC and TVA each agree to indemnify the other against and save
the other harmless from any and all claims by or liability to any other person
arising out of the negligence of the indemnifying Party or its agents or
contractors.
SECTION 5.3 NOTICES.
All notices and other communications, except as provided for
payments under the Terms and Conditions, shall be in writing and shall be made
to the representative of the other Party and shall be deemed properly given if
mailed, posted prepaid, as indicated below:
If to USEC: If to TVA:
Director Manager
Power Resources Group Industrial Marketing
United States Enrichment Corporation Tennessee Valley Authority
6903 Rockledge Drive Highland Ridge Tower
Bethesda, MD 20817 535 Marriott Drive
Nashville, TN 37214
(a) Certain Notices May Be Oral. Notices between the authorized
operating representatives of the Parties may be oral, but shall be confirmed in
writing within two (2) days.
(b) Changes in Persons to Receive Notice. The designation of
the person to be so notified, or the address of such person, may be changed at
any time and from time to time by any Party by similar notice.
SECTION 5.4 CONFIDENTIALITY.
The attached Nondisclosure Provisions, set forth in Attachment 5,
are incorporated in this Contract, and USEC and TVA are each therein referred to
as "Receiver" when it receives proprietary and confidential information from the
other and "Discloser" when it discloses proprietary and confidential information
to the other. Under this Contract, Proprietary Information, as defined in
Attachment 5, shall include, without limitation, Baseline Energy Prices, prices
for Baseline Buyback, prices for Additional Energy, forecasts of TVA's power
system operations, and other forecasts relative to potential suspensions of
Baseline Energy disclosed to USEC.
-16-
<PAGE> 17
EXECUTION COPY
Proprietary Information
SECTION 5.5 INCORPORATION OF CERTAIN TERMS AND CONDITIONS.
(a) Incorporation. The attached Terms and Conditions, set forth
in Attachment 4, are incorporated in this Contract.
(b) Conflicts. In the event of any conflict between the
provisions of the body of this Contract and the Terms and Conditions set forth
in Attachment 4, the former shall control.
SECTION 5.6 WARRANTIES.
(a) TVA Warranties:
(i) TVA is validly created and existing under the
Tennessee Valley Authority Act of 1933, as amended.
(ii) TVA has full power and authority to execute the
Contract and engage in the transactions contemplated
in the Contract.
(iii) The Contract, once validly executed, shall be legal,
valid, binding, and enforceable against TVA in
accordance with its terms.
(iv) The execution, delivery, and performance of the
Contract will not conflict with, result in a breach
of, or be a default under applicable law or material
agreement, including any bond, loan, or other
financial agreements, to which TVA is a party.
(v) No government or any third party consent, approval,
or authorization of any kind is required in
connection with the execution, delivery, or
performance of the Contract by TVA.
(vi) There is no judicial or administrative proceeding
pending or threatened, which would materially
adversely affect the ability of TVA to carry out its
obligations under the Contract.
(vii) TVA'S EXPRESS WARRANTIES CONTAINED IN THIS CONTRACT
ARE EXCLUSIVE AND NEITHER TVA NOR ANY PERSON ACTING
ON ITS BEHALF MAKES ANY OTHER WARRANTY, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY
OR OF FITNESS FOR ANY PARTICULAR PURPOSE.
-17-
<PAGE> 18
EXECUTION COPY
Proprietary Information
(b) USEC warranties:
(i) USEC is the successor of the Government corporation
known as the United States Enrichment Corporation
and is validly existing under Delaware law and under
its bylaws and is qualified to do business in each
state in which its business activities create a
requirement to be so qualified.
(ii) USEC has full power and authority to execute the
Contract and engage in the transactions contemplated
in the Contract.
(iii) The Contract, once validly executed, shall be legal,
valid, binding, and enforceable against USEC in
accordance with its terms.
(iv) The execution, delivery, and performance of the
Contract will not conflict with, result in a breach
of, or be a default under applicable law or material
agreement, including any bond, loan, or other
financial agreements, to which USEC is a party.
(v) No government or any third party consent, approval,
or authorization of any kind is required in
connection with the execution, delivery, or
performance of the Contract by USEC.
(vi) There is no judicial or administrative proceeding
pending which would materially adversely affect the
ability of USEC to carry out its obligations under
the Contract.
(vii) The country of origin of TVA UF6 Material shall
conform with the origin listed in the definition of
UF6.
(viii) At the time USEC transfers to TVA title to and
ownership of the TVA UF6 Material, the TVA UF6
Material shall be free and clear of any lien,
pledge, encumbrance, security interest, or other
similar claim that could impair TVA's right to take
good and marketable title to the TVA UF6 Material
and USEC shall indemnify, hold harmless and at TVA's
option, defend TVA from any claim contrary to the
representations in this subsection.
(ix) USEC'S EXPRESS WARRANTIES CONTAINED IN THIS CONTRACT
ARE EXCLUSIVE AND NEITHER USEC NOR ANY PERSON ACTING
ON ITS BEHALF MAKES ANY OTHER WARRANTY, EXPRESS OR
IMPLIED, INCLUDING ANY
-18-
<PAGE> 19
EXECUTION COPY
Proprietary Information
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE.
SECTION 5.7 PREVIOUS ARRANGEMENTS.
The 1995 Agreement is hereby terminated as of 0000 hours central
prevailing time on September 1, 2000.
SECTION 5.8 CHOICE OF LAW.
Except with respect to any choice of law rules that may exist, the
validity, performance, and all matters relating to the interpretation and effect
of this Contract and any modifications to it shall be governed by the Federal
law of the United States.
IN WITNESS WHEREOF, the Parties hereto have caused this Contract to be
executed by their respective duly authorized officers as of the date above.
UNITED STATES ENRICHMENT
CORPORATION
/s/ William H. Timbers , Jr.
----------------------------------------------
Title: President and CEO
--------------------------------------
Date: July 7, 2000
--------------------------------------
TENNESSEE VALLEY AUTHORITY
/s/ Mark O. Medford
----------------------------------------------
Title: Executive Vice President
Customer Service and Marketing
------------------------------------
Date: July 10, 2000
--------------------------------------
-19-
<PAGE> 20
EXHIBIT 10.45
EXECUTION COPY
Proprietary Information
ATTACHMENT 1
BASELINE ENERGY FOR PERIOD ONE
(TOTAL OF FIRM AND INTERRUPTIBLE BASELINE ENERGY) (MW)*
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 2005 2006
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 630 1,533 1,779 1,569 1,650 1,549
-----------------------------------------------------------------
February 650 1,526 1,772 1,569 1,644 1,545
-----------------------------------------------------------------
March 758 1,533 1,779 1,569 1,651 1,550
-----------------------------------------------------------------
April 859 875 1,120 1,575 1,653 1,559
-----------------------------------------------------------------
May 980 1,254 1,254 1,254 1,254 1,254
-----------------------------------------------------------------
June 300 300 300 300 300
-----------------------------------------------------------------
July 300 300 300 300 300
-----------------------------------------------------------------
August 300 300 300 300 300
-----------------------------------------------------------------
September 494 750 750 750 750 750
-----------------------------------------------------------------
October 615 861 1,023 1,562 1,647 1,548
-----------------------------------------------------------------
November 765 810 1,114 1,234 1,651 1,551
-----------------------------------------------------------------
December 688 1,172 1,779 1,569 1,651 1,549
-----------------------------------------------------------------
</TABLE>
*The monthly MW amounts shall be multiplied by the number of hours in
that month to determine the required quantities of Baseline Energy. The
actual hourly MW amounts shall be essentially constant except during
ramp up/ramp down periods and will be scheduled in accordance with
operating procedures jointly developed under section 2.2 (f).
A-1
