Confidential information has been omitted in places marked ***** and has been filed separately with the Securities and Exchange Commission.Confidential treatment has been requested with respect to this omitted information.

DE-NE0000530

Amendment 003

AMENDMENT NO. 003

TO

COOPERATIVE AGREEMENT DE-NE0000530 BETWEEN

DEPARTMENT OF ENERGY (“DOE”),

USEC INC. (“USEC”),

AND

AMERICAN CENTRIFUGE DEMONSTRATION, LLC (“ACD”)

(collectively, the “Agreement”)

1.	Line 9 of the Opening Page is deleted in its entirety and replaced with the following:

Funds Obligated This Action: $44,378,055 in agreed to value equal to ***** SWU transferred to USEC Inc. as the SWU Component of ***** KgU Enriched Uranium Product (EUP) via EUP Transfer**.

**EUP Transfer is defined in Attachment H - EUP Transfer Provisions.

2.	Line 10 of the Opening Page is deleted in its entirety and replaced with the following:

Funds Obligated Prior Actions: $133,390,184 (comprised of $87,670,184 equal to up to 39,200 MT DUF6 accepted by DOE) (original agreement), plus $45,720,000 funding provided by DOE under GFY 2013 continuing resolution (Amendment No. 001).

3.	Line 11 of the Opening Page is deleted in its entirety and replaced with the following:

 

Total Government Funds Obligated: $177,768,239 (comprised of $87,670,184 equal to up to 39,200 MT DUF6 accepted by DOE (original agreement), plus $45,720,000 funding provided by DOE under GFY 2013 continuing resolution (Amendment No. 001), plus $44,378,055 equal to ***** SWU as the SWU Component of ***** KgU EUP transferred to USEC Inc. (Amendment No. 003).

4.	Section 3.01 of the Agreement is deleted in its entirety and replaced with the following:

In the event of any inconsistency between the terms of this Agreement and the Attachments, the inconsistency shall be resolved by giving precedence in the following order:  (1) this Agreement and (2) Attachments to this Agreement. In the event of any inconsistency between Attachment B  to this Agreement and Attachment 1 to the RD&D Test Program , the inconsistency shall be resolved by giving precedence in the following order:  (1) Attachment B and (2) Attachment 1 to the RD&D Test Program.

5.	Section 7.03 of the Agreement is deleted in its entirety and replaced with the following:

7.03 Technical Milestones and Deliverables. Attachment B to this Award establishes Technical Milestones and deliverables.  Recipient agrees that all information provided or made available under this agreement, including deliverables, shall be complete and accurate to the best of its knowledge.  If the Recipient fails to achieve any Technical Milestones and deliverables, DOE may renegotiate the statement of project objectives or schedule of Technical Milestones and deliverables in Attachment B to this Award.  In the alternative, DOE may deem the Recipient’s failure to achieve Technical Milestones set forth in Attachment B to be material noncompliance with the terms and conditions of this Award and suspend or terminate the Award.  DOE shall have the right to rescind its acceptance of a deliverable required under this Agreement or its acknowledgement as to the achievement of a milestone if DOE later determines that the acceptance or acknowledgement was based on incomplete or inaccurate deliverables or other information provided by Recipient.   Allowability of costs shall be handled in accordance with the applicable regulations.  See, e.g., 10 CFR 600.25 and 10 CFR 600.352

6.	Section 8.01 of the Agreement is deleted in its entirety and replaced with the following:

 

8.01:  The maximum amount of liability assumed from the Recipient by DOE, which is made available through DOE assumption of Depleted Uranium Hexafluoride (DUF6) title and liability, shall be as set forth in the table below.  For each of the periods set forth below, the Recipient is prohibited from incurring costs for which DOE reimbursement will be sought in excess of the following amounts; provided, however, that unutilized funds made available in any period may be made available to reimburse costs incurred in any subsequent period at DOE’s discretion.

Award Period	DOE Method of Cost Share	Maximum DOE Incremental Amount of Cost Share Dollars
Budget Period 1 Funding Period 1 6/1/12-7/31/12	DOE assumption of 11,813 MT of DUF6 liability -	$26,410,272 (in the form of DUF6 liability assumed by DOE)
Budget Period 1 Funding Period 2 8/1/12-11/30/12	DOE assumption of up to 27,387 MT of DUF6 liability	$61,259,912 (in the form of DUF6 liability assumed by DOE)
Total for Budget Period 1	DOE assumption of up to 39,200 MT of DUF6 liability	$87,670,184 (in the form of DUF6 liability assumed by DOE)
Budget Period 2 Funding Period 1 12/1/12-3/12/13	Appropriated Funding	$45,720,000
Budget Period 2 Funding Period 2 3/13/13-6/15/13	DOE transfer to USEC Inc. of ***** KgU EUP containing ***** SWU as the SWU Component and approximately 408,833.614 KgU as the Feed Component with Recipient to return approximately 408,833.614 KgU Feed Component to DOE as set forth in Attachment H.	$44,378,055 (agreed value of ***** SWU transferred as a component of the EUP transferred to USEC Inc.)
Budget Period 2 Funding Period 3 6/16/13-7/31/13 Estimated Government Cost Share	To be determined by DOE based upon the availability of appropriations or other sources of consideration	TBD
Budget Period 2 Funding Period 4 8/1/13-9/30/13 Estimated Government Cost Share	To be determined by DOE based upon the availability of appropriations or other sources of consideration	TBD
Budget Period 2 Funding Period 5 10/1/13-12/31/13 Estimated Government Cost Share	To be determined by DOE based upon the availability of appropriations or other sources of consideration	TBD
Total Estimated Government Cost Share for Budget Period 2		$192,329,816

 

 

Budget Period 1 is divided into two funding periods.  DOE will accept title to DUF6 for the initial period (6/1/12-7/31/12) after award of this Agreement to allow the Recipient to begin work on approved activities.  Upon satisfying the conditions set forth in this Article 8.01 below, the Contracting Officer will issue written authorization allowing the Recipient to incur costs during the remainder of Budget Period 1 and DOE shall assume the remainder of the DUF6 liability to be assumed for Budget Period 1.  As of the execution date of Amendment No. 001, the Parties acknowledge and agree that the Contracting Officer issued the necessary written authorization required by the preceding sentence on 7/31/12.  DOE cost share for Budget Period 1 will be fulfilled through DOE’s assuming title and liability for up to 39,200 MT of Depleted Uranium Hexafluoride (DUF6), which the parties agree will be treated as the Government providing $87,670,184 in cost share contributions (80% of the total estimated cost of the agreement for Budget Period 1).

Among other requirements set forth elsewhere in this Agreement, DOE will not assume liability from the Recipient incurred beyond 7/31/12 unless (a) the Equipment Contract (Contract No. DE-NE0000488) has been executed and title to the Transferred Property (as defined therein) has been transferred to DOE and (b) the Recipient provides a revised application for financial assistance under this award to DOE no later than 7/24/12 that includes: (1) cost, schedule, Performance Indicator/Milestone detailed estimate (to Work Breakdown Structure level 3) for the Project; (2) a report detailing ACD’s efforts to implement a governance structure demonstrating capability to provide overall management of the project (see Article 6.02) and demonstrating that the ACD has submitted to the Nuclear Regulatory Commission (NRC) a complete package requesting a Foreign Ownership, Control or Influence (FOCI) determination in a form acceptable to the NRC; and (3) a revised Attachment B that includes proposed Technical Milestone dates.  As of the execution date of Amendment No. 001, the Parties acknowledge and agree that Recipient has met the requirement in the preceding sentence.

DOE will not issue written authorization permitting incurrence of costs under this Agreement during Budget Period 2 unless the Recipient submits the following to DOE no later than 9/21/12: (1) documentation evidencing the existence of ACD with, subject to obtaining necessary regulatory approvals, the governance structure referenced in Article 6.02; and (2) revised cost, schedule, Performance Indicator/Milestone detailed estimate (to Work Breakdown Structure level 3) for the American Centrifuge Cascade Demonstration Test Program.  Execution of this Amendment No. 001 acknowledges that the requirements of the preceding sentence have been met and written authorization to incur costs under this Agreement during Budget Period 2 was provided by the Contracting Officer.

Budget Period 2 is divided into multiple funding periods.  For Budget Period 2, Funding Period 1, DOE has provided up to $45,720,000 for the Government Cost Share.  For Budget Period 2, Funding Period 2 (3/13/13-6/15/13), DOE will provide $44,378,055 in Government Cost Share (80% of the total estimated cost of the agreement for Budget Period 2, Funding Period 2).  This Cost Share will be met via the agreed upon value of the SWU Component (***** SWU) of the EUP transferred to USEC Inc. in accordance with the provisions of Attachment H.

At DOE’s discretion, and subject to requirements elsewhere in this agreement and the availability of appropriations or other sources of consideration, DOE may provide funding for future funding periods through further amendment(s) of this Agreement.  DOE will not authorize continuation of the Project or provide Cost Share funding to reimburse costs incurred by the Recipient under this Agreement for future funding periods unless the Recipient has successfully met all milestones and provided to DOE all deliverables scheduled for performance or delivery before the end of Budget Period 2 Funding Period 2 as set forth in Attachment B Project Scope – Amendment #2 and demonstrates to DOE’s satisfaction evidence of sufficient progress toward Recipient’s ability to successfully meet the milestones scheduled to be completed during future funding periods.  In the event DOE provides Additional Funding (above the “Current Funding” provided by Amendment NO. 003 to this Agreement), DOE and Recipient shall amend this Agreement to reflect such Additional Funding.

DOE will not assume liability or otherwise reimburse costs incurred by the Recipient under this Agreement above the Current Funding without first issuing written authorization permitting the Recipient to incur costs under this Agreement above the Current Funding.  Notwithstanding the above, there is no requirement for written authorization permitting the Recipient to incur costs under this Agreement constituting the Government Cost Share up to the Total Government Funds Obligated.

In addition to other available remedies, in the event the conditions in this Section 8.01 for the continued funding of the program are not met, the Contracting Officer may suspend or terminate this award without recourse through corrective action by Recipient.  In the case of such a suspension or termination, costs shall be addressed as set forth in 10 CFR § 600.24.

7.	Section 9.03 of the Agreement shall be deleted in its entirety and replaced with the following:

 

9.03 Repayment in the Event of Termination

A.  Repayment of Unexpended Funds.  In the event the total allowable costs incurred for the project are less than the total estimated project cost through Budget Period 2 Funding Period 2, either due to termination of this Agreement or for other reasons, the total amount of Government Cost Share made under Article 8 will be adjusted on a pro rata basis to equal DOE’s share of the total project costs in the same method in which the Government Cost Share was originally provided (see the table in Section 8.01).  For example, unexpended Government Cost Share provided to fund Budget Period 1 Funding Period 1 would be adjusted in the form of DOE’s transferring DUF6 back to USEC.  If the overpayment of Government Cost Share cannot be adjusted in the original method in which it was provided, it shall be adjusted via one or more of the following methods, listed in descending order of acceptance:

 
 

1) Recipient shall return a quantity of EUP involved in the EUP Transfer equivalent to the proportion of unspent Government Cost Share to DOE and DOE shall, if permissible, consistent with all applicable laws, return the equivalent quantity of Feed Material pro rata based on the agreed value to the nearest full cylinder;

2) In the event either Recipient or DOE cannot effect the transfers in 9.03(A)(1) to fully satisfy the required repayment, Recipient shall repay DOE in funds for any unexpended Government Cost Share; or

3) In the event Recipient or DOE cannot effect either of the prior methods of repayment to fully satisfy the required repayment, as a last option, DOE shall return a pro rata amount of DUF6 to USEC calculated based on the ratio of DUF6 to Government Cost Share originally provided in Budget Period 1 Funding Period to the nearest full cylinder.

B.  Accounting and Calculation Procedures.  Following termination or expiration of this Agreement, Recipient must submit an accounting of costs incurred until the point of termination or expiration to DOE’s Contracting Officer within ninety (90) days of the date of termination or expiration.  Within thirty (30) days of the delivery of the accounting of the total costs of the project, DOE shall notify the Recipient of the need to adjust the Government Cost Share in one of the forms set forth in section 9.03(A), and identify the specific quantity and method of unexpended or unallowed Government Cost Share that must be returned, if applicable.  The Recipient will notify DOE of any objection to the amount or method of Government Cost Share return identified under this Section within ten (10) days of receiving DOE’s notice.  If adjustment is to be in EUP and there is no objection, the Recipient will identify the cylinder(s) containing the quantity to be returned, or as close to the necessary quantity as reasonably practical.  If adjustment requires physical delivery of Feed Material or DUF6 by DOE, DOE will identify the cylinder(s) containing the quantity to be returned, or as close to the necessary quantity as reasonably practical.  Recipient or DOE, as appropriate, shall transfer and DOE or Recipient, as appropriate, shall accept title to material required to be transferred under this Section 9.03 on the earlier of (i) the eleventh day after receipt of notice if no objection is delivered; (ii) the date DOE and the Recipient agree to the transfer(s); or (iii) the date any dispute is resolved under Article 21.   Physical delivery of any material returned shall be at the Paducah Gaseous Diffusion Plant by mutual agreement of the parties and Enrichment, taking into consideration relevant provisions of the Lease Agreement between DOE and Enrichment, dated July 1, 1993 (Lease Agreement), as amended.  In no event, however, shall any cylinders be returned after the date USEC completes the turnover requirements and DOE accepts return of the property pursuant to relevant provisions of the Lease Agreement. Notwithstanding any other provisions in this Agreement, including Attachment H, any adjustment and title transfer required under this section 9.03 shall be at no cost to DOE.

8.	Article 10 of the Agreement is deleted in its entirety and replaced with the following:

 

The maximum Government obligation to the Recipient is limited to accepting no more than 39,200 MT of uranium in the form of DUF6, plus providing $45,720,000 in additional funding, plus providing $44,378,055 in agreed value of the SWU component of the EUP Transfer in additional funding.   The Recipient is not obligated to continue performance of the project after the maximum Government obligation and the Recipient’s share of the project costs are expended.

9.	A new Section 15.07 is added to the Agreement as follows:

15.07  Notwithstanding any other provisions in this Agreement, the EUP Transfer shall not be considered real property or equipment for purposes of Articles 15 or 17 of this Agreement.

10.

The parties agree that this Amendment, including the incorporation of Attachment B Project Scope – Amendment #2 and its included milestones and deliverables, does not affect, alter or modify in any way the definition of “Successful Completion of the American Centrifuge Cascade Demonstration Test Program” milestone in the June 2002 Agreement.  The parties further agree that this Amendment, including the incorporation of Attachment B Project Scope – Amendment #2 and its included milestones and deliverables, does not constitute and shall not be construed as an event beyond the control or without the fault or negligence of USEC resulting in Recipient’s or its affiliates’ inability to achieve the “Successful Completion of the American Centrifuge Cascade Demonstration Test Program” milestone in the June 2002 Agreement.

11.

Attachment B – Project Scope – Amendment #1 is deleted in its entirety and replaced with Attachment B “Project Scope – Amendment #2 Cooperative Agreement for the American Centrifuge Demonstration Program” dated 3/12/13.  The revised Attachment B – Project Scope is hereby incorporated into this Agreement and is found as Attachment B to this Amendment 003.

12.	Attachment H entitled “EUP Transfer Provisions” is hereby incorporated into the Agreement.  The transfer of EUP from DOE to USEC must be conducted in accordance with Attachment H.

 

13.	Attachment H.1 entitled “List of EUP Cylinders” is hereby incorporated into the Agreement.

 

14.	Attachment H.2 entitled “Furnished Feed Material” is hereby incorporated in the Agreement.

15.	Attachment H.3 entitled “DUF6 and Cylinder Specifications” is hereby incorporated in the Agreement.

 

16.	All other terms and conditions of the Agreement remain the same.

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