ML20248C875

Response to Order Modifying Licenses & Order to Show Cause Why Licenses Should Not Be Revoked.* Requests Hearing on Issues,Including Funds for Equipment.Supporting Info Encl

ML20248C875
Person / Time
Site:	05000000, 05000603, 05000604
Issue date:	09/13/1989
From:	Irving S ALL CHEMICAL ISOTOPE ENRICHMENT, INC.
To:	NRC COMMISSION (OCM)
Shared Package
ML20248C832	List: ML20248C831 ML20248C875
References
OM-SC, NUDOCS 8910040050
Download: ML20248C875 (196)

Text

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\G U NUCLEAR REGULATORY COMMISSION

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In the Matter of: ) Docket Nos. 50-603 _ -

All Chemical Isotope Enrichment, Inc. ) 50-604 Pine Ridge Office Park, Suite 202-B )

702 S. Illinois Avenue ) License Nos. CPEP-1 Oak Ridge, TN 37830 ) CPEP-2 RESPONSE TO ORDER MODIFYING LICENSES AND ORDER TO SHOW CAUSE WHY LICENSES SHOULD NOT BE REVOKED Comes now All Chemical Isotope Enrichment, Inc. and for response to ORDER MODIFYING LICENSES AND ORDER TO SHOW CAUSE WHY LICENSEE SHOULD NOT BE REVOKED would submit the following information, and would respectfully request an evidentiary hearing on this matter. A1ChemIE's response is submitted in three parts, namely Part One: answer to allegations, Part Two: A1ChemIE position on iusues, and Part Three: exhibits and references.

PART ONE: RESPONSE TO PLEADINGS This response to pleadings references the ORDER MODIFYING LICENSES AND ORDER TO SHOW CAUSE WHY LICENSES SHOULD NOT BE REVOKED on a paragraph by paragraph and page by page basis.

1. A1ChemIE confirms and admits the statements made in paragraph one under (I.) of the NRC's pleading. A1ChemIE generally admits the statements in paragraph three under (I.) of the NRC's pleadings, but would show that certain initial construction activities have begun, including the arrangements regarding land purchases, the initial site layout, environmental studies, and site survey activities.

2. A1ChemIE confirms the statements made in the first paragraph under (II.) of the NRC's pleading. A1ChemIE generally admits the third paragraph under II. of the NRC's pleadings.

A1ChemIE generally denies the allegation contained in paragraph four of I_. of the NRC's pleadings, upon page 3.

In response to thereto A1ChemIE will show:

A. On May 4, 1988, five individuals obtained $450,000 loans from Anderson County Bank of Anderson County, Tennessee, and the proceeds from said loans were used to pay closing expenses and to fund a $2 Million escrow pursuant to a previously-submitted escrow agreement between A1ChemIE and the Anderson County Bank. Funds for this escrow account were provided from the notes ~~

submitted by individuals and were additionally secured 8910040050 890920 --

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N by $4 ;Million ' worth of the - A1ChemIE unclassified

. equipment which is located f at the Gas Centrifuge Enrichment Plant'in Portsmouth, Ohio. The terms of:the-~

notes underlying the 82 Million escrow was for ' six months (tolNovember 4, 1988). It was at all times the.

understanding of A1ChemIE, Anderson County Bank and,the p

Nuclear Regulatory Commission t h a t '. O n c e - A 1 C h e m I E had-sat 1sfied the requirements of - paragraph 4.of the

!A1ChemIE-DOE contract, the $2 Million escrow would' be -

-dissolved. This interpretation is in accordance; with .

the A1ChemIE-DOE contract..

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B. Before November 4, 1988, the Anderson - County Bank prepared a six-month extension agreement on ' the notes underlying the $2 Million escrow. -At that time, however, because the NRC's licensing process appeared to be nearing an end, - AlchemIE and the Anderson County Bank. decided to renew that agreement to a month-to-month basis.

C. Under the A1ChemIE-Anderson County Bank arrangements, all funds from sale of A1ChemIE surplus equipment were i being tendered to the Anderson County Bank and used for l repayment of loan interest and for A1ChemIE operations.

D. At all times material hereto it was the understanding L

and impression of.both A1ChemIE and the Anderson County l

Bank that.the obtaining of the NRC Construction Permit L by A1ChemIE was the last major hurdle remaining before l paragraph 4 of the'A1ChemIE-DOE contract was satisfied. At this time the DOE had not unilaterally.

mandated a large ($7-9 Million) D&D bond' before A1ChemIE could obtain title to the classified equipment.

E. From November 4, 1988, through early spring of 1989, the A1ChemIE-Anderson County Bank relationship remained L

solid, and the two parties continued to communicate and confer extensions of the respective loan agreements.

, F. In late January 1989, and then subsequently on February 28, 1989, the DOE notified A1ChemIE formally for the first time that it would not transfer title of classified equipment to A1 Chem 1E until such time as A1ChemIE had posted in advance a $7-9 Million bond to insure ultimate D&D obligations. It is A1ChemIE's position that this unilateral mandate was contrary to the spirit and letter of paragraph 4(A)(IV) of the A1ChemIE-DOE agreement. In all regards, the size and structure of the requested instrument from the DOE placed an unfair, unreasonable, and unexpected burden on the operations of the A1ChemIE Corporation. Proof introduced at the hearing on this matter will show that it was this requirement which has materially affected A1ChemIE's ability to perform under its DOE contract, ~

led to the A1ChemIE financial difficulties, and' caused

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, concerns between A1ChemIE and the Anderson County Bank. This requirement had not formally been placed'on A1ChemIE at tM U.me of the A1ChemIE hearings on the NRC license. this requirement impeded and interfered with the ability of the A1ChemIE Corporation to proceed with its financing plan. The imposition of the requirement was done unilaterally by the DOE-ORO and was beyond the control of A1ChemIE and was further contradictory t7 the spirit _and letter of the A1ChemIE-DOE contre :t. In other words, DOE surprised A1ChemIE with /a unfair requirement which has materially affected AIChemIE's ability to obtain financing and which was done after A1ChemIE's NRC Hearings and in contradiction to previous representations by the DOE.

2. A1ChemIE generally admits the averment in paragraph five under II. of the NRC's pleading (page 3) but would deny the conclusion reached by NRC in the last sentence of said paragraph and would show that based upon an arrangement currently in place between A1ChemIE and two groups of investors and once A1ChemIE resolves the issues between itself and the DOE, the Corporation is financially qualified to conduct its activities under its license, and to proceed with its business. This area involves coordination with the A1ChemIE reorganization action and A1ChemIE Reorganization Plan; additional evidence on this particular matter will be presented at the haaring on this case.

3. A1ChemIE generally admits that the DOE has made the representations and statements ascribed to them in paragraph six under II. (pages 3 and 4). A1ChemIE denies the validity of the DOE's assertions. Instead, A1ChemIE will show that it has given a good and valid D&D bond to the DOE and that on or before the termination date of the A1ChemIE-DOE contract A1ChemIE had provided a satisfactory approach to the DOE to ensure that D&D concerns would be met as required by paragraph 4(A)(iv) of the A1ChemIE-DOE contract.

A1ChemIE's position is that it has satisfied the A1ChemIE-DOE contract, and the position of the DOE to the contrary is untenable, contrary to applicable Technology Transfer Acts (specifically the Technology Innovation Act of 1980, and the Technology Transfer Act of 1986) and relevant Executive Orders. A1ChemIE further asserts the DOE has frustrated and interfered with the Corporation's ability to proceed under the A1ChemIE-DOE contract. These wrongful actions by the DOE were beyond the cos. trol of A1ChemIE, and while they have hampered A1ChemIE's ability to proceed with its business, the Corporation nonetheless remains committed to resolving these issues in a fair fashion, proceeding under the A1ChemIE-DOE contract, and performing in all regards in accordance with the A1ChemIE NRC Licenses.

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4. For the reasons foregoing, A1ChemIE firmly denies the assertions contained in paragraphs one and two of (III.) of the NRC pleadings (page 4). Again, A1ChemIE would show that the wrongful actions of the DOE occurred and have continued L since the hearing on this matter. A1ChemIE's financial position, relationship with Anderson County Bank and

' optimistic belief in its ability to obtain necessary project financing were as represented to the NRC in writing and in all hearings on this matter; the situation did not deteriorate or change until the events arose between A7ChemIE and DOE which lead to the imposition by DOE of a

$7-9 Million bond requirement. Incidentally, the bond requirement levied on AlchemIE was based on a report obtained by A1ChemIE from the International Technology Corporation (IT), and was further based on an erroneous reading of that report.

5. In response to paragraph three under (III.) (page 4)

A1ChemIE would reiterate that it has satisfied its contract with the DOE and the DOE decision not to transmit to AlchemIE possession of the classified centrifuge equipment is unfair and erroneous, against public policy, and contrary to the spirit and letter of the A1ChemIE-DOE contract agreement which underlies this technology transfer.

A1ChemIE would admit that in the event that it is unable to obtain gas centrifuge equipment then no purpose exists for Construction Permits CPEP-1 and CPEP-2. However, A1ChemIE would show that~this issue is not yet resolved.

6. A1ChemIE understands the position taken by NRC in paragraph 4 (III.) (page 5). The A1ChemIE-DOE relationship is complex and, quite frankly, currently mucked up. A1ChemIE will in all regard provide notice to the NRC prior to our taking possession of classified equipment. This is a matter which must be coordinated between A1ChemIE, NRC, DOE, and the A1ChemIE reorganization action.

7. In response to (IV.) of the NRC's pleading, A1ChemIE would rely on its foregoing responses, but would say additionally that in the event the thirty-day notice requirement negatively impacts A1ChemIE's ability to go forward with its project, then A1ChemIE would request that the NRC review such circumstances, and make such modifications as is appropriate under the circumstances.

8. In response to (V.) of the NRC's pleading, A1ChemIE would submit this document, and would request a hearing at which more detailed and elaborate evidentiary testimony can be presented. A1ChemIE would show that this is a complicated and complex set of circumstances, involving the coordination between private industry, U.S. Bankruptcy Court, and at least two federal agencies. Additionally, A1ChemIE would incorporate by reference in this answer the exhibits filed and annexed hereto.

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9. In response to (VI.) of the NRC's pleading (page 6),  ;

A1ChemIE would state that it has expended numerous funds, {

efforts, and resources in the obtaining of its NRC '

Construction Permits. No issue has been raised as to the validity or effectiveness of the many subcomponents of the <

AIChomIE NRC application. Rather, the inquiry focuses on I the applicant's financial ability to perform it's business I I

in a fashion that protects common defense, safeguards, and security interests. A1ChemIE's financial ability to perform will be scrutinized by the U.S. Bankruptcy Court, DOE, NRC, and the Corporation itself. Under the circumstances, these matters will necessarily be resolved before A1ChemIE takes possession of classified equipment.

Any other averments in the NRC Pleading not specifically admitted herein are generally denied.

For all the foregoing reasons, A1ChemIE respectfully submits that its Construction Permits should not be suspended or revoked, and A1ChemIE requests a full and fair hearing on these issues. A1ChemIE would additionally show that it is in the public interest for this project to proceed and that all parties hereto will ensure that the project proceed with priority for the protection of national interests in safeguards and security matters.

A1ChemIE would further incorporate by reference herein the averments and documents in Part II and III, attached hereto.

Respectfully submitted,g c% / W4' -

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Steph n A. frying Attorney of Record A1ChemIE, Inc.

State of Tennessee County of Anderson I, Stephen A. Irving, hereby affirm that I have read the foregoing answer believe the information and statements contained t!)ereinho be , true to the best of my knowledge, inforsnstion, an riief.

Wrad Jtephey A.Tfirlhg 1 fD Personally appeared before me, the undersigned Notary, Stephen A. Irving, with whom I am personally acquainted and who acknowledged that the statements in the foregoing Answer are true the be f his knowledge, information, and belief.

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( PART TWO.

ALCHEMIE POSITION ON ISSUES

1. THE ALCHEMIE-ANDERSON COUNTY BANK RELATIONSHIP The A1ChemIE-Anderson County Bank financial relationship began May 4, 1988, when A1ChemIE and Anderson County Bank entered into Escrow and Security Agreements. SEE BANK DOCUMENTS in Part III.

Under this arrangement, five individuals contributed per stirpes to the Escrow Fund. A1ChemIE provided a first security interest in unclassified equipment owned by it and located at DOE's gas centrifuge enrichment facility in Piketon, Ohio.

A1ChemIE's inventory of equipment included equipment necessary l for operations and equipment surplus to operations. The i A1ChemIE business plan called for the sale of the surplus equipment, with funds obtained therefrom used to pay the interest on the notes to Anderson County Bank as well as other necessary operational expenses.

It was the understanding of A1ChemIE and the bank that the $2 l Million escrowed funds would be released once A1ChemIE satisfied the requirements of Paragraph 4 A of the A1ChemIE-DOE contract and obtained title to the classified gas centrifuge equipment.

SEE DOE DOCUMENTS in Part III.

It was also the understanding of both A1ChemIE and the bank that the last major hurdle in Paragraph 4 A (iv) was the obtaining of the requisite NRC construction permits, which was done on February 10, 1989. With A1ChemIE making interest payments, the l A1ChemIE-Anderson County Bank financial relationship would end j with the release of the escrowed funds.

The original note agreements between the five individuals and the bank extended until Nov. 4, 1988. At this time, the parties were carefully monitoring the NRC licensing situation, which was i

then set for a final hearing in December of 1988. A six-month l extension on the notes was prepared. SEE BANK DOCUMENTS in Part l III.

This extension was never executed, however, because at that time the parties anticipated the license would be soon forthcoming.

l Accordingly, A1ChemIE and the Bank began rolling the loan on a month to month basis. The relationship between A1ChemIE and the Bank was strong at that time.

In December of 1988, it appeared to all parties that the D&D requirement of contract paragraph 4 A (iv) would be satisfied by 1 A1ChemIE's posting a Standby Letter of Credit with the NBC in the amount of $517,050. SEE DOE DOCUMENTS in Part III. This i omount m- :* " - " r ' t NTf tc prev?f- 'n g te p. cit _t. a f.  !

national safeguard and security considerations.  !

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x Pego 2 of 6 By letter dated February 28, 1989 and subsequent letter dated March 29, 1989, DOE formally and unilaterally advised A1 Chem 1E for the first time that the only acceptable c'proach to satisfying contract paragraph 4 A (iv) would be for A1ChemIE to post in advance a surety instrument in the amount of $7-9 Million.

This event changed everything. A1ChemIE endeavored for severa]

months to get DOE to change this approach, but was unsuccessful.

The advance bond requirement had at least the following effects on the AlChemIE Business Plan:

1. The $2M escrowed funds were not released when anticipated. Additional interest accrued. The Bank became concerned about effectuating principal reduction.

2. The ability of A1ChemIE to obtain necessary project financing was enormously impaired. The risk factors to a lending institution were 1ncreased by at least one order of magnitude. Instead of a conventional loan transaction, a Lender's exposure was increcsed dramatically and up front by $7-9Million. This money had to be posted before A1ChemIE could get operational and begin repaying any loans.

Additionally, the requested surety instrument by its terms would be a prior recurity interest on the A1ChemIE equipment and would place a conventional lender in a secondary position. This does not lend itself to a start-up venture being able to obtain projec b financing.

3. AIChemIE's operational expenses continued for a significant time beyond that anticipated. without making progress toward product manufacturing.

Basically it was a situation of more out-go and delayed income.

4. A1ChemIE was, as a consequence, unable to begin its removal of classified equipment as, anticipated.

Without satisfying the one DOE requirement, A1 Chem 1E could not satisfy the other.

5. Overall, the Project was delayed pending resolution of the DOE D&D issue.

Because of the foregoing facts, among others, Anderson County '

Bank felt less secure about its position. On March 9, 1989, the '

Bank advised A1ChemIE by letter that it might be necessary to foreclose on the collatera). SEE BANK DOCUMENTS in Part III.

A1ChemIE and the Bank resolved this matter by allowing the Bank to direct surplus equipment sales activities. This got the Bank more actively involved and provided more secure feal i nem a bot' t-sales operations. With this action, the A1 Chem 1E-Anderson County Bank Relationship again became solid.

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Pcgo 3 of 6 Sales of surplus equipment then proceeded under the direction of Anderson County Bank, with income derived therefrom going to the Bank. At this time, A1ChemIE was actively seeking to acquire the requested surety instrument for DOE even though A1ChemIE felt the requirement was unfair and contrary to the A1ChemIE-DOE ayeement.

A1ChemIE contacted well over one hundred various sources for the requested burety instrument, but was unable to obtain one.

Generally, the required instrument was considered to be commercially unreasonable under the circumstances.

At the same time, problems were developing with regard to equipment removal. AlchemIE was unable to remove salable items outside of the removal schedule and a requirement that an area be physically disconnected by Martin Marietta Energy Systems, Inc. before any equipment could be removed therefrom. Also, differences arose with the Department of Energy regarding ownership of certuin items of equipment. In any event, because A1ChemIE was not allowed to remove saleable, valuable items the A1ChemIE cash flow buffered; the increased expenses concomitant to additional months of operation also hurt the company's financial position and the relationship with Anderson County Bank.

Also at this time, Anderson County Bank was under outside pressure from the FDIC, and the A1ChemIE loan comprised part of this problem. Because equipment sales were slow, the Anderson County Bank determined it necessary to seek foreclosure on the secured equipment and to sell not only surplus equipment but process-essential equipment as well. This action would have severely impaired A1ChemIE's ability to proceed with its project. As a consequence, A1ChemIE filed for reorganization, as previously noticed to the NRC.

As stated earlier, many of AlchemIE's financial problems arose as a result of inability to comply with DOL's demand for a surety instrument. This demand was beyond the ability of the A1ChemIE Corporation to control.

Presently, A1ChemIE enjoys a good working relationship with the Anderson County Bank. Matters pertaining to A1ChemIE financing will, of course, have to be worked out within Bankruptcy Court scrutiny and as a part of the A1ChemIE plan for reorganization.

2. THE ALCHEMIE-DOE CONTRACT A1 Chem 1E takes the position that it has satisfied the A1ChemIE-DOE agreement and should be in a position to take possession of classified equipment, subject to applicable NRC' orders. This matter addresses itself to paragraph 4 of the A1ChemIE-DOE contract. Specifically, A1ChemIE would shnw:

1. It has obtained the NRC permits required by 4 A (1).

2. NRC has approvec our Security Plan, and to the best of our knowledge so has DOE, as required by 4 A (ii).

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3. Our machine disposal p3an was reviewed by DOE, who required four corrections thereto. These corrections were made and the document was resubmitted to DOE. A1ChemIE has not had any response from DOE since the resubmittal. This should satisfy 4 A (iii).

4. Prior to August 15, 1989, DOE was notified that A1ChemIE had obtained the necessary bond commitment. The actual D&D surety instrument was delivered to DOE on August 18, 1989. A1ChemIE has thus satisfied the requirements of 4A (iv) both as written and as interpreted by DOE.

5. A1ChemIE's insurance agent coordinated with DOE's insurance consultant regarding the insurance policy referenced in 4 A (v). A L'inder for the agreed-upon policy was obtained and transmitted to DOE prior to August 15, 1989. The binder will take effect upon the obtaining by A1ChemIE of ownership of classified equipment.

6. DOE has approved A1ChemIE's schedule for removal of centrifuge equipment as required by 4 A (vi).

A1ChemIE is behind schedule for a variety of reasons '

related to the required D&D bond. A1ChemIE reasonably feels it can still meet schedule requirements, but such arrangements must be made pursuant to AIChemIE's plan of reorganization.

7. A1ChemIE received in early 1988 the necessary Attorney General's opinion as required by 4 A (vii).

The aforesaid items comprise those contractual items required to be performed before A1ChemIE can take title to classified equipment.

It must be noted that DOE takes a contrary opinion on whether A1ChemIE has satisfied items 3, 4, and 5 above. Additionally, DOE takes the position that the AlChemIE-DOE contract was terminated before item 4 was satisfied and that the bond provided to satisfy item 4 was insufficient because it was only for a one-year duration.

These issues have not yet been resolved. Frankly, and regrettably, the issues are indicative of poor communications and a worsening relationship between A1ChemIE and DOE. It appears that in many instances simple personality conflicts or ill-will have gotten in the way of issue resolution, and somewhere in the process the important public policy of Technology Transfer has gotten lost. This situation is not the fault of any one party. During the A1ChemIE-DOE relationship, '

ccrP p-^y her fier:cycf cr interent dr ref r.; th_ prcjt successful. At times, however, emotions beneath the dignity of the concept and benefits of the project have interfered with issue resolution.

Pcgs 5 of 6 i This has been an exceedingly complex and difficult technology transfer. It must be noted that many of the unresolved issues address government jurisdiction over classified equipment once 4 I

the title thereto has passed. A1ChemIE feels such jurisdiction-is, under the Atomic Energy Act, the proper purview of NRC. The contractual approach with DOE would indicate that such jurisdiction is with DOE.

Again, this reflects the difficulties with Technology Transfer endeavors in our Country which were anticipated by the Technology Innovation Act of 1980.

Documentary evidence relation to this section is contained in Part III hereof, particularly that section titled GENERAL DOCUMENTS.

3. ALCHEMIE'S CURRENT ABILITY TO PERFORM Because A1 Chem 1C is currently in a Reorganization, its ability to perform as anticipated will depend on its ability to work out a viable Reorganization Plan satisfactory to Court approval, and one which satisfies NRC concerns. This matter is currently being worked out, but is not yet finalized.

A1ChemIE would respectfully reserve the right to supplement this response with information from said Reorganization Plan, once the same is finalized. Additionally, A1ChemIE intends to present oral testimony on its Financial Ability to perform its business at the requested hearing on this matter.

In general, A1ChemIE would submit that it has obtained investment groups who will provide necessary funds to enable ,

A1ChemIE to perform its obligations under the parameters of its ]

NRC license, the A1ChemIE Business Plan and the A1ChemIE-DOE contract. No activities creating ownership of Classified Equipment will be finalized without proper notice to NRC.

Further, A1ChemIE was created to enrich stable isotopes using

. gas centrifuge equipment. In the event A1ChemIE and DOE are unable to mend their differences and A1ChemIE cannot use said '

equipment, then the Technology Transfer contemplated by the A1ChemIE Project will have failed and the NRC licenses will be unnecessary. These matters are still open and unresolved, and '

A1ChemIE respectfully requests that no adverse action be taken against our NRC permits until these issues are resolved and there is a full hearing on this matter before the NRC.  ;

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ALCHEMIE RESPECTFULLY REQUESTS A HEARING IN THIS MATTER.

ALCHEMIE WOULD INCORPORATE BY REFERENCE HEREIN THE PLEADINGS FILED AND DOCUMENTS SUBMITTED PREVIOUSLY TO NRC IN RESPONSE TO REQUEST FOR INFORMATION.

ALCHEMIE WOULD RESERVE THE RIGHT TO PRESENT ADDITIONAL INFORMATION AT THE HEARING ON THIS MATTER.

ctfu11y submitted,

'fb 4.s t. S.U N C Stef> hen A. Irving h Attorney of Record i

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PART THREE DOCUMENTS i

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BANK DOCUMENTS I

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ANDERSON COUNTY BANK Member FDIC 101 South Main Street I Clinton, Tennessee 37716 615/457-4200  ;

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.3 Il (.if March 9, 1989 Mr. John H. Smelser, Jr.

Chief Executive Officer Alchemle, Inc.

Pine Ridge Office Park Oak Ridge, Tennessee 37830 Re: Loans to AlChemie. Inc., principals from Anderson County Bank

Dear John:

As we have previously discussed, and as you are aware, the above referenced loans are presently carried by the bank in a delinquent status. I reulize the Department of Energy has, with AlChemIe, Inc., established a schedule for removal of the equipment which does not correspond to your original plans, and which Department of Energy now is apparently following to the letter, it is still necessary that we adhere to the terms of the original agreement.

Therefore, by this letter, 1 e. 'n giving you notice that the loan must be paid in full, together with all late charges and expenses of the bank within 30 days from the date of this letter. If payment is not made within that time, it will be necessary for us to, under provisions of the i contract, take possession of the collateral and proceed to l sell it as rapidly as possible.

If you have any questions, please do not hesitate to contact me.

1 Sincerely,  !

I l William H. Arowood, Chairman WHA:lep I

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i .ELBERT M. COOPER, JR.

c4Uomy at .[aw TELEPHONE 1615) 457 9106 SUITE 325 ANDERSON COUNTY BANK BUILDING MAIN AT BROAD l' CLINTON, TENNESSEE 37716 June 14, 1989 Stephen A. Irving chairman of the Board All Chemical Isotope Enrichment, Inc.

pine Ridge Office Park, 202-D 702 S. Illinoin Avenue Oak Ridge, Tennessee- 37830 He: Delinquent loans with Anderson Count.y Dank

Dear Mr. Irving:

An you are aware, All Chemical Isotope Enrichment, Inc., has certain loans with Anderson County Bank of Clinton,

' Tennessee. Those lonns were due and payable in full on November 4, 1988. Since that time, little reduction has been made in the amount of the notes. In fact, there has been no reduction in principal and any amounts applied have been substantially insufficient to pay accruing interest.

The notes were seven (7) months delinquent on June 4, 1989.

You and others on behalf of A1ChemIe have made numerous representations to Anderson County Bank that financing was forthcoming from other sources which would retire the indebtedness owed to us. Among those sources were, for exnmple, Genern) Electric Corporation, Enrnet.t Bank of Florida, Third National Bank, First Tennessee Bank, First -

American Bank, and many other named and unnamed sources. We have yet to receive any evidence, ot.her than verbal representations, that any such financing is forthcoming.

On May 20, 1989, a representative of your Board offered to Ihe Bank from an unnamed source the sum of $125,000.00 for a delay in foreclosing the Bank's lien for sixty (60) days, not wi t hstanding the prior stnt.cments unde that the Department of Energy deadline would expire long before that time. We were also told that the unnamed source would provide payment of all AlChemIe, Inc.'s operating expenses.

However, you personally indiented to me a few days later -

that it would be necessary for the Bank, in order to receive the $125,000.00, had we been willing to do so, to extend to A l " h c r. i t . Inc , a 3.500,000.03 1ine of credit. You had previously been advised on several occasions that any further extensions of credit, given the status of the

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It is our understanding that at least one (1) suit has been filed against AlchemIe, Inc., and several buyers of non-owned equipment or equipment which cannot be released have contacted the Bank requesting repayment of deposits which they had mnde to Alchemic and 11niversal Brokers of Equipment. Suits have been threatened not only against Alchemie, Inc., but ngninst Anderson County Bank. You, being nn attorney, can realizc the seriousness of the taking by persons acting on behalf of AlChemIe, Inc., of deposits on purchases of equipment and then failure to deliver the equipment or refund the deposits.

On May 26, 1989 a member of your Board of Directors, in what appears to be a breach of the so-called " Forbearance Arrarnent" ordered persons working on behalf of Anderson County Bank nt portsmouth, Ohio, to stop n11 sales of equipment. The proceeds of such sales could have been applied by Anderson County Bank to your loans.

Obviously, the circumstances are such that under the security agreements covering equipment and contract rights, and also under the agreement which has been described as a "Forchearance Agreement", the Bank's position is not one which would inspire confidence in AlChemIe, Inc.

As has been requested by you and by an attorney purportedly ,'

acting on your behal f, the following information is furnished:

The principal amount due on all of the loans is

$2,355,267.66. The accrued interest due and owing upon n11 of the loans through June 20, 1989, is $271,388.15.

Under provisions of the notes signed by AlChemIe, Inc.,

there are late fees of $85,403.80 which accrue at the rate of 1.04% per month on the entire delinquent amount. The Bank has incurred expenses in servicing the loan and in attempting to recover the amount owing over the past almost thirteen (13) months in the amount of $186,374.00. In addition, the Bank has paid my nttorney fees in working with the loan, particularly since November 4, 1988, and those fees presently exceed

$20,000.00. However, it is my understanding that the Bank would be willing to compromise for that amount. I would, of course, in the event of payment in full of the above amounts, charge no fees and expenses other than any previously charged under the so-called

" Forbearance Agreement".

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l These numbers will be effective only through June 120, 1989.

Obviously, unless payment is andn prior to June 20, 1989, there will be, in addition to accrued interest, additional Inte charges applied, as the entire amount will have been past due for more than seven (7) months.

As much as-1 regret to do so, it is necessary that this letter be treated as a notice of foreclosure under the security agreement covering equipment and the security agreement covering contract rights. We are hereby taking possession of all of the tangible collateral covered by the security agreements and are giving notice under provisions of Section 6 of the security agreement covering equipment that sales will resume on June 22, 1989 under procedures as we were'utilir.ing, when the unfortunate incident occurred with the delivery of the handwritten note from your director, Mitzie Miller. T he one change would, of course, obviously be that Anderson County Bank will not consult with Alchemic, Inc., regarding the price received for any goods and will not preserve any equipment for AlChemie, Inc. We will be forced to liquidate all of the equipment necessary to satisfy not only all of the items listed above but any additionni feen and expenses. We will further be forced to advise the U. S. Department of Energy that we have foreclosed the security agreement covering contract rights, in order to allow us to work directly with the federal ngencies in liquidating the equipment.

If you have any questions, please feel free to contact me, or if you have any concrete, supportable proposals for refinancing this indebtedness elsewhere or paying this indebtedness, please contact me at once.

Sincerely, r

• Elbcrt H. Coopct, Jr.

EMCJ r: klj i

l i

i

. 35544 Fedstal Regist2r / Vo!. 34. No.155 / Monday. August 28. 1989 / Notices y '4 '

i Firearms and ExploeNes Recogntoon 6. Other personnel desiring to )

and Detection; Trairiing Sympoelum Construction Penmt No. CPEP-2 parnc;pate a tne trainmg symposium. authorizes the licensee to construct it acewev: Nuclear Regulatory Reg;stration m!crmation, which is Oliver Spnngs. Termessee. a new Commission, presently under development. will be facility for the ennchment of stable acvtone Notka nf trainine svmposiu n. mde available to prospect:ye attendees isotores. and to possess uraniam as leter thi. yast At @s nry it is cahbration sou ces arid as sussuamv: ne Nuclear Regulatory annepated that a registration fee in the c:ntammanon on ps centnfae Cmnmission (NRC) will sponsor a three- ncishborhood of $150.00 wdl be :harged *tachines and associated equipm*-*

day trattung symposum forits staff and to nmovernment a:tendees. All brosght fmm the Department of Enerb l attendees will be regiated to pre- Cas Centnfuge Enrichment Plant tee e er e a and register. There wdl be no registanon at traming symposium. (GCEPl. To date no concruction Explosives Recognition and Detection." activities have been undertaken Dates: November 28,2s, and 30,1980. De ted at Rockville. Maryland. this 21st day pursuant to Construction Permit No.

of Augusttess. CPEP-2.

Asesmet Hyatt Regency Bethesda. One for the Nuclear Resuistory t'eh Bethaeda Wtro canam Bethesda. g 4 Guy A. Adams,

Wryland 30s14.

L ac,3, p3,,,,,, ojpa, ,fy,,g,,cas,,,,,,p The licensee's rgoposed enriciument pas puernes arosesimoes oestrac7: Sofirtyendsaftsuanh.

- stable isotopes would utikse claastSei 1 Pnscilla A. Dwyer. OlBoe of Nuclear d

hu Wtartel Safety and * ' . ;.;f.6, U.S, Nuclear Regulatory r --A ian

[FR Doc.sNo Je Filed 6.as-as eds ass!

en.i,me sens tea m .m gas cettrifuge equipment. Spec 1Scally, this ses centrifuge equipnent has henc tested by the DOE and nas been shows Washington, D.C. aosas. Telephone (301) to be capable ofproducing spedal 4as cers,

toesset was, so ecs and so aos,usense 3 eUpeL,ehdesrfARY er0nMATI0st his nuclear materialin the forza of earich Nea CPEP-1 and CPEP-2) uraniumin such quantity as to ha d j

! ermposium is being sponsored by the signiBeance to the comme defem an IMvisie of U ~ " and As Chemicallootope Enrictunent,Inc.; escurity. uently,this egelsment j tp p i = mmeofNealene CreerIgesstying usenses and creer is a peoduction ty whiebsammther i Weertal and Safsey asui Safossarda. Its Te SheerCause Why Usepees Shesdd liosasedin acomedamos wi Alesis DieNineesed purposelaas peneide to NRC stairand interemad hessness taformation about Ensegr Act of1854, as m state.of-the-art flmarms and expleelves All rhmin=1 hotope Enrichment, k (eseseatione11v.181.and5 s ;l

. taohnologies, methode,el detection and (AlChemIE or houm), Pine Ridga Section108 production Ima:Wi== me {

motsinvahing Smarms and O! Bee Park. Suite m 702 BHmois hama==lpursuant to to CFR part 3D. .

l aupinhem.The esaposium to being Avenue. Oak Ridge.IN 37380,is the Under 10 CFR past sa the appni===simr J planned espost of a new inktive to holder of Construction Perndts (licenses) license is mgaired to submitimisemme

< foster technology avneance among NRC numbered CPEP-1 and CPEP4, issued showing themis AnawimHy gemilhed t staff, NRC licensees,and the Federal by the Nuclear Regulatory Commission carfy out,la accordanos wie the (NRC) pursuant to 10 CFR part 50. Commission's regulations, the activities

comununfty.The decision to sponsor the sympasiums et this time is not toGective Construction Permit No.CPEP-1 was for which es homm is ought. In da change in the domutic threat lasued on February 10,1988, and was judslag the edegency of an apphcation,

"'Ifoam8at. De8ymPoehias & amended on June 30,19es, to extend its the es==mi== ion most End, her aus.

. r.nclassi$ed. latest data for completion to November that the applicantis AnandaDy 3.1988. Construction Permit No. CPEP-2 quah5ed, and that the issuance of a Based upon the training nates of the was issued on February 10,1988, an.i sympostum and possible seating licem willnot beinimical to se has a latest date for completion of common defense and secunty. As haitations which may occur based upon mich 31.1982, described in the Federal Register Notice response, the NRC plans to use the Construction Permit No. CPEP-1 d the constmetion pennn pmemung m following order of prmrity in approving this heansing action for CPEP-1 and registrants for participation in tse authorises the modification of the existing Centri.fuge Plant Demonstra non CPEP-2 (52 FR 15315, April 28,1986), osa symposium. Attendance will be hmited

, to approximately 400- Facility (CPDF) at the U.S. Departzr.nt of the isms ist this constmetion pennu

- of Energy s (DOE) Oak Ridge Gasec .s licensing proceeding was whether the

1. NBC pereommel directly engesed in p

the M . ^ of physical security Diffualon Plant. Speci$cally. CPEP . applicant (now beenses)is th-My also authorizes thelicensee to acqu , and financf ally qualified to modify and reguistions,inspecanon or licanning of ownership of and take possession c. construct the proposed facilities in such I;, NRC licensees seguired to have search capabilities. security-classified gas centnfuge a way as to assure adequate pmtectiec

2. Support stadt ofinstructional machines and associated classified of the common defense and secunty.

l

, personnel. equipment capable of ennching In that proceeding, the licensee  ;

e uranium. to transport the equipmer. is provided written evidence and

3. Personnel of NRC licensees who necessary, and to conduct. in the C: OF, 3 testimony in hearings of the Atomic '

perform, provide training in, or establish tests using up to two gas centnfuge Safety and 1.icensing Board. Based upon 1 policy for physical secunty searches. machines. CPEP-1 also provides for ne

4. Persons who, as spents of NRC that infonnation, the staff found that the ;

implementation of security and l

' licensees, fer=ulate or devele; Ikensee safeguards measures at CPDF and licensee was technically and "nancialh j policy on physical secanty searches. quahfied to moddy the eustmg CPDF

' modification of that facihty to enrich facility in such a way as to assure 5.Personnelimaa other gose nment stable isotopes. Construction Permit No agencies vv.th cn scing pr: gams adequate prc'e:'Jx cf de :: .act.

directly related to fusarma and CFEF-1 also autbonzes the homsee to defense and secunty, this fandra possess uranhum as cabbration sources appears in Construction Permit CPEP-1. '

explosives recognition and detection.

and as contamination on the machines. A similar process led to a st=tlar Ending ,

ik 4

4 Fo&ral h:istoe / Vol. 54. No.103 / Sicnday. Aupst ':3. Im / Notices

.a

=- -

~$ regaring ecnstraction of &e pt::ose:!

fanhty e. C;nstructen Pemi! CFEP-2. A!ChemIE to meet contractual cornmit: cents to the DOE. and the clear Fct all the above reas6s and becaue smceinsuance of the construenon indication that AlChemIE is in no I fmd that !Isck the req &e reaso .sb!e semuts. rertain events andmformaton position now or m the foreseeable future assurance that the hcensee can proceed metcia5v affect the !indmgs and with operatiens under Construction c -dmons requirad forissuance of the to rr.eet those comnutments." Finady.

Per=ts Nos. CPEP-1 s'd CpIP-2 in DCE stated. "Nn additien to not nnst .. ton re m:ts. A letter of P:r" 14. euencmg the Sales Agreement with en .c9ance weh the Cm%n s 1W9. from Elbert M. Cecpar. Jr. attorrey AJChr.lE. the DOE wdl discontmue rep ht:ons and in such a a ty that he for te Andesen Cm.*y Bank, C9r.ki. wd! he adea iscu?sions wi h A!ChemIE en the ule enemen defe.a.e pru'ect;n of the n.ie and seedy.Ihase ta A!Cte'n1E. emrta thot A!Che n!E has of cen'rifugt equipment contained in c;rtainloans with tre Andtre:n County and the lease of the Centnfuge Plant determmed that Construcuca Pema Bank, which loans were due and Demonstration Facilitylocated at the Nos. CPEP-1 and CPEP-2 should be psycblein fdl on November 4,1988. Oak Ridge Gaseous Dtffusion Plant." meified to require notice to the Further. it is asserted in the letier thet gII Commission pnor to Ifeensee's taking the notes were seven months delinquent possession of classified equipment.

on June 4,1900. Contrary to these Based on the above. It appears that Furthermore. pursuant to 10 CFR 2.201(ci assertions, the licensee's submittals to the licensee failed to fully and and 2.204 I And that the public interest the NRC staff and the Ucensmg Board of accurately disclose to the staff or the requires that th3s OrderModifying November 11,1988, December 19,1908, Ucensing Board its tm Ananelat Ucensee be inunediately effective and and January 4,0, and 17,198B, conMon during thelicensing soview that no prior notice is required.

consistently presented an optimistic period when it was pneen W picture of inser alla. Its ability to obtain documents and testimony the bankloans.SpectScaUy. AlChemIE Board. He apparently incomplete and Accareegly, purement k medens m failed to notify the staff or the Ucensing inaccursu informadon which the 181b,181c.1911,181o,1st and its of the Board that its loans with the Bank were licensee did provide led the Staff to find Atomic Energy Act of teH, as amended, delinquent during the period of the that the licensee was financially and du Commlaeion's regdaUons k 10 Ucename review. unhSed to modify and construct the Byletter dated June as,less, famudesla such a way as to assemj,,,3,7,,g,,,,g, ,g,,g,, r_ m CFR 2.24 and 10 CPR Part R g,, ,,,,,,,g,, ,,,,,, y,,, ggg.,,

AIChemIBnoti for,rotmodonom . Sed the f%==d==lan that, meetmuCham= h"*

con,,,eco n ,e,m,,,No,.c, ,ang and GD 4 ase meeSed as fuRduer had Bled for reorga=3==*== in the As Canason E.1g h CPS 1ede United States annWptcy Court for the CPEP-2.Hd w the staf known du Conetion IR.111e CPEF-2is ad6d the Eastern Estrict of Taaaaaaa=4 Case ., g no,,,id conedon, b foHowhg:

~

6611A). Pursuant to 10 CFR sta5 would not have issued construction perndts to AlQemII. uommsee shan meshis wriths ib's 50.84(f), in a letter dated July 17,150B' Director. Ogles of Nedser Meterial SeAny the Director. OfBos of Nuclear Material he NRC must be able to rely on its and Safsssenh UA Nealear Regulatory Safety and Safeguards, mquimd licensees to provide complete and commissias. Wash =en== DC asas and the AlChemlE to provide in writir.g, bY accurate information. Section 50.0(a) of Regional Adminisessur. NRC Regies H, m August 18,198B, under cetb or 10 CFR part 30 spectSee that information Marietts Street, NW, Suits EIDE Atienta. CA afBrmation, answere to the request for provided % du Comadmion shah be 30ssa, at least se deys before takles information which was attached to the complek and accumte in au mapal Possessica el any closetBed egelpment, letter as Enclosure 1. De information respecta. Section 188 of the Act provides V j was reqmrod for purposes of for revocation of anylicense for any l deterndning whether or not AlChemIE is materialfalse statementin the Us phrskeademf, that licanan currently in compliance with the application tr upon obtaining other show cause why construction permits licensing basis for Construction Permits information which would warrant the Nos. CPEP-1 and CPEP-2 should not be Nos. CPEP-1 and CPEP-2. On August 15 Comadesion to refuse to grant a license revoked. Pursuant to 10 CFR 2.202(b).

1989, documents were received from on an original application.De the licneses may show cause why its AlChemIE in response to that request licensee's disregard of the Commission's licenses should not have been modined for information. Based upon our review need for complete and accurate and why its Ifenese should not be of these documents, AlChemIE has not information in this instance cannot and revoked,by a written answer will not be tolersted, under oath or a demonstrated that it is financially stfon within 20 days quahfied to conduct the activities under Furthermore, the issuance of the after the date ofissuance of this Order.

its license. construction permits to AlChemIE was setting forth the matters of fact and law Byletter of August 11.1980, DOE based upon the Bcense taking an which the licensee relies.ne possession of the classified gas licensee may answer this Order. as advised AlChemIE that the Sales centnfuge equipment under the terms of Ag eement. (Contract No. DE-R005- provided in 10 CFR 2.202(d), by the Sales Agreement. AlChemIE has aa0R21776 titled "Centnfuse Eqmpment consenting to the provisions speciSed in failed to take possession of the saction IV above.

Agreement and Bill of Sale," dated equipment and, based upon DOE's November 20,1987), between DOE and yg AlChemIE for, infer olio, transfer to decision not to extend the said Sales Agreement, has no further opportumty Pursuant to 10 CPR 2.202(b), the AIChemIEof gas centnfug. = chines at to take possession. Without possession DOE's Gas Centnfuge Ennchment Plant. li:ersee may,inits answer fded under of the gas centnfuge machines, the was to expire on August 15.1%3. and projected activities for which AIChem!E section V, request a hearing.De would not be extended by DOE. DOE licensee or any other person adverre:y souchtlicenses cannot occur Thus. affected by th2: Order may request a indicated thet its decision not to mend there is no longer any purpose for the Sales Agreement was " based heanns within 20 days of its issuanc e-substantially on the contmuing failure of Construction Permits CPEP-1 and CPEP- Any answer to this Order or any req uot 2.

for hearing shall be submitted to the i

k_ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ . _ _ _ . _ . _ _ _ . _ _ _ _ . _ _ _ _ _ . _ _ _ _ _ _

" >-16 .

deral Rezister / Vci R No. If,3 Menday. A.x.:st 23.

• 69 Jc ., n Director. Of see o Nuc!cer Matend thegs. dat QCNpS Uruts 1 and 2 are The fo!!omng is a list of de l Safety and f.afegaards. U.S. Nuclear subject to all rules. regulations. and ne'rpt: ens ' om Ac;ents R. secten R n!a: ry 2:=11:ss.on. wash.rgten.

. O:ders of the Com= ssion now or I:I C requested ty CECO. with a bnef CC 20U5. Ccd also shalj be sent to hereafter m effect. psen; tion. De aded dec; tons of Se Atstar.t General Ccusel for The staton to com;rised of two t' ese exe npucn req cats and :i &e

% .p .a r-r- . ment at de same boi!.ns water reactqs,st tne :icensee's N.< staff s e i. awn

ess and to the Memoral We ir:a:-d m noca as.at:: County. a n .t.:wd : -

e .m wv % . .- - ..: ; Ca and

/ dm n.a rstor. NRC Rer.:n 11.131 !1rns. M C w.,,.:Ci Manetta Steet. NW. S de 2X'0. Atanta, s: . ' ce .na:ed :n g; 9 e pub L: d r,. m :.s n, CA 303:3. !!o perscn c'br dan de 1 T,_:2r.e 3 . ., ,y : ,  ; 3..,3

.:censee requests 4 hear.n4. dat person On .N.ovember 19.1580. the Sociert Lne Gre:.;s j.re A en T3-1 shall set forth with partesn:y de Commission pubbsbed revised i 50 48.

mannerin which h:s mterest :s "Fi e Frotecuan." and a new Appendix and TB-Ill):c .ne e.uent :n t r:anual R to 10 CFR part 50. Fire Protection cperations imclu6rg hot sh.i:dewn adversely affected by this Order and repairsj disallowed by secton IILC.1 are shall address the entens set forth in 10 Program f:r Nuclear Power Facilities Operating Pnor to January 1.1979." necessary to prevent spunous CFR 2.71e(d). Upon the licensee's regardmg fire protection features of operaticas and high impedance faults cf consent to the provissoas set forth in safe shutdown equipment.

section IV of tbs Order, or upon failure nuclear power plants mquried to nadafy the General Design Cnterion reisted to (2) Control power circuits for Diesel of the licenses to fue and answer within b spect5ed time, and in the absence of fire pmtection (Crttarion A Generstors and certain 480V breakers to to 10 CFR part 50). ne the extent that hot shutdown repairs any other request for a heanng, the i 50.44 prmssoas specified in asetion IV above and Appendix R became self. evaluation, disallowed by action EGil are

.. CECO submitted additional letters dated aquud k compemak kr Em WM

' shan be ihd widnaut febr Oder or doctdcd bolada daign dehh.

proceedmps. An answer eder section V December 4.1985. June 25.1988 and July 22.1988. September 30, October 1, and (3) Unit 1 Reactor Building (Fire Zones

! or A request for bearing under section h VI of this oder shdinot sta b November 23.1987.Rese letters 11111112.111as. 'I'orn M

1. mm aste effecdweness of ' order. modined and wi&dmw se pWus 1.111N-Toru North) and Unit 2 Upes tbs fednew of the licenses to fue an exempdan aquesta and pmposed oser Reactor Building (Fire Zones 1.112.

mmpeon mqmts ime secdom M.G. 11J11.1115-Torna South, and answur within the specaSed tiase, and in the absenas of any eaber request for a ems wis theae ,- 1.111N Tarus North) to the extant that 1 heartas, Canstrucatan Permits CPEP-1 ,, gg P ,, , , , , ,,, cosnplate 8 bour fire toted barsiers t inquida on tems mnoerning $ pursuant to Section EGla arenot and CPEP-2 are revoked and this action pmvided.

and c

]

shall be final without fustbar Order or pmceeding, [im a[g on yw (4) Unit t Reactor / Turbine Buuding If a headng is reguasted by the of the originalDecenrber18.1se4 letter' Interface Boundary and Unit 2 Reactor /

Leanm or a pemen whose Wamst la CECO seantted krh exempun Turbine Building intorfaos Boundary to adversely e5ected, the ru mon will requesta b letters dated Jann 12 the extent that 3-bour fin rated barriers 19e7. SeptEnber 30.1987 (different lett e r pursuant to section ECla are not

an Onke denWas de uma and provided.

place of any h=anns if ahauringis held- than as above). October 1.ter (same letter as above). November 2D 1987 (5) Unit 1 Reactor Building (Fire Zones dei m eto be W at M November 23,1987 and November 30, 1.111.1111 1111 111.4.1.1.11 i . hearing shaU be whether this Order p should be sustained. ige 7. nase letters specifically requested 1.116.1113.1111.11.2111.21 and i approval for exemptions fmm 1114] and Unit 2 Reactor Buildirig (Fire Dated at RockviHe. Maryland this eth Subsection EG1 to allow maanal Zones 11211.112.1.113.1.114.

dsy of August.1983. operations, including hot shutdown 112111.1.4.11J111.311113. and For the Nuclear Regulatory Com:r.insion. repairs (i.e. pulling and/or replacing 11.3.4) to the extent that automatic fire Hugh L Nmpeon.1 fases), for schievtng and c:aintaining .' detection and fixed fire suppression DeputyEtacuuve DuscarforNuclect shutdown which would resolve the systems pursuant to section EG.3 are Mesenals Sc/ety. 5cfeguards, andCpercriorj Commissions concerns and preclude r.ot provided.

Support other problems associated with fire. (6) Units 1 and 2 Control Room (Fire (TR Doc. 89-200o Fi.id MS-49. e 65 am) induced spunous aetuations. Zcne 2.0). Uruts 1 and 2 Aux.tliary

• • • " " ' On December 1 (Hot Shutdown Computer Room, and Un!t 1 and 2 Repairs) and December 11 (Fire Auxiliary Electric Equipment Room (Fire Protection)of1987 the NRCissued Zone 6.3) to the extent that a fixed fire (Docket peo so-254 and 35 2001 Safety Evaluation Reports (SER) suppression pursuant to section EG is approving aD exemptions from not provided.

Cc.TEsm O. Echoon Co., Queo Appendix R Section EG requested bt (7) 4-KV Bus Duct penetrations to the Ott'ee Nycteer Power Station. Untt Nos. CECO except for those identified by atent that con)plete 3.heur fire ra ted 1 and 2; Exempt 6on CECO in applications dated Septembe.- barners pursuant to section EGla are g 30. October 1. and November 23,1987 not provided.

(these exemption requests are still un - (B) Standby Gas Treatment System The Commonwealth Edison Cer ;eny NRC review). By letter dated Februar and the Reactor Buildtng Vent System (CECO. the bcensee)is the holcer cf 19.1988. CECO provided unsolicited Piping Penetrations to the extent that a Operstmg Ucense No. DPR-29 whrh cor.ments to the aforementioned SER, complete 3. hour fire rated be- ier stier.res operation of Q :ad C.' o ind repested that some specific pursuant to seenon EG.2 a are net Nuclear Power Station (QCNPS) Un:t L changes be made in them to improve provided.

and Operating IJcense No. DPR-30 accuracy and clartv. Ccnsequent!v. t' wh" h auth: .:c s opt:4.;..;. cf D . m tw wr Ev e n -- O *. - * '

NEC :e.ssued rev: sed SERs dated Ar and 2 to the extent tnat a t:mn: f:re These licenses provide, among etter 20 and )tiy 21. IM6 (rrspect:yely). detecticn and fMd fire suptressien

o MINUTES OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS SE ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

A special meeting of the Board of Directors was held at the corporate offices at 10:00 o' clock a.m. on the 15th day of February, 1989. ~Present were all of the Directors of the Corporation as indicated by the signatures on the attached Waiver.

Each of the Directors received notice of the time, place and purpose of the meeting.

Stephen A. Irving agreed to serve as Chairman and at his request, Dr. A. Andrew Carey agreed to serve as Secretary.

The Chairman stated that the purpose of the meeting was to consider the extension of the various loann payable to Anderson County Bank. The Chairman explained that heretofore the corporation had borrowed certain sums from Anderson County Bank and also pledged as collateral all of its equipment and contract rights at the U.S.D.O.E. Pikeville, Ohio Project which included five (5) loans in the amount of $450,000.00 the same executed by Dr. A. Andrew.Carey, Stephen A. Irving, Judith Wilson, P. Diane Mealer and John Smelser, Jr. The Chairman explained that Anderson County Bank had offered a beneficial opportunity to extend said loans and that it was appropriate to consider the same. There followed a general discussion of .the ma'tter and upon motion duly made, seconded and unanimously carried, the following resolution was adopted:

m_ __m ___.______am.______-__-.m______m _ _ . _ . _ _ . _ _ . _ _ - _ - _ _ - _ _ _ _ _ _ . - _ _ _ _ _ _

[ . ,

-4 RESOLVED, that the President be and hereby is empowered.to. execute Extension Agreements at Anderson County Bank so that the current indebtedness of the corporation, being approximately $43,000.00 and $106,000.00 each may be extended and further that the President be and hereby is empowered to execute Extension and Repayment Agreements for-the indebtednesses owed by Dr. A. Andrew Cary,: Stephen A. Irving, Judith Wilson, P.

Diane Mealer, and John Smelser, Jr., it being.

noted that Judith Wilson's obligation had been assumed by Buddy ~Scruggs.

RESOLVED, further, that the corporation confirm its. obligation to pay all of the above indebtednesses and that further the pledge and granting of security interest in equipment and contract rights at U.S.D.O.E. -

Pikeville, Ohio facility shall continue for all of.the seven (7) indebtednesses stated above. It is understood that the' loan originally executed by Judith Wilson has been assumed by Buddy Scruggs. The Extension Agreement shall provide for a six (6) month l term with minimum monthly payments of

$325,000.00. The Treasurer is authorized to pay an extension fee on each of said notes of 3.5%. The interest rate on such extension I period is to be 13.5% per annum. Monthly payments are due on the 15th day of each month beginning on March 15, 1989, and the entire remaining unpaid principal and any unpaid interest shall be due and payable on the 15.th day of August, 1989. In furtherance thereof, the President is hereby authorized to execute all such documents reasonably required to accomplish the same and the Treasurer is directed to pay unto Anderson County Bank 3.5% extension fee on each of the outstanding balance on the same and to make the monthly payments as required above.

There being no further business to be conducted, upon motion duly made, seconded and unanimously carried, the meeting was adjourned.

Respectfully submitted,

- - - . =_

SECRETARY

- _ - _ _ _ _ __--________-_-_-_-___________u=_

h i

l

'4 I

APPROVED FOR ENTRY:

3 CHAIRMAN OF THE BOARD 1

.1 1

3 l

l l

l l

l

~ . . . ~ . ~ . . . . . . _ . _ , , .

. . -use e

- _ _ . - - - . - - _ _ _ . _ - _ - - . - - - _ . - _ - - - - _ - - _ ~l_

WAIVER The undersigned, being all of the Directors of All Chemical Isotope Enrichment, Inc., do hereby waive notice of the special meeting of the Board of Directors of the corporation and hereby consent that said meeting may' be held at 10:00 a.m. , ' on the.15th day of February, 1989, at the offices of the corporation in Oak Ridge, Anderson County, Tennessee, for the transaction of such business as may come before the meeting.

DR. A. ANDREW CAREY i

STEPHEN A. IRVING MITZI MILLER 1

I

__-__ ______ _- __-__-____________--__-_-_ _ _-____ __ _ __ - - _ _ _ - a

L i

EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

Heretofore, JOHti H. SMELSER, JR. executed a certain promissory note in the amount of Four Hundred Fifty Thousand Dollars ($450,000.00) dated May 4, 1988, the terms and provisions of which are incorporated by reference as if set forth in its entiretys.and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed tb grant an entension of the same for a period of six (6) . months provided certain terms are mett and WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as followsi

1. The aforesaid note and the indebtedness thereby 1

evidenced shall be extended to be payable six (6) months from date, the same being August 15, 1989.

2. The interest rate shall be modified to thirtean and one-half percent (131%).

3. The maker agrees to pay an extension fee of three and one-half percent (31%) of the balance inich as of the date of this agreement is Three Hundred Torty Four Thousand One Hundred Sixty one Dollars and Thirty-Eight Cents ($344,161.38).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Dr. A. Andrew Carey, Judith Wilson, Stephen A. Irving, and P. Diane Mealer and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be made monthly, being due on the 15th day of each month beginning on Perch 15, 1989, in the amount of Three Hundred Twenty Five  ;

Thousand Dollars ($325,000.00). If such som is not received by j the Bank on or before the 15th day of March and the 15th day of eerceeue-t raaths, then the Bank may demand the entire amount of all of the aforesaid notes immediately_due and, payable. _The._ _ _ .

recainiep principal and any unec?lected interest shn11 be due

-~

and payable on August 15, 1989. -- --

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I. 5. Heretofore All Chemical Isotope Enrichment, Inc. has.

agreed that it shall also be obligated.to insure the prompt

. repayment of the aforesaid indebtedness and to save and hold harmless the maker from such payment and does hereby join into this agreement for the purpose of Indicating (5*'. It agrees to such payment.

6. Further, heretoforre, All Chemical Isotope Enrichment, Inc. has. pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment,-Inc. does reconfirm its agreement that the .

aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extenslon and repayment terms as herein stated.

WITNESS our agreement thls the 15th day of February, 1989.

JOHN H. SMELSER, JR., Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

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EXTENSION AND REPAYMENT AGREEMENT-WITNESSETH,-THAT:

Heretofore, DR. A. ANDREW CAREY executed & certain a

promissory note in the amount of Four Hundred Fifty Thousand Dollars (5450,000.00) dated May 4, 1989, the terms and 1

provisions.of which are incorporated by reference as if set-forth in its entirety; and WHEREAS, the holder of said note, ANDERSON COUNTY. BANK, has agreed to grant are extension of the s6me for a period of six (6) months provided certal' ' nterms are~ mets and WHEREAS, the parties have so agreed and now desir6 to reduce to writing their agreemer.t.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby

-evidenced shall be extended to te payable sis (6) months from date, the some being August 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (1314).

3. The maker agrees to pay an extension fee of three and one-half percent (31%) of the balance which as of the date of thid agreement is Five Hundred One Thousand 71ve Hundred' Twelve -

Dollars and Thirteen Cent 4 ($501,512.13).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Stephen A. *irving, Judith Wilson, P.

Diane Mealer, arid John H. Smelser, Jr. and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all ot the aforesaid notes shall be L.

made monthly, being due on the 15th* day of each month beginnino on March 15, 1989, in the amount of Three Hundred Twenty Five Thousand Dollars ($325,000.00). If such sum is not received by the Bank e: or before the 15th day of March and the 15th day of

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of all of the aforesaid notes'immediately due~and payable. 'Th 7 reesinia, n-iaci-71 naA any uncollected interest shall be de

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and payabic on August 15, 1989.

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. Heretofore All Chemical Isotope Enrichment, Inc. has

{ agreed that it shall aleo be obligated to insure the prompt repayment of the aforesaid indebtedness and to save and' ' hold turmless the maker f rom such payment and does hereby. join into 4

this agreement Ier the purpose of indicating'that it agrees to. '

such payfrent.

6. Further, heretofore,.All Chemical. Isotope Enrichment, Q Inc. Las pledged and granted security' interest. In cortain

. contract rights ar.d equipment which Security Agreements are dated the 4th d'ay of May, 1988, and All Chemical Isotope .

Pnrichment, Inc. does recontirm its agreement'that the aforesaid Security Agreement shall escure the Indebtedness stated'herein-subject to the extension and repayment terms as herein' stated.

WITNCSS our agreem, tnt thli.the 15th day of February, 1989

-DR. . A. ANDREW CAREY, Maker' ANDERSON COUNTY BANK By:

Its:

TiLL CHCHICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

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l- EXTENSTON AND' REPAYMENT AGREEMENT WITNESSETH, TimT:

Heretofore,. STEPHEN A. IRVING executed a certain promissory note in the amount of Four Hundred Tifty Thousand Dollars ($450,000.00) dated May 4, 1988, the terms and  ;

provisions of which are incorporated by reference as if set forth in its entiretys and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed to grant an extension of the same for a period of.

six (6) months provided certain terms are mett and WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being August 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (131%).

3. The maker agrees to pay an extension fee of three and one-half percent (314) of the balance which as of the date of this agreement is rive Hundred One Thousand Five Hundred Twelve Dollars and Thirtec. Cents ($501,512.13).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Dr. A. Andrew Carey, Judith Wilson, P. Diane Healer, and John H. Smelser, Jr. and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be 5

made monthly, being due on the 15th day of each month beginning on March 15, 1989, in the amount of Three Hundred Twenty Five Thousar.d Dollars ($325,000.00). If such sum is not received by the Dank oa or before the 15th dey of March and the 15th day of

. . ~ , ...e cm u . a. n.a , uemano tne entare amount.

of all of the aforesaid notes immediately"due"and fifyable.~ 'ThE ~

ren. . r. : ;'rlacipal ani any uncollected in tc rc~ t shall be duc and payable on August 15, 1989. '~ ~'?3h-

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5. Heretofore All Chemical Isotope Enrichment, Inc. has agreed that it shall also be obligated to insure the prompt repayment of the aforesaid indebtedness and to save and hold harmless the maker from sich payment and does hereby join into this agreement for the purpose of indicating that it agrees to such payment.

6.

Further,. heretofore, All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract Eights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc, doec reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness, stated herein subject to'the extenslon and' repayment terms as' herein stated.

l WITNESS our agreement this the 15th day of February, 1989.

STEPtiEN A.-1RVING, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

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l-ASSUMPTION, EXTENSION AND REPAYMENT AGREEMENT 4

WITNESSETH, THAT:

WHEREAS, on the 4th day of May, 1988, JUDITH WILSON

, executed a certain note in the original principal sum of Tour Hundred Fifty Thousand Dollars ($450,000.00); and WHEREAS, the holder of sald note, ANDERSON COUNTY BANK, has agreed to grant an extension of the same for a period of

.six (6) months provided certain terms are mets and WHEREAS, BUDDY 3CRUGGS has agreed to assume said indebtedness and for the purpose of this agreement shall be referred to as makers and WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THERETORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being August 15, 1989. I

2. The interest rate shall be modified to thirteen and one-half percent (133%).

l

3. The maker agrees to pay an extension fee of three and j i

one-half percent (31%) of the balance which as of the date of 1 this agreement is Tive Hundred One Thousand.Five Hundred Twelve i

Dollars and Thirteen Cents ($501,512.131.

4. References are made to four (4) other like notes also l executed on May 4, 1988 by Dr. A. Andrew Carey, John H. I smelser, Jr., Stephen A. Irving, and P. Diane Mealer and two "

(2) notes executed by All chemical Isotope Enrichment. Inc. It is agreed that payments combined for all of the aforesaid notes shall be made monthly, being due on the 15th day of each month l beginning on March 15, 1909, in the amount of Three Hundred i I

Twenty rive Thousand Dollars ($325,000.00). If such som is not J received by the Bank on or bufore the 15th' day of March and the

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entire amount of all of the aforesaid notes'immediately due'end~~ ~ '

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payable. The remaining principal and any uncollected interest shall be due and payable on August 15, 1989.

5. Heretofore All Chemical Isotope Enrichment, Inc. has agreed that it shall also be obligated to insure the prorr.pt repayment cf the aforesaid indebtedness and to save and hold harmless the maker from such payment and does hereby join into this agreement for the purpose of Indicating that it agrees to such payment.

6. Further, heretofort. All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 15th day of February, 1989.

BUDDY SCRUGGS, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

j Its:

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+; o EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

Heretofore,'P. DIANE MEALER executed a certain promissory

, note in the amount of-Four Hundred Fifty Thousand Dollars

($450,000.00) dated May 4, 1908, the terrs'and provisions of which are incorporated by reference as if set forth in its entirety; and l WHEREAS, the holder of said note, ANDERSON COUNTY BANK, l

has agreed to grant an extension of the same for a period of six (6) months provided certain terms are met; and l

WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being August 15, 1989.

2. The interest rate shall be mcdified to thirteen and one-half percent (1314).

3. The maker agrees to pay an extension fee of three and one-half percent.(3ft) of the balance which as of,the date of this agreement is Five Hundred Eighteen Thousand Thirty Five Dollars and Forty-One Cer,ts (5518,035.41) .

4. References are nade to four (4) other like notes also executed on May 4, 19b8 by Dr. A. Andrew Carey, Judith Wilson, Stephen A. Irving, and John H. Smelser, Jr. and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be made monthly, being due on the 15th day of each month beginning on March 15, 1989, in the amount of Three" Hundred Twenty Five Thousand Dollars (S325,000.00). If such sum is not received by the Bank on er before the 15th day of March and the 15th day of subsequenL months, then the Bank may demand the entire amount

u. ... ;. Laa a;ottsaau nctes Immediately due and payabic. ine

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remaining principal and any uncollected ~IM irest~shall'be due

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-5. Heretofore All Chemical Isotope Enrichment, Inc. has I agreed that it'shall also'be obligated to insure (,he prompt repayment of the aforesaid indebtedness and to save and held

. e harmless the maker from such payment and does hereby'

)oin into this agreement for the purpose of Indicating that it agrees to 1

such payment.

6. Further, heretofore, All Chemical 1sotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1938, and All Chemical Isotopo Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the Indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 15th day of February, 1989.

P. DIANE MEALER, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

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EXTENSION AND REPNENT AGREEMENT I WITNESSETH, THAT:

WHEREAS, ALL CHEMICAL ISOTOPE ENRICHMENT, INC.,.

. hereinafter referred to as "AlcheinIE" has heretofore on the 12th day of May, 1988, executed o'certain promissory note in the original amount of Three Hundred Eighty Four Thousand Dollars ($384,000.00), and subsequently on the lith day of-July, 1988, executed a promissory note in the amount of Ninety Five Thousand Dollars ($95,000.00), both of which are in favor of ANDERSON C00NTY BANK, hereinafter referred to as

• Bank"; and WHEREAS, Bank and AlChemIE have agreed to extend the same-for a period of six (6) months provided certain termo are mets

-and WHEREAS, the parties ' ave n so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being August 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (13111.

3. The maker 9grees to pay an extension fee of three and one-half percent (31t* of the balance which cs of the date of 9

this agreement is Forty Two Thousand Eight Hundred Ninety One Dollars and Fifty Three Cents (542,891.53) on the first note and One Hundred Six Thousand Sixty Eight Dollars and Thirty One Cents ($106.060.31$.

4. References are made to four (4) other like notes also executed on May 4, 1988 by Stephen A. Irving, Judith Wilson, P.

Diane Healer, and John H. Smelser, Jr. It is agreed that payments combined for all of the aforesaid notes together with the two (2) promissory notes which are also being modified by txtr ;,sion and hepayrncr.:. modi f ication t e r n.. anal; be mah monthly, being due on the 15th day of each month- beginning en-tcr . ,;, 19f9, in the a-c;nt cf Three kun:hed Twer.ty rive a -

4

l

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t-Thousand Dc11ars ($325,000.00) and if such sum is not rc elved by the Bank'on or before the 15th day of March and the 15th day of subsequent months, then the Bank may demand the entire amount of all of the aforesaid notes launediately due and l-payable. The remaining principal and any uncollected interest shall be due and payable on August 15, 1989.

5. Heretofore All Chemical Isotope Enrichment, Inc. has agreed that it shall also be obligated to insure the prompt repayment ofsthe aforesaid jedebtedness and to save and hold harmless the maker f ros.. such payment. and does hereby join into this agreement for the purpose of indicating that it agrees to such payment.

6. Further, heretofore, All C.homical Isotope Enrichment, Inc. has pledged and granted security intereat in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 15th day of February, 1989.

ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

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t EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

WHEREAS, ALL CHEMICAL ISOTOPE ENRICHMENT, INC.,

hereinafter referred to as "AlChemIE" has heretofore on the 10th day of October, 1988, executed a certain promiscory note -

in the s:Iginal amount of Forty Thousand Dollars ($40,000.00),

and on the lith day of July, 1988, executed a promissory note in the amount of Ninety Five Thousand Dollars ($95,000.00),

both of which are in favor of ANDERSON COUNTY BANK, hereinafter referred to as " Bank"; and WHEREAS, Bank and AlChemIE have agreed to extend the same for a period of six (6) months provided certain terms are met; and WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness *hereby evidenced shall be extended to be payable six (6) months from date, the same being Scotember 15, 1989.

2. The interest rate shall be moilfied to thirteen and one-half percent (13!%).

3. The maker agrees to pay an extension fee of three and one-half percent (31%) of the balance which as of the date of this agreement is Fortv Three Thousand Five lundred Sixty Five Dollars and Sixty Four Cents (543,565.64) on the first note and One Hundred Eiqht Thousand Seven Hundred Fifty Five Dollars and Fourteen Cents ($108,755.14) on the second note.

4. References are made to five (5) other like notes alno executed on May 4, 1988 by Stephen A. Irving, Judith Wilson, P.

Diane Mesler, John H. Smelcer, Jr. and Dr. 4. Andrew Carey. It i= agreed that payments combined for all of the aforesaid notas together with the two (2) pt.?missory notes which are also being modified by Extension and Repayment modification terms shall be made monthlv, beina due on the 15th day of each month beginning on Am il 15, 19ts, in the amount of Three Hundred Twenty Five

7 E

.Y .

4 Thousand Dollars ($325,000.00) and if such sum is not received by the Bank on or before the 15th day of April and the 15th day of subsequent months, then the Bank may demand the entire amount of all of the aforesaid notes immediately due and

- payable. The remaining principal and any uncollected interest shall be due and payable on september 15, 1989.

5. Heretof ore All Cnemical Isotope Enrichnient, Inc. has agreed that it shall also be obligated to insure the prompt repayment of the aforesaid indebtedness and to nave and hold harmless the maker from such payme nt and does hereby join into this agreement for the purpose of indicating that it agrees to such payment.

6. Further, heretofore, All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its acreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our aareement this the 2nd day of March, 1989.

ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

a 1-EXTENSION AND REPAYMENT AGREEMENT l

WITNESSETH, THAT:

l Heretofore, JOHN H. SMELSER, JR. executed a certain I promisserv note in the amount of Four Hundred Fifty Thousand Dollars (5450,000.00) dated May 4, 1988, the terms and provisions of which are incorporated by reference as if set forth in its entirety; and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed to grant an extension of the name for a period of six (6) rbnths provided certain terms are met; and WHEREAS, the parties have so agreed and now desire to reduce to writing their aareement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same beino Seotember 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (131%).

3. The maker acrees to oay an extension fee of three and one-half percent (31%) of the balance which as of the date of this agreement is Three Hundred Forty Nine T5ousand Three Hundred Eightv Nine Dollars and Sixtv Cents ($349,389.60).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Dr. A. Andrew Carev, Judith Wilson, Stephen A. Irving, and P. Diane Mealer and two (2) notes executed by All Chemical Isotope Enrichment. Inc It is agreed that nayments combined for all of the aforesaid notes shall be made monthly, being due on the 15th day of each month beginning on April 15, 1989, in the amount of Three Hundred Twenty Five 15o2 mand Dollars (S325,000.00). If such sum is not received by the Bank on or before the 15th day of Apr' and the 15th day of subsequent months, then the Bank may demand the entire amount

c. 8. v ,t a n n sata nutes arm edta u l'. 6x a r. d [aja a . .

remaining princioal and any uncollected interest shall be due mi mr/C:le on Septewhe" 15, 1909.

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5. Heretofore All Chemical Isotope Enrichment, Inc. has j

agreed that it shall also be obligated to insure the prompt repayment of the aforesali indebtedness and to save and hold i harmless the maker from such payment and does hereby join into this agreement for the purpose of indicating that it agrees to such paymeat.

6. Further, heretofore, All Chemical Isotope Enrichment.,

Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th dav of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement thin the 2nd day of March, 1989. I i

I JOHN H. SMELSER, JR., Maker l

ANDERSON COUNTY BANK 1 By: 1 Its:

l AI.L CHEMICAL ISOTOPE ' dNRICHME'3T, INC.

By:

Its:

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l -- -ASSUMPTION, EXTENSI'ON AND REPAYMENT AGREEMENT. ')

n; .a l J' I WITNESSETH, THAT:

l.  !

WHEREAS,'on the 4th day of May,.19BB, JUDITH WILSON ,

executed a certain note ir. the original principal sum of Four

'i Hundred Fifty Thousand Dollars ($450,s00.00); and: q 1

WHEREAS, the holder of said note, ANDERSON COUNTY BANK,7  ;

)

has agreed to grant an extension of the same for a period of 'j j

six (6) months provided'certain terms are met; and l

WHEREAS,- has agreed to assume said indebtedness and for the purpose of this agreement shall be  ;

. referred to as maker; and 3 l

WHEREAS, the parties have'so agreed and now' desire'to

' reduce to writina their agreement. I

'I NOW, THEREFORE, in consideration of the mutual' promises  !

contained herein the parties agree as follows: )

1. The aforesaid note and the indebtedness thereby.

evidenced shall be extended to be payable.six (6) months from date, the same being September 15, 1989. j l

2. The interest rate shall be modified to thirteen and i one-half percent (1311). j

3. The maker agrees to pay an extension fee of three and j 1

one-half percent (311) of the balance which as of the date of j this agreement is Five Hundred Eight Thousand Nine Hundred i Eighty Nine Dollars and Seventy Three Cents ($508,989.73).

l

4. References are made to four (4) other like notes also  !

executed on Mav 4, 1988 by Dr. A. Andrew Carey, John H.

l Smelser, Jr., Stephen A. Irving, and P. Diane Mealer and two j l

(2) notes executed by All Chemical Isotope Enrichment, Inc. It j is aareed that payments combined for all of the aforesaid notes j i

shall be made monthly, being due on the 15th day of each month beginning on April 15, 1969, in the amount of Three Hundred Twentv Five Thousand Dollars ($325,000.00). If such sum is not received by the Bank on or before the 15th day of April and the 15tn osy oi sauseguent months, then the Bank may demand the entire amount of all of the aforesaid notes immediately due and U

-- . _ . - - . . _ . _ _ _ . _ . m_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _

l $

i payable. The remaining principal and any uncollected interest shall be due and payable on September 15, 1989.

i

5. Heretofore All Chemical Isotope Enrichment, Inc. has l

acreed that it shall also be obligated to insure the prompt repayment of the aforesaid indebtedness and to save and hold harmless the maker from such payment and does hereby join into this agreement for the purpose of indicating that it agrees to such payment.

6. Further, heretofore, All Chemical Isotooe Enrichment, Inc. has pledqed and granted security interest in certain contract rights and equipment which Security Agreements are date.i the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 2nd day of March, 1989.

ANDERSON COUNTY BANK By:

Its*

ALL CHCMICAL ISOTOPC ENRICHMENT, INC.

l By*

Itst

4 EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

Heretofore, DR. A. ANDREW CAREY executed a certain promissory note in the amount of Four Hundred Fifty Thousand 1

Dollars ($450,000.00) dated May 4, 1988, the terms and provisions of which are incorporated by reference as if set forth in its entirety; and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed to grant an extension of the same for a period of six (6) months provided certain terms are mets and q WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from 4 date, the same being September 15, 1989. i 1

2. The interest rate shall be modified to thirteen and one-half percent (131%). l

3. The maker agrees to pay an extension fee of three and one-half percent (31%) of the balance which as of the date of this agreement is Five Hundred Eight Thousand Nine Hundred ]

Eighty Nine Dollars and Seventy-Three Cents ($508,989.73).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Stephen A. Irving, Judith Wilson, P.

Diane Mealer, and John H. Smelser, Jr. and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be made nonthly, being dne on the 15th day of each month beginning on April 15, 1989, in the amount of Three Hundred Twenty Five T5ousand Dollars ($325,000.001 If such sum in not received by the Bank on or before the 15th day of April and the 15th day of subsequent months, then the Bank.may demand the entire amount of all of the aforesaid notes immediatalv due and revable. Tha remaining principal and any uncollected interest shall be due and pavable on September 15, 1989.

_________=____________________-__-__

I ,

s

5. Heretofore All Chemical Isotope Enrichment, Inc. has agreed that it shall also be obligated to insure the prompt repayment of the aforesaid indebtedness and to save and hold harmless the maker from such payment .snd does hereby join into this agreement for the purpose of indicating that it agrees to such payment.

6. Further, heretofore, All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc, does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 2nd day of March, 1989.

a t's .h s (. - tg , , ;

DR. A. ANDREW CAREY, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its e

c

. - s .

4 EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

Heretofore, P. DIANE MEALER executed a certain promissory note in the amount of Four Hundred Fifty Thousand Dollars

($450,000.00) dated May 4, 1988, the terms and provisions of which are incorporated by reference as if set forth in its en',irety; and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed to grant an extension of the same for a period of six (6) months provided certain terms are mets and WHESEAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree as follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being September 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (131%).

3. The maker agrees to pay an extension fee of three and one-half percent (31%) of the balance which as of the date of this agreement is Five Hundred Eight Thousand Nine Hundred Eighty Nine Dollars and Seventy-Three Cents ($508,989.73).

4. References are made to four (4) other like notes also executed on May 4, 1988 by Dr. A. Andrew Carey, Judith Wilson, Stephen A. Irving, and John H. Smelser, Jr. and two (2) notes executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be made monthly, be'ng due on the 15th day of each month beginning on April 15, 1989, in the amount of Three Hundred Twenty Five Thousand Dollars ($325,000.00). If such som is not received by the Bank on or before the 15th day of April and the 15th day of subsequent months, then the Bank may demand the entire amount of all of the aforesaid notes immediately due and payable. The renal.ina prtqcipal and any uncollected interest shall be due and pavable on September 15, 1989.

! 4

5. Heretofore All Chemical Isotope Enrichment, Inc. has agreed that it shall also be obligated to insure the prompt I repayment of the aforesaid indebtedness and to save and hold harmless the maker.from such payment and does hereby join into

f. .

this agreement for the purpose of indicating that it agrees to such payment.

6. Further, heretofore, All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May, 1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Security Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 2nd day of March, 1989.

P. DIANE MEALER, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

EXTENSION AND REPAYMENT AGREEMENT WITNESSETH, THAT:

Heretofore, STEPHEN A. IRVING executed a certain promissory note in the amount of Four Hundred Fifty Thousand Dollars ($450,000.00) dated May 4, 1988, the terms and provisions of which are incorporated by reference as if set forth in its entirety; and WHEREAS, the holder of said note, ANDERSON COUNTY BANK, has agreed to grant an extension of the same for a period of sin (6) months provided certain terms are met) and WHEREAS, the parties have so agreed and now desire to reduce to writing their agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein the parties agree ss follows:

1. The aforesaid note and the indebtedness thereby evidenced shall be extended to be payable six (6) months from date, the same being September 15, 1989.

2. The interest rate shall be modified to thirteen and one-half percent (131%).

3. The maker agrees to pay an extension fee of three and one-half percent (3}%) of the balance which as of the date of this agreement is Five Hundred Eight Thousand Nine Hundred Eighty Nine Dollars and Seventy-Three Cents ($508,989.73).

! 4. References are made to four (4) other like notes also l

executed on May 4, 1988 by Dr. A. Andrew Carev, Judith Wilson.

P. Diane Mesler, and John H. Smelser, Jr. and two (2) notes 1

executed by All Chemical Isotope Enrichment, Inc. It is agreed that payments combined for all of the aforesaid notes shall be j

made monthly, being due on the 15th day of each month beginning l

on April 15, 1989, in the amount of Three Hundred Twenty Five i

Thousand Dollars ($325,000.00). If such sum is not received by the Bank on or before the 15th day of April and the 15th day of subsequent months, then the Bank may demand the entire amount of all nf tha afore=nid notes immediately dua and payah!c. Thn remaining principal and any uncollected interest shall be due and onyable en September 15, 1989.

a 1

l i

I

5. Heretofore All Chemical Isotope Enrichment, Inc. has 4

l agreed that it shall also be obligated to insure the prompt d repayment of the aforesaid indebtedness and to save and bold harmless the maker from such oavment and does hereby join into this agreement for the purpose of indicating that it a _ Tees to such payment.

6. Further, heretofore, All Chemical Isotope Enrichment, Inc. has pledged and granted security interest in certain contract rights and equipment which Security Agreements are dated the 4th day of May,1988, and All Chemical Isotope Enrichment, Inc. does reconfirm its agreement that the aforesaid Securitv Agreement shall secure the indebtedness stated herein subject to the extension and repayment terms as herein stated.

WITNESS our agreement this the 2nd day of March, 1989.

STEPHEN A. IRVING, Maker ANDERSON COUNTY BANK By:

Its:

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

By:

Its:

f

C m----- ____ ._

DOE DOCUMENTS I

l 4

f 1

i

),

ew -

L &

i4IUsemHLE, Inc.

- 2 Chemical hotone Enrichment, Inc. .

t e August 18, 1989

' '~

Mr. Joe LaGrone Manager U.S. Department of Energy Oak Ridge Operations

Post Office Dox 2001 Cak Ridge, Tennessee 37831 t-

Dear Mr. LaGrone:

In DOE's letter dated August 11, 1989, four items were stated that had to be completed by AlchemIE to finalize our contract.

With our response letter of August 15, 1989, and this letter, we have completed these items and consider our contract obligations to be fulfilled, and the contract to be f u l filled.- While A1ChemIE's contract with DOE provided for a termination date of August 15, 1989, under the provisions of 11 USC section 108(b),

AlchemIE has a period of 60 days after the filing of its Since bankruptcy petition to perform its obligations.

A1ChemIE's bankruptcy petition was filed June 20, 1989,Because this period'would normally have expired on-August 19, 1909.

August 19, 1909 is a Saturday, Bankruptcy Rule 9006 provides that the period extends through the next business day which is August 21, 1989.

Listed below are A1ChemIE's responses to the various alleged def aults as set forth in your letter of August 11, 1989.

Allegation No. 1 A1ChemIE has not met the Equipment Removal Schedule which was agreed.to by A1ChemIE and DOE on September 29, 1988.

RESPONSE

A1ChemIE has offered on various occ'asions to remove equipment. Through the investors, bids were taken on the next phases of removal. DOE has not responded to our inquiry for proceeding with equipment removal. We are prepared to go forward with the Equipment Removal Schedule expeditiously. We will increase crew sizes and add additionni shifts if all parties agree it is necessary.

A1ChemIE is prepared to meet the Equipment Removal Schedule dated September 29, 1988.

Pine Ridgo Ouico Posk. Suito 202 0 702 !!!inois Ave Ook Ridge. IN 37830 (615) 482-0029

Mr. Joe LaGrone August 18, 1989 Page'2 i

Allegation No. 2 Financial Assurance, including bond to cover decommissioning and decontamination of A1 Chem 1E equipment and financial protection-(insurance) for the DOE relative to A1ChemIE utilization The fact of centrifuge equipment,- has not been received by DOE.

that A1ChemIE's very recent attempt to produce a bond' resulted in'en alleged fraudulent bond being executed raises doubts about the Corporation's ability to meet this requirement in any event.

RESPONSE

Pursuant to our commitment letter of August 15, 1989 from UFEI, Inc., please find attached a bond in f avor of DOE in the amount of $5,070,000 for the DGD of equipment and a copy of the insurance binder submitted to Anderson County Bank on July 28, 1989, by Insurance Administrators which is being held in escrow.

Allegation No. 3 A1ChemIE has not met the removal schedule as contained in contract mod. 7, dated January 11, 1989, which specified machine removal would begin in April 1989 and be completed by June 1990.

RESPONSE

A1ChemIE can meet this schedule as stated in RESPONSE 1 above. .

l Allegation No. 4 AlchemIE has not provided the DOE en adequate centrifuge hardware disposal plan following the DOE comments transmittal to A1ChemIE on February 27, 1989, on the initial plan or a revision to the plan based on AlchemIE's more recent commercial plans.

RESPONSE

A1ChemIE responded to this letter on March 9, 1989, but as of this date has not received a response from DOE.

Additionally, our machine disposal plan was patterned after Martin Marietta's which was accepted by DOE.

Upon your receipt of this letter A1ChemIE has completed its contractual obligations and has fulfilled contract number DE-ROOS-800R21776. Said obligations are required to be accomplinnec prior to the t e r n.1 n a t i o n o a t. e , wlu ch are requirements for A1ChemIE taking title to the classified

v Mr.~ Joe LaGrons

. -August 18,: 1989-Page 3 equipment. Please execute immediately a written release..of the 1 -$2 Million currently in escrow and 'a . Bill . of Sale for the classified equipment. Your- assistance in helping A1ChemIE is l greatly appreciated.

Sincerely, i

TLCHEMIE, INC.

cx .cd-<Ly' Dr. A. Andrew Carey Chairman Pro-tem, President.

AAC/bc ATTACHMENTS:

1. Performance Bond

2. Commitment Letter from U.F. & I., Inc., dated 8-15-89 3.- Copy of insurance binder being held in escrow by Anderson County Bank

4. AlchemIE's response to DOE's February 17, 1989 inquiry.

regarding disposal plan

4. AlchemIE's .responsc -to DOE's August 11, 1989 letter regarding contract cc: James C. Hall, letter and attachments e

9

l un i t uuni ca. v i t o .... .. , . .., ,,,

PERFORMANCE SOND ' """"""" , . ,,,,

tsn onnen,cs,ons en orruns

, 8-10-09 l es enc .P A .t.,ee , e., . . ,.. . a,. ..,

i v es. or oi.caxis A iion r.c ,,,..,

L All chemical Isotope Enrichment, Inc. INDIVIDUAt. Oriar"Eas"te 702 S. 1111 noir; Avenue, Suite 202-D 03k Ridge, TN 37030 JotNT VENTURE h CORPOrtA HON STATc of SNcoflPonATsoN TennOSSOO suficivec&t sNo edes a 6 unen saarr.ess.JJ PENAL SUM OF tlONO 44LLeohlst William S. Harris 5 THousAmots) HUNT 4TEgst 070 000 c cr415 2031 Lemmon Ave., East 00 Dallas, TX -75204 cosinAcrTarc c ou r sinc t uo.

DER 005-000R21776 1Cl.lGATION:

Je, the Principal and Sureiyfiesl, are firmly bound to the United States of Arnerica thereinafter called the Government lin the above penal Jm. Far payment of the penal sum, we bind uurselves,our heirs, executors, administrators, and successors, tomily and severatty However, here the Sureties are corporahons actmg as co sureties, we, the Sureties, bind ourselves in such sum Inmtfy and severally" as werl! as severally" only for the purpose of allowing a jo nt action or actions against any or all of us For all other purposes, each Sutely binds itsell.

'mtly and severally with the Prencipal, lor the payrnent of the sum shown opposite the name of the Surely. li no hmet olliaDihty s1 anos-sted, the femst of liability is the full amount of the penal sum.

3NDITIONS:

• The Obligations of this bond expires on August 18, 1990 at 12:01 A.M.

w Principal has entered into the contract identified above.

irREFORE:

c aboie obligation is void if the Principal -

lalfil Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original term of e contract and any entensions thereof that are granted by the Government, with or without nonce to the Suretyl.est, and outing the ble any guaranty required unde r the contract. and I?! perforrn and lutielts att the undertakings, covenants actms conosteons and agreements Cey and all duly authorited modilacat'ons of the contract that hereaf ter are made. Notice of those modifications to the Suretyliesl are ived, (b) Pays 13 the Government the full amount of the taxes imposed by the Government,if the said contract is subject to the M tler Act.

)ctU.S C. 270a 270el, which are collected, deducted, or withheld from wages paid by the Principal an cartying out the construceson con-with respect to which this bond as lutnished.

THESS.

e Principal and Suretylies) executed this performance bond and allized their seals on the above date.

P RINCIP AL priature(si tsrets teuen Corporate 1emeht o A. Andrew Carey I,'[, President & Chairman Pro-tem

"_ , \ INoivtuuAt. suntivue st an.iureki it r)* I" t uta . ms, , tsrets esreto

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h'1111am S. Ilarris CoRPOR ATE $URFTYtfF59 Hrrne 8, s1 All of tNc. LIAtssLil y Linitsi Amie:u .

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Tessetti

1. Ttpeds sT ATE OF 4NC. LeABtLITy LtM4T Name &

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** Corporaie

?$ s ,,,,et t 1 Seal a tutterlet & t. 3.

Tettelst af s pede Name 6 - s t A T E OF 4NC.. LeASILeiv LIM 61 g AEftfrest g

"' Corporate 5,,psaou,eg,t E Seal

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t ettellt trree.re Name & st AT E OF sNC. LeAetosiv LeusI tes Atk9 Felt g

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.( s.enseurehl Seal N-meist & t. a.

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• • ** . Corporate h seneturets, Seal n

-g Nameist & 3. 2.

Teetetst

1. Ftpedt r4 AIL PL A IHousAND total parutuu 50.00 $253,500.00 -

INSTRUCTIONS 1, This form is authorited for use in connection with Governmenf SURETYllESI" in the space designated "SURETYllESI" on the c:r.itracts Any deviation from that form well require the wrillen face of the form insert only the letter identification of the suret es apptstsl of the Administrator of General Services.

Ibl Where individual sureties are involved, two or more respon.

2. Insert the luft legal name and business address of the Principal in sible persons shall esecute the bond. A completed Af tedsvit of the spare designated " Principal" on the face of the form. An Indevidual Surely (Standard Form 281. for each individual surely, outhors'atenn person shall sign the bond. Any person signing in a shall accompany the bond The Gowrnment may reauvre these representative capacity (e g. a.i attorney in.lacti must furnish evi. sureties to lutnish additional substantiating information concerning stence el authority if that representative is not a member of the their financial capabetely.

~ firm partnership or joint venture, or en officer of the corpora-sion involved. 4. Corporations esecuting the bond shall affin their corporate seats. Individuals shall esecute the bond ooposite the word "Corpo-

' 3 f c' Cttr-*:Me: ri::.&; t' ; L:N :: ser:te: must pt:* c' ran SC . and shmL amin ar. aseswt se d t a em ' . " a .

the Department of the Treasury's list of approved sureties and New Hampshire, or any other jurisdiction recuereng adhesive sea's must act within the limitatsn listed therein.Where more than one 4

crrporate surety is involved. their names and addresses shall appen' 5 Type the name and titte of each person se';ning this bo,nd in the in abc spaces (Surely A. Surely B, etc l headed "CORPORAT E space provided.

^^^^^-~~nmm^^r-%d A A O AO a Ar) n , r% m r\ c%

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. AFFIDAVIT OF INDIVIDUAL SURETY

. n.eonam,cuenen n~<=1 sona.saos 8 TATE of Texas ss f 450-12-4210 i c.UNTY .F D3Itas _

I I, the undersigned. being duty sworn. depose and say that I am* Ill one of the s'utelies to the attacharf bond; 121 a tillien of the United Se:tes for a permanent resident of the place where the contract and bond are esecuted as provided in paragraph 3 of she instructims on cweine; 13) of full ago and legally cornpetent; and (4) not a partner in any business of the principal un the bond or bonds on which I appor as surety. The Indoernation lutnished below is true and complete to the best of my knowled pa.This i af fidavit is made to induce the United

~ itates ti America to accept me at surety on the attached bond ,

.NAa.E grees. .wd6.. a o (Tere se arsau a. Hoest Aconcss tN.m 6er, se.ves, cu,. as.e,. esr ceses 3214 Dartmouth William 5. Harris A .A.. ., or...oM ..N.

....n g g .. ... ... wn. 759nt, ophthalmologist / Surgeon 35 years self j TofiEETrK5trATis sN...u. sen... cu,. si.u.14r c.s., , .. itLzenoNt e.o. ,

2811 Leumon Ave. East m Dallas, Texas 75204 . . susmess- (214)f 522-1522

.1ME FoLLowtho es A T RUE a[rRLsf MTA&5ET5 ATeoN or OFTHt; uv entstNT ETs LsAR6 LITS [s. AND NET wonTH AND DOES NOl eteCLUDE ANY AssoN F6MANC4AL $NisnLET 1 NAVE $N lHL entNCirAL Trel. A1iACHED sono.

5,633,927 .

a. Fair value of solely owned real estate' s I.074.759

b. All mortgages or other encumbrances on the real estate included in Line a 4.559.I68

c. Real estate equity (subtract Line b from Line a) 4 971 1E4

d. Fait value of all solely owned property other than real estate' 9 530.,j57

e. Tcial of the amounts on Lines c and d

f. Allegher liabilities owing or incurred not included in Line b M9 903 3

$ R R 9n at #17

g. Net worth (subtract Line i from Line e)

OsW E*ut0 lllllr'e','/ "* '"* "" * "*.* "" " '*' " ' " *** '"'* * ' * * "" * * ' " * * ""' *** " ' ** """ * ** * ** "' '"'" "" *

• goycson ANo ogsCairTson or at AL Esi Att or wH CH e Au sous ownca.THE VALuC of wH6CH is DNCLUDED IN L6hE e.lTEM 3 Sao attatched financial statement Amu,ns et sunnd nl.. tin eles ** n.D entou ter su.sien rerreen: $

ocsc'aarsson or rnortas v mcLuoco m Lme e, of tu s Aeove tos.n ese o.a.a et aus nus.rv et er.> runs ur.natn Sco Attached Finacial Statement

4. ALL c1 Hen soNos oN wmen i Au sunu y ss e.a ca.,.cin .as e,ne.. et .ua ..... .t .... .. .uu, Honn ^

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p-14, CERTIFICATE OF SUFFICIENCY

,.1 ,8 Hereby Certify That the surety named herein is personally known to me; that, in my judgment, said surety'is responsible, and qualified to act as such; and that, to the best of my knowledge, the facts stated by said surety in the foregoing affidavit are true.-

e.- = rzwesesseead n. stGN AT unn L

' Honorable Keith Dean jg 04ggj/h

. G. Wr!C!^L TITLE l' 265th:3udicial District. Court Judge of allas County-

, e. nonnu pre,aar, so.es, cur, ss.u. w cwo

• 600 Comnerce, Dallas County Courthouse, 265th Court, Dallas, Texas' 75201 (214)f633-7471 INSTRUCTIONS

1. Individual sureties on bonds executed in connection with Government contracts, shall complete and submit this form "

with the bond. (See 48 CFR 28.202 2, 53.228(e).) Any deviation from this form will requ' ire the written approval of the Administrator of General Services.

1 No c:rporation, partnership, or other unincorporated associations or firms,as such, are acceptable as individual sure.

ties. Likewise members of a partnership are not acceptable as sureties on bonds which partnership or associations, or any co partner or member thereof is the principal obligor,. However, stockholders of corporate principal is acceptable pro.

vided (a) their qualifications are independent of their stockholding or financiat interest therein,and (b) that the fact is expressed in the altidavit of justification. In determining the net worth (item 7g) on the face of this form, an individual surety will not include any financial interest in assets connected with the principal on the bond which this affidavit supports.

3. A United States citizenship is a requirement for individual sureties. However, only a permanent resident of the place if execution of the contract and bond is required for individual sureties in the following locations -any foreign coun.

ry; the Commonwealth of Puerto Rico; the Virgin Islands; the Canal Zone; Guam;or any other territory or ocssenion '~

at the United States.

. The individual surety shall show a net worth not less than the penal amount of the bond by supplying information

' equired cn this form. The surety,shall have the completed form notarized.

..The certificate of sufficiency shall be signed by an officer of a bank or trust company, a judge or clerk of a court of ccord, a United States district attorney or commissioner, a postmaster. a collector or deputy collector of internal Evenue, or any other officer of the United States acceptable to the department or establishment concerned. Further

certificates showing additional assets, or a new surety, may be required to assure protection of the Government's in.

erest. Such certificates must be based on the personal investigation of the certifying officer at the time of the making

%reof, and not upon prior certifications.  !

. All signatures on th:: affidavit submitted mu'st bc originats. Af fidavits bearing reproduced signatures are not acceptabic.

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A11.chemicalfIsotope Enrichment, Inc. INDMOUAt. .

702 S. Illinois Avenue, Suite 202-D Oc^ataciisiiic:

02k* Ridge, TN' 37830 .

O aoiarvcaruni . G coaronation

- *' ' '

• ETATE Ofr 4NCOnt'OnATech

. sum.s vieu.t m....i.o Tenriessen a s~~."u .a..uona PENAL SUM Of: WOND 4pLLeoNg53 William Johnie Webb THd'U5ANDtL) HuhpflED(5l C LH I S~

213'llenson. Street, Box 237 *

• 5 070 000 00

'Livingston,.TN- 38570

• cohrnAcioArr coNinac r e.o.

DER 005-880R21776-081lGATlON:-

We, the Principal and Suresy[ies), are firmly bound to the United States of America (hereinaf ter called the Governmen sum. For paymeni of the penal sum. we bind ourselves, our heirs. executors, administrators. and successors, jo p' reseverally" the Sureties are corporations actin 0 as co sureties, we, the Sureties, bind ourselves in such sum "tointly and se only for the purpose of allowing a joint action or actions againstl a ,

Jointly cated, theand limit severally of liability is the with fullthe amount Principal, forsum.

of the penal the payment of the sum shown opposite the name of the Surely.11 no CONDITIONS:' *The' obigdtichs ' cir this bond expir'es on Augu'at 18, 1990 at 12:01.A.M.

6he Principal has amered into the contract idenlified above.

EHERE/DRE:

The above oblignalon is void if the Principa' -

tailli Perforn$ and fulfills all the undertakings,' covenants. terms. conditions. and agreements of the contract during the origin

he contract and any entensions thereof that are granted by the Govesnment, with or without notice to the Suretyliest.and curing 18 any guaranlV required under the contract, and (21 perform and fulfills ull the undertakirigs, covenants. terms conditions, Di any meived. an 3 all duly authorlied modifications of the contract that heresiter are made. Notice of those modifications 10 th Ibl Pays It' the C9vernment the full amount of the tares imposed by si e Government,if the said contract is subice to th C0 with

?act U.S.C.

1. aspect 270s 270el.

to which this bond which i; furnis arededucted, cettected,

' or withhcid

' hud.'from wades paid by '*

the Prmcipal in carrying out the construction con-SITNESS:

DD Principe: and Suretylies) executed this performance bond and affixed their seals on the above date. -

f*filNCIPAt.

i8.

3. . .

signaturelal c::: . O k o *

/ rse.r> -

use.u Corporair "QI,',Ii " A. Andrew Carey rr m a Presittent & Chairman Pro-tem-INOlVfDUAs. SURETYll[11 -

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ConrDrlATE sullETYllESI .

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• g Steneemeld Corporate

, some 64 & 6. Sect 3.

i . T.82tsi .  ;

rTvret i DPSiG-al-Hf-3000 > * ** 3s.106

'YIOuJ (otrOft L*M*!f ,- - CTANDAMD rnrW M Inf V. 80 8 M

_ _ - _ _ ~ - _ - - - - - - - 0** *

• j-I t

~

4 - * . COf1POftAlc StJ8tt TYttcs!(Crareapedt

• ls t. AI L,00 INC. LIAUlblIV L8 Mil

' Name & .. ,.

Je ' Adileest - .

2. . .

Co'rPorO f c

%*g 6. . . . .

• 59"*dd ..

Seal

'I

-. a.

is,sent e .

'er **** -

LeAusL:l v s.euel F bl AIL 00 8:40.

g ,,,. . ,

• ' Aggress - - * . * , , . ,et . ' ' .

• i. .

t i.

Corporafe l ,, , , , ,,

, . . sna Segnagestelal ..... gygg.

R 4. . . . a.

• • pi hr.r.wist & . / . .

Tettetsi rTreeff:

. . * . .s - . ' . . 51A10 0+sNC. LsAuthsiv Laust Naevie & '

g . Adoress g

=-

-g i. a. Corporale p ., Sogneswehl L .E Seal . . -

. g( Namehl& 4. . a.

Tettetil

• t I rTerrett LaAustsiy Laue

- Name & . . . . . * . . ... 11 Allo *8HC , . .

g as Atl8ress . . . ,, , , . , , .

'- v ., . : .

Carpar. ter h sw.wou, .; .

sc.t -

s 61 Nimeill & 4.

a. , , , ,

1stletzt rT.'nedt b1 AIL 06-SNC. LI A0iL11 v L8Me l Name & .

, Aasress . $ - *

s. s. *. Corporale O Sienetwetsi geog' I N.-l., &

. Tottelst CTrpedt

.. a. .. , . .

LsA0aL11 Y LSMIT N:me & .. , . . .

.. 51 A.T E* OF 4NG. ...

g .. Address . . . .

• h" . . * *

s. . . . a. " ' -

Corporatt

. y; sipisewehl

. 3 ,,j -

Namelsl& s. a. . ..

h Teilefsl .

. .e, .

rTypodi n AIL PLn THOUSAND TOTAL ,

DOND.

sentuluu s 50.00 $ 253,500.00 .

.- .. . . .. INSTRUCTIONS ,. , ,, , ,

SURETY (IESI". In the space designated **SURETYilESf" on the

l. This form is noiborized for use in connection with Government contracts. Any deviation from this form will require the written face of the form insert only the letter identilocation of the surettes appr&vil of the Administrator ~

of General Services.

• lbl Where indevidual sureties are involved, two or more respon-

2. Insera the fulllegalname and business address of the Principalis sible persons shall execute the bond. A corripleted Alfedavit of

' the space designated "Principat" on the face of the form. An Individual Surely (Standard f*orm 281, for each individust surety.

- authorization person shall sign the bond. Any person signing in a .:. .shall accompany the bond. The Government may require th. -

representative espacity (e g . an attorney in.f act! must furnish evi. suretics to furnish additional substantiating information concern.ty  !

dence ci authority 11 that septenentative is not a member of the their financial capability. I

- I

. firm, partnership or joint venture or an officer of the corpora. . .

sion involved. 4. Corporations erecuting the bond shaft affin their corporate seats. Iridividuals shall enecute the bond oppossie the warJ Corpo- j 3 lal Corporations executing the bond as suretics must appear on' .

rate Seal". and shaft allie en adhesive seat il esecuted in Maine. l the Ocpartment ol the litasury s lin 01 ac. proved sureters ano gew 3.tampshisc, or any other jurisdscleon scQuiring adfitnwt sea'n enust act within the limitation listed therein.Where enore than one cttporate surety is involved. their names and addresses shall appear " 5. Type the name and title of each person signina this bond inlthe l in the spaces (Surely A, Surcty D. etc 1 hea*d "COnron ATE spare provided. j

, j s . .- t . i . . . - ,. STAnoano ronea n t'ser inr~ te *"

.- _ _s t - . + - _ _ _ - . _ _ _ _ _ _ _ _ _

l

._ _ . _ _ _ i

. '. u n. ,.. ...o vi o u..n, i- !

, AITIDAVIT

• OF frJDIVfDUAI. CultETY g:,;er s.usovis*.nu en ee.or el

. STArcor . - i -

• 3090 0005 Tcnnconco , .

Lout 45'Y ul' .

ss. 414-22-7o34 .

, overton * *

• States for a perinancrit resident of the place where the contrac n ec teverse; (3) of full age and IcDalty cornpetent; end 14) not a partner in any busine v, as surety. The infortnas,lon lutnished below is true and coinplete to states of Arnetica to accept sne as surcty eq the attached bond.

g, NAac go en t. une.wa.s**U L1' ave erreinu

, )

3. nouc AvonCss gnumt.ar, suses. cur. yana,2.sr co,sq. i W1111arn Johnic Webh nouto 3, Dox 134n ,

A 1 ys*E ArtD DUnAlsON 08; QCCUPAT40N Livingston, Tir '38570 . .

4. HAsi4C 06' Cut 8g.Q V C gg gjg ,,4g.,supje,8dl. ,o sie de) til Hella s Construction Manager

.,_, _ ,Lm.

..........<..,.a....._.,

golf-cenployed

..,..,.~..

213 !!cncon Street - Dox 237 HOMC-Living:Lon, Til 30570 1-G15-023-1039 DU31HESS- 1-G15-023-2015 , *

. ')*rst4ANCtAI.INTrnL5T THC FOLLOwarvu 4 tiAVC IN s5THC #4ALLCTS TI4UCof fl[f THC(IC5CN f*n8NCsPAL.OH T ATt4N Titl AT Of* T ACitCD NYooNO. l'HC5t'NT UQL Atty A55

a. Fair value of solely-owned real estate' '

.b. All mortgages or other encumbrances on the realcstate included in Line a

$_ 495,cc3

c. Heal estate equity (subtract Line b from Line al. 29,05G

d. Fair value of all solely-owned property other than real estatc*

_ 4Gc,cov

c. Total of the amounts on Lines e and d 22,215,947

, f. All other liabilities owing'or incurred not included in Line b . 22,cn2,ssa D. Net worth (subtract L.ine i from Line c) .

. 12,402 C .

,s 22,c7o,292 stule.s $1 not esanspies*.

> Mt include Prod *!!9 *EtmPt (roen esecution*end ,ett tor,eny useson instudint tiomentend es,m Avovr. *.

s.oc AisON.. AND s~

pC&CiteP140N 08' itCAL L61 ATL OF WHacet 4 AM GOLE OWNLn. THE VALuG Of

. ~. .

Dwelling and 23 ncres,. overton Counti, Route 3, Dox 134D, Livingston, TN$ 3G3,GG3 Commercial.Duilding Livingetort, Til 30570 & Lot, Overton County, 213 Dencon St. - Dox 237 132,000 Asnount of entutd usiv, floss of,f,ow reef #sists for issellan purpoets: $- 231,400

• gy DL&Ci18PiiON Of PiaOPEill Y 4NcLuCCO ste Latv0 c. 4TLM 7 ADOv0 (Liss sh, raise of sort seitsory s/properts sewistiJ ~ a C:sh - y 0,177 A/C nec - 20,G00 Noten acc - 90,271 Cash surrender-Life Inc. '- 17,G00 C210 Collection - 0,000 ncal Uctato Invcutment; - 225,000 Invcutsacnt in I. Cas oil p;;rt:crship: - 21,505,940 stockc/Privato - 10,095 stockc/Public - 5,795 Furn - 03,400 CII P'Inip - 00,050 01.1 f. canon - 10,400 Automotivo - 34,90o ut 111 t:y Deposit.n - $ J 10 i uoNos ON wmen ^m sunc t v ssiet< <<iar <8er eaa ..a =ns ot <=ch *oaati u a.a,. ,0.

I t Oi.600E 700 00,100% N624740 C6103 00160105,427 00 509 5092A30 5 854 00 . <s004 DTCG0 7 8 9 C6 7 0 0 6 0119 313.0 L\ s kN -

l

" s GS0412I?i'vD0 n M A 4 n . 0 0 0. O465 .

0 P346 OACASGu9c00309 ,.199, i s a. smau an"lBIN110B1D H 41011H400 09C o ._Q1IIL U400.00 a,;.. N,duuL - EAC0l w 0_,__.

rsrse<< .eeroea.aeus r ***Ci iO wmm ino, at som

• al'.'m W. .T . Wh _

DER 005-000H2177G is, sun 5entarD AND SWOnN To nrrorIbtr At rot nw- ~~ ~

, onTr onto arw"rTror" '

O wohin cAv vcAn

• .~ a em sue s u'<r e-n d**m ae A gust 17, 1909 ' " "*

,,aus AND 1 sit e: 08 Of i f cout. ADtMNik.

U. StC NAl uHL ON'#

1LisaNG OAlst (Tus sr 084uft

., sa y c osaug;f.gogv

L APsstL:.

Lonnio A. Ilolt '

es ig es et.883-8083

• p g g c' ,,[hf% 3-31-91 (veOu3 Cof TsuN Us AffL C

14. CElill.i:lCA..T.E 01: SUFFI.CI.ENCY

~

. .. l.Ife' reb'y Certify /That the surcty named herein is personally known.to me; that, in my judgrnent, said surcty is responsible, and qualified tu act as such; and that, to tho best of my Imowled DC. the facts stated by said surcty in the foregoinD affidavit arc true. ,

s.w.mee.e:n. . . . . .. .~.~.c .

Ja /,,, f,,,;-

.:a.i.,;,u.run.'..;. .. L ~. ' . . . . . .

/

"" 'l ' ^'" "P . . . ' .

Circailt' Court Clerk ,

a. ADDittJh (Nesent er. 8 3rv8 f. C3fr. beefe. I.id' Code) , ,

Cvsrton County Courthouco _Public Squarc Livingston, TN 30570 .

' .. . . ...r '

~'

INSTRUCTIONS L .

1. Individual suretics on bonds executed in connection with Govemment contracts, shall complete and submit this form with the bond. (Sec 48 CFR 20.202-2, 53.228(c).) Any deviation from this form wilf requ' ire the written approval of the Administrator of General Services. -

?. No c:rporation, partner: hip, or other unincorporated associations or firms, as such, are acceptabic as individual sure.

ies. Likewise members of a partnership are not acceptabic as suretics on bonds which partnership or associations, or any

o-partner or membersthereof is the principal obligor,, However, stockholders of corporate principal'is acceptabic. pro.

ided (a) their qualifications are independent of their stockholding or financialinterest therein,and (b) that the fact is xpressed in the affidavit of justification, in deterrnining the net worth (item 70) on the face of this form. an individual urcty wl!! not include any financial interest in assets connected with the principal on the bond which this of fidavit upports.

. A United States citizenship is a requirement for individual suretics. However.only a permanent resident of the place f execution of the contract and bond is required for individual suretics in the following locations-any forciDn coun.

y; the Commonwealth of Pucrto Rico; the Virgin Islands; the Canal Zone; Guam;or any other territory or possession l f the United States.

The individual surcty shall show a. net worth not less than. the penal amount of the bond by supplying information quired on this form. The surcty,shall have the completed form notarized.

The certificate of sufficiency shall be signed by an officer of a bank or trust company,a judge or clerk of a court of cord, a United States district attorney or commissioner, a postmaster, a collector or deputy co!!cetor of internal venue, or any other officer of the United States acceptable to the department or c'stebtishment concerned. Further rtificates showing additional assets, or a new surety, may be required to assure protection of the Government's in-rest. Such certificates must be based on the personal investigation of the certifying of ficer at the time of the making crc (, and not upon prior certifications.

All signaturcs on the af fidavit submitted mu'st be originals. Af fidavits bearing reproduced signatures are not acceptable

.g

.N

/ Rrnlemal Offirr ~1, thidoston, p.c.

.i - lQ w.g Corporale tirailguarter, J.a non vist,., i s.

August 15, 1989 i

Dr. A. Andmw Camy, Prestdent Alche mie, Inc.

l 702 South Illincds Avenue Stdte 202D Oak Ridge, Tennemee 37830 REF: Department of Energy

Dear Dr. Carey:

On behalf of U. F. & I., Inc. please be advised that we will provide two sufficient and qualified individuals as sureties on payment and performance bonds in favor of the United. States Department of Energy in reference to the transfer and utilization of certain DOE equipment based

upon the following conditions.

We must see verification of bank deposits at the Anderson County that U.

Bnnk and secondly we must receive and be satiaried F. L 1.,

Inc. has a security internst in the equip-ment being transferred from the DOE to Alchemie, Inc.

Dy copy of this letter we are advising Mr. Joe La Crono that we stand ready, able and willing to protect the interest of the DOE under the restrictions as contained in this letter.

Your$sVeryTruly,

% u & K d ec ~ u Dorden H. Itallowes, Esquire 1

DRil/ sis 1

CC: Mr. Joe La Crone 4

~ cr __,s- - ~ - ~ -- - i

/

i i INSURANCE ADMINIS77tATORS INC. . .

P.O. BOX 4990 .

1209 EUCtJD AVENUE KNOUTLLE. TN 37921 0998 615/523 0451 July 28, 1989 Hr. Bill Arrevood ANDERSON COUNTI RANK

, 101 South Hain Street Clinton, TN 37.116 RE: AlchemIE, Inc. - Cenatal Liability Insurance

Dear Mr. Arrowood:

, Enclosed please find the orfginal of an incomplete " Accord Binder" for American International Group's General Liability Policy. We will effect coverage upon receipt of a deposit premium of $13,500 and a signed AFC0 Premium finance Note. We, and AIG are prepared to effece coverage at your direction.

Should you have any questions please do not hesitata to give us a call.

Very truly yours, .

Neil A. Zabo, CPCU President NAZ/Jmr O cm * . dm ... 9 . . _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -

I McCup.l. INSURANCE BlNDEQ.,. ,

s. ,. , . 4 . .

. p.g,.y;. g.g i'$A"5 2

' THIS DINDER IG A TEMP 0hARY INSURANCE CONTRACT. SUBJECT TO THE CONDITIONS SHOWN ON THE REVERSE SIDE OF THIS FORM aseta no.

yitionsa AtNKH19Henons, DC. courant APtmICAN IW199021061,008. 3005572

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615/523-N51

- =,ra ==. em, Commanc = = mow mause Coedrafsv Ptn ENFiRe80 ror ILY NO.

St$CIIIPTION OP OPanett080s8vteccLt98Pnepe#ff putumig tassay1

$(St; SUS.C00g

, 4 ALL OldGCM, ISQEPE LNRIQ&824', DC. Ctn ISCRta'E M4GORDRAIAS NdaMCfURB83

. A10.TMIE, IAC.

702 S,112.1101S AYh11E I G K RIDE , TH 37830 cowsnants.: i ' .;. "

• c.. :. m t s: u s : '" .i . . :.~' 1, ; i g.  :.g,, Au.WADluTy,UMITS M THOUSANDS e.m w wei.==m . . .

c.owan ..agnanus

, . amouw,. . . . .e.. seucrat.e .ce= sun.

" MMC 4tfMSOFL000 SASIC , Oft 040- 4 SPEC.. .

e e A

f -

2 kMha-- -

= -

amaaL Lasam eentsw.aonature i

~

E COMME 8tCIAL OCNtnAt LI4PILifY * -

P1000. - C00srers A00M'0 ATE

• 8 PeneonaL a Aonswa.edu'ay '* 1,000,-

= =ssmaK X oeCun

,~

OM8E23 8 Ctmtfuctoet g Peor. - .8ACH th"CultpWNCE .

. . . . . ,8 i 50 i

_* Pint DAMAGE lAar ano Arel 4 fit fp0 pafE FOft CLA8WS Marit? t I

. 40E.0. EllPepe0C tany one

..poss(

MpTOIpepita i att yg,eC4t3 . SCttfIMAEO vtte%f 3 CSL 8 I tmemrY 91ftR9faCCe.8

?IC980uutIO PD 'l-BIEO. PAT $

9549 e ,

-, .,_Unf -'t A M M 8'E*L#AUAGE ALL VreeCLF.8 SCHEDULtp VtHICit$ ACV CSifMN8 KD- STAtt0 AnsotsNT 4

' UC 9fp Often

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. Clearnet4N taasnetta cons .at.t.ao.D.Af

. f F'3R etafist.osat.st. .. . --

3

$fAfpf0RY WDemest'0 couPresatsDel - ,8 lEACll ACCEstWT) bee 8 spleast Poucy theff; gaspL37tsi a LIApa.itY i anserstoCu eurtemi ~ ~ ~

~~ ~ ~ ~ ~ ~ ~ ~ ~ ~

iratsa sosamisonsniLstruce:ON) H fl d0baGES~

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tecnft40tt y Accet:0NAL M5Unre b,

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4*4tPaytt P. O. ICX 2001 04 HIDGt:, SH 37031-8757 ..p .

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6 1

I l

. i TERMS: NET 10 DAYS ..

IN5LfRANCE ADMINISTRATORS. INC. Past out DAYS $

P.O. Il0X 49Y8 12n9 f.LICLID AVENUE A stavice cHanor or stit.Ptn KNOXVILLE.1N 379210998 MNHIiet arm ANNULA) WEL 82 Instimnec 615/523-0151 ND '0 *" P^st out moscas

{

\dininistraton pn0 Duct 4 CUSTout4 DactI encic.E

, NO Df4 DAll #ca AIdDGE, DC. 8D) 2001203 7/20/0 702 S.1111rois Avenue Oak Ridge, Tri 37830 s

rawc.o Oc4osto PLEA $F DETACH HEnF AND nFTUnN 7tn5 PORTION W17H YOUR REMITTANCE. --

INSURANCE ADMINISTRATORS,1NC.

uwa 4.u. s m  :

osecmerce. .. . m , u,nu.u.uu 8  ; i l Gereral Liability - AIG

. 28 ,! 89 'IDD $ 45,132.00 07 25i90 I  : l

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PREMW DUE C*4 tirt Ctfvt part SHowni AB7vt M;atCEPT WL4 g( $(WY LNLt$s Af 00($ttti iw % . ..eus,. w. ,- ..- .,a. ~ 6 45,132.00 e% ,. ....a ., u ,, w - ,w , ~ n I

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4 .

p .utwscara,we ~ a.

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.L. , p.w ADE00eem22, Hat.

M Chumicalbolopo Okichmuni. Inc.

(-

g Mr. Joe W... Parks l

D1roctor, Enrichmont Operations Division U.!!. : Doparlerint of. Enorgy

' oak-nirtro t oporationu P.O. llor 2001 ,

Oak Ridge, TN. 37031-0757

Subject:

.A1ChemIE Cos Contrifugo Machina Disposal Plan In your lottor of March 3, 1909 ' you or.proccod four concorns 'on the nubject pinn. Wu havo addrocsod unch concern and express our

. reply following a copy of.cach of the concorns.

DOE Conenrn: 1. DOE npproved nocurity and uhlpping pinns must bo in placn and compilin) with durinrj nccomplinhment of tho tanku

. out1(nod in tho; plan. It is undorntood thoso planu aro presontly in tho DOE roview cyclo.

A3ChoenIE Hooponuo: . 7:so DOE / OHO Gocurity Dopartment, Jn responne tra our- querf on March D, 1909,. informs us th:st the CPDl' Security Plan is approved and a lottor of approval is boing preparod.

The shf pping plan has bocn ruviewod by ORD, commentod, rovised

- hy AlcinemIE, rot.urnod to ORO- whoru Malcolm Tholuon, -on March 8, l'J U ') , uald he was roviowing it.

DOE Conenrn: 2. Humoroun referencon uro mado to c3 nunificti partu t. hat will bc chipped in DOE for dinpocal. CCEP (PORTS) hhn

,nn, diroction, pinnninrJ, fundir.g or facilition to accomplish thJs-ucopo of work. (ref. pg. 1, par.2; pg.3, items a-DI PU. 4 - fly.

2 - par. I und itcau a and c).

A1ChomIt.: Honponuo: DOE han the only nuthorized dispecol mnann for closcitied contrifugo compononta. Thorofore, tho fint1 diupoual oi-clousiflod contr11ugo componnntu, whnn no longor u;crul, must bo by DOE. It in undurutood that DOE rinou not have moann of final dispounl nt the Porti, mouth Caucouu Diffusion l'innt utt:o but donu h avo, or will havo, moonu or disponal at tho .

Oak tr J <lps Gaucouu Diffur.lon Plant uitu. Thureforu A1ChomIU's plan providos for packaging for DOE dispoual.

DOE Concorn: 3. (Hof. pg. 2 lot pur. and pDo. 16 ti 17).

Mothods 11ut uay not bo comploto. Alco, many if not all mothoon requico rovicw anc rovirsion to vorify adoquacy for AIChomIE uuo su well an-to roflect AlchomIE'o heal th, unfuty, contamination control, s.tandard - opora tiner methoda, proceduruu, practicou, etc.

rathor than Goodyour'u (CAT).

A1ChomIC Rouponco: The methods usod succouufully in CCEP by --

Coorlyoar Atomic Corp. havn boon reviewod by A1ChomIH. A1ChomIE CApoCtB to use th0Go with come minor ChangoD. A1ChemIE will contJnuo to roviuw thumo as work progrossou to mako improvemontu thorcin. '

DOE Concorn: 4. (Rof. pg.3).

Uuo of tho Wro,ck ' Disassembly Standu (WDS) will introduce contamination' to horotoforo clean facilition and oguipmont, thoroby, significantly incroacing the potontial liability for decontamination.

A1ChomIU Ho 1ponno: A1ChomIE, from its coveral discuculonn with DOE and HMES personnol, _underntundu that n plan in ruquirod frun A3 ChnmIE for uso of the WDS. 'the principal concurn in tho spread of contamination and como moans ' to provunt thu aproud in noccuuary.

With ruro. onco tn your innt paragraph the rororoncou to other rela tivo plann w.u s bu added whon the planu are approvod (uno responnu to No. I abovo). Tho location of 'cito' in the last santonco in taken to moun.CCEP. Tha uub)nct plan in for con tri f ugo u now Lt thn CCEP a n ti et CPDF (Geo p. 1, Introduction), cinco thoco aru intorrolatod.

We trust thic ' reply removoa your concerna and that notico of approvalo of tho socurity und chipping planu will bo roccivod expeditiously along with approval of the uub joc't plan.

Sincoroly, ALCstEMIE. INC.

?!,,t b.

Joitn H. Smolnor, .7r. , .

vClilef Executivo Officer .

JHS/ kid

. l

+

L.

f_

m AKhed..REJuc.

M Chemical holope EnIchment. Inc.

.AuDust 15, 1909 Mr. James. C. fla11 Assistant Manager for_ Enriching Operations U.S. Department of-Energy Dalt Ridge Dperations' '

P.O.cDox 2001 Dak Ridge, TN- 37831-8G50 RE: Your Ictter of August 11, 1909

Dear Mr. Ita11:

This letter is sent 'specifically in response to your August'11, 1909,- letter and will attempt to address all matters stated in your letter on an item by item method.

Your first paraDrnph, you charncterizo our arrangement as "the sales _ agreement for removal of excess equipmenL." I believe the Alchem16/ DOE. relationship is much more than this. It is a TechnoloDy Transfer.

Also in the first paraDraph of' your letter, you note that the A1ChemIE/DDE contract has been extended "15 times to nilow AlchemIE timo to meet itn contractual commitments to the DOH."

You 1907, also noto.that the agreement : was executed on November 20, for a one year period. First, I appreciate yo u r-forthright statement that A1 Chem 1E needs to fulfill only con t ractua l requirements. Alchem1E has now sa tis fied all compliance of the heavy reguintory burden necessary for Alchem1E to possess and use classified gas centrifuge equipment. This includen, of_ couron, our justico department review, our compliance with the Atomic Energy Act of 1954, our obtaining of the ~ necennary congressional rule change, and most recently our obta1ning of the necessary construction permits from the Nuclear llegula tory Commlusion. The remaining obstacles impeding this technology transfer are all-c_ontractual with DOE.

Also, please let me point out that the DOE'n demand for en up-front securi ty instrument.In the amount of $7-9 Hillion was not formally made upon A1 Chem 1E until January of 1909, some two months after thn ono year period of oter ngreement had es:pf red.

I should oiso point out that your fifteen extensions include several forty-eight hour extensions. The factual matter is that A1 Chem 1E has had approximately six months to meet your m ._ _ ~ _ _ _ _ _ ~ __ __ - -

Mr. Jamon C. Itall August 15, 1909 PoDo 2 imposed requirement of the up-front suroty instrument, and this six month period han been parceled into small increments which have p3acod continual timo demands upon A1ChemIE and its potontini financiers. These time demands have impeded our ability to obtain this auroty instrument.

I would nino like to point out that I am not a lawyer but a scientist. Perhaps this is why I have such difficulty understanding the suroty instrument requirement., I have road the Alchemic / DOE agrooment many times, and I completely fall to find any mention of bond or surety instrument any place within that document. As'I read this agreement, it says that AlchemIE will como up with an " approach" to insure that adoquate Dr.D funds will be available, and ft is up to DOE to review and hopofully to approve our approach. I know that we have submitted to you perhaps half a dozen various approachos to moot the requirements of paragraph 4A(iv), but all have been

. rojected. I cannot understand why a surety instrument must be anted. You must know the difficulty of a small business acquiring such an instrument, and it seems to me that thoro are savoral other approachos among those we have suggested which would burdon, moot your ronconablo concerns without imposing an undo and perhapa Jmpossible burdon upon the A1 Chem 1E corporation. Porhaps you can explain this to me.

In paragraph two of your letter, you note that DOE will " impose storogo charges for unclassified equipment remaining past the dato contained in the Equipment itemoval Schedule." Storage is an important matter to the A1ChemIE Corporation. We have requestod at least throo timos that wo be allowed to obtain from DOE Itn availabic storogo npace, either in the GCEP facility, or at somo location naar or in CPDF. You havo indicated to us thrit you might look favorably on such a storago arrangement, but you have yet to give un any agreement on this matter. Storage of classiflod equipment is critical to AIChemIE's ability to perform under the contract. As we have told you three timos in the past month, AlchemIE is ready to immodlately proceed with dismantling of equipment at GCEP. In my opinion, by increasing the number of shiftu worked by A1ChemIE employees, we can still readily mcot our removal deadline. It is true that we are behind on our removal schedule, this is because of bank actiono which were precipitated by the need for AlchemIE's continued operations until we could acquire the bond for DOE. I believo wn can still meet our removal dondline, I nLross to you again that wo oro ready to proceed immediately with actions necessary to obtain nnproval nnd prorned w!th dic"'entling activ1 Lien n; GCEP.

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Mr. James C.  !!all August 15, 1909 P8De 3 ParaDraph three of your letter says you have decided not to extend.our agreement because of "the continuing failure of A1ChemIE to ' meet . contractual commitments to the DOE, and the clear indication that Alchem1B is in no position now or in the foreseeable future to . meet this commitments." I reject this assumption on-your part. A1 Chem 1B is in the process of. devising a reorganization plan which will clearly. indicate to the DOE and

!' the Alchem1E creditors that we do, indeed, have .the ability to meet ' nit valid commitments of the corporation, proceed with our business, and make it a profitable operation. Furthermore,.1

' believe ' that many aspects of our inability to comply - with DOX contractual' requirements has been due to actions by the DOE

~ which directly and unfairly frustrate our ability to preform.

If you will honor nie with a face to face meeting, I will explain all of these matters to you. Please allow the court to decido -

if we adequately meet our contract under reorganization.

In item two of your letter you note our recent unfortunate event in our obtaining a bond. Well, you are correct here. Ilowever, you should know that Alchem1E's own efforts resulted in From what I understand, discovering the prob 1 cms with the bond.

other government agencies have accepted bonds from this some company. I don'L think this shows incompetence on the agencies, nor do I think that A1ChemIE's situation should raise-any doubts about our. ability to meet this requirement. I want to point out that A1 Chem 1E has other bond options, and much of our haste in pursuing.a bonding company At hasthis been due to the continual short time, A1 Chem 1E has a commit catensions given us by DOE.

from ACTNA Corpora tion - to write the necessary bond (with steep

collateral requirements) and should soon have a letter of

' commitment irom Frank D. - lin11 and Company, Additionally, Alchem1E is, one of the nations

-leading financial organizations.

close to obtaining a bond from a group of individuals who have on. several occasions in the past posted comparable bonds for the

)'

DOE. .Even though I think the bond requirement is unfair and

. insensitive to technology transfer policies, I want to stress my firm belief that in the very near future A1 Chem 1E will have acquired a satisf actory bond instrument for the DOE. This is cne reason that terminating our agreement at thin time, after so such work, effort, accomplishment, and expenditure by each party, is imprudent and not in the best interest of our company, our community, or our country.

I believe that A1 Chem 1E has provided the DOE with an adequate centrifuge hardware disposal plan. If you will check your reecrdr, y~' w!!$ ran th n t- wn hnve Jn f n e t- 'rnnpnndod to your commitments of February 27, 1909. Additionally, you know that our machine disposal plan mimics in most regards the Martin Marjetto machine disposal plan, which was acceptable to the DOS.

i Mr. Jamen C. 11011 Augunb: 15, 1909-Page 4 i ts equipment in a manner and timeframe

- Alchem1E ' con remove to meet - is obligations to DLA.- 1 do not which .willtha allow DOE balleve t . continuing the technology transfer Ouraction Alchem1E of AlChemIE' will . interf are with your commitment.

contract contemplates that _ you might have to begin.some equipment removal of yourThis owncontingency

~

efforts in theisevent that we addressed in are our Dut egain, this is a situation.

1 icgging behind in.ours.

tschnology transfer agreement. -

where you. can remove equipment in . n f ashion that:For does

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not harm example, the chanceu of our technology transfer succeeding. leaving available for you can begin on . contaminated equipment,. I think it is incumbent

- cur. ur:s the uncontaminated machinery.

.upon a. federal agency and a' small that we address thoseprivate business concerns that' cometo work up in auch a fanhion a technology transfer that is very important to without. killing This can be done, but it needs good dialogue and a our country.

fair interchange of ideals'instead of an adversary approach.

Cencrolly, when a party takes action 6dverse to en agreement, that party does so because it is in that parties interest.

fail to see how not extending the A1 Chem 1B

-flonestly, Mr. Hall,in the interest.of the DOE. I 6on't think .itdon' is in I

contract is of the Oak Ridge community. I certainly t the interest of our important policy of think it is in the interest technology transfer. In fact, I think it is in the interest and of no party.

If termina ting the contract benefits no one, in fact, extending the contract in hopes transfer work, that we can,all parties, it benefits

successfully make . thisthen I think the latter course of action should be follo Again 1 stress -that you must note that we Alchem1E h ahave s .,m met a d eall of our credible-regulatory requirements; I think you accomplishments towards- this technology transfer. tk must recognize that both Alchem1E and the DOE have made mis a esare jus in our respective dealings, but these- and importunt technology complicated to happen in such to recognize that these are going to happen-a

• transfer. We need from our errors, and to find a way and work positively to learn transfer work. Finally, you state in to make this technology is discontinuing discussions with A1 Chem 1E your letter that DOE This is notRather, a matter which1E A1 Chem wewas have the on matters related to CPDF.

any kind of a contractual deadline.

uucccccrul renpondent to a DDR RFP for une of this surplue

- asse t, and we have been diligently

^

leaseworking with the DOS and equipment transferto dnvine a mutually satisfactory arrangement. As you know, reny of theco detailsThis, have only been to me, in recently worked out between the parties. t c1 timo car 3y on area whore the DOE has not given A1 C more time for continuing discussion.

)

t Mr. Jnmen C. flo11 August 15, 1909 P ge 5 if.the DOE terminates this contract our technology and is transfer scraps gas forevor As you know, contrifuge technology 'thenbusiness becomes suchthat of equipment a noble project.

doomed and A1 This Chem 1E s liquidation. should not happen toa foreign consortium is planning aloo Even as I write this letter, I I think that Des centrifuge operation on with our own shores.forelDn entity; this centrifuge competing, if nocosuary, hines can whip their gas cur gas contrifuge mac that I cannot compete Dut I know t iflyour gas shelved.

cachines.

enntrifuge technology is either scrapped or prema ure

.American business noods a chance to compete with foreign it regards

- industry, and giving this chance technology is insector to private apparently the hands as t ity.

of centrifuge Das Picase give us more time to develop this oppor un DOE-Ono.

Sincerely, ALCllEMIE, INC.

Ci. . t($_*L.3 Dr. A. Andrew Car'ey Chairman Pro-tem, President AAC/bc e

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" AKlienirIE, lac.

All Chemicot isotope Enrichment, Inc.

August 15, 1989 Mr. James C. Hall Assistant. Manager for' Enriching Operations U.S. Department of Energy Oak Ridge. Operations Post Office Box 2001 Oak Ridge, TN- 37831-8650 RE: Compliance with AlchemIE-DOE contract paragraph 4A(iv).. ALCHEMIE APPROACHES

Dear Mr. Hall:

. Paragraph 4A(iv) of the A1ChemIE-DOE Agreement places upon A1ChemIE the requirement to devise an approach to insure that funds ~ will be available to perform classified equipment DED in the' event A1ChemIE, for any reason, fails to do so. As I read this, AlchemIE proposes and DOE performs a reasonable review to see if approval can be _ forthcoming. Now, within that time allotted under our most recent extension, A1ChemIE hereby formally proposes the following ' approaches to meet and satisfy paragraph 4A(iv):

1. Within thirty days of this date, A1ChemIE will post with the DOE a financial surety instrument in the amount of $2.26 Million, said amount being the amount contemplated by.the IT report - on which both parties have relied - to perform D&D on the classified equipment if the same is in storage.

2. AlchemIE will place $250,000 in a cash escrow account for the DOE, and will increase that amount at a rate of $50,000 per month until the cash escrow shall equal the sum of $2.26 Million.

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3. 'A1ChemIE, as previously offered, will provide the DOE with zero coupon bonds which, upon maturity, will equal the amount necessary for classified equipment DED.

4. A1ChemIE will provide the DOE with on appropriate security agreement in the unclassified equipment now owned by AlChemIE, and will pay to the DOE an agreed upon percentage of the net from equipment sales, as such sales occur, until said amount should equal $2.26 Million.

_ _~ _m m m m mo w- aaaas e mse

4 Mr. James C. Hall August 15, 1989 Page 2

5. A1ChemIE will supplement the existing $2 Million cash escrow with an additional $260,000, and will maintain said cash escrow until such time as we are able to supplant it with an appropriate surety instrument satisfactory to the DOE. .

6. A1ChemIE will devise an external sinking fund, into which a percentage of our gross sales from operations at CPDF and our new facility will be placed until such time as the not total of the external sinking fund shall equal 85.07 Million (being $2.8 Million for CPDF and $2.25 Milli,on for GCEP equipment).

7. A1ChemIE's letter of credit, which has satisfied NRC D&D concerns, will be placed into effect immediately upon our obtaining title to the classified equipment.

I believe that submission of these reasonable approaches within our contractual deadline satisfied paragraph 4A(iv). I think the obligation is now with the DOE to advise the A1ChemIE Corporation which of these approaches is acceptable to the DOE.

Should more than one of the approaches be acceptable then please advise immediately in order that A1ChemIE can choose that approach which has the least negative impact on our business plan.

As you are aware, these approaches will be integrated into a proposed plan of reorganization which must be approved in bankruptcy court proceedings. However, I think all parties to this transaction recognize 'the simple fact that the surety instrument is the main obstacle that stands between A1ChemIE and its operation of a successful business. ,

I would also like to add for clarification that AlchemIE believes that we have satisfied all other contractual requirements in paragraph 4 of the DOE contract. The required insurance policy has been approved by the DOE and we have a binder on said policy ready to take effect immediately upon approval by DOE of our surety method. A1ChemIE assumes that our response to the DOE comments to our machine disposal plan are satisfactory to DOE since we have not heard anything contrary since our submission of that response in March of 1989. Also, our machine disposal plan follows the Mg; tin Marietta Machine Disposal Plan, which has previously been approved by DOE.

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Mr. James C. Hall August 15, 1989 Page 3 Upon your approval of any one of the seven approaches outlined ,

above, A1 Chem 1E will have satisfied all matters necessary to obtain title to the classified GCEP equipment. For this reason, I hope your favorable approval will be forthcoming as soon as possible. A1ChemIE will certainly agree to extend our technology transfer agreement for such period as is necessary for you to review the suggested approaches.

Respectfully submitted, ,

ALCHEMIE, INC.

(L . o Wb y Dr. A. Andrew Carey Chairman Pro-tem, President AAC/bc

gy JA.

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AKhemm, Mme.

' All Chemicol Isofooe Enrichment, Inc.

August 11, 1909 Mr. Joe LaGrone, Manager U.S. Department of Energy Oak Ridger Operations Post Office Dox 2001 F

Oak Ridge,_TN 37831 IN RE: Technology Transfer of Classified Gas Centrifuge Equipment, and Technology from the Department of Energy

, to A1ChemIE

Dear Mr. LaGrone:

You have previously requested that I contact you personally to discuss certain key issues affecting the referenced Technology Transfor. Dy this letter, I am doing so and addressing the following:

A. .The status of our technology transfer. .

B. The need for resolution of key imminent issues.

C. How to make this technology transfer successful.

I think it is important at this time to address the numerous rumors and innuendos which have pingued the A1ChemIE Project and to address forthrightly the - sum and substanco of our situation as it now stands.

My four years experience with this project have civen me a great appreciation of the strong and importent nationa.'. policy favoring technology transfer efforts. In thin regard, it is important to recognize that the A1ChemIE Project does not 4.nvolve just a sale of surplus DOE equipment to a private corporation; instead, the A1ChemIE Project represents America's most ambitious ofiort over to transfer a vnluable technology from tho exclusive control of our federal government into the private sector.

.This transfer effort occurs in an era which strongly favors such actions and recognizes their importence to the Amerienn econoiny. I personally have come to view this transf.er in light of the congressional policy proclaimed in the Technology Innovation Act I35 USC.7 Secifon 3'/01 o Lc, ) where:

• rs o renn,oee rtmse r,na e n e , n,-n e ther

'.. Technologv nnd industrial innovation are essential to

• he ocone 91c , envi.ronmental, and social well-beina of

. . . . . . .~:. . w . w. w .

Pino PH: o rWo Pa*. Suttu ?O?-9 707 tilinnS Avn. Nk rNdpo. "J 37830 (Aas) AR2-00?0

i Mr. Joe LaGrone August 11, 1989 Page 2

2. Technology and industrial innovation offer an improved standard of living, increased public and private sector productivity, creation of new industries'and employment opportunities, improved public services, and enhanced competitiveness of United States products in world markets.

3. Many new discoveries and advances in science occur in universities and federal laboratories, while application of this new knowledge to commercial and useful public purposes depends largely on actions by business and labor. Cooperation among academia, federal ' laboratories, labor, and industry, in such forms an technology transfer, personnel exchange, joint research projects, and others, should be renewed, expandod, and strengthened.

4. Uusinessos have performed an important role in advancing industrial and technological innovation.

5. Industrial and technological innovation in the United States may bo lagging when compared to historical patterns and other industrialized nations.

G. Increased industrial and technological innovation would redeco trade deficit, stabilize the dollar, increased productivity gains, increase employment, and stabilire prices.

7. Government antitrust, economic, trade, patent, procurement, regulatory, research and development, and

- tax policies have significant impacts uoon industrin1 innovation and the development of technology, but there is insufficient knowledge of their effects in particular sectors of the economy.

8. No comprehensive national policy exists to enhance technologic innovation for commercial and public purponon. Thnso is a need for suchJ olicy,, including a strono national oolicy suppor_ti_ng domestic technology trannier and utilization of the science and technology resources of the Federn1 Government.

I think this congressional act says it all for the purposes of this letter.

E Mr. Joe LaGrone August 11, 1989 Page 3 Congress recognizes tho importance of a strong technology transfer policy. Congress recognizes that technology transfer offorts in American lag behind those of other countries.

Congress recognizes that tho federal regulatory burden often Congress contributes negatively to technology transfer.

recognizes that there is a need to evolve processes and regulations which take into consideration thoso difficulties which traditionally impair our country's ability to get business from under government auspices and into the privato sector.

I believe the transfer of classified gas contrifuge technology should be viewed in light of these pronouccments.

DEN'EFITS OF THIS TECHNOLOGY TRANSFER This technology transfer offers the following bonnfits to our country:

1. Significant DOE cost avoidance in removal of equipment from GCEP and in decontamination and disposal of classified equipment.

2. A valuabic use of a terminated technology which involved the expenditure of several billion dollars of taxpayer money.

3. A private sector opportunity which:

a. creates jobs and revenues for both the Oak Ridge, Tennessec and Piketon, Ohio communities.

b. can enpture an international market for domestic purposcu.

c. will use a closed DOE facility (CPDF) which is currently an annual cost loss for the DOE.

d. can produce desperately needed products in quantities not now available in the world market.

e. can, by the manufacture of these producte significantly contribute to the development of numerouf industries within the United States in such important areas as environmental vaste stream tagging, minimizing boiling water reactor shutdown time and worker exposure to radioactivity, devising anticounterfeiting nnt* indurtriel pu pren".

p3ccm fer c: f r. , cu-ren y, and provido necesrary products for important research endeavors in such fields as high and low energy and medical physics, nuciner space reactors, diagnostics.

h Mr. Joe LaGrono August. 11, 1989 Page o I believo, thnt if anything, these benefits are understated.

The benefits, however, clearly fell within the benefits anticipated by the "Stevenson-Wydler Technology Innovation Act of 1980."

PROBLEMS WITH THIS TECHNOLOGV TRANSFER The problems offecting this technology transfer are numerous.

Many are the fault of A1ChemIE, which is a start-up company experiencing all the problems and concerns attendant to any such venture: funding difficulties, business plan refinements, management and experience, shareholders factions, resentment in tho established business community, and the general development of a corporato identity.

Other prob 1 cms are exactly those contemplated by the Technology Transfer Act, especially its recognition in section 3701{7) that government regulatory policies have significant impact on industrial innovation, but that there is insufficient knowledge of their effects in particular sectors of the economy. I would like to explain some of these effects as they pertain to our particular technology transfer:

1. AlchemIE has experienced an unprecedented regulatory burden on its staff and financial resources. This hen occurred because our technology transfer involves classified technoloov, regulated by the Atomic Energy Act of 1954, and an a renuit we have been subject to regulatory compliance by the DOE, NRC, the Justice Department, State authorities, the ACRS and others. Often times, those regulatory requirements have conflicted, and the problems have had to be worked out inter-agency. This has been a lengthy process on some occasions. Nonetheless, A1ChemIE has taken these burdens hood-on and has obtained necessary congressional action, required NRC construction permits, passed Justice Department reviews, complied with competitive bidding requirements, obtained necessary State operating permits, met personnel 0-cicaranen requirements, filed necessary sciety analysis reports and environmental assessments, filed necessary safeguards and security plans, and generally spent four years of time and expense simply to get through the compliance phase of this technology transfer so that the .

company could get into production and bring its benefits to l bear for the American Peopic.

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Mr. Joe LaGrone August 11, 1989 Page 5 At this time I wnnt to state simply and directly my personal recognition that in the past four at times, years A1 Chem 1E acted rudoly towards DOE representatives havn,  ;

personnel, been intolerant of delays inherent in the process, mado representations to DOE personnel which were too optimistic, acted at times heavy-handed, utilized congroscional support without following appropriate inter-DOE chains of command, and made numerous other errors which have affected our relationship with the DOE. We have made these errors and we have taken action to correct them, and it is a simple fact that any technology transfer effort is going to , involve mistakes and occasional ill feelings betwenn the company socking to bring the technology quickly into operation and .the agency seeking to protect its interests in the transfer.

IMPACT OF DOE ACTIONS ON ALCHEMIE BUSINESS PLAN At the same time, the agency decisions of the DOE have frequently had a negative impact on the A1ChemIE business plan and our nbility to got financing and get operational. I would cpecifi.: ally point out the following instances:

1. AlchemIE's earliest Business Plan involved enrichment of mercury-196 isotope for une as an energy savings measero in fluorescent light bulbs. The Philips Corporation estimated this product would save one-half For billion dollars A1ChemIE, it was annually a one among American consumers.

hundred million dollar annual market. We abandoned this target candidato for enrichment no a result of DOE's concern

• about environmental and safety considerations (which can be mot) and in view of the general climate surrounding the mercury situation at Y-12 and K-25. As a result of abandoning this huge market, A1ChemIE has had to prove market viability to financini sources based on less secure This has impacted our ability to got end smaller marketc.

financing.

2. AIChomIE has egreed to a schedule for equipment removal at GCEP which involves an orderly, room by room removal of enuipment. Becaune of this, we have been unablo to sell 14.cns of equipent which are surplus to nur planned ccope of oporation and which are located in a room not yet scheduled for romoval. Th% necommodation to DOE'c reasonablo request has had the impect of. impairing A1Lnem1G'c cenn flow.

3. AlchemIE has had difficulty in obtaining fixed criteria for An a result, we have sa'ety ann tyr a reports from DOE.

prepared SAR documents three timos, only to find they do not meet the current ", current criteria." The duplicitous effort

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l Mr. Joe LaGronn August 11, 1989 I Page 6 1 i

and additional expenses incurred as a result of not having a fixed targnt have cost grnator expenditures to A1ChemIE than anticipated by our business plan.

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4. On November 20, 1987, A1ChemIE and the USDOE executed our contra'ct agreement which provided the framework for our technology transfer (contract No. DE-R005-880R21776). I wrote the initial draft of this agreement, and participated throughout in its negotiation. Reflecting the cost avoidance benefit to DOE of our transaction, A1ChemIE agreed in paragraph 4A(iv). thereof that DOE was entitled to approve A1 Chem 1E's " approach for assuring that adequate funds will

. be available for decontamination and disposal of all classified and/or contaminated equipment, should A1ChemIE for any reason, fail to do so. " On February 28, 1989, by letter from DOE, A1ChemIE learned forma 13y for the first time that the only acceptable approach to the DOE was for our company, which is not yet operational, to post in advance a surety instrument fully guaranteeing all l conceivable cost for DGD. As you know, A1ChemIE fought this interpretation, both the soproach and the amount required, because we recognized that thin method of assurance could severely imoact our business plan. It has. In the existing regulatory climato, londing institutions and surety organization are most reluctant to post instruments to guaranteo cost of clean-up of radioactive contaminants.

This is true because of the institutions' fear of absolute liability which could conceivably, by future regulation or by court decisions, be held to be absolute liability. In other words, the technology transferee has mado diligent efforts to secure the surety instrument to moot this requirement, but the same is simply not easily forthcoming in the current commercial lending noctor. This is one of the type of croblems that congress foresaw, and I believe it i is incumbont on the DOE and A1ChemIE to intelligently ,

addresa this conenrn in a manner which does not doom the technology transfer.

5. Paragraph 4C of the referenced contract agreement places an obligation upon A1ChemIE to completo its compliance requirements within n one year period, unles's extensions are granted by DOE. DOE has granted A1ChemIE numerous extensione, ranging in length from one month to forty-cight hours. DOE has also used this extension perogative as a lotter for A3ChemTE to poroe to contrnet modification or clarifications. In all regards, this date of termination has been like n knife at the jugular of this technology transfer, and I want to reinto the commerciel difficulties this has caused A'.Chom1E. When sccking financing, a privato

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Mr. Joe LaGrone j August 11, 1989 I Page 7 sector company is aware that lending institutions are required to do " duo diligence" before they would make any loan commitment. Because of the deadlines and the small extensions thereon, A1ChemIE has continually had to placo its potential londing sources under tight time tablesLendors. which are not beneficial to a favorable lending A1ChemIE has, decision.

of necessity, had to don't like to be hurried:

icndors in order to get matters within our latest hurry its extension deadline. The tight time frame has caused, some potentially viable lendors'to back off from project financing considerations altogether.

In-other words, just as congress expected, technology transfers are plagued by problems at every stage, and no one entity or individual is to fault for these problems, but these tyco of prob 1 cms must be recognized and addressed if technology transfer offorts are to succeed in this country.

A1ChemIE and DOE have both expended millions of dollars of funds and large amounts of personnel resources towards making this technology transfer successful. We have both made enormous accomplishments towards this goal, and we now stand poised to take this technology transfor from thn drawing board stage and into operation Itowever, the contract extension deadline looms agnin.

DOE feels it has given A1ChomIE enough time to comply.

Lot me asnuro you that we have not had enough time to comply.

This compicx and ambitious technology but transfer it cannot with do theif so requirements placed upon it enn succeed, I there are constant imponding timo constraints on performance.importan think it is if we are unablo to

.continuoun and diligent nfforts to comply; do so within an arbitrary deadline stated at a time when the full regulatory compliance burden was not fully understood by either party, then thisFor shouldthis not formIarespectfully reason, basis to killrequest off this technology transfer.

that the DOE continue to work with the A1ChomIE Project in all regards to ensure that this technology transfer has the greatest chances for success.

A1ChemIE has undertaken o reorganization in federal court in order to obtain time to moet its compliance requirencnts and to errange its affairs nn that it possesses a maximum chance for success. I hope' DOE will recognize this and part cipate in making this technology transfer a " win-win" situation instead of a " lose-locc* situation.

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. 1 C l Mr. Joe LnGrone Avrtunt 11, 1909 Pngo U Finally, let me addrosn a couple of matters which havo~come--up recently anr1 achieved publicity in the Oak Ridger.- As you are aware, A1 Chem 1E thought it had its financial concerns solved with the involvement of an investment group who agrned to provido the necosnary bond nnd necessary operating enpital for the project to go for; ward. Ono fr.cmber of this investment group turned out to be under indictment in California for allegations of-- f raud . Upon learning this, tho.A1 Chem 1E Doard of Directors imrrediately undertoo'k 'un investigation of the individual and tho investment group. Recognizing the concerns of DOE. and NRC that our investors be " purer than Coasar's wife," our board of directors immediately took the step of requesting Mr. Buceta to xosign from his involvement in the investment group. This has been done. In all regards, the board has acted with the recognition that our peruonnel and investors must bo reasonable concern of DOE and NRC before the project can go forward.

Certainly, this has been e setback to A1ChemIE's financing efforts. -Nonetheless, 1 think our prudent actions should impress upon DOE that A1 Chem 1F does not intend to go forward in any fashion other than an appropriate one. Again, I request that the DOE cive A1ChemIE the necessary time to consummate the few remaining matters in thic technology transfer in an appropriate fashion so that Federal policy objectives can bo met, this projnct can go forward to success, and the benefits of this project can enure to A1Chom1E, the DOE, and the American People.

Thank you for your attention to this rather long letter.

Very truly yours, A M@

l.

Stephen A. Irving Attorney at Law I

.SAI/bc j

r.

, .i.b 7.:,

'9 c,y .

~D distribution:

, Co'ngresswoman Marilyn' Lloyd 2255 Rayburn: House Office Duilding

Washington? DC 20515

-Congressman-Bob McEwonr i 12431.Rayburn llouso Offico, Building h  ; Washington, De 20515:

Congressman [ Jimmy'Duncen.

!g 12206 Rayburn' House Office Duilding b ' Washington..DC. 20515 s.

-Admiral Wetkins 1 Department of F:norgy:

JamesfForrestal Building

-100. Independence Avenue SW. (

Washington, DC; 20585 Senator James R..Sanser 298'R'ussell Sonnte'Offico Building L

' Washington, DC ~ 20510'

'Senntor: Albert Gore, Jr.

.393 Russell Sonnte Office Duilding Washington,'DC- 20510 Mr.~ GenofJoyce Joyec, Meredith, Knolton & Flitcroft Post Off.4cc'Ilox 3443 Cak. Ridge, TN: 37831 Mr.l Bob Bernero-Director,' Office of Nuclear Material Safety and Safeguards

-Unito<!-States Nucicar Regulatory Commiss4.on Washington, DC 20555-Dr. A11ni Dromicy Offico.of Scionen and.' Technology Policy Executive Office Building Washington, DC- 20500 Ms. Barbara'Driggs 2431'Rayburn House Office Building Washington, DC 20515 l: Mr. Dirk Forrester 298 Russell Senato Office Building Washington, DC 20510 Mr. Ray Neal 393 Russell Genatre Office Building Washington, DC 70:10

2

,g- ,

r7 r . Distribution Continued:-

Ms. Sue Carlton.

2266 Rayburn House Offico Building Washington,.DC 20515' 1Ms. Pam'Steele .

U.S. Attorney.

U.S.' Post Ofrico and Courthouso

' Knoxville, TN -37901-

Ms.' Patty Foster U.S. Trusteo 610 Pla?.a Tower Knoxville, TN- 37929 Mr. Dill Sonneberg.

'U.S..Trustco 610 Pla7.a: Tower Knoxville, TN '379'29 i

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' I Ch9rnical isotope Enrichment, Inc.

July 26, 1989 Mr.' James C. IIall Mr.' Joseph W. Parks

'Mr. Robert E. . Lynch U. S. Department of Energy Post Office Box 2001 Oak' Ridge, Tennessee 37831-8757 RE: Classified Equipment Gentlemen:

Once the A1ChemIE Corporation has tendered to the Department of Energy the insurance policy required by Paragraph 4A(v) of the A1ChemIE/ DOE contract and the eight million dollar bond in the language of DOE Standard Form 25, and written on a treasury-listed company as required by Paragraph 4A(iv) of the A1ChemIE/ DOE contract, A1 Chem 1E will have satisfied all those conditions necessary regarding our agreement with the Department of Energy to obtain ownership of the classified gas' centrifuge equipment. Given AIChemIE's current circumstances, this situat3on could create some logistical problems for the Department of Energy, and it is the intention of this letter.to

-address DOE's concerns in that regard and offer a solution.

Subject of course to required court approval, A1 Chem 1E would agree with the Department of Energy that while we obtained title h, to the classified equipment, we would not take possession of the

' classified equipment or technology until such time as the Department of Energy completes its due diligence activities and j approves the ownership interest of A1 Chem 1E's new investors.

Under this plan, A1ChemIE would proceed 6 tith dismantling the GCEP equipment, both classified and unclassified, according to the Department of Energy schedule. While we would dismantle classified equipment, we would not take the equipment off site, storing it instead in space provided by the Department of Energy l at the GCEP facility under the control of the Department of Energy until such time as the approval of the new investors' owncrchip interert is obtajned.

non p ,ho Omco rtut. Suito 202 0 707 tilinris Ave Ook thdge. TN 37830 (615) 482-0020 w-_____-______ _ _ - __ __ _ _ _ - - - - - - - - - -- - - _ - .__ _ _ _ _ _ _ __ _ _ _

• U.S. Department of Energy July 26, 1989 Pege 2

'This plan is, of course, subject to the Department of Energy .

providing A1ChemIE appropriate storage . space at the GCEP facility (see attached previous correspondence on this issue).

l I

With this plan, and subject to any required court approval, A1ChemIE can proceed space with meeting its removal schedule requirements with the Department of Energy and in dismantling, ond. safely storing that classified equipment which we will use for our production operations in our new facility.

All parties to this transaction are, of course, concerned that unauthorized people do not have even the appearance of access to classified equipment and technology. These concerns are naturally regulated and scrutinized by applicable Security Plan considerations. However, the plan proposed above will add additional insurance state is finalized that until and such the time as A1ChemIE's Department of Energy and transitional Nuclear Regulatory Commission have approved the new investor's ownership, the classified equipment and technology, while owned by AIChem1E, will remain under the possession and control of the Department of Energy. Hopefully this plan will meet the reasonable concerns, provide the Department of Energy plenty of time to undertake its due diligence activities, and yet enable both the A1ChemIE Project and the scheduled removal of equipment to proceed apace.

Incidentally, the Board of Directors has been advised by F. D.

O'Sullivan, representing Urban Management Consultants, Pty.

1.td., that, if necessary, they will assign any voting rights they might acquire pursuant to stock ownership, irrevocably, to an American citizen, Timothy Kurtz, until such time as they receive the necessary consent of the applicable regulatory authorities to their investment in A1 Chem 1E.

If you have any questions or concerns in regard to this matter, please do not hesitate to contact us.

Very truly yours, ALClEMIE, INC.

-Se A. Irving,-Chai a rt Doerd of Directors c' . J1NA[t c, _

A. Andrew Carer, Memoer Peerd ef M reetc~

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July 7, 1909 Mr. James C. Ifall Assistant Manager Enriching Operations U.S. Department of Energy P. O. Dox 2001 Oak ilidge, Tr4 37031-0650 i

RE: Lease of AETF and CTF

Dear Mr. Ital):

In anacosing the alternatives for timely removal of equipment from the CCCP and storage for use in theThis Oakisflidge arca one alternative the storage in the CPDF, stando out as the most officient.

AETF, and CTF at the ORCDP of sparc parts for the CPDF and equipment for A1ChemIE's neu facility.

The ACTr and CTF are attached to the CPDF and could be detached from other facilitica by blocking the corridor to the CPh and foncing out as planned to isolate the CPDF. The attachment displays a general diagram of these facilitics.

The ACTF and CTF uou)d provide adequate storage space readily sccured Parts required in the CPDF for protection of clascified hardware.

could be readily tronuf ers ed to the CPDF uning the existing trannfer corridor and monorail. Equi pmer.t for the new plant at Oliver Spring :

could be moved in the came manner to the loading docic in the CPDF.

As an additional consideration, in the event for som3 rencon A1ChemIE did not cor tinue in business, the relocation of the CCCP classified equipment to the AETF and CTF would facilitate the DOE providing cinco dispocal of the claccilled security protection. Furthermore, equipment will probably be at the ORCDP the relocation to theuc buildings would also result in coct avoidance by DOC for shipping from the CCEP or A1 Chem 1E's storage facility at a location not at the ORGDP.

Since from our viewpoint thic in the bcct practical colu ti on to provide storage cpace we request the opportunity to diccuss with you the 1 casing of thouc buildings.

Sincercly, ALClf 2MI C, llJC.

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l l Dr. A. Andrcu Carcy President Pine IMtge Orfico Pos. Soile ?O? h 702 Illinoi: Avo-. Cbk Pdgo.1r137030 (MS) 482-0029

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            -July 27, 1980 Mr.~ Robert C. Lynch   .

Deputy Director Procurement and Contracts Division U.S.-Department of Energy Oak Ridge Operations Post office Dox.2001

            .0ak Ridge,. Tennessee. 37831-0757

Dear Mr. Lynch:

This is in follow-up to A1ChemIE's letter.to you dated July 25, 1988, concerning the proposed lease of both the R/A and. the PB1 building at the GCEP plant in Piketon, - Ohio. We would.like to discuss with you a short-term, interim lease on the PB1 facility while a longer term lease is being-negotiated. Wo feel that the Icase would facilitate completion of the GCEP project for the following reasons: 1. DOE could be contractually and relieved security requirements of the burden of providing health, safety, during AIChemIE's cicarance of the building.

2. State and Federal laws and regulations could be applied by A1ChemIE. Private enterprise is accustomed to this.

3.. A1ChemIE anticipates that the NRC license will be in place prior to September 15, 1980. 4 '. With a lease of the faci 2ity and a NRC' license in place, A1ChemIE would have the option of using NRC This standards of minimum levels of contamination. wou3d be beneficial for determination of sale and dispocc1 decinfonc.

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Mr. Robert E.' Lynch July:27, 1988. ..

           'Page 2-Thanking ' you in advance for your consideration on ' this matter.

Sincerely, ALCHEMI ,.INC. 4! fil Jo n H.'Smciser, Jr. dief.Executivo Offiger.

              - JilS/bc cc:.J. Parks / DOE
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lilChemEE,Inc. Chsmicd holopo Enrichment. Inc. .f. Julg 25, 1900 Mr. Joe W. Parits Deputy Director Enrichment Operations U.S. Department of Energy Oak Ridge Operations Post Office Dox C Dalt Ridge, Tennessco 37030

Dear Mr. Parits:

has committed to completo As you are aware, AlchemIE, Inc.,

      *he c     GCEP facility project.as soon as is possible. In order to facilitate this project we would need to acquire from DOE a Icase on both the Recycle and Assembly Duilding (X-7725) and the Process Duilding Number One (X-3001).

Please consider this letter as a request from A1ChemIE, Inc., to lease the R/A Building, (all floors) for a period of five years with another five-year option, and the PB1 Building for a period of eighteen to twenty-four months. Sinco this project is of mutual benefit to both AlchemIE, Inc., and the Department of Energy we would lilce to discuss the terms as soon as possibic. Sinecrely, ALCI!EMIE, NC.

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                )I         '     hIb & h Mr, John fl. Smelser, J}.

Criicf Executivo Of fice,5.' JIIS/JCD/bc

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shs L Department of Energy l l Ook Ridge Operations P.O. Box 2001 Ook Ridge. Tennessee 37831-. 8651 March 29, 1989 E0-89-130

                                                                                                         &D Mr. John H. Smelser AlchemlE, Inc.

702 S. Illinois Avenue Suite 202-B Oak Rid 0e, Tennessee 37830

Dear Mr. Smelser:

Reference is made to our meeting on March 10, 1989, in which you requested our estimate and basis thereof for the decontamination and decommissioning (D&D) of the Centrifuge Plant Demonstration Facility (CPDF) and the Oliver Springs Facility, the expected recovery of CPDF D&D funds, and operational readiness review (ORR) criteria guidelines. D&D OF CPDF AND OLIVER SPRINGS FACILITY As previously provided in our letter of February 28, 1989, we estimated $2.8 , cillion for the D&D activities associated with the classified equipment at I CPDF and a rough-order-of-magnitude estimate of $7 to $9 million for - l classified equipment at the Oliver Springs Facility. These estimates were l d: rived from the cost estimates contained in the International Technology  ! Corporation report of November 1987, which A1ChemIE provided to the Department of Energy (DOE) in January 1988.  : i L Until a detailed facility design is completed and it is known which isotopes ! will be enriched at the Oliver Springs Facility, a better estimate cannot be cade. Specifically, the following information would be needed: a detailed cperating facility design; feed and withdrawal and cascade design; recycle l activities plan (assembly, disassembly, and cleaning); design of storage and j maintenance support facilities, if any; and the planned isotopes (RCRA or non-RCRA) for enrichment. Article 7 of contract no. DE-R005-880R21776 states that: "A1ChemlE shall provide assurance, in an amount and form acceptable to DOE, that adequate funds will be available for decontamination and disposal of all classified h-_____-___m- _ _ _ _ - . _ - _ _ _ - _

w ? $4 a Mr. John H. Smelser March 29, 1989 and/or contaminated equipment should AlchemIE, for any reasen, fail to do so." This commitment is one of seven conditions (namely, condition no. (iv) in Article 4.) equipment. classified which A1 Chem 1E must satisfy before it obtains ownership of the You have asked 00E to advise you in writing as to the

                       ' amount and form" of assurance which would be acceptable to DOE.

With respect to GCEP equipment (contract no. DE-R005-880R21776): Amount: $9 million* Form: 1) Escrow account, or

2) Irrevocable standby letter of credit with standby trust agreement.

                   *furnished Subjectby  to AlchemIE.

refinement after the above-specified detailed information is With respect to CPDF equipment (contract and lease under negotiation): Amount: $2.8 million Form: 1) Escrow account, or

2) Irrevocable standby letter of credit with standby trust agreement.

The documentation establishing either an escrow account or a letter of credit must be approved by 00E. RECOVERY OF CPDF D&D FUNDS DOE proposes that for each centrifuge machine in the CPDF which fails and is not replaced. A1ChemIE will withdraw $20,833 from the $2.8 million fund for decontamination and disposal of each such machine. A reserve of $300,000 will be maintained in the fund to assure restoration of the leased premises, grounds, all optionand equipment upon termination or expiration of the lease, including periods. OPERATIONAL READINESS REVIEW CRITERIA In September 1988, Mr. Wayne Bonnett, of our office, met with Mr. Ernie Evans, of your staff, to discuss operational readiness reviews and, subsequently, provided the following information pertaining to guidelines for operational readiness reviews:

1. Operational Readiness Course Book, EG&G Idaho

2. Occupancy - Use Readiness Manual, ERDA 76-45-1

3. Work Process Control Guide, DOE 76-45/15

4. liFIR Operational Readiness Tree

5. GCEP Tu:d & Withorawal Operational Readiness Tree

L-ke Mr. John H. Smelser - 3- March 29, 1989 There have been' previous meetings with members of your staff and DOE for purposes of discussing ORR criteria and guidelines. I trust that this information has been responsive to your request. If I can be.cf further assistance, please contact me. Sincerely, 5

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k N ku,, Jo W. Parks Jty Assistant Manager for Enriching Operations cc: R. E. Lynch, AD-42 e f 6 3 9

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1. Department of Energy I Oak Ridge Operations o- P.O. Box 2001 Ook Ridge, Tennessee 37831- 8501 Pbbruary 28, 1989

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f ._ . J;w - r .1 Mr. John H. Smelser, Jr. l' kl' 1.h Chief Executive Officer AlchemIE,'Inc. Pine Ridge Office Park Suite 202-B 702 1111nois Avenue Oak Ridge, TN 37630

Dear Mr. Smelser:

Thank you for your letters of Tebruary 13 and February 21, 1989, concerning the Department of Energy-(DOE) prerequisites to the transfer of centrifuge equipment. With regard to the decontamination and decommissioning (D&D). DOE appreciates the approaches that A1 Chem 1E has provided; however, after a thorough review, we have concluded that $517,050 would be insufficient to cover the total D&D costs for all the classified centrifuge equipment to be used by Alchem1E. . DOE's analysis indicates that $517,050 would adeque,tely meet the cost to bury this equipment at a proper disposal site. However, this amount _would not be adequate to cover the other D&D activities, such as, equipment removal, decontamination, and crushing operations that precede burial. Specifically, we have estimated that it will cost $2.8 million for the D&D activities associated with the classified equipment located at Oak Ridge, and approximately $7 to $9 - million for the D&D activities associated with the classified equipment to be located'at your Oliver Springs facility. As part of the Centrifuge Plant Demonstration Facility (CPDF) equipment sales agreement, it is our position that financial assurance must exist to cover the D&D activities in the event A1ChemIE should default. Therefore, the financial assurance for CPDF aust be $2.8 million rather-  !

                     -than the $517,050 which AlchemIE insists is the proper amount based upon its ability to provide all labor and transportation.

Your offer to increase the letter of Credit amount for D&D quarterly, after becoming operational, would only shift the risk for D&D to us until there was $2.8 million credit established. Any arrangements must be adequate to permit us to asisuse the obligation, subsequent to AlChemlE's initial operation, of Icmoving and properly disposing of AIChealE-owned equipment from CPDF. Otherwise, the financial obligation of AlchemIE would fall upon' the taxpayer which is not warranted considering the commercial nature of the A1ChemIE project.

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                                                                                 )

e. Mr. John H. Smelser Fbbruary 28, 1989 We regret the misunderstanding that arose from an internal Nuclear Regulatory Commission (NRC) memorandum, resulting from a , misinterpretation by the NRC staff of a telephone conversation between l members of my staff and the NRC. Our position has been and was at the time of the conversation that $517,050 was inadequate for the aforementioned reasons. We have documented that with the NRC. On February 1,1989, the NRC formally requested that we provide a D&D escinate for CPDF and Oliver Springs plus CPDF. 'Our letter of I February 15, 1989, to the NRC provided an estimate of $2.8 million for CPDF and approximately $7 million to $9 million for Oliver Springs. With respect to your Attachment 1 - items 2, 3, and 5, the following is provided: Security Plan - Approval of Revision 6 will follow incorporation of two  ! word changes. Approval is expected by March 3, 1989. Disposal Plan - The plan was reviewed and comments provided in our letter of February 27, 1989. l Insurance Policy - The information A1ChemIE submitted has been reviewed and a determination is now being made by our legal staff. You can expect a written response by March 6, 1989. As to your February 21, 1989, letter', I regret that my staff was unavailable on the date you called. In our meeting on January 31, 1989, I described my position on the amour.t of financial assurance that will be required for D&D of the CPDF. Since that meeting we have had Bechtel National, Inc., review our estimates and confirmed that $2.8 million would be required for D&D of A1ChemIE owned equipment. I see no reason. to alter the position I explained to you on January 31 about there being a sufficient D&D reserve for the CPDF. With respect to your request for a one-on-one meeting, you should continue to work with my staff since they are the appropriate people to negotiate the financial arrangements and resolution of other issues such as disposal plans, safety analysis reports, and required level of insurance policy to protect the Government. Sincerely,

                                                //     c,   A Joe La Grone                          ,

Manager  !

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.. .~ AKhemIE, Inc. All Chemical lsotope Enrichment. Inc. December 22, 1988 Mr. Jim Hughlett U.S. Department of Energy Oak Ridge Operations Post Office Box 2001 Oak Ridge, TN 37831

Dear Jim:

Enclosed is our D&D plan that we submitted to the NRC. Included in the plan is a standby trust agreement and a letter of credit in the amount of $517,000.00 Jim, it is our understanding that in a worst-case scenario business failure by A1ChemIE our irrevocable letter cf credit with Anderson County Bank would trigger a trust fund entitled the A1ChemIE Liquidating Trust. The bankrupt corporation would then be liquidated by an administrative judge appointed by the court for that purpose. The trustee would dispense the funds to the appropriate parties. The liquidation of A1ChemIE's assets would be on an orderly basis, and a sufficient fund would always be available to remove, decommission, and decontaminate all necessary support items and dispose of the classified equipment in accordance with the current DOE rules. I am also enclosing a list of sales of some of the surplus equipment that we have removed from the GCEP plant in Piketon, Ohio. As you can see, we have already generated considerably more net revenue from these sales than we anticipated. We had only projected to this date sales of

                 $558,000 the equipment we anticipated selling has been sold, however, instead of $558,000 the scheduled equipment sales have produced revenues of $1,437,084.                     The total sales figure to date is $3,334,434.                    I have enclosed documentation from our sub contractor Universal Brokers of Equipment,        Inc., to supporc this figure.          Mr. Bob Moffitt and Mr.         Dick Urban have an international reputation for liquidating Department of Defense installations and their
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N q%' , " Mr. Jim Hughlett December 22,7 1988 Page'2 expertise fits very comfortably into our operation, however, a closer look at the offers and acceptance will show that we are far above the four percent D.O.D. -liquidators rule-of-thumb figures that we were led to expect by and their consultants. In our original calculations we were very Withconservative the experience in our approach to the funding formula. we are gaining, and the clientele we are developing the funding of the : D&D plan is becoming less In any event, and the lessfunds of a projection. and more of a reality. for complete D&D of the CPDF and GCEP f acilitiesIwill' wouldbe readily available through the trust agreement. expec^, the $517,000 letter of credit to fund a liquidating and trust that will have ..enough resources to fund removal any cost attendant to the orderly sale of equipment plus the decontamination and disposal of contaminated and/or classified equipment. Our plan that has been accepted by the NRCIf is enclosed you have and any made a part of our contract with you. Please acknowledge additional questions please contact me. your acceptance of this plan in writing. Respectfully submitted, ALCHEMIE, INC. Paul C. " Buddy" Sc u g Chief Operating Of er PCS/bc Enclosures

                                                                                          ._____.____..______s____-_______--                                                   -.

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y AKhemd,Inc. .

All Chemicolisotope Enrichment. Inc. February 13, 1989 Mr. Joe LaGrone Director of Operations Department of Energy Oak Ridge Operations Post Office Box 2001 ' Oak Ridge, TN 37830

Dear Mr. LaGrone:

On November 20, 1987, when A3ChemIE and DOE signed contract No. . I DE-R005-880R21776, we agreed to comply with the provisions of paragraph 4 A (iv) which provides g that AlchemIE may not take ownership of Classified Equipment until we receive: Approval by DOE.of A1ChemIE's approach for assuring that adequate . fund will be available for decontamination and disposal of all classified and/cr contaminated equipment should A1ChemIE, for any reason, fail to do so. (emphasis provided) Since the execution of this document, A1ChemIE has provided the staff at DOE-ORO severa alternate approaches to meet the assurance requirement. }To ' date, all have apparently been rejected (certainly none have been accepted). Specifically, A1ChemIE has offered the following approaches:

1. We have posted a standby letter of credit and a standby trust agreement with the Nuclear Regulatory Commission, pursuant to 10CFR50.36, in the amount of $517,000.00.

On December 16, 1988, Joe Parks notified NRC that this was sufficient. (Letter enclosed)

2. We have offered to increase the amount of this letter of credit quarterly af ter A1ChemIE becomes operational and generates income.

To obtain ownership of classified equipment, A1ChemIE was required to satisfy a total of seven items in paragraph 4(A). A1ChemIE has satisfied the remaining six items, we assume, though DOE has never formally notified us of this fact. Please gee DOEAttachment staff has1 to-datefor details.provided A1ChemIE no definitive guidance on what they consider a reasonable and fair approach to meet this requirement. Could you please do so in writing? mam m-m mt e m enoa 2nor",+ h.., v ow e. " i .' 7 0 ' " "le- aa^ w '^

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             'Mr. LaGrone February 13, 1989

Page 2

3. -

We have provided data to show that many of the be disposed materials subject to D&D requirements will of in the natural course of operations. . 4. We have demonstrated that.we possess the ability to

                                      . sell. surplus equipment and generate revenues to pay for D&D expenses.

5.- Most importantly, we have demonstrated through our financial data that once we get fromoperational, we can sales to cover any generate sufficient revenue An independent panel of three reasonable costs of D&D. Administrative Judges took evidence on this issue and'

                                             .found in A1ChemIE's behalf.3 Our succeed.

approach to insuring that D&D You funds will berisk, have accepted available is our ability to succeed as planned. If you take actions hoping for large avoidance benefits. . which harm our cost ability- to succeed, youMoreover, increase your risk of you prevent

               ' losing . the                          cost  avoidance    benefits.

A1ChemIE from producing products which have enormous beneficial impacts on American Health and Industry. fair approaches both Mr. LaGrone, we have tried many to meet the spirit and intent individually and in package form, DOE, apparently, continues to 4 A (iv). of contract paragraphof up-front assurances which frustrate the spirit and demand a level and intent of Technology Transfer Acts and policies, threatens the whole A1ChemIE project. Could you please assist Time is of the essence in this matter. A1 Chem 1E in achieving a fast and fair resolution?

                                                                                                                          )

Sincerely, L HEMIE, INC. 1

                                                                  \
                                                      //                                                                  \

n XKg 7L I J n H. Smelser, Jr. hief Executive Officer ' I JHS/bc 3 See Findings of Fact, enclosed. l

x a e I l ATTACHMENT 1 Status of the seven required compliance items from- A1ChemIE - USDOE contract paragraph 4(A).

1. NRC issuance to A1ChemIE of a construction license authorizing it to possess gas centrifuge machines. ,

A. This item was issued by the NRC on February 10, 1989.

2. NRC and DOE approval of AlchemIE's security plan for the transportation and protection on a continuing basis of the classified gas centrifuge equipment and technology.

A. NRC has approved this. A three judge panel approved this. It was submitted to DOE in July 1988. A1ChemIE assumes that DOE has approved this, but we have. received no word from DOE.

3. Approval by POE of A1ChemIE's machine disposal plan.

A. This was formally submitted to DOE in early January 1989. See 2 A above.

                  - 4. Approval of A1ChemIE's approach for assuring D&D funds will be available.

A. See letter.

5. Receipt and approval by DOE of requisite insurance policy.

A. Submitted to DOE in October 1988. DOE, as additional insured on policy, will have legal expenses covered by policy. Subsequent updates have been submitted per DOE's request.

6. Approval by DOE of A1ChemIE's schedule of removal of equipment.

A. Approved by D0E on September 29, 1988.

7. Receipt of Attorney General opinion that transfer is inconsistent with anti-trust laws.

A. Received from U.S. Attorney General's Office in December 1987. To the best of A1ChemIE's knowledge, we have achieved compliance on all items, subject to the matters mentioned in the attached l Will letter. Does DOE's non-response indicate acquiescence? you advise on DOE's position in this regard?

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• PERFORMANCE DOND a..e onwas.u.n n unanas 0-10-09 see.c o.As. n.... , 4 0. n. .aa,n., s vn or os.c.auriai nou rr -...

INDIVIDUAs. PARIN[nStup All Chemical Isotope Enricliment, Inc. 702 S. Illinois Avenuo, Suite 202-D Cak Ridge,.TN. 370'10 aoint vtNTunE h CORPonattoN imTor it.conmint son Tennesnoo "JiicT, e c si m....n, . s .. .. .aana..in erNat sue. oe anno oLLioenst fit 6KATdiin Err 76ncom cruis William S. Ilarris S 070 000 00 2011 I.emmon Ave.,.Enst cournArioTir rowinaciuo. D:llian, TX 75204 DER 005-000n21776

>D LIGAil0N:

Ve, the Psincipal and Suresylies), are firmly bound to the United States of Arnerica thereinafter called the Governtnenalin the above tienas um. F:t payment of the penal sum. we bind ourselves.nus heus. executors,admimstrators,and successors.somity and wverally Nowever.

  -' visere the Sureties are corporations achng as co surebes, we, the Surthes, bind ourselves in such sum **lomily and severally ** as weH as
     ' lev 2relly" only for lhta purpose of allowing a toests actiort of actaarts againtst any Dr all of us for all othei purposes each Surely b nds itself.

3mily and severall/ with the Pamcepal. lor the payrnen 01 the sum shown oppossie the stame of the Suresy. Il no hmet of hah.hty is mus-

     .ited, the hmit 01 liability is the full amount of the penal sum.

0NDITIONS: *The Obligations of this bond expires on August la, 1990 at 12:01 A.H.

he Principal has entered into the contract identified above. HEREFORE:

    ~he above obligation is void il the Principat -

jallij Perform; and fulfills all the undertakings, covenants, terms. conditions, and agreements of the contract during the original terrn of he contract and any entensiorts thercol that are granted by the Government, with of without nohce to lhe Suresvi esl. and aiding the site J any Osaranty sequaed under the contract, and Ol per form innd fulblis att the under taLmgs, covenants. terms conod.ons. and agrecenents i eny Od all duly aulnorsted anodihcat.ons of the contract that hereaf ter are made. Notice of those rnodefications to sf ac Surelyhell aic

    &aved, ibt Pays to the Government abe full amount of the taxes imposerl by the Governrfient,if the sasd contrace is subject to the IA.tler Act.

10 U.S C. 270a 270cl. which are collected, deducted, or withheld from wages paid by the Principal in carrying out the construction con-aCl Wille rispect to which !!iss band 8:. lutnidh!. IITNESS. he Principal and Suretylies) executed this performance bond and af fined their seals on the above date. P filNCIP A L

      $ignaweist bt..ca 8 A e C'Uf tse.n                                                                            tsaan     Corporate H:m.hl a.      ' A. Antirew CnreI roiria ste e.a,          l' resident & Clialrman Pro-tem INDIVipuAL SuntTYll St stn.tu,2rd                    f-          /

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        ',y,"'j,'   " William S. !!arris CollPollATE SuHElvitL51 s T A r c of artc,   s.nausLeiv 4.6 wit g, g Asu.e n                                                                                               g

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' i.. ia 81acade LIAD4L4I y LtMit SI AIL Of GNC, sgame & Ark!'rts g y

                                                                             #*                                                               Corporaf:
       $     5.v.au.e eis                                                                                                                                Seal N        se.,so a        i.

e .. cio e r. ...t. _ SI AIL Of ING. L4AusLt1Y LeM41 Haveie &

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n M I4 9ttfl19 6 4. 2. i .u,m i14 crol 9 sl AIL Of GNC . LeADeLliv lam 48 name s g Askirrtl

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{ n s.en suarta Seal a. 3 u ,,nein a Te 6elti t. rr. ,.r e

                                        ,oyo                n AirTon i..ousANu             so AL entuiuu      k      $

50.00 $ 253,500.00 Ifl5TRUCTIOrl5 SURETYllCSl" In the space designated "SURETYll[$l" on the i Tids intm is authorited for use in connection with Government face of the lorrn insert only the lettes identilocation of the surre es contracts Any deviation from this form will require the wrialen appr: vat of the Administrator of General Serrsces. Ibl Where individual sureties are involved, two or more respon-sible persons shall esecute the bond. A rompleted Allidavit of 2 InserI the fulllegalna ne and business address of the Principalis Individual Surety (Standard Form 28i, for each indevedual sur rty, the s;we designated 'Psincipal" on the face of the form. An shall accompany the bond The Government may ecouae these esthore*ation person shall sign the bond. Any person signing in a sureties to fairnish additional substantiating informat,on concerneng representative capacity le g , an attorney in-lacti must turnish evi-stenc2 of authority il that representative is not a member of the their financial caoabetely. fum, partnership, or joint venture, or an of ficer of the corpora-4 Corporations esecuting the bond shaff affin their rn'tsorm' toin envolved. seals. Individuals shall e tecute the bond opposite the word Corpo.

     *)     fM (*ntrm,3 sew cirnetinq the hnnri as suretics must appear on        rate Stat" and shall af fin an adhesive seat it caer.uted in Maene.

taew tlampshese, or any other lurssJ4 teen soumsmo aJrwow sco . the Department of the locasurg 5 hst of approved sureties and aust act wohin the limitation listed therein.Where rnore than one 5 Type the name and title of each person signing this bond in the corporate surety is involved, their names and addresses shall appear fa the maces (S uty I . Surer, 8. etc ! headed "COM'Oftt.TC space rrovided.

Twpano rono n Darv terv tr **

1-

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Al'FIDAVIT OF INDIVIDUAt. SURETY sesa.s.nas tree sawwum en nos.1

. itAtt or Yevas                                                 si' f 4 50-12-4 210 EmmWD                                                                                                                                .

Dallas I, the undersigned, being duly sworn, depose and say that i ern: lit one of the sureties to th 5 eses far a potreienent sesictens of the place where the contract and bondhich are executed.f I appear smou; 131 ol fatt m;ps and le ptly competent; and 141 not a patiner in any business of the trincipal J es suessy. Tiw inloemation fusnished below is stue and cornplete to the best of nov 6.nowi64 f.ities el Anwrica lo accept rne as surety on the attached bond. , a.nouc Anoncss su. .... as es. ru, s..u. asr c...s

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s. oAus ir 3214 Dartmoutti D a5v "lHD T WI I I I arn S. Ila r r I s e.=Amoorsu9.JI.hhTNd,"...d..e....,

a.ives Ano ownwsirarrawAi o= 35 years sett Ophthalmologist / Surgeon

                                                                                     ". ulcer.6Ec No.                                                           ,

s. susiwt ss Anon t ss su...... s,... ; cu,. s mu. ise c.,a,,

2111 1.cerinon Ave. Eas t nour_ Dallas' T xas 75204 .

                                                                  .                        ausiHrss. (214)f522-1522 E Ts 4.4A8stsTsr s, ANO NET Wo'4Tel AND 0006 Not sNcLuDE Arty Eleti roLLowiHr. is a 1put 84[P At sf NT Af ton Of -Y Pf6f stNT Als                                          0 NONo.

I4NA84CIAL sh1LHisi 8 flAVc (N 184c AsslIs of THs' PHlhCIFAL oh Ital. All ACHl: 5,0 3,927 .

a. Fair value of solely. owned real estate' __i.n7s.759 s

b. All mortgages or other encumbrances on the real estate included in Line a ir . 5 59. I 611

c. fleal estate equity (subtract Line b from Line al _8Le971 1184-

d. Fait value of all solely. owned property other than real estate' _ L130e.332

e. Total of the amounts on t.ines c and d _ .-.4 ILS03

f. All other liabilities owing or incurred not included in Line b $ _JL,JL'W.,_4.8d -

eur ouernu, .., se

9. Het worth (subtract Line i Itom Line el s

  *on       eo.s na.se ore.raro, eumos tea. nus, nee ses eene ter oor no,se uru, ems omaan .e su s.a a osees u a ua.

Au socc ownca.inc V Ai.uc ot%cu as euctuoro in uat ..inu a i g5is Ae.o orsca etion or oc Ai.rstATc or woecn: See attatched financial statement r $ 4moeint er seessus e,el.ellon erasese rest essete for fassiles pe poses: ~~ ts 9.Dcsc86sPitort of enorcsaiv stickwocD ats Lans a situ 3 Apovc ska s she eet.e of e.sh sensory elprocessy nee.eu e Soc Attacticcl Finacial Statement sa. ALL uitsth costos are naucu a A SuntT Y snuse ehe. eser sad emeens of.un Dead, si eene,se esaus Nono ~~ Is. fid~iiUtvD.e,ONI L n Ac t 1o wH6 cts inas Af i soAvsl'~il LAI L

14. S e3H Tune i e ar. ~ ** ee r seuo

                                           )      '                                        DP.R 0 05-0 00H2177 6                                                                                            '

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                                        ' 1 13.subscullif D AND   c ai Y$Ah WORN D sl AT10
                                                                                   ~     Bf f 0Hf Mt At 70Ltows:

I IOT~I6"ha'd'rswn; 6 e DAll OAlte ADe. tit 4tU LitL 6 O//icial i

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42,, Katy Men 1(er Crair'

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sT AND ARD F ORM 2R tr.cv. In t JI e.s tv.o.e .us.eces

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14. CERTlHCATE OF SUFFICIENCY I I Hereby Certify. That the surely named herein is personally known to me; that, in my judgment, said surely is esponsible, and qualified to act es such; and that to the best of rny knowledge, the facts stated by said surely in the

!oreg:Ing sifidavit are true. 3 nun me..,,,u ..s o. m.r.m u nc. - l II:norable Kei th Dean dM  ; b///e m nc u m 265th Judicial District Court Judge of allas County icurasstu 4.r.a,..:.cu,.si.=. w e s.; 600 Conme r ce , Dallas County Courthouse, 265th Court, Dallas, Texas 75201 (214)f633-7471 INSTRUCTIONS f ndividual sureties on bonds executed in connection with Government contracts, shall complete and submit this form hn the bond. (See 40 CFR 28.202 2, 53.220le).l Any deviation from this form will require the written approval of t3 Administrator of GeneralServices. i e N3 corporation, partnershi p, or ot her un ncorpora assoc ai ons etd ti or firms, as such, are acceptable as individual sure-ds. Likewise members of a partnership are not acceptable as sureties on bonds which partnership or associations, or any D partner cr member thereof is the principal obligor.. However, stockholders of corporate principal is acceptable pro-Mod la) their qualifications are independent of their stockholding or financialinterest therein, and (b) that the fact is

pressed in the af fidavit of justification. In determining the net worth [ Item 7gl on the face of this form, an individual Tety will not include any financial interest in assets connected with the principal on the bond which this aff davit cpports.

, A United States citizenship is a requirement for individual sureties. However,only a permanent resident of the place ] execution of the contract and bond is required for individual suretics in the following locations - any forei Dn coun. y; the C:mmonwealth of Puerto Rico; the Virgin Islands; the Canal Zone; Guam;or any other territory or possession I the United States. The individual surety shall show a net worth not less than the penal amount of the bond by supplying information Tuired on this form.The surety,shall have the completed f orm notarized. The cer1ificate of sulliciency shall be signed by an officer of a bank or trust company,a judge or clerk of a court of cord, a United States district attorney or commissioner, a postmaster, a collector or deputy collector of internal venue, or any other officer of the United States acceptable to the department or establishment concerned. Further Utificates showing additional assets. or a new surety, may be required to assure protection of the Government's in. Fest. Such certificates must be based on the personal investigation of the terlifying officer at the time of the snaking nercol, and not upon prior certifications. l 1 > A!! signatures on the af fidavit submitted mu'st be originals. Af fidavits bearinj reproduck! signatures are not acceptabic.

s. .s...: _

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PE11FORMANCE UOND iS.e trew cs.u..e . ,e.ene) y 3g.y9  ;

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I l All Cliemical Isotope Enrichment, Inc. O '"otviou^i. Oran1"ca:ian 1 702,S. Illinois Avenue, Suito 202-D Oal: Itidge, TN - 37030 . O aoiar vratunc G conronAvion 6Tae c 6r sucosu.onation Tenricsson auna v oc a su. 4.s .-d 6..uu.. .s.s.n.su#8 rs nat. cou or tauNu e,m.Leonist fit 6u%oia nuriuncola criitT i H1111am Johnic Webb 5 070 000 00 213 Ilonson Street, Dox 237

• consnact onsc contnacsno.

Livingston, TN

• 38570 den 005-000R2177G OD t.lGATION:

We, the Psincipal and Surcsylics!, are firmly bound to the United Statas of America [ hereinafter called the Covernmentl in the above penal sum. I'or payrner. of the penal sum, we band ourselves, our heirs, executors, administrators, and successors, foirilly and wverally. Howyer, where the Suretics are corporations acting as co sureties, we, the Suretics, bind ourselves iri such som **fointly and severally" as well as

                   severally" only for the purpose of allowing a joint action or actions ar3ainst arty or all of us. For all other purposes, cach Surely binds itself, jointly and severally with the Principal, for the payment of the sum tJiown opposite the name of the Surcty. If no hmit oil.abihty as inde.

cated, the limit of liabihty is the full amount of the penal sum. - CONDITIONS:' 'The obig6tions of this bond expiren on Augu'nt 10, 19 90 a t 12 : 01 A.M. The Principal has entered into the contract identified above. THEREranE: , The above obliD ation is void if the Principal - (allli Perfarm; and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the oriDinal actm of the contract and any catensions thercol that are granted by the Govesnment, with or wsthout notice to the Suretyl est,ano ourmg the hic el any guarante acqui:ed under the contract, and (21 perform and falfills all the undertakings, covnnants, terrns condiports, and agreements Cl asiy and all duly authorited modifications of the contract that hereaf ter are made. Notice of those modificatioris to the Surtirliesi aid waived. Ibl Pays to the Government the full amount of the tares imposed by ti e Government,if the said contract is subicci to the 14tter Act, l40 U.S C. 270a 270cl. which arc collcticd deducted, or withhcid from wages paid by"*the Principal en carryinD out Llic constructiori con. tract with sospect to wluch this bond .i' lutt:Ished.' ' * *' WITNESS: The Principal and Suresylicsl executed this performance bond and affixed their seats on the above date. - f*lllNCIP AL

4. . a. .

Signaturchi c:: ct_ k V -

• Corporate rsnh rsnes "Ci,t,t'I'I '

A. Andrew Carey cre r.d> l' resistent & Chairman Pro-tem-

                                                             ,                                       INotVIDt.; AL SUQciYtt[$t 538 "d"'!I s

k)d /lttth.k trou asnes

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arer.as H. J . jWebb CottroIIA TE suit (1YttEst g,,,,, slait ur mL. L AsuLas t L 6ul 4 Aiu.2 u - ) ge{ , siennunhi

s. 3- Corpornte

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Tash . sr. n tr$ti Ts40 Cl-It?-40re ** 79 '08 cT Art 0At1D ronM n anr w. su e n mwrtema, mwm mth Ir an o mn eoa

l cOlleOll Al t. 511861 T Vitt $1 fC2as.auriff l 8.A e L,ue eHC. Le AliaLe l v Las.ta l Nmr f, ' ' ~ A8ki'Fll $ em

                                                                                                         *                '                                                                                                                                          Corpora te '          {
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                           ." h" rstrarial     lestetil te    1.            ..           <                                                                                                                                                                                                  l ITe ve**t
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• 1
• SI^I'Uf 8'*C' ^U'I' '"d'I Hmpe is Acaderts g g ~

• Corpornic f, s.gnaturetti SeaI \

2 N.unt inl fs s. 2. M 1.elrist

• s Tv r.e au sI Al L ue ar40. L4AtHL81 Y LIM 4I ,

Hame & . . . . . .

• ass 4(kstfll . , , , . g E s6. u,,hi .J.. .

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• Corvora fe -

Seal

                           .".,                                                                                                                                            J.                                    .

si flamrist fs 4. ,, Isaleist (Twerdt LsAusLei y Leeds a _ SIAIL ussteL. teame & AOdrett , g ,

                               *                                 **                                                                                                        **                                                                                            Corpornfe  .

l~, Signatueehl

8. 2. *. * ** .***,

3 t<ametti 4 Testelal ITy r ret t 51 A I L ,OF 4r40. LI AueLil V 4.sMa i , Hamt f. . , e . Andeels 3 I* * **

• Cornorofe h, s.onssure hl Seal

3. 2. . , -

3 N,ameist ..sc hs &

                                             ,T , ,,, ,r ,                                                   .

HA1L nn lesousArtu toIAL DOND entwou $ 50.00 g 253,500.00 INSTRUCTIONS , , , I, This lorm is authorized for use in connect!on with 'Government SunETYllES'l" In the soace' designated "SUnETillESI" on the cinisacts. Any deviation f#om this form wil! #cquire the written f ace of the form inscrt only she letter identification of the suret es appr:; val of the Administrator of General Services. *

• lb) Where individual suretics are involved, two or enore respon.

2. Inscre the fulllegalname and business address of the Principalis sibte persons shat! caccute the bond. A compteted Af fidavit of the space designated Principat" on the face of the form, An Individual Surety (Standard f"orm 201. for each individuat suret..

authori stion persnn shall sign the bond. Any person signing in a .

                                                                                                                                                                                 .shall acccmpany the bond The Government snay ecou;re sie.                                                 .

scpresentative capacity le g.. an attorney.in facil must furnish cvi- sureties to lutnish additional substantialmg information concern ty dence of authcrity if that scoresentative is not a mcenber of the their hnancial capabit;ty, firm, partnership, or joint venture, or an of ficer of the corpera. . . tion involved.

4. Corporations esreuting the bond shaft affia their corporate seals. Individuals shall execute lhe bond opposite the word "Corpo-3 (a) Corporations executing the bond as sureties must appear on'

• fate Seal", and shall affis an adhesivt seat il esecuted in IAa.ne.

the Deras tment of thc ircasut h's I;.1 c* a;orutd su'cika cid thv. Llampshine, or ariy otnct gunsJactbn IC4 M:G Mkih . - sniest set within the limitation listed therein.Where more than one ~ corporate surety is involved, their names ' nd a addresses shall appear

• 5 Tyric the name and title of each person signing this bondinlthe in the spaces (Surcty A. Surety D. ett I heatd "CORPOnATE spar.: provided.

                                                           *a+t'i.**s                                                                                                .

stAnnano ronM 75 nAck entv so ase

                                                                                                                                                     ~~

5 TidG.7;;.; uuv, ,i;;;;;;,;;, AITIDAVIT Ol IfJDIVIDUAl. Sullf*TY ga,e o.uum n.nu en .ewr..I { n s<yanug, Lia s s. oe' . counsvor. " , ss. 414-22-7034 t i

  ,                   overlosi *                                               *                                                           *
                                                                                                                                                                                                                                                             ,   {

l. the undersIDned. bcInD riuff sworn deposo and say that i om: (t) onc of the s'orctics to the attachts! bond; (21 a citiron of the Unned states for a permanent resident of the place whero the contract and bond arc executed as provided in paragraph 3 of the insuuttiuris (cverse; (31 of full age and leDally carnpetent; and '(4) not a parsner in any business of the principal ort the bond or bonds on wh as surcey. The information lutnished below is truc and completei to st c bcss of any 1.ngw!cJ p. This af fidavit is in.sde loinduce Stancs of America 10 accept me as surcty on the attached bond. -

3;uin.sc greet. madasa, suit t1 ere or vnnnt 3 NO"L ^DunM IN"*"b *' A'.H. Chr. b!*H. Zsf Coast. Itouto 3, llor 13411 itilliain Johnic Hebb 6 .. .. Livinguton, Til' 30570 .

   .         g i ves. nno ounAlson on                       c occuraison                                                                                                                                                                             .

4;nAuc or curkova'ii sit nas nurserns. .o...us 011 Ifells s construction Hanager t:cif-Dnployed , g, pp;,sedL8.b g4DDelLI.E IN#8H8'88. 4 88stl. C887. I*8a88*'. 5 4' LW6Aff ea. I 8 LL8*10WHU NU. 313 Itenson street - trox 237 Hof tC- 1-G15-fl23-1039 Livingston, Til 30570 ou; int:5 G15-023-2015 ,

• g g the l's ging;15 INTLitLLT A Ts slut ssAvt isf ut ehtsinT ATsON 1stC /cLCis ol'ofTalc MY8'ItaltC4 PRt:5CNT (GLCIL pas.OH LlatisLM 1tsl. 80L. As*D ATI AcetLD uono.84CT Wol4188 Atto DOLL #408 itvGt.uoL / thy

a. Fair value of solely owned real estaic a s ' 495.cc3

             .b. All rnortgages or other encumbrance: on the real c: tate included in Line a                                                                                                                                                      29.usc

c. Ilcal estato equity (subtract Line b frorn Line ol. . . 4G6.607

d. Fair value of all:otely-owned property other than real estale' 22.21s 94i

c. Total of the arnounts on Lines c and d 22, cit 2.w4

            . f. All ott.cr liabilities owing'or incurred not included in Line b                                                                                 .

1,1(4 iia

         . D. I' leg wargli (r,ubtra.ct Line i from Line c) .                                         .
                                                                                                                .                                                              ,s                                              22.cin,jsa C

6t2.s estincluste gsudsJ siesas seen* 99099999 Plast. estmPI rtom es,testion'end sale for,ent twenon inclusting Stannteland estmvilon rurttr*,interret in toreamuntry property endy [43.ocriisord nuo on AND . pCLCi,tlP)

                                      ..          .     . ort 06: 8tLAs.

• LL1/O C os; tvancs4 8 AM LOLL 06vHLat.188L VALUC of tvalac84 4S 4NCLuoLo tre LsHG ,, s[Ls.: ;

Dwc111 rig and 23 acres, overton County, noute 3, nox 1340, Livingston, TH $ 3G3,CG3 Comunercial .nullding & Lot, overton County, 213 tiencon St. - nox 237 LivinUntoil, T!I 30570 332,000 sienos nf of esetssed s,efusflon s/n1,oav trolsafets for isselloes purpoets; y 231,400 g.52Lt.C85U'iSon of n'stoYCin Y encLuoCU est LshC ss. 81L64146UoVC $Lnni she wasus esteeth testtory utprorssig erperusetzt ~ Cash - y 13,177 A/C Ilec - 20,G00 llotcc !!cc - 90,271 Cacil Surrendcr-Life Inc. '- 17,G00 Coin Collection - 0,000 Itcal 1: state Inventarent; - 225,000 Inveut. ment in 011 & Can l'artnership - 21,505,940 Stocks /Privato - 10,095 stocks /Poh11e - 5,795 l' urn - D3. 400 Oil 1*rgulp - 'Jo,050 011 f.cncen - 111.400 Automo t-I vo - 3 4.'100 ~ut.llity Deponitn - $ 110 NtIt oi.a.n 600Ruonus on ivencn a m LunLiy asseer re auur end...svi.as et 0016 010 ' 70fl.00 t16247400c6 03.<h

• cad.si 00 no l SO9 001..UACA .Glin4 n16:4i'sS 00, 6H DTecT7T'JtT71 9c00306: ,399' g g, ;.as.u,61 u(\MN sic

                                        ,4      2     7      . 00       ,10       01]        S       O       9   2   A    3     0   0
                                                                                                                                     .04  4  6  }3WV 1;At00051m101LLu.n11.n Uno 0 9 c0  4 01                                       PisD_D.03SB.

4 0 0. 00 8 2.eus:(nota Ann t.un t snac t t o we seena f_e o.ua aerwer..as suenyt nat sa ns 0 0_...l_a.8.164. E .L Hebb DCit005-0 0 0ft2177 G l'I. EDI6SCittnt'O AND SlVOllN TO fil:rofit s40 As l'ottoivc: e.DAlf OAlli ADMINISTrnCD ~ M 83Y An861Tilidt*8her#wn.~5t8amaJ l m net,t (: n v 's b . . AuguuL 17, * "* """ I'luu

                                                                                                                                                                                                                                          @#I'd
-* naue Ano in t c ce" lit # scens. Aouents-                                      b ec.nAl unL                                                           t.. u v c ru.u.u p.soh                                                               88d 1L8SSH6a CAI** SE W* ** r*0"0E                                                                            *
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.rs;1s ee4 e.88 3-8883

• gg.ges vriC viov5 CDITsutt us AcLc .CTAllDAnn'l'nt'tM 711 frtrv. Io ais

i

      ~~~ "

Ut. Ctill llFICA,l',t1 OF SUFFICI,F.rJCY , ,

                                                      -        -                                                         .                                             ~
                 ~ f.He'rctly Certify /That tim surcty named herein is personally known.to me; that,in my judgrnent, said :urcty is reponsibic, und qualified to act us such; and that, to tho best of my laiowledge, the lacts :,tated by said surcty in alu.    -
    . forcDoinD af fidavit are true.
                                                                                                                '* " "^w".C

z. n,s,y, spo:ma y,.es.. . . . . .

J G , , ,., , ,229) p m v

              .:     . .               1.
                                                  - ~            -      .       -

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      ,, J rhnny 11,rown . . .                             . .      r        .              .           + . .                                                                          .

c. .- . . o,~. m r c , ., , .,

                                                                                                                                       /                    .

Circuiti Court Clerk .

     & ,uon d w % . ~ .u. cur. m.... w c a.:                                                                                                                                      .

Cverton County Courthouse Public Squarc T.ivingston, tri 30570 .

                                       . . ~ .. - - -                                                                                              .

INSTflUCT!ONS -

                                                                                                                                                      -                                                                     i

1. Individual suretics on bonds executed in connection with Government contracts, shall compfcte and submit this form with the bond. (Sec 40 CFO 20.202 2, 53.220(c).) Any deviation from this form will regtiire the written approval *< of the Administrator of General Services.

2. No corporation, pa,rtnnrship, or other uniricorporated associatio..; or firms, as such, arc acceptabic as individual sure.

tics. l.il:cwise mcmbers of a partnership are not acceptabic as suretics on bonds which partnership or associations, or any , l co partner or member thereof is the principal obli or,, D However, stockholders of corporate principal'is acceptabic. pro. viced (a) their qualifications are independent of their stockholdinDs or financialinterest therein,and (b) that the fact is expressed in the affidavit of justification, in determining the nct worth (llem 70) on the face of this forrn,an individual surety will not include any financial interest in assets connected with,the principal on the bond which this allidavit supports.

3. A United States citizenship is a requirement for individual suretics. However,only a permanent resident of the place ci cxecution of the contract and bond is required for individual suretics in the following locations-any foreign coun.

try; the Commonwealth of Puerto Rico; the Virgin Islands; the Canal Zone: Guam;or any other territory or possession - cf the United States.

4. The individual surcty shall show a not worth not less than. the penal amount of the bond by supplyinDi nformation required on this forrn.The surcty,shall have the completed form notarized.

5.The certificate of suf ficiency shall beDsi ned by an officer of a bank or trust company, a ludge or clerk of a cour1 record, a United States district attorney or commissioner, a postmaster, a collector or deputy cotIcctor of internal i revenue, or any other officer of the United States occeptable to the department or c' establishment concerned. Forther certificates showing additional assets, or a new surely, may be required to assure protection of the Governme terest. Such certificates must be based on the pctsonal investigation of the certifying o!Uccr at the time of the ma j thercol, and not upon prior certifications. G. All signaturcs on the af fidavit submitted mu'st be originals. Af fidavits bearing reproduced signaturcs are no 1 i . . . . h o. -w , www

E f g - j -- . gg

                                                -          1    .. i  -_       =
                                              .:        ; 7     i  '  ----
     ' Rrgional Offire                        E-fj, W,. '

l f[I uc ,- Corporal. licaitqua,1crs l... t ..... ven.. : :. W,.i.inni..n, ii.c. ar----" _ _ . _ . .

                                                              ~

Augmt,15,1989 Dr. A. Andrew Carey, Prealdent

                   ' Alche mie, ]nc.

702 South Illinois Avenue Stdte 202!) Onic Ridge, Tennemco 37830 REF: Department of EnerCT

Dear Dr. Carcy ,

On behnir of 11. F. It I., Inc. please be advised that we will provide tuo sufficient,and gun 31ried individuals'as nurction on. payment, and. performance bondu in favor of the linit.cd ' States Department, of Energy in reference to the trcnsfer and utiliznt,lon of cert,nin D0is equipment, based upongthe following conditions. Ele must scoLverification of bank deposit.s at the Anderson County- Bnnk and nocondly wo must receive and be antisfied that, 11 F. L T., Inc. han a securit,y interont in the equip-ment being t.ransferred from the DOE to Alchemic, Inc. By copy of Lhis letter we are advising Mr. Joe La Crono that, uc stand ready, able and willing to protect, the interest of the: DOE under the rest,rictionu nn contained in this letter. Yourn Very Truly, (6 0 $ 0.c: Dorden R. lin110wes, Esquiro a-Q DRil/s]s CC: tir. Joe La Grone f.ul snnville, ri mor ri.nn, (ao.it 3s3. i .ii 3 27' M'r' S err, r?m One rnir'r'i" Cro f r r .

l INSURANCE ADMINISTRATORS INC. - P.O BOX 4998

• 1209 EUCtJD AVENUE KNOYYttu!. TN 37921-0998 615/523+I51 .,

l July 28, 1989 Mr. Bill Arrovood ANDERSON COUNTI RANK 101 South Main Street Clinton, TN 37716 RE: A1ChemIE, Inc. - General Liability Insurance

Dear Hr. Arrowood:

         ,                   Enclused ple.ase find the original of an incomplete " Accord !!1ndcr" for American International Group's General !.1 ability Policy. Wa will effect coverage upon receipt of a deposf R premium of $13,500                             ,

and a signed AFC0 Premium finance Note. We, and AIG are prepared ) to effect coverage ac your direction. Should you have any questions please do not hesitate to give us a' call. Very truly yours, . l I Neil A. Zabo, CPCU President - NAZ/Jmr j l t 46 e " "h . I 40 0

S,

                                                                                                                              ' .g,; 7,,.j'$'j'Tj"Q g               ._.

insulti)./.JNSURANCE BINDER. .SUUKCT ,

                                                                                                       .. ./,.g,.,,

TO THE CONDITIONS SHOWN ON THE ACVCnSE l THis amoEn e A TEMPORARY INSURANCC CONTRACT. snet a 90, GIDE OF THIS f OllM courAwe e viewera

     .imswics NyartIDitwtorts, nc.                                                                   PN NMN W. use rMe                                         .

3005572 ut!""" i.: st u Av 9 C. L** Ost Au ea was RCnVu12,114 37921-099U t:15/h23-451 ' 19419 Oleict~h 85 85'tutb to t:Tett0 004hAr.t Di THE Al@Vt $4AadtG tonerNf1 P(M (NFStefG rQL4t.Y 880. bl&CntP 31000 DF optn A94088&fvtleCLEStrn0P&fitY frulimhg terone.( cope : stacoDe se9espre ' ISuiG'E UMCuurt/ GAS HMIJF7CIUntr.1 , N& aMacAr, E(itrft 1.tmictun', Iw. IIA Atc.T xit, JR. I l N 2 s, n LitoIs Avhu.E ' ! o.x nnce;, nt 37s30 L

                                                                                              ' "           v'          ,,aj-

• i,r.;,; ALL LIADILITf,UMITS IN filOUSANDS

( ' ,j . " ' ., .r M (! v,.:2j/Y*'"- COVEAAGES ,- , . . Assouwt . .. escuctanta .coursen. - c-

                                                                                  - .ov.e.nAnor.onut               .
                 . rt er utsun.ance          .

roorte" c49:4s or toes e DASIC 6fCAD. , isrtC.. e E M8

                                                                                                                                                                                                                                        ~

f 4gtH(ig Arg,ntgatg g $

                                                                                                                                                                                                                                         ~

GENT 4AL LIADLITV efl00 . COWr'for$ A0GhtC.Aff 8

                                                                                                                                                 *rsso aL a Awesen nam,                                                ,1,000,-

E ' COnau[tattat CtwtnAt tlAf'iLiff

                                                                                                                                                                                                                     ',s.

1,000,

                 . eL s.Au A cecun                                                                                                                 saceioc.ewei.t.c. c g<

oma s a rminwioirs raor. reit cAuAct p,,r a,.I e

  .-

• MED ENPEN68 lany a.e peeses( $

strinQ paft F0ft CL AIUS bt4DE' 3

                                                          . .       . - .,                                                                          C2L

_. ALL vtpet4tg , SCIIE DLAED WEle0Lf 3 _t W900sDP't B mietIIstAcce .8 ttA44 fr PD {$

            *ectosDWilt0                                                                                                                            uso rAr                                  ie rir                                      'l seento                                                                                                                                                                           .      .             .

04 iAr,( *tu ^t ACY , ALL vtesett s , scostouLto Wteackt6 ' AviDr1*w.ALDAWAGL ..

                                                                              .                                                                                                31Atto AWOUNig8 COLLI *sI0l4 0r.0 Oftsn (Acts                      I Alt Ac.0nd,                sits estimato fet f Lfif t,)N
          ' tte rito      ~
                                                                       * ~ ~*'***                                                                     OCCunntNC,E Eth"tIaEsty
           ' LMBAtttAFOftta                                                                                                         .-          . . . . .

estestta tel8Ja t.Arnrlta r.u.nd .rtrino.D.Aff Fort rt AFAt pet.it.: .. . .- _ $i&fitfOnf 8 ft ACll ACCElrHf) 8 FN$tA$t POLacy iNif) stomb.tM S EDMPstessteLW Al40 frtittJ SE Tacts flaPLO4tl. ttIPLOrtM & LIAtiLiff SPEEPAL 4pf f9ttaQH&tig &lfitLIlONUO THER EDVC AAGES

                                                                                                                               -               ' .                                          "       '*i'           .
                                                                                                                                                                                                                          *          'o    ,
                                                        , , , , ,, . J                                                                                                                      AprielCual 88*,'Uft D HAME & AUDI(L$$                                                                                  a,          HORit401t
                                                                                       .                           toss rarte
        .., Ed.iWinid1' Of' 1:MCY                                                                       e toAH e P. O.1cX 2001                                                                            ..,.      .
                                                                                                                                              ~ ~ ~ ~~ ~ ~                                             ~ ~ ~ ~ * ~ ~ '

Ort. kI! r.r:, til 37031-0757#' .

• AulleOfellp f6f thtttetatevt

I GENERAL DOCUMENTS i

y , .7 .(i) Interest on the escrowed funds shall be the property of AlChemIE;

                         .(ii) The escrow agreement shall terminate and the funds be released to AIChem!E when AlChemlE acquires- ownership of the classified equipment pursuant to paragraph 4 hereof; (iii) Should AlchemlE not obtain ownership of the classified equipment and this. Agreement is terminated under paragraph 4 after ownership of the unclassified equipment has vested in AlChemlE, the escrowed funds shall become the property of DOE without requirement of any legal action.

C. If the Attorney General advises that the transfer would be inconsistent with the antitrust laws, this Agreement shall terminate. If AlchemlE has not deposited 52 million in the escrow account within 30 days after the date of receipt of the opinion of the Attorney General that the proposed transfer of equip:nent to Alchem1E is not inconsistent with the antitrust laws, this Agreement shall terminate. Said 30-day period may be extended by mutual agreement of the parties.

4. Ownership of Clessified Equipment A. Upon occurren:e of all the following events, ownership of the classified gas centrifuge equipment shall vest in Alchem1E:

                                                                 -S-

g

14. CEflTIFICATE OF SUFFICIENCY

           , I Hereby Certify, That the surely named herein is personally known to me; that.-in my judgment.'said surely is responsible, and qualified to act as such; and that. to the best of my knowledge, the facts stated by said surety in the
  ; foregoing atfidavit are true.

m. seu. Awn L g y l ,0-s m,s ne .,

lion'srab i e KeI t h Dean d q,f,f/f r

   , e. pf r 8C6AL TITLE

265th Judicial District' Court Jud:e l of a!!as County

5. ADDRE55 lNoenber. #poo4. CJfr. Seees. KIP Csales 600 Conmerce, Da l l a s Coun t y Cou r t hou s e , 265 t h Cou r t , Da l l a s , Texa s 75201 (284)f633-7471 INSTRUCTIONS

1. Individual suretles on bonds esecuted in connection with GoWrnment contracts, shall complete and submit this form with the bond. (See 40 CFR 28.202 2. 53.220lel.) Any deviation from this form witt raqu' ire the written approval of the Administrator of General Services.

2. No corporation, partnership. or other unincorporated association: or firms, as such, are acceptable as individual sure-sies. Likewise members of a partnership are not acceptable as sureties on bonds which partnership or associations, or any co partner or member thereof is the principal obligor.. However. stockholders of corporate principal is acceptable pro.

vided (a) their qualification: are independent of their stockholding or financialinterest therein, and ibl that the fact is rspressed in the altidavit of justification. In determining the net worth (ltem 7gl on the face of this form, an individual surety will not include any financial interest in assets connected with the principal on the bond which this af hdavit supports.

 ~ 3. A United States citizenship is a requirernent for individual sureties. However,only a permanent resident of the place cf execution of the contract and bond is required for individual sureties in the following locations - any foreign coun.

try; the Commonwealth of Puerto Rico; the Virgin Islands; the Canal Zone: Guam;or any other territory or possession cf the United States. 4.The individual surety shall show a net worth not less than the penal amount of the bond by supplying information required on this form.The surety.shall have the completed form notarized. 5.The certificate of sufficiency shall be signed by an officer of a bank or trust company, a judge or clerk of a court of record, a United States district attorney or commissioner, a postmaster, a collector or deputy collector of internal revenue, or any other officer of the United States acceptable to the department or establishment concerned. Further certificates showing additional assets, or a new surety. may be required to assure protection of the Government's in-terest. Such certificates must be based on the personal investigation of the certifying officer at the time of the making tirrett, and not upon prior cortilications.

6. All signatures on the affidavit submitted mu'st be originals. Af fidavits bearing reproduccd signatures are not acceptab sT AND ARD ronM 28 BACK gEEV. f

• 8 8r o clo e 8944 0 - etI sM (233

1

                                                                                                                                                                       ,':.'.",'l'.'l.'."..'.,""""~"'""'**"'-"""""'"                    !

etnFOflMArJCE DOf40 * * ' . ss.v 4,..u.,ce. u .or.e oticos. Surs ty*, la terratin ton.seasontty preret 4 a.ocstT susovc40H./.No..DLLclitPI . #ON OF 8tC

                                                           . AL L!.1 AT C 04. tvHacts 4 Aa.e GOLL owitt.st.14sb VALuc of tyssaces fu INCLUDCD see LeHC e, eig.a.e ;

Cuc111n2 and 23 acres. Overton count:y, Route 3, nox 134n, Livingston, TN $ 3G3,GG3 courocreial .Duilding s T.ot, overton county, 213 riencon St. - nor 237 Livingstod, TIl 30570 132,000 Amount ef ererseed veluation ef eben tret ent,te for tasellou perpents: $- 23]* 00 LcusVEsON of VinOVGil1 Y StycLUDCU Ste LSNs; an. 81 Lee 14:UovC IList trst vesur eleach tetegory of property seg.euugegro ~~ Cash - 5 0,177 A/c Itcc - 20,G00 llotcc floc - 00,271 cash Surrendor-T.ifo Inc. '- 17,G00 Crin CollecLion - 0.000 neal !!stato Inventment; - 225,u00 Inventasent in 01J & Cas Partnerships - 21,505,940 cteckc/Privato - 10,095 stockc/Public - 5,795 Purn - D3.400 CII Irjulp - 90,o50 01.1 r. car:en - Itt.4oo Autoreotivo - 34,900 ut tJ J ty tiepen:i t.n - ? 110

 ,$r aintn aoups on ivn.cn e A i r.unTt v es...e <s....<in . e .... ae er ,e<* 6..de u ana,. .. ....,,lyrCGT/IITCF10 0 6 0119 311. D.

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                 . g.llerel y Certify /That the surety named herein is personally known.to mc; that, in my judg nent, said surcty is responsibic, and qualified to act us such; and that, to tho best of my knowledge, the facts stated Isy said surcty in the foregoinD affidavit are true.                                                    ,                                                                              ,

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INSTflUCTIONS -

1. Individual suretics on bonds executed in connection with Government contracts, shall complete and submit this form with the bond. (Sec 40 CFil 20.202 2, 53.220(c).) Any deviation from this (crm will requ'irc the written approval of -

• the Administratorof GeneralServices.

2. N) corporation, partnership, or other unincorporated associations or firms, as such, are acceptabic as individual sure.

tics. Likewise members of a partnership are not acceptabic as suretics on bonds which partnership or associations, or any co. partner or member.thereof is the principal obliD or,, However, stockholders of corporate principal'is acccolabic. pro. vided (a) their qualifications are independent of their stockholdinDs or financialInterest therein, and (b) that the f act is cxpressed in the affidavit of justification, in determining the nct warth (item 7 0) en the face of this form, an individual surety will not include any financial interest in assets connected with the principal on the bond which this affidavit supports. -

3. A United States citizenship is a requirement for individual suretics. However, only a permanent resident of the piace ci execution of the contract and bond is required for individual suretics in the following locations - any foreign coun.

try; the Commonwealth of Puerto Rico; the Virgin Islands; the Canal Zone; Guam;or any other territory or possession - ci the United States. 4.The individual surety shaft show a net worth not less than. the penal cmount of the bond by supplyinDi nformation required on this form.The surcty,sha': have the completed form notarized. 5.The certificate of sufficiency shafi be signed by on officer of a bank or trust company,a judDe or clerk of a couri of record, a United States district attorney or commissioner, a postmaster, a collector or deputy coIIccior of internal revenue, or any other officer of the United States acceptable to the department or c' establishment concerned, rurther certificates showing additional assets, or a new surcty, may be required to assure protection of the Government's terest. Such certificates must be based on the personal investi D ation of the certifyinD ollicor at the time of the makin thercol, and not upon prior certifications. G. Allsignatut, , on the affidavit submittcd mu'st Dbe ori inals. Alfidavits bearing reproduced D si naturcs are not ac 1

      'D g h

-.f (r (i). Interest on the escrowed funds shall be the property (

'                    ~

of A10 hem!E; (ii) The escrow agreement shall terminate and the funds be released to AlchemlE when AlchemlE acqpires ownership of the classified equipment pursuant to paragraph 4 hereof; (iii) Should AichemlE not obtain ownership of the classified equipment and this Agreement is terminated under paragraph 4 after ownership of the unclassified equipment'has vested in AlchemlE. the escrowed funds shall become the property of DOE without requirement of any legal action. C. If the Attorney General advises that the transfer would be inconsistent with the antitrust laws, this Agreement shall terminate. if A1ChemIC has not deposited 52 million in the escrow account'within 30 days after the date of receipt of the opinion of the Attorney General that the proposed transfer of equipment to A1ChemIE is.r.at inconsistent with the antitrust laws, this Agreement shall terminate. Said 30-day period may be extended by mutual agreement of the parties.

4. Oynership of Classified Equipment l

A. Upon occurrence of all the following events, ownership of the classified gas centrifuge equipment shall vest in AlchemlE:

                                                                                                                                                          ~

t

                                                           '(i) 'HPC issuance to A1 Chem 1E of a construction license
                                         = authorizing it to possess pas centrifuge machines (such machines being
                                         " production facilities" as defined in L 11v. of the Atomic Energy Act) and the uranium contamination contained in certain of the machines; (ii) HRC and DOE approval of the A1Chemit security plan for the transportation and protection on a continuing basis of the classified' gas centrifuge enrichment equipment and technology; (iii) Approval by DDE of A1ChemlE's machine disposal plan; (iv) Approval by DOE of A1ChemIE's approach for assuring that adequate funds will be available for decontamination and disposal of all classified and/or contaminated equipment should Alchem!E, for any reason, fail to do so.       (Seeparagraph7);

(v) Receipt and approval by DOE of the insurance policy described in paragraph 8; (vi) Approval by DOE of AlchemlE's schedule for removal of centrifuge equipment from DOE's facilities (See paragraph 6); and (vii) Receipt of the opinion by the Attorney General that the proposed transfer of equipment to AlchemlE is not inconsistent with the anti-trust laws, as required by EPim 101-45.310.

i ! i  ! e . i i Department of Energy .

• Oak Ridge Operstkms

             -e
                      =                              P. O. Boa E

• Ook Ridge. Termessee 37831 I

l Mr. Dennis Bell Chief Executive Officer AlChemIE Corporation pine Ridge Office Park Suite 202-B 702 South Illinois Avenue Oak Ridge, Tennessec 37830

Dear Mr. Bell:

CONTRACT NO. DE-R005-880R21776, OWNERSHIP OF CENTRIFUGE EQUIPMENT This memorandum constitutes formal notification to AlChemIE that the Attorney General has reviewed the proposed sale of the centrifuge equipment and determined that it does not create or maintain a situation inconsistent with the antitrust laws. In accordance with paragraph 3 of the subject agreement, AlchemIE has thirty days from the receipt of this meno to execute the required escrow agreement. Please acknowledge receipt by signing in the space below and return the original of this letter to me. Sincerely, N , R. E. Lynch, Dep y Director AD-422:WWWistrom Procurement and Contracts Division ACKNOWLEDGEMENT: NAME: ;M e /7M TITLE: Chief Exceutive Officer DATE: March 4. 1988

                                                                                                              . -l,J,; w f                                                                                                            -
                                                                                                                   ~

DEPARTMENT OF DEFENSE

p P sTR ATEGIC DEFENSE INITI ATIVE ORG ANIZATioN W ASHINGToN. DC 20301 7100

[ V T/IS 13 March 1989 A. Andrew Carey, PhD i All Chemical Isotope Enrichment, Inc. 702 S. Illinois Ave., Suite 202-B

           . Oak Ridge, TN 37830

Dear Dr. Carey:

The Strategic Defense Initiative is pleased to select your proposal Thermionic Nuclear Space Reactors with Enriched Tungsten-184 for Phase 1 SBIR funding. A committee of government scientists, engineers, and technical managers recommended it as a promising approach for SDI. You competed with 857 proposals in the FYB9 SBIR solicitation where only a fifth will be funded. You passed the first test, and SDI looks forward to your feasibility study to answer the critical questions for a Phase 2 decision. Please note that SDI expects to fund only a third of the Phase 2 proposals. The Department of Energy will negotiate and manage the contract for SDI. The Innovative Science and Technology Office of SDIO will decide whether to fund Phase 2. Some contracting instructions are atteched. This letter does not authorize you to incur any expense before a contract is agreed to with a government Contracting Officer. The Contracting Officer will appoint a contract Technical Manager who can help you. He can provide liaison with SDI and the government technical community. But in the spirit of SBIR, you must succeed on your own. Thank you for joining the SDIO/IST SBIR Program. I look forward to your phase I success. Sincerely, Dwight Duston, Director Innovative Science and Technology Attachment

O P* t

     %                                                                                                                                     i 1

4 d l SUPPLEMENTARY INFORMATION L l L  ! l 1 i

                                                                                                                                           ,i l

A government procurement agent will contact you to negotiate  ! l: and execute a-contract. A Con' tract Technical Monitor (CTM) will_ handle the technical aspects of your contract. The CTM. will speak for the government Contracting Officer on technical mattern after contract award. , The.CTM will~ receive your progress reports and will report on your contract to the Department of Defense. .The CTM will act as 1 l your intermediary,;when needed, for other government. agencies. The CTM will assist the Contracting Officer in preparing to award l

                                                             -the contract, but oniv the contracting Officer is emoowered to-commit the covernment.                                                  l i

You need not contact the CTM, but such contact between you  ! l and the CTM might avoid unnecessary problems in contracting. You

                                                             .should D2t contact the Strategic Defense Initiative Organization.            l l

Your Contract Technical Monitor will be: Ms. Alice Williams Department of Energy,MS-ll34 785 DOE Place . l Idaho Falls, Idaho 83402 Phone:208/526-0972 All reports, publications and proposals relating to any SDIO sponsored SBIR contract must identify the Strategic Defense Initiative Organization as the source of funding.

9. l

 . 13414 Federal Register / Vol. 52. No. 77 / Wednesday. April 22.1907 / Presidential Documents

5. -

Presidential Documents

                           ._. Executive Order 12591 of April 10,1987                                                                                                                     d l                                                                                                                        %.

Facilitating Access to Science and Technology

                        \
                          ;         Dy the authority vested in me as President by the Constitution and laws of the i        United States of America, including the Federal Technology Transfer Act of i       1980 (Public Law 99-502), the Trademark Clarification Act of 1964 (Public Law j      98-420). and the University and Small Business Patent Procedure Act of 1980 (Public Law 96-517), and in order to ensure that Federal agencies and labora-                                                                         >

i tories assist universities and the private sector in broadening our technology base by moving new knowledge from the research laboratory into the devel- 4 opment of new products and processes. It is hereby ordered as follows: Section 1. Transfer of Fedenlly Funded Technology. l (a) %e head of each Executive department and agency, to the extent permit. led by law. shall encourage and facilitate collaboration among Federal labora-tories. State and local governments universitlet. and the private sector.

            -                       particularly small business. in order to assist in the transfer of technology to
                                %Jhe marketplace.

(b[The head of each Executive department and agency shall, within overall funding allocations and to the extent permitted by law: (1) delegate authority to its government-owned government-operated Federal laboratories: (A) to enter into cooperative research and development agreements with other Federal laboratories. State and local governments, universities, and the prip e vale sector;and (B) to license, assign. or waive rights to Inte!!ectual property developed by the laboratory either under such cooperative research or development agreements and from within individual laboratories. (2) identify and encourage persons to act as conduits between and am . Federal laboratories, universities, and the private sector for the transfer of - technology developed from federally funded research and development ef- r,. forts; , (3) ensure that State and local governments universities, and the private sector are provided with information on the technology, expertise, and facill- * - ties available in Federallaboratories; .. . ' . (4) promote the commercialization, in accord with my Memorandum to of 18.1983, the Ileads of Executive Departments and Agencies of February - patentable results of federally funded research by granting to all contractors. regardless of size, the title to patents made in whole or in part with Federal , funds, in exchange for royalty-free use by or on behalf of the government; (5) implement, as expeditiously as practicable, royalty-sharing programs with inventors who were employees of the agency at the time their inventions were, made, and cash award programs; and

                      #                (0) cooperate, under policy guidance provided by the Office of Federal Pro-curement Policy, with the heads of other effected departments and agencies in                                                    .

11.( deulepmed of a unifo*m polley permitting Federsi contrerfor, to retain rights to software engineering drawings, and other technical data Fenerated , u.- by Federal grants and contracts, in exchange for royalty-free use by or on behalf of the povernment. 8 .1

I Federal Res;i.tcr / Vol. 52. No. 77 / Wednesday. April 22. 1987 / Presidential Documents 13415 $ y Sec. 2. Establishment of the Tcchnology Shore Program. The Secretaries of Agriculture. Cormnerce. Energy, and Health and Ifuman Services and the Administrator of the National Aeronautics and Space Administration shall select one or mere of their Federallaboratories to participate in the Technolo-gy Share Program. Consistent with its mission and policies und within its overall funding allocation in any year, each Federal laboratory so selected  ; shall: 1 (n.) Identify areas of research and technology of potentialimportance to long- ' term national economic competitiveness and in which the laboratory possess- ,i es special competence and/or unique facilities; , (b) Establish a mechanism through which the laboratory performs research in areas identified in Section 2(a) as a participant of a consortium composed of United Pates industrics and universities. All consortia so established shall have, at a minimum, three individual companics that conduct the majority of their business in the United States; and (c) Limit its participation in any consortium so established to the use of i' laboratory personnel and facilities. However, each laboratory may also pro-vide financial support generally not to exceed 25 percent of the total budget  !! for the activities of the consortium. Such financial support by any laboratory in all such consortia shall be limited to a maximum of $5 million per annum. Sec. 3. Technology Exchange-Scientists and Engineers. The Executive Direc7 tor of the President's Commission on Executive Exchange shall assist Federal agencies, where appropriate, by developing and implementing an exchange s program whereby scientists and engineers in the private sector may take temporary assignments in Federal laboratories, and scientists and engineers in Federal laboratories may take temporary assignments in the private sector.

                                                                                                                 /

Sec. 4. International Science and Technology. In order to ensure that the . United States benefits from and fully exploits scientific research and technoia- { Fy developed abroad. , g (a) The head of each Executive department and agency. when negotiating or entering into cooperative research and development agreements and licensing arrangements with foreign persons or industrial organizations (where these i entities are directly or indirectly controlled by a foreign company or govem-ment), shall. In consultation with the United States Trade Representative, give appropriate consideration: (1) to whether such foreign companies or governments permit and encourage United States agencies, organizations, or persons to enter into cooperative research and development agreements and licensing arrangements on a com-parable basis; (2) to whether those foreign governments have policies to protect the United States inte!!cctuai property rights; and (3) where cooperative research will involve data, technologies, or products subject to national security export controls under the laws of the United States, to whether those foreign governments have adopted adequate meas-ures to prevent the transfer of strategic technology to destinations prohibited under such national security export controls, either through participation in the Coordinating Committee for Multilateral Export Controls (COCOM) or through other international agreements to which the United States and such forcis n governments are signatories. (b) The Secretary of State shall develop a recruitment policy that encourages scientists and engineers from other Federal agencies. academic institutions.

             ,.                 and industry to apply for assignments in embassics of the United States; and l

6 (c) The Secretaries of State and Commerte and the Director of the National Science Foundation sha'! develo;> a central mechanisn. for the pren.p arm' efficient dissemination of science and technology information developed - abroad to vms in Federal laboratories, academic institutions, anel the private sector on a fee-for.scrvice basis. i

1 & I 1

 ,       -1343G-                Fedoral Register / Vol. 52. No. 77 / Wednesday. April 22.1987 / Presidential Documents -

fl'  : Sec. 5. Technology Transferfrom the Department of Defense. Within 8 monthe of the date of this Order, the Secretary of Defent.c shall identify a list of i ) funded technologies that would be potentially useful to United States indus-a fries and universities. The Secretary shall then accelerate efforts to make these technologies more readily availabic to United States industries and-  ; universities. ' Sec. 6. Dosic Science and Technology Centers. The head of each Enecutive department and agency shall examine the potential for including the establish.

 "                                                       ment of university research centers in engineering science, or technology in the strategy and planning for any future research and development programs.

Such university centers shall be jointly funded by the Federal Government, the i; private sector, and. where appropriate, the States and shall focus on areas of { fundamental research and technology that are both scientifically promising and I. ave the potential to contribute to the Nation's long-term economic competitiveness.

                                                                                                                                                         )

Sec. 7. Reporting Requirements. (a) Within 1 year from the date of this Order, the Director of the Office of Science and Technology Policy shall convene an interagency task force comprised of the heads of representative agencies and ) the directors of representative Federal laboratories, or their designees. in l order to identify and disseminate creative approaches to technology transfer l from Federal laborecries. The task force will report to the President on the progress of and problems with technology transfer from Federallaboratories. (b) Specifically the report shallinclude: (1) a listing of current technology transfer programs and an assessment of the effectiveness of these programs: (2) identification of new or creative approaches to technology transfer that might serve as model programs for Federal laboratories: (3) criteria to assess the effectiveness and impact on the Nation's economy of planned or future technology transfer efforts; and (4) a compilation and assessment of the Technology Share Program estab-lished in Section 2 and, where appropriate, related cooperative research and development venture programs. Sec. 8. Relation to Existing Law. Nothing in this Order shall affect the  ! continued applicability of any existing laws or regulations relating to the transfer of United States technology to other nations. The head of any > Executive department or agency may exclude from consideration, under this Order, any technology that would be, if transferred. detrimental to the inter- , cats of national security. .

                                 .                   Ti!E WHITE HOUSE.

April 10.1987. Filed 0-21.at 11 to eml silhng code 3 ps.es.M Editorint note: F the President's statement of Apr. to. on sisning FO ts*91, see the WeeAI' J Compilation of1% sidential Documents (vot. s3. no.1s).

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15 USCS ! 3701' . COMMERCE'AND TRADI l 3701. Pladless . . De Congress Ands and declares that (1)-(9) [ Unchanged]

                  *            (10) The Federal laboratories and other. performers of federa!!y fanded research e-development frequently provide acicatiac and technological developacats of potential u6 to State and local govers.ments and private ladustry. 'these developments, which inclut e            inventions, compu'st  . software, and training technologies, should be made accessible,t those governments and industry. Dere is a need to provide means of access and to su l adeguate personnel and funding support to these means.

(II) [ Unchanged]

                .      (As amended Oct. 20,1986, P. L 99 302, l 9(f),100 Stat.1797.) .

Hth70RY: ANQ11ARY LAWS AND DIRECITYES Amendmenh: 198L Act Oct. 20, 1986, la para. (10), inacrsed ", including inventions, software, sad trainlag technologies," following *developacats". shwt sides: Act Aug. 14,1986, P. L 99 382, i 1,100 Stat. til, provides: "This Act euy be etted as the 'Japamme Technical Uterature Act of 1986'.". For full classiacation of such Act, consatt USCS Tables volumes. Act Oct. 20.1986, P. L 99 502, { I,100 Stat.1785, provides:"This Act say be cited as the ' Federal Technology Transfer Act of 1986*." .

            .          l3702. Parpose

[latroductory matter unchanged] (1)[ Unchanged] - . G) promoting technology development through the establishment of cooperative researcl Center 5. . (3) stimulating improved utilization of federally funded technology developments, includ ing inventions, software, and training technologies, by State and local governments ant' the private sector; (4), (5) [ Unchanged] (As amended Oct. 20,1986, P. L 99 302, l 9(b)(l), (f)(2),100 Stat.1795,1797.) HISTORY; ANQLLARY LAWS AND DIRECT!YES

                             -     Amendments:

1960 Act Oct. 20, 1986, is para. (2), autatituted " cooperative research centers" for

                       .           *ecaters for ladustrial technology"; is para. (3), inserted ", locluding inventions, software, and training a^ alas ".
              ,       l3703. DeAalttens                                                      ,

[ Introductory matter unchanged] (I) "O!! ice" means the Office of Productivity, Technology, and Innovation establist: under section 5 of this Act [15 USCS j 3704]. (2)[ Unchanged] 0)"Asalitant Innovation, appointedSecretary" pursuant tomeans section 5 the of thisAaslitant Act 15 USCS Secretary l 3704]. [for Productivity

                         . (4) " Centers" means the Cooperative Research Centers established under section 6 or section 8 of this Act [15 USCS l 3705 or 3707].

(5) [ Unchanged] . (6) " Federal laboratory *' means any laboratory,' any federn!1y funded research and development center, or any center established under section 6 or section I of this Act [15 USCS l 3705 or 3707] that is owned, leased. or otherwise used by a Federal agency and funded by the Federal Oovernment, whether

• operated by the Government or by s' contractor. i (7) " Supporting stency" means chher the Department of Commerce or ths .Natlo:.;?

Science Foundation, as appropriate. , (I) " Federal agency" means any caecutive stency as dcEned in section 105 of title 5,1

          .                  Un!ted Stater Code, s.nd the cd!!tary depriments as dcIned in section 102 of such tidc. g (9) "Invention"' means any invention or discovery which is or may be pstentable or'
                         *btherwise protected under title 35, United States Code, or any novel variety of plant, which is or may be protectsb!c under the Plant Yariety Protection Act O U.S.C. 2321 e

seg). . 120 m, ,

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101 Couth Main Street Clinton, Tennessee 37716 615/457 4200 t May 4, 1988 Department of Energy RE: Irrevocable Letter of Credit on behalf of All Chemical Isotope Enrichment, Inc., a Tennessee Corporation - In compliance with your agreement- dated November 20, 1987, Section 3.A.(ii), Anderson County Bank of C1'inton, . Anderson County, Tennessee, is irrevocably indebted to Department of Energy by this letter in the sum of.Two Million Dollars ($2,000,000.) under the terms of said Agreement and the Escrow Agreement of this date, the terms of such Agreements are incorporated'herein by reference. ANDERSON OUNTY BANK t / BY: H. ARbWOOD PRESIDENT WHA:sm e ,. FDIG

                                                                                                                                                             ~"?

i. , . ,

.;_ ,' j i Department of Energy. 1

         * '-                                 ook Ridge opw tions l

l P, O. Box E Oak Ridge, Tennessee 37831 l q May 4, 1988 i Mr. William H.'Arowood President Anderson County Bank . 101 S. Main Street ' Clinton, Tennessee 37716

Dear Mr. Arowood:

This is to acknowledge receipt of the completely executed Escrow Agreement under which an escrow account in the amount of $2 million has been established in accordance with the terms of Contract No. DE-R005-880R21776, as modified. Accordingly, the Department of Energy conveys title to the unclassified GCEP equipment free and clear of encumbrances to AlchemIE Corporation. A1ChemIE is free to remove the unclassified equipment from .he premises at DOE's facility in Piketon, Ohio. Sincerely, t Robert E. Lynch, Deput Director Procurement and Contracts Division L -. - - - __ __---- _ _______-- _ _ --_ _ _

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j -- Contract No. DE-R005-880R21776 CENTRIFUGE EQUIPMENT AGREEMENT AND BILL OF SALE This Agreement is made and entered into on this the [ 8 day of dE(/[/A./1987, by and between the UNITED STATES OF AMERICA (hereinafter referred to as the " Government"), acting throuch the SECRETARY OF ENERGY (hereinafter referred to as the " Secretary"), the statutory head of the DEPARTMENT OF ENERGY (hereinafter referred to as

                                              " DOE"), and All Chemical Isotope Enrichment, Inc., a Tennessee corporation (hereafter referred to as "A1ChemIE").

WHEREAS, the DOE terminated its Gas Centrifuge Enrichment Program in June 1985, and, as a result, the assets of the gas centrifuge program became surplus to the needs of DOE, and WHEREAS, DOE desires to mitigate the significant expense of maintaining, disassembling, transporting, decontaminating, and disposing of equipment which is now of no use to it, and WHEREAS, DOE published on April 7, 1986, a notice in the Federal Register (Vol. 51, No 66) seeking Expressions of Interest from the private sector for participation in DOE's uranium enrichment program, and L WHEREAS, AlchemIE submitted a proposal to utilize gas centrifuge l technology and equipment to enrich stable, non-fissile isotopes for tecnal, incustrial, anc researcn appiitations, and

                                                               ~

_1

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          /

l l i WHEREAS, the A1ChemIE response to said Request for Expressions of Interest was chosen by DOE on July 24, 1986, as a proposal meriting further discussion, and l l' WHEREAS, DOE and A1ChemIE discussed this proposal from July 1986, through October 1986, ascertaining the merits thereof and the require-L ments necessary to transfer classified DOE technology and equipment to the private sector, and WHEREAS, on November 5, 1986, DOE published in the Commerce Business Daily a Request for proposals to acquire and utilize gas centrifuge technology and the surplus centrifuge program assets, and AlchemIE responded to said Request For Proposals, and WHEREAS, the parties have reached agreement on the terms and . conditions for transfer of the equipment, and WHEREAS, this Agreement is entered into pursuant to the authority of the Department of Energy Organization Act (42 USC 57101 ET SEQ), the Atomic Energy Act of 1954, as amended (42 USC 52011 ET SEQ) and other applicable law. NOW, THEREFORE, DOE and AlchemIE agree as follows:

1. Parties. The parties to this Agreement are the Department of Energy (DOE) " i All Chemicel Isotope Enrichment, Inc. (A1ChemIE).

I

' 7.U# i i 7 i

2. Conveyance of Surplus Gas Centrifuge Eouipment. .i A. DDE does herehy convey to A1ChemIE the exclusive f the surplus gas. centrifuge

                    . contractual right to acquire ownership o program equipment delineated'in Attachment I hereto, which is divid into Part'1.A (unclassified inventory) and 1.B (classified inventory).

The conditions A1ChemIE.must satisfy in order to acquire ownership are With respect to centrifuge set forth in paragraphs 3 and 4 hereof. technology, it is understood that access thereto is governed by paragraph 5 hereof. B. In consideration of -the foregoing, AlchemIE agrees to remove said equipment at its sole expense and assume financial responsibility for ultimate decontamination, as applicable, and di Additionally, AlchemIE agrees to pay thereof pursuant to paragraph 7. DDE two percent (2t) of the annual gross sales generated by Alche its production facility utilizing the equipment in Attachment 1.B. over a period of 20 years, beginning in 1991 and continuing annual 2010. The term " Annual Gross Sales" means the aggregate 12-month sales by AlchemIE of centrifuge-enriched stable isotopes, The first payment hereunder shall be for A1ChemIE's without deduction. annual gross sales for calendar year 1991 and shall be due and 31, 1992. Subsequent payments shall be to the DOE on or before January computed, payeble and due in like fashion.

                                                                                                                                          'l l
                                                                   ~

L.- J/ 1 i l A1ChemIE agrees that DOE, the Comptroller General of the United States, or any of their duly authorized representatives, may, I upon reasonable notice, review and inspect any directly pertinent books, documents, papers, and records of A1ChemIE relating to annual gross sales at the AlchemIE corporate offices at 702 South Illinois Avenue,

                                                  ~

Suite 202-B, Oak Ridge, Tennessee 37830, or any other locations as appropriate.

3. Ownership of Unclassified Equipment A. Ownership of the unclassified equipment shall vest in A1ChemIE uponi (i) Receipt of the opinion by the Attorney General that the proposed transfer of. equipment to A1ChemIE is not inconsistent with the antitrust laws, as required by FPMR 101-45.310; and (ii) Deposit by A1ChemIE of $2 million in an escrow account pursuant to an agreement between AlchemIE and a bank, the terms of which have heretofore been approved by DOE. The approved form of escrow agreement is attached hereto and made a part hereof as attachment 2.

B. The purpose of the $2 million escrow account is to additionally compensate DOE for the unclassified equipment should A1ChemIE not obtain ownership of the classified equipment. Therefore, the parties agree that: _ 4

Interest on the escrowed funds shall be the property (i) i of AlChemIE; (ii) The escrow agreement shall terminate and the funds be released to A1ChemIE when A1ChemIE acquires ownership of the classified equipment pursuant to paragraph 4 hereof; (iii) Should'A1ChemIE not obtain ownership of the 4 classified equipm2nt and this Agreement is terminated under paragraph af ter ownership of the unclassified _ equipment has vested in AlchemIE t the escrowed funds shall become the property of DOE without requiremen of any legal action. C. If the Attorney General advises that the transfer would be inconsistent with the antitrust laws, this Agreement shall terminate. If AlthenIE has not deposited $2 million in the escrow account within 30 days aiter the date of receipt of the opinion of the Attorney Ge that the proposed transfer of equipment to AlchemIE is not inconsiste Said 30-day with the antitrust laws, this Agreement shall terminate. period may be extended by mutual agreement of the parties.

4. Ownership of Classified Ecuipment A. Upon occurrence of all the following events, ownership of the classified gas centrifuge equipment shall vest in AlchemIE:

r- -

     ,C'                 e' (i)    NRC issuance to AlChemIE of a construction license authorizing'it to possess gas centrifuge machines (such machines being-
                            " production facilities" as defined in 911v. of the Atomic Energy Act) and the uranium contamination contained in certain of the machines; (ii) NRC and DOE approval of the A1ChemIE security plan for the transportation and protection on a continuing basis of the t                           classified gas centrifuge enrichment equipment and technology; (iii) Approval by DOE of A1ChemIE's machine disposal plan; (iv) Approval by DOE of A1ChemIE's approach for assuring that adequate funds will be available for decontamination and disposal of all classified and/or contaminated equipment should AlchemIE, for any reason, fail to do so.       (Seeparagraph7);

(v) Receipt and approval by DOE of the insurance policy described in paragraph B; (vi) Approval by DOE of AlchemIE's schedule for removal of centrifuge equipment from DOE's facilities (See paragraph 6); and (vii) Receipt of the opinion by the Attorney General that the proposed transfer of equipment to A1 Chem 1E is not inconsistent with the anti-trust laws, as required by FPMR 101 45.31D. l

a n. - I

 ' , ,[ -

B. Failure of DOE to approve any of the foregoing shall not Accordingly, be a " dispute" within the meaning of paragraph 16.  ! A1ChemlE understands and agrees that DDE's determination with respect each of the above items is unilateral and final and is not subject to l administrative or judicial review in any forum. C. If events (i) through (vii) of paragraph A have not occurred within one year after the date of execution hereof'or any extension agreed to by parties, this Agreement shall terminate. A1ChemIE shall make no claim for refund of any payments it may hav to DOE prior to termination. )

                                                                         ~

5. Access to Centrifuge Technology. Upon DOE issuance of a Permit for Access to Restricted Data, category C-24 -isotope separa l , pursuant to 10 CFR Part 725 (as amended by Federal Register 52, No. 156, dated August 13,1987), Alchem1E shall bt afforded acc Failure of DOE to issue a permit to classified centrifuge technology. shall not be a "di.spute" within the meaning of paragraph 16. l

6. Location of Equipment and Removal _. l 4

A. TheequipmentidentifiedinAttachment1(Parts 1.A.and 1.B.) is located at the DOE Gas Centrifuge Enrichment Pla l Piketon, Ohio. Alchem!E shall bear all costs of disassembling, packing, ) removing, and transporting the equipment from the Plant to its sec i I i I

                                                                                                                -- j l

L l

C. jo . l'. l' facility in Tennessee. To the extent A1 Chem!E removes the equipment with its own forces or participates in ruoval by others, it shall comply with. DOE safety, health, security and other requirements related to its presence at the Plant. B. AlChemlE sh611 remove all equipment from the Gas Centrifuge Equipment Plant in accordance with'a schedule to be agreed to by the parties. If it fails to remove all equipment within the period specified in the schedule, it shall thereafter pay DOE on a monthly basis for the continued storage of any remaining equipment. The amount of such storage fee and other details shall be set forth in the removal schedule. C. Notwithstanding subparagraph B above, removal of centrifuge equipment from the northern half of Process Building Number One shall begin in February 1988 and shalf be completed by the end of November 1989 or such later date as determined by DOE. Until ownership vests in AlchemlE, DOE agrees to store said equipment elsewhere at the Plant, at no storage cost to A1 Chem!E. AlChemIE understands and agrees that li it fails to initiate removal in February 1988, DDE, at DOE's expense, will begin If AlchemIE begins removal using cxpedited and economical methods. removal in Feervary 1988 but DOE later determines that AlchemIE will be untble to complete removal by November 1989 or such later date as

                                                                                                                      ~

((. l l~ determined by DOE, Alchemic understands and agrees that DOE may remove, 1 l:

                            -at DOC's expense, remaining equipment using expedited, economical procedures. Although 00E may permit A1ChemIE activities to continue concurrently with DOE's, AlchemIE shall cease removal operations if so directed by DOE.

A1ChemlE is under no obligation to take any equipment removed by DOE pursuant to this subparagraph C. If A1ChemIE desires

,uch equipment, it assumes the risk that the equipment may have been dae:ned during removal.

D. Attachment 1 i:; subject to revision after execution of this Agreement to more accurately account for components of major system items that.may not be completely represented by the descriptions therein. E. A1ChemIE may, at its expense, provide for Upon declassification of certain items on Attachment 1.B. declassification such items shall be immediately transferred to Attachment 1.A.

7. Decontamination and Disposal. AlchemIE shall be responsible for the decontamination and disposal of all classified or contaminated equipment of which it has acquired ownership. It shall ascertain the .

cost for the protection, decontamination, and disposal of the entire 4 t

                                                                 -9

O i A1 Chem!E classified or contaminated inventory received by AlchemlE. shall provide assurance, in an amount and form acceptable to DOE, tha adequate funds will be available for decontamination and disposal classified and/or contaminated equipment should A1 Chem!E, for any reason, fail to do so.

8. Hold Hermless and Indemnification. AlchemIE agrees to hold harmless and indemnify DOE from any liability of any kind or character whatsoever, including damage to property or injury to or death of persons, arising from the use or operation by A1 Chem!E of the gas l'

AlchemIE agrees to obtcin and maintain centrifuge process or equipment. a general liability insurance policy covering AlChem!E operation Said policy shall be this hold harmless and indemnification of DOE. submitted for DOE approval of the policy limit, coverage provisio insurance carrier. Resale, A1 Chem 1E shall not convey ownership of the classified 9. equipment described in Attachment 1 (Part 1.B.) without the prio .  ! consent of DOE.

10. Disclaimers _.

A. All equipment is conveyed to AlchemlE as is, where is" DOE in place at DOE's Gas Centrifuge Equipment Plant in Piketon, O disclaims any and all warrsnties, express or implied, including l u l limited to, the warranty of merchantability and the warranty of fitness for a particular purpose. AlchemIE hereby acknowledges'that the gas centrifuge equipment was designed and manufactured to enrich uranium and was not designed for the purposes intended by AlChemIE. AlchemIE assumes all risk for such use. B. DOE assumes no responsibility with respect to the use, sale, or other disposition by A1 Chem!E, its vendors, customers, or transferees of the equipment sold hereunder, of products made by use of such equipment or of information or data, if any, furnished under this agreement. C. Although both parties believe Attachment I to be accurate, DOE makes no representation that all items listed in Attachment I are, in fact, present at the Plant.

11. patent Understandings, A. Nothing in this Agreement is to be construed as:

(i) Granting by implication, written or otherwise, any license or right under patents or patent applications owned or )

     .o ~ ..

i controlled by the Gnvernment other than the implied license to use equipment or machines sold under this Agreement for enriching stable non-fissile isotopes; or (ii) A warranty or representation by the Government that the use of equipment or machines sold under this Agreement will not infringe rights of third parties; or. - (iii) An obligation on the part of the Government to bring or prosecute any actions or suits tor. inst third parties for patent infringement; or (iv) An obligation on the part of the Government to file any patent application, secure any patent or maintain any ratent in fone; trr (v) A restriction on the Government's right to manufacture, sell or use or to license others to manufacture, sell or use gas centrifuge equipment or machines for any purpose whatsoever. B. This tgreement does not provide a basis for the Government to assert rights in AlchemIE inventions. L i-C. The Government is not aware of intellectual property rights owned by third parties which would be infringed based on the use of c:;uip cr.t er ::chinct reld under this Agreement. i

I ;. : e

                                                                                  .I
  'i i

12.. Covenant Against Contingent Fees. AIChemlE warrants that nr. I person or selling agency has been employed or retained to solicit or: secure this contract upon an agreement or understanding for a commis-sion, percentage, brokerage, or contingent fee, excepting bona fide. employees or bona fide established comercial or selling agencies maintained for the purpose of securing business. For breach or vio-lation of this warranty, the Government shall have the right to annul this contract without liability or in its discretion to deduct from the . contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee.

13. Officials Not to Benefit. No member of or delegate to Con-gress, or resident commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit.

14. Permits--Laws, Regulations and Ordinances. AlchemIE shall procure all necessary permits or licenses and comply with all applicable laws, regulations, and ordinances of the United States and of any State, territory or political subdivision.

15. Applicable law. This contract shall be construed in accor-dance with the internal law of the United States applicable in the United States Federal Courts to contracts to which the Government of the United States of America is a party, including, but not limited to the Atomic Energy Act of 1954, as anended.

                                                              >s 2.

16. Disputes.

A. This contract is subject to the Contract Disputes'Act of 1978 (41 U.S.C. 601-613) (the Act). B. Except as provided in the Act, all disputes arising under or relating to this contract shall be resolved under this clause, C. " Claim," as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as 6 matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief, arising under or relating to this contract. A clafm arising under a contract, unlike a claim relating to that contract, is a claim that can be resolved under a contract clause that provides for the relief sought by the claimant. However, a written demand or written assertion by the Contractor seeking the payment of money exceeding $50,000 is net a claim under the Act until certified as required by subparagraph D.(ii) below. A voucher, invoice, or othc= n1ne request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the Act, by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount or is not acted upon in a reasonable time. D. (1) A claim by AlChemIE shall be made in writing and submitted to the Contracting Officer for a written decision. A claim by

4 :s the Government'against'AlChemIE shell be sub.fect to a written decision l by the Contracting Officer. i (ii) For A1 Chem 1E c16fms of more than 550,000, A1ChemIE shall' submit with the clait a certification that-- , (c) the claim is made in. good faith; (b) the supporting data are accurate and complete to the bcst of AlChrt;i's knowledge and belief; and l (c) the amount requested accurately reflects the contract adjustment for which A1ChemIE believes the Government is liable. 1 (iii) The certification shall be executed by-- l (a) A senior company official in charge at the A1ChemIE plant or location involved; or  ; i (b) An officer or general partner of AlchemIE having overall responsibility for the conduct of AlchemIE's affairs. l E. For AlchemIE claims of $50,000 or less, the Contracting Officer must, if requested in writing by A1ChemIE, render a decision within 60 days of the request. For A1ChemIE-certified claims over

                                                                                                                                                                   ~

w --- _ _ . _ _ _ _ _ _ _

     *:    X
                   $50,000, the Contracting Officer must, within 60 days, decide the claim l

or notify A1ChemIE of the date by which the decision will be made. F. The Contracting Officer's decision shall be final unless A1 Chem!E appeals or files a suit as'provided in the Act. G. The Government shall pay interest on the amount found due and unpaid from (1) the date,the Contracting Officer receives the claim (properlycertified,ifrequired),or(2)thedatepaymentotherwise Simple would be 6ue, if that dcte is later, entil the date of payment. interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Act, which is applicable to the period during which the Contracting Officer receives the claim and th at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim. H. A1 Chem!E shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under or relating to the contract,  ; comply with any decisions of the Contracting Officer.

17. Term and Termination.

A. The term of this Agreement shall continue until all classified and/or contaminated equipment has been ultimately decontaminated and disposed of or until sooner terminated in acc l 4

                                                            - if -            _ _ _ _ _ _ _ _ _ - . - - - - - - - _ - _ _ _ - _ _ _ _

                 -                ~               ~         ~                                 ~               ~

with this paragraph 17 or paragraphs 3 or 4 Notwithstanding the~

       'oregoing, AlCherr.IC's obligation to pay.00E two percent of'its gross

, ales shall cease at the end of the period specified in paragraph 2.

L. After ownership of the equipment has vested in AlChemIE, DOE may terminate this Agreement for default if AlchemIE fails to:.. (i) Decontaminate and dispose of classified and/or

       ' contaminated equipment in accordance with the machine disposal plan; or                                 ,

(ii) Comply with any prov',sion of this Agreement, including provisions of those documents submitted by AlChemIE and approved by 00E pursuant to paragraph 4. I C. In the event of termination, ownership of all classified  ; equipment shall revert to the Government without the necessity of further action by and at no cost to 00E. The Government may take such action as it deems appropriate with respect thereto, and the funds guaranteed by AlchemIE pursuant to paragraph 7 shall be used for the payment of the Government's costs in connection with the disposition of all classified equipment in AlChemIE's possession. i l i l

r

        #                              4 o                                               IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day and ysar 11rst abcve written.

ALL CHEMICAL ISOTOPE ENRICHMENT, INC. UNITED STATES OF AMERICA BY: 5LChr AHY OF ENERGY BY: a. - f/MY<f CY: /b h Peter D. Dayton te,n.. , A. Irving ri f h TITLE: Director, Procurement TITLE: Chairman, Board of Directors . and Contracts Division l l L . l , l w_--_--_______.

o .. Attachm2nt 2 usenoW AGREEMENT d into on.this the THIS ESCROW AGREEMENT 198_, by and between is.sade ALL andCHEMICAL entere day of _ Tennessee-corporation hereinafter ___OTOPE ENRICHMENT, INC., a d IS E referred to by its acronym "AlchemIE" anhereinaf WITNESSETH: t s Department of Energy (USDOE) have entered terminated GASinto a contra USDOE to AlchemIE of equipment from the CENTRIFUGE ENRICHMENT PROGRAM, and located at DOE's Gas WHEREAS, said equipment isi currentlyand ost avoidance a benefit of to USDOE Centrifuge Plant in Portsmouth, Oh o, ~ from the AlchemIE/USDOE transaction-is the chas agreed to removing said equipment, and AlchemIE cost thereof, and der certain WHEREAS, to additionally compensate DOE unto post an esc circumstances, AlChemIE has agreed i h the t<erms and the amount of Two Million Dollars, w tby this document, and conditions of said account governed h AlchemIE/USDOE WHEREAS, the applicable portions of t et are stated verbatim a agreement addressing the escrow accoun follows: i nt shall Ownership of the unclassified equ pme "A. vest in AlchemIE upon: in (ii) Deposit by AlchemIE of $2 million an escrow account pursuant to anagree bank, the terms of which have heretofore been approved by USDOE. The approved form of escrow agreement is attached hereto and made a part hereof as Attachment 2. unt is The purpose of the $2 million escrow the acco B. IE not to additionally compensate USDOE foru obtain ownership of the classifieTherefo

    ,=     .

i (i) Interest on the escrowed funds shall be the property of AlchemIE; ' (ii) The escrow agreement shall terminateand when AlchemIE acquires ownership of the classified equipment pursuant to

• paragraph 4 hereof;-

(iii) Should AlChemIE not obtain ownershipo Agreement is terminated under paragraph 4 after ownership of the RDelassified equipment has vested in AlchemIE, the escrowed funds shallbecom , requirement of any legal action. C. If the Attorney General advises that the i te. transfer antitrust laws,wouldthisbe inconsistent Agreement with shall term in nathe the If AlchemIE has not deposited $2 million of date escrow account within 30 days after the l receipt of the opinion of the Attorney Genera i t that the proposed transferSaid of 30- equipment t laws, this Agreement shall terminate. day of the parties." (AlchemIE/USDOE Agreement, pages 4 and 5) in order to establish h IEan and escrow accou NOW, THEREFORE,which meets the foregoing criteria, AlC e _ agree as follows: i Dollars with

1. AlchemIE hereby deposits Two Mill onwhich shall hold said fu

_~ Kgent. d fundsiodically shall be to the

2. Interest generated from the escroweproper AlchemIE, at AlchemIE's direction.

d hall occur as

3. The disposition of the escrowed fun s s '

follows: without a) The escrowed funds ($2 millionshallinbe nt.remitted to US deduction) accordcnce with the terms of this agreeme y to trifuge If AlchemIE performs the act' ions necessar b) obtain ownership of classified gas cen f the equipment pursuant to Paragraph 4 o 2-

AlChemIE/USDOE agreement, then,the upon submission of proof thereof to the Escrow Agent, escrow funds AlchemIE. If AlchemIE obtains ownership of the c) unclassified gas centrifuge equipment ifiedbut does not obtain ownership of the classequipment, then, u thereof to the Escrow Agent,shall be disbursed upon dem

                                                                               " Proof" shall be d)

For purposes of this Agreement, defined as an instrument signed by USDOE disposition of the escrowed funds. e) At the time of disbursement under anyconditier.s paid to AlchemIE. t the

4. It is expressly understood and acknowledged d or tha in any escrowed funds are not to be pledged, assigne ,

manner encumbered except as addressed herein. i Escrow t IN. WITNESS WHEREOF, the parties hereto'no Agreement, has been read, understood, and concurred with in full. I Date

                                                                                          ~

Inc.

                                   ~All Chemical Isotope Enrichment, Date
                                                                                            ~
                                   ~

Bank l Date Approved: U.S. Department of Energy l n ,,

                                                                                                                   +=n
                                                                                                                     ' =

mm-

   ;.-    ..                                                                                                              j f

l 5-ESCROW AGREEMENT l into on this the. g THIS ESCROW AGREEMENT is made and enteredr194[, by and be{ tionherpinaf

                  /d day of (#/ % INC.,                  _ _ , aTennessee corpo                        MI#/d,        '" {

uov/ /4## ISOTOPE ENRICHMEKT, l referred to by its acronym "AlChemIE" and hereinafter referred to as " Escrow Agent."'~ - WITNESSETH: Department of the sale by THAT WHEREAS ALCl!EHIE and i tthe d GAS United States Energy (USDOE) have entered into a contract fo l CENTRIFUGE ENRICHMENT PROGRAM, and t DOE's Can

• WHEREAS, said equipment is currently located ad a benefit to US Centrifuge Plant in Portsmouth, Ohio, an t avoidance of '

from the AlChemIE/USDOE transaction is the cos d to pay the removing said equipment, and AlchemIE has agree cost thereof, and d certain WHEREAS, to additionally co6pensate DOE and un erescrow acccunt in circumstances, AlchemIE hasdocument, agreed and to post anthe conditions of said account governed by this IE/USDOE agreement addressing the escrow account ar I follows: h ll "A. Ownership of the unclassified equipment s a  : vest in AlchemIE upon: (ii) Deposit by AlchemIE of $2 million in an escrow account pursuant to an agreement between A1ChemIE and a bank, the terms of which have heretofore been approved by USDOE. The approved form of escrow agreement is attached hereto and made a part hereof as Attachment 2. t is B. The purpose of the $2 million escrow accoun l to additionally compensate USDOE for the t unclassified equipment should AlchemIE n , Therefore, the parties agree that: e M

                              ~_

C NQ* . t

                                                                   ~

i

 ! f.*
                       -(i) Interest-on                    the escrow'ed funds shall be the property of AlchemIE; '

(ii) The escrow agreement shall terminateand the fun m when AlChemlE acquires. ownership of the classified equipment pursuant to

                     -                       paragraph 4 hereof; (iii,)                  should AlchemIE not obtain ownershipof the gl Agreement 13 terminated under paragraph 4 after ownership of theunclassified eq AlchemIE, the escrowed funds shall become the property of DOE without                                       '

requirement ofiany legal action.. - C. If the Attorney General advises that the transfer would be inconsistent with the antitrust laws, this Agreement t f shall terminat escrow account within 30 days after the da e o l receipt of the opinion of the Attorney General i that the proposed transfer Said of equipment 30- toA1C laws,-this Agreement shall terminate. day period of the parties." (AlchemIE/USDOE Agreement, pages 4 and 5) ' NOW, THEREFORE, in. order to establish an escrowd account whichjectstheforegoingcriteria,AlchemIEan _ agree as follows: ' fi8./P. ith , 1.Al,9 N. / 0, hep,IEAerebydepcsitsTwoMillionDollarswwhic r Xgent. h ll be the , i lly to

2. Interest generated from the escrowed funds AlchemIE, at AlchemIE's direction. ur as i

3. The disposition of the escrowed funds shall occ follows: ,

a) The escrowed funds ($2 million in without ~ deduction) shall be remitted to USDOE,accor I b) If A1ChemIE performs the actions necessary tol ssified wLtain ownership of c a , equipment pursuant to Paragraph 4 of the ~__ l 1

           - N--          _ _ _    _ _ _ _ _

AlchemIE/USDOE agre:m:nt, th:n,. Upon sub 21ssion g of proof thereof to the Escrow Agent, theescrow funds sh AlchemIE, - Ii c) If AlchemIE obtains ownership of the unclassified gas centrifuge equipment but does not obtain ownership of the classified ~ equipment, then, upon submission of proof thereof to the Escrow-Agent, the escrow funds shall be disbursed upon demand to uSDOE. d) For purposes of this Agreement, " Proof" shall be defined as an instrument signed by USDOE and attesting to the Escrow Agent the appropriate disposition of the escrowed funds. c)' At the time of disbursement under any conditions hereof, accrued interest shall be paid to AlchemIE.

4. It'is expressly understood and acknowledged thator thein any escrowed funds are not to be pledged, assigned, manner encumbered except as addressed herein.

IN WITNESS WHEREOF, the parties hereto now sign this Escrow Agreement, attesting by the signatures below that this document has been read, understood, and concurred with in full. .. t r of tr;bg A Yr fl

                                            ' zu fAf
                   ~

Inc. Jat'e A 11 Ohemical' Isotope gz'ichment, er Y /? _

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                ~

• Bank l ,
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1W M k Approved: N u.S. oepartment of energy goate , l l 6 e eldl8 - -_-p

                                                                                                                -___w

MINUTES OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS SE ALL CHEMICAL ISOTOPE ENRICHMENT, INC. A special meeting of the Board of Directors was held at the corporate offices at 12:30 p.m. on May 4, 1988. Present were all of the Directors of the Corporation, being Dr. A. Andrew Carey, Stephen A. Irving, Dennis L. Bell, and Judith Wilson, being a

         , quorum. Each of the Directors received notice of the time, place and purpose of the meeting.

Stephen A. Irving agreed to serve as Chairman and at his request, Dr. A. Andrew Carey agreed to serve as Secretary. The Chairman stated that the purpose of the meeting was to consider consummating the transfer of the equipment from D.O.E. The Chairman noted that the required Attorney General's opinion had been received but that it was necessary to post a Two Million Dollar ($2,000,000.00) escrow deposit pursuant to the contract. The Chairman indicated that it would be necessary to seek funding for said $2,000,000.00 escrow account. There followed a general discussion of the matter and upon motion duly made and carried by t.he affirmative votes of the following: Stephen A. Irv'ng, A. Andrew Carey, Dennis L. Bell and Judith Wilson. With negative votes of the following: None. The following resolution was adopted:

               ~

RESOLVED, that the Chairman of-;the Board

                                                                                                       .shall execute such documents as are necessary e                                                                                           to hypothecate as security in favor of Anderson' County Bank its entire interest in-
 !.t1                                                                                                   the unclassified equipment from.the U.S.                                          -

D.O.E. Project,: subject to $4,000,000.00 UCC-1 limitation,'together with all contract' rights in a certain Centrifuge-Equipment Agreement and' Bill of Sale as security for i .- the indebtednesses of Dr. A. Andrew Carey, Stephen A'..:Irving, John H. Smelser, Jr..P. Diane Mealer and . There being.no further business to be conducted,-upon motion-

                         - duly made, seconded and unanimously carried, the meeting was l                            adjourned.

Respectfully submitted,

                                                                                                                                , CL . 6d.c4J~          ;)

SECRETARY V

                                                                                                ""               Y  /

H L' AP*6uG A KHAIRpAN 4P'THE BOARD Q s I

o ,_ l-AGREEMENT  ; l THIS AGREEMENT made and entered into by and between ANDERSON COUNTY BANK, herelnaf ter referred to as " Bank", ALL CHEMICAL ISOTOPE ENRICHMENT, INC., hereinafter referred to as "A1ChemIE", and . /7 . iMM h6cf% ,

                           %L A . nu                            ..       P~Aoa L2-                           ,

n, ll. % ,[_ -and . r[*h Ol./3W. , hereinafter referred to as "Obligors". l' This memorandum sets forth the understanding of the

                .          parties with reference to various matters.

I

1. Obligors have each executed a promissory note payable i to Bank in the amount of Four Hundred Fifty Thousand Dollars ll ($450,000.00) dated May 4, 1988.

i

2. Bank, at Obligors' request, has issued a letter of credit to the United States Department of Energy in the name of A1ChemIE for the purpose of providing the escrow funds pursuant to the transfer of U.S. DOE equipment.

3. That AlchemIE agrees to, and hereby does apply for, an increase in its presently axisting line of credit with Anderson County Bank by a sum not to exceed Sixty Thousand Dollars

($60,000.00), which increase shall be utilized for the payment t of certain fees and expenses incurred in the aforesaid transaction pertaining to U.S. DOE. This the h day of 7N , 1988. J ,,,e

                       '                                      ANDERSON C ' TY BAN l

Sh - Y. D )- l-

                                                                   // nities -

ALL CHEMICAL SOTOPE ENRICHMENT, ( 1 INC. Bys, ,Ns , /i?/J ' %

                                                                      //bMAA), Bo&c cor afesef>et
                                                                                   ~
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                                                                   / f$ff su ,            / Ult + A /

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F f F l l ' _ _ _ _ - __ ___________---__~

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                                                     ;                             MEMORANDUM AGREEMENT

[ This Agreement made and entered into by and between-

                                                     ,* Anderson County Bank, hereinafter referred to as " Bank", and a
                                                     '       All Chemical Isotope Enrichment, Inc., hereinaf e referred to
                                                                                  ~uCEtu: flutitos (}wsgA)/)

as A1ChemIE and Sam l=Racee.w. / l. WITWESSETH THAT I WHEREAS, AlchemIE has entered into a Hypothecation l

                                                     ., Agreement and various security agreements to provide collateral i

for various indebtednesses owed to Banks and fh b $ i, o,h gofbportidnofthesecurity,towit funclassified / ), n

                                                                                              ~bf
                                                          .equipmenttobeconductedby}S=f[qlA,vClit                O't>f**%}                            I                   ...na,   mV Jar.ue   oM li                                             r - w).         yACL.</}                                          -

l, NOW, THEREFORE, in consideration of mutual pr'6a ses I Ij contained herein the parties agree as follows: r

                                                      !                 Anderson Co'inty Bank does hereby onsent to tf o                           [le of various items of equipment by Sent r              nd             10                                        ale w!11 be conducted within 91 days of date and that the enLfre net proceeds of the sale shall be used to dlScharge the l Indebtednesses cwed to Bank by                           , Dr. A.. Andrew 1,.               Bell

[Carey,StephenA. Irving, Dr. Bruce R. Clark, Dennis

                                                          ' Judith Wilson, and A1 Chem!E.

j WITNESS our signattkres this //k day of h8'f t , k ll19dB. I p ALL CHEMICA ENRICH ENT I SOTOP ) , j Bra l' N v ANDERSON CD TY BANK l  ! - i B. ./ 1h f-

                                                                                                              /4 N1               Of%ts ms,a a,,,

jj . . _ e I. i!

• -c p-g 9

{ lH L i NYPOTHECATIONe. de AGREEMENT 4Lctt f, (((jl ko,olOs 1 i ens ,3 W In consideration of Anderson County Bank loaning r. A. d Hs a l' ' 13r )~ h'AndrewCarey,StephenA. Irving, P. Disn Mealer, John H.

                              ! Smelser, Jr. and In d.' L. [A//[5 /6                           , a total amount not I to exceed Four Million Dollars ($4,000,000.00), All Chemical-l'IsotopeEnrichment,,Inc.doesherebyhypothecateandpledgeas security, its' entire interent securing such indebtednesses to h Anderson County Bank, securing Anderson County Bank in the

• unclassified equipment subject to $4,000,000.00 UCC-1 j limitation, together vith all its right, title and interest in

                                  ,! a certain contract Ce,ntrifuge Equipment Agreement and Bill of fSalebyandbetweentheUnitedStatesofAmerleaactingthrough the Secretary of Energy and the undersigned dated November 20, I

i 1987. The terms of this hypothecation are absolute.

                                    ;       WITNESS our signature this the //YL day of                              ]                                                                 ,

1988. Abt. CHEM CAL $0 TOPE ENRICi! MENT, l INC. / . Dys _. [ / fun / STEPHEN A. 1RVING Chairman of the Board e i I,,

e' . L TO: The A1 Chem!E Board of Directors The undersigned hereby of fer to A1ChemIE to provide a letter of credit in the amount of Two Million Dollars ( $ 2,0 0 0 , 0 0 0.1 in a form satisfactory to DOE under the followlng terms and conditions:

1. We will provide an irrevocable Two r1111on Dollar t.etter i

 '                             of Credit on Bank of Anderson County, satisfactory to DOE i                               requiteemnts, six months irrevocable, renewable with a reduction.

2. Fees are as follows:

(a) Two Hundred Fif ty Thousand Dollars ($250,000.) for letter of credits (bl Fifty Thousand Dollars ($50,000.1 legal fees to Joyce, Meredith, Knolton & Filteroft l (cl Tour Hundred Thousand Dollars ($400,000.3 finders and consultant's fee to Financlai Intensive Care Corporations and (di Flfty Thousand (50,0001 shares common stock to rinanclal Intonalve Care Corporation.

                                                                                                                      ,w y/(//

3. A1ChemIEsecuresloanwitgunclasslfledequipment. Five corporate representatives Individually borrow Four Hundred Fif ty Thousand Dollars ($450,000.1 to be secured by said equipment.

4. We will release all collateral f or long-term flnancing purposes upon your release of our letter of credit.

5. Financial Intensive Care Corporation and Joyce, Meredith, Knolton & F11teroft, for the aforesaid fee, continue to provlde dlligent efforts for A1ChemIE to obtain long-term financing.

6. While the Letter of Credit is In piece, a designate of Anderson County Bank will alt on the Alchemic Board of Directors.

However, the Bank v111 not supervise operations of A1 Chem!E.

7. All liquidation proceeds will be and become the property of A1ChemIE, except that from the flrat three milllon dollars (53,000,000.1 liquidated. AlChemIE will use said funds to f J

rubrtitute ce celleterel for our Two Mill!en poller Letter of Credit. l 1 l l _ _ _ _ _ _ _ - _ _ _ . - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ - _ - - _ - - - - _ - -

             , dh -
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                                            -                                                      a                hl Ifit/Y

w. ca.anx asasonN(

ANDERSON COUNTY BANK A _ _ .. .*. . s FINANCI AL INTENSIVE CARE CORPORATION 71s }}-l g y . - , . ,,.a ,% hN&AMH eoWat: .

                                                                 ,TDA2,<cis
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h& b/ cS9Ws . L a. & g i u____________________________--._____ ______ _ _ _ _ _ _ _ _ _ . _ _ _ __ __ _ _ _ _ - - . - I

h '. - - p6 N p y

        ,                    s/

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($crfificate h r El le unbersigitch, as $rcretary of $ tate ofl ti e $ tate of Mennessee,

          $u ljereby certifies l!!)nt ill e attaci eb boruntent foas receideb for fi!!ng on belg

__ att i:ntwicit timici;r snateuxtwT. rwe. h loss bulg execuleb in accorbance teilll tllc Gennessee Sencral Ear; oration inas founb to conforci to lato anh fans fileb bg !![e unbersigurb, as Secretarg of j

                       $ tate, on !! !e bate notch on Il ie becuatent.

jg

• El;rrefore,ill e unber signeb, as $rcretary of flute, anb bg dirf ue of flge i t I autljority testeh in Igles bg lafo, igerebg t issure li is certificate anb attacl es I ers knuary 7th --, 19_s7 _,

il e heruntant folgirig fuas bulg fileb on l

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                                                                                                                                                             %eseese, g

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re._ t : g (EI tt.b 681JAN*I E0 RE5tAILD CHARILR Dr ALL CHDistAL 15010PE ENRICINLHT, INC. INDER SEC110N 48-1-304 Or 1HE El(.RAL CORPORA 110N ACI 48-1-304 of the Cenerst Pursuant to the provisions of Section Corporation Act, the trsdorsigned corporation adopts the ro!!owirg reststed f charter, trionimously approved and s:cepted November 1,1986, by a vote o all shareholders of records

                           .                                                                                   ARl!CLE 1.

The nome of the corpoistion is All Chemical isotops Enrichment, Inc. For convenience and other purposes, the corporettors any operate under the name *A1Ches !L . AR11CLE II. The duration of the corporation is perpetus!. ARl!CLE 111. The address of the principal of flee of the corporation in the state of Tennessee shs11 be 702 South Illinole Averue, Suite 202-B, ook This address is in Anderson County, Tennessee. Ridge, lennessee 37830. l.RilCLE !Y. The corporation is for profit. ARilCLE V. PURPOSES Ato POWERS the Purposes for thich the corporation SEC110N 5.01 In Censrels is organized ares (A) to engsgs in the business or enrichment of non-fissils isotopes for consercist sal; ming centrifuge or laser sanufseturing to obtain necessary licenses, eschines, and manuf acturing methods: to manurseture equipeent and asterlsts, and technology tronarer to own and operats a contrifuge sachines for company use and for sale chemical asnurseturing plants to engage in research and development into possible spin off producto er contrifuge technology.

1 (B) to carry out the purposes hereinsbove set forth in any i ,,...- atste, territory, district or geesession of the linited States, or in any

                   , i< . , g M,0k M,forsi n eguptiry, to the extent that these purposes are not forbidden by the 6t1 M lene of sold state, territory, district or posseeston or the thilted States or foreign country.

SEC110N 5.02 Powers: In the furtherance of the above purposes, the corporation sha!! possess and eserciso e!! powers and privileges granted corporations by the laws of the state of Tennesses now or hereafter enacted, together with any powers incidental thereto so for es such powere and privile- - are necessary or convenient to the conduct, promotion or alleinment of the business or purposes of this profit corporation. SECIION 5.03 Transaction of Business: To transact any of the foregoing businesses, acting for itself or acting for another, or Lt. become a partner, or joint venturer, in any partnership, or joint venture, origeged in any buelness which this corporation is authorized to engage in on its own behalf, and to adopt such assumed name or noses es the corporation moy, by resolution, direct, and the directors of the corporation the!! suthorize of ficers to certify a person or persons to act for the corporation in the conduct of any business, including join' vvnture or partnerehlp business. ARilCLE Yl. SLCil0N 6.01 Number The esmisus number of shares authorized under this rest st ed charter is ILN MILLION SHARES (10,000,000) with POINT j ) ZERO DNE CENT (.01) per value. SLC110N 6.02 Section 1244 Stock: Shares soy be lesued for such consideration se is fixed from time to time by the Board of Oltectors.

• ARl!CLE Vll.

The corporation wl!! not cosamence buelness unt!! consideration of the value of at least DNE THOUSMO DOLLARS ($1,000.00) has been received 1 for the leeuerce of shares. ARilC(C Yllt. SEC110N 8.01 Preemptive Rights: All shares shall be without preemptive rights. SECTION B.02 Equal Rights: All shares shall have equel rights without *e sference. Ll:Il0N C.CJ Yctjn; Fightt: Each holdrr er the eterk cf the _.er*-.

l * ~ t 1 ONE IHOLISAW SHARES (1,000) to TEN HILLION ' SHARES (10,000,000). FLLU gtgfit.Hf 0; (bb Por value of each ehere le changed from DNE DOLLAR gj.g 1) 19 RLl TIS ($.10). (c) the company's acronym, "AICheelE" la noted in the charter news previously it' wee not listed. However, the offielo! nees of the , corporation le tricehnged. (d) The corporate addrese le changed 7tos 281 Broadwey, ook Ridge, Tennessee to 702 South 1111 nolo Avenue, Suite 202-B, ook Ridge, Tennessee, to reflect the new address of the company's office. (e) The purpose clouse hee the addition of one sentence, nees "to engage into posolbleispin off products of centrifuge technology." The menner in which any exchange, reclosolfication or cancellation of leaued shores provided for in the amendment shrll be effected le se follows: (1) Loch current ehereholder shall tender his existire eheree of stock to the corporate secretary and receive therefrom a new certificate for 5,25B oberes for each one original shore owned by the respective ehersholder. DA1LD, this the 2nd day of January,1987.

                                                                                                                                                                               ,  A lA          ///A<A -

OLpHLN A.' I RVA NE 5ecretery All Cheelcol Isoto [ Enrictament, Inc.

e e l 8 corpoMign ,shs11 have one vote in respect of each share of stock held by

                    . nf of him   akrecord t I" on t . books of the corporation on all matters to be voted hy he stockholders. The corporation does not have curuletive voting rlpit e.

SECTION 8.04 Stockholder Action Without Hosting: Any corporate action upon which a vote or stockholders is required or permitted say be taken without a meeting or vote of stockholders with the written consent of stockholders having not less then a mejority of all the stock entitled to vote upon the action if a meeting avere held, provided, that in no cose shall the written consent by holders be less than the minimum percentage of the vots required by statute flued for the proposed corporation action and further provided that prompt notice shall be given to s11 stockholders of the corporation of the taking of corporate action without a meeting and by less then unanimous consent. ARi!CLE IX. SEC110N 9.01 Cods of Bylewel the inittel Code of Bylews of the corporation shall be adopted by its Board of Directors. The power to siter, emer.d or repeal the Code of Bylaws shall be reversed to the directors in the manner set forth in the Bylews. The Code of Sylews per contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with the Tennessee Geners! Corporation Act or these Articles of Incorporation. SECllDN 9.02 Amendrent of Articles of Incorporations the corporation reserves the right to ameruf, siter, change or otherwise repeal eny provlelon pertaining the sanner now or hereafter prescribed by statue, and all rights ronferred upon stockholders herein are granted subject to this reservation. PARI 11.

1. The date the original eherter was flied by the Secretary of State woe Maqy 14, 1986.

2. The restated charter resteter the text of the charter, and further amends or changes the charter as specirled below and woo duly authorized by unanimous written consent by shareholders on November 1, 1986:

(a) The number of sherse of common stock le inscreased from ._

i' '

• l, SECURITY AGREEMENT EQUIPMENT THIS AGREEMENT, Made and entered into this b ayd of May, 1988, by and between ALL CHEMICAL ISOTOPE ENRICHMENT, INC., of Oak

                    ' *1dge, Anderson County, Tennessee, hereinafter referred to as
                ' ' Grantor", and ANDERSON COUNTY BANK of Clinton, Anderson County, l Tennessee, hereinetter referred to as ' Secured Party".

af WITNESSETH:

                    '           For and in consideration of the mutual cavenants and promises F       herein contained, Grantor and Secured Party agree as follows:

3. Definitions; as i.erein used:

h (al " Equipment

• means all unclassified equipment shown

                 , on the attached Exhibit A, and including all parts, accessories,
                     ' attachments, replacements and additions thereto, whether now owned or hereaf ter acquired by the Grantor, sygg $ mggndollar All other terms used herein shall have the meaning given in I' T .C.A. 47-9-101, et. seq. Uniform Commerical Code, Secured Y Transactions.

2. Representations and Warrantics.

                  ,                  (a) Except for the security interest of Secured Party,
                  ' the Grantor is the owner of all equipment, free from all liens,
                  , security interest, encumbrances, or other right, title or interest I and the Grantor shall defend the equipment against all claims and

• demands cf all persons at any time claiming the same or any

                  , interest therein adverse to the Secured Party.

(b) Except for the financing statement filed or to be I' filed in respect of and for the security interest of the Secured l: Party herein, no financing statement is now on file in any public fofficecoveringanycollateraloranyproceedsthereoforinwhich dthe Grantor is named as or signs as "a debtor", and so long as any amount remains unpaid on any indebtedness or liabilities to

                       ' Secured Party, the Grantot will not execute and there will not be        '

on file in any public office any such financing statement. . i. 4 (c) All equipment presently owned or hereafter acquired I'by Grantor is and will be kept at the following location: U US DOE - PIKEVILLE, OHIO & Ot.IVER SPRINGS, TENNESSEE

                    and Grantor will promptly notify Secured Party of any change in or addition to the location above set forth, it being understood that except for the prior written conseht of Secured Party, no pcollateralshallbetakenoutoforbelocatedorkeptoutsideof dTennessee.

(d) Grantor's chief place of business is: Pine Ridge Office Park, 202-B, 702 S. Illinois Avenue, Osk Ridge, Tennessee, 37830 I' b o (1) d

                    'l.:

il . u

]+ y l' 3. Security Interest: ^ Promlee to Pey. l I' , Grantor acknowledges that Secured Party own, and the debt I hherebytransfers,grantsandconfirmsuntotheSecuredParty,a j,securityinterestinallequipmentoftheGrantor,nowowned,as [wellasanyandallequipmenthereafteracquired,tosecurete

                                 ! payment of various indebtconesses owed to Sec7 ed Part
                                 , Dr. A. Andr w C rey, Stephen A. Irving, L .'d _f M A           k)n - is f

h41 andbuc' lith Wilson, and Grantor in a total amount not.to !"  ! exceed $4,000,000.00, said notes being payable to the Secured hParty, and also a*e and all extensions and renewals thereof, and l ' all costs and expenses, including reasonable attorney fees,

                                     ' incurred by the Secured Party in the collection and enforcement of ithe note and enforcement and protection of the security interest 1 thereby created, and any and all indebtedness and liabilities of
                                 ,l Grantor and the above individuals, to the Secured Party now-.
                                 ', existing or hereaf ter incurred, natured or unmatured, direct or l' contingent,andanyrenewalsandextensionsthereofand
                                   ,substitut. ions therefor whether same be several, joint or joint and
                                   !several.

O 4. Repossession Inspection. O Secured Party may, at any time, and without regard to whether Grantor is in default, take possession of the equipment

                                   '. remaining in the possession of Grantor or in the possession of any

[personotherthanabuyerfromtheGrantorintheordinarycourse pofbusiness. Secured Party may enter into premises without legal

                                'pproecssforsuchpurposeorforthepurposeofexamining equipment. Grantor shall provide access to the premises and records of Grantor for such purposes whenever requested by secured Party.
                                .           5. Protection of Equipment.

i (a) Grantor shall not rent, sell or lend any of the equipment or cause or permit any lien or security interest I,therein, other than the security interest of secured party without the written consent of Secured Party.

                                   .            Ib) Grantor shall keep the equipment properly housed and Uprotected against loss or damage by the elements or otherwise.

(c) Grantor shall pay when due all taxes on equipment and f lany and all other charges.

                                ]

4 (d) Granter agrees, at Debtor's own expense, to keep all htheequipmentinsuredtothefullinsurablevaluetherof, (with insurance companies satisfactory to Secured Party) and with loss hpayableclausest.oSecuredPartyasitsinterestmayappear,

                                'lagainstlossbyfire, theft,andsuchotherhasardsasSecured Party may direct, and pay promptly when due all taxes or assessments on the equipment as well as all costs and expenses
                                   ~ incurred or accruing in connection with the custody, care and ypossessionthereof,andtomaintaintheequipment,inatleastas Lgocid condition as wher, received by the Grantor.

l (2) i

                               'i N

        .e                 - e.

w,

    .s+

'I: , (e) Grantor shall turnish Secured Party certificates or other evidence satisfactory to. Secured Party of compliances with the insurance and other covenants of this section contained. (f) Grantor agrees to execute and delavor ruch financing jstatementorstatements,oramendmentstheretoorsupplements

                                            # thereto, or other instruments as Secured Party may,.from' time to.

r i time, require in order to comply <with the provisions of the Uniform Commercial Code and to preserve and protect the security-

                                             ' interest thereby granted. In the event for any reason, the law of f a jurisdiction other than that of the State of Tennessee or that of the State of Ohio becomes or is applicable to the collateral or Iany part thereof, or to any loan by secured Party, the Grantor agrees to execute and deliver all such instruments and to do all-a such other things as may be necessary or appropriate to preserve,
                                             , protect and enforce the security interest and lien on the Secured

Party under the law of such other jurisdiction at least to the same extent as such security interest would be protected under the provisions of the Uniform Comunercial Code as adopted in the State -

                                              '; of Tennessee and the State of Ohio. Grantor will pay all costs of
                                              ; filing, financing, continuation and termination of statements, I with respect to the security interest interest created hereby.

(g) In the event Grantor fails to maintain insurance or pay taxes, assessments, costs and expenses which t.he Grantor is under any of the terms hereof, required to pay, or fails.to l# maintain.the collateral or to keep t.he collateral free from other ' security interests, liens or encumbrances, Secured Party may make j expenditures for any or all such purposes and the amount so ifexpensed, together with interest thereon at the highest legal rate

                                              'Ll of interest, shall become inanediately due and payable by the lfGrantortoSecuredParty,andthesameshallhavethebenefitof                                                               j and be secured by the security interest herein granted and agreed to.                             All costs and expenses of Secured Party in retaking, holding,                  l

[preparingforsale, and selling the equipment in the event of any default by Grantor, including court costs, reasonable attorney's ifees,andlegalexpenses,shalllikewiseconstituteadditional indebtedness of the Grantor, which the Grantor promises to pay on

demand and which shall be entitled to the benefits of and secured by this security agreement.

6. Default; remedies.

                                                                                             on default in payment of any indebtedness of Grantor to               ;

4 Ii Secured Party, or in the performance of any agreement of Grantor ' , l lt iwith Secured Party, Secured Party, may, at its election, declare

                                               !,any indebtedness then owing by Grantor to Secured Party                                                             4 inunediately due and payable and shall have with respect to all j
                                                    . collateral in which Secured Party has the securiti interest, lincluding, but not limited to equipment and all the remedies                                                 i I

l 1 l i (3) I

i,1 11

                                              .I' s

______m_____

() '.' '

• I:

g provided herein,' in any agreement with Grantor, by T.C.A. 47-9-501

     ,.                                                                                                      All ig sgg., of the State of Tennessee, or otherwise by law.

y remedies are cumulative and may be exercired concurrent 2y or i

successively. Any requirement of the code for reasonable notice

                                          ,to the Grantor shall be met, if such notice is mailed postage

[ prepaid, to the Grantor at the address shown on Section 2(d)

                                        } hereof at least. five (5) days before the time of the sale, dir. position or other event or thing giving rise to the required notice.

7. Waiver.

Failure to exercise any right shall not be construed as a

                                           ' waiver of any covenant or condition in this security agreement, nor shall such failure affect the exercise of such right on any fsubsequentbreachofthesameoranyothercovenantorcondition.

I j' B. This instrument cennot be modified without the written i, consent of the parties, and no waiver of any provision of this

                                            ' instrument shall be valid except by writing signed by all parties.

j IN WITNESS WilER F, we have hereunto set our hands and seals

                                            'this       L day of     VLAk1             , 1988.

ALL C CHMENT, INC.

                                                                                   $tefhen   A. Irving Chairman of the Boa ANDE ON CO         , BANK BY         /            .

W illiam H. Arowood, Presi'ient t (4) l i t

                                              .I i

b

> L

    .w-    m e ":
                 ,I
         .       l?

f fI. ANDERSON COUNTY BANK CONTRACT RIGHT1

                    '                                  SECURITY AGREBMENY

( The undersigned, All Chemical Isotope Enrichment, Inc., hereinafter referred to as " Grantor", does hereby assign and grant unto Anderson County Bank a security interest in all contract rights and the proceeds thereof whleh the Grantor now has or may acquire at some time in a certain Centrifuge Equipment Agreement and SL11 of Sale by and between the United States of America, acting through the Secretary cf Energy, and

                      -         the Grantor, dated November 20, 1987, as security for the indghtedness of Dr. A. Andrew Carey, Stephen A. Irving, De.

i p, Via.e f.Iro(~ y J.J>., If. Srv4 e , 9 BrM-- * . 1:r6 r:n..i. L. Leil, and Judith Wilson, collectively i referred to as " Debtor", each in the amount of Four Hundred-Fifty Thousand Dollars ($450,000.001 as evidenced by promissory And MyCLn ts [ e,4 laf5 bv Io .5Cm J Qe& notg and such amount payable to Anderson County Bank, hereinafter ' Secured Party". The Grantor does hereby irrevocably designate and appoint Andernon County Bank as its lawful attorney for and in its name, place and stead to ask, demand, receive, receipt and give acquittance for any and all amounts which may be or become due

                      ,, or payable under said Contract or any amendments or supplements 6

ll thereto. This Security Agreement is given to secure the payment and performance of all loans heretofore or herewith made the above Debtors and any future advances made by Secured Party to Debtor and also any and every other obligation or liability, direct or indirect (including overdrafts), of Debtor to secured Party, and claims of every nature and description of Secured Party against Debtor now or hereafter existing.

• Secured Party shall have the right to notify any party or

                            ,    parties obligated on the assigned Contract to permit Secured Party to act as Grantor at any time when the Grantor is then in default hereunder. Untti such time an Secured Party elects to excrcisc such rights, Granter 1r authortred, an agent of the Secured Party, to enforce said Contract. The costs of such i

e f

     --    u I

j~ l collection ~and enforcement, including attorney's fees and out-of-pocket expenses, shall be borne solely by Grantor whether the same are Incurred by Secured Party or Grantor. DESTOR HEREBY COVENANTS, REPRESENTS AND WARRANTS AS j FOLLOWS6 t

1. Grantor warrants in connection with the Contract right l

L covered by thls Agreements (al it arises under an existing [I binding wr16 ten contract between Grantor and the other party

                                       !i thereto, and represents a bona fide transactions (b) the title
                                          ; of Grantor to the Contract right is absolutes (c)                                                                                              the Contract right has not been transferred to any other person, and no person, except Grantor, has any claim thereto; and (d)'no set-off or counterclaim to any moneys due under such Contract exists an of the date of the assignment, and no agreement has
                                          '   been made with any person under which any deduction or discount snay be claimed, except as set forth in the Contract.

i

                                          .         2. Grantor wl11: (a! inform Secured Party immediately of delay in performance, or ciales made, in regard to the Contracts (b) furnish to Escured Party all Information received

[6 by Grantor effecting the Contract.

3. . Grantor shall execute from time to time, alone or with l{SecuredParty,anyfinancingstatementsorotherdocumentsand

                                           ; do such other act or acts considered by Secured Party to be
                                       !,necessaryordesirabletoperfectorprotectthesecurity interest hereby created, and shall pay all costs and expenses t

(including, without limitation, reasonable fees and expenses of i counsel and filing fees) related to the preparation and filing of any financing statements or other securlty interest hereby created. I ti 4. That the Contract shall not be modified except with il

l. the written concurrence of Anderson County Bank.

DEFAULT Time is of the essence in this Security Agreement and Debtor shall be in default upon the happening of any of the { followings (a) Any failure to pay when due the principal and L interest, or other obligations or changes secured hereby (b) N i t

                                       !e                                                              2
                                       .I

m b g m. r l any failure to perform or observe any term or agreement hereins ,

         ; Ic) If Grantor or Debtor becomes insolvent or la the nubject of-I a petition in bankruptcy, either voluntary or involuntary, or In any other proceeding under the federal bankruptcy laws or
         ' makes an ansignment for the benefit of creditors or is subject to any proceeding for reorganization, arrangement, readjustment of debt, dissolution or liquidations or if Debtor or Grantor 13 I
           , named in, or any of any Debtor's or Grantor's property is j subject to, a suit for the appointment of a receiver; or if Grantor fails to maintain its corporate existence in good
           . standing.

j Upon the happening of any of the foregning events of hdefault,theentireindebtednesssecuredherebyshall,atthe I option of Secured Party, become Asunediately due and payable without notice or demand, and Secured Party shall have the immediate right to pursue all remedies provided by law; and

           ! without limiting the generality of the foregoing, Secured Party 6
           !.mayexerrelsethefollowingrlqhtsandremedies:

1. Secured party may notify the U. 5. Department of I

• Energy that it is exercising its rights under the Security i

N Agreement and thereafter exercise all those rights of Grantor 8 under the Security Agreement. j; 2. Grantor hereby agrees that a notice sent to it by i first class mail five days before the time of any public sale j or the time after which any private sale or other disposition J of the Contract is to be made, shall be deemed to be reasonable

! notice of such sale or other disposition.

h Secured Party may incur reasonable attorneys' fees and

           %               3.

t' legal expenses in exercising its rights and remedies upon

           -     , default or in protecting or defending the priorities of Secured j I Party's interests in the Contract. Grantor agrees to pay such t

• reasonable attorneys' fees and all court costs, expenses of ftitlesearch,andcostsofpublicofficials,allofwhichshall d'

g become part of Secured Party's reasonable expenses of retaking, j, holding, preparing for sale,. selling or the like and shall be part of the debt secured hereby. I I i

                              '                      3 l

i. 1 .- ,

                              'i  -

!4 ' 4. This Agreement made and entered into by and between (thepartiesinAndersonCounty, Tennessee,andthesameshall

                                  ; he governed by the laws of the State of Tennessee.

i MISCELLANEOUS: No failure on the part of Secured Party to exercise, and no delay in exercising, any right or remedy hereunder shall [ij operate as a walver thereof, nor shall any single or partial-

                                   ' exercise by Secured Party of any right or remedy hereunder
                                    ! preclude any other or future exercise thereof or the exercise of any other right or remedy. This' Security Agreement and the j rights and obligations of the parties hereunder, including
                                    ! remedies on default, shall be construed and interpreted in i accordance with the laws of the State of Tennessee. Any notice i

or notification required'to be given may be given by malling {suchnoticebyfirstclassmall,postageprepald,toGrantor's address as it appears after Grantor's sigrature hereto. All the terms, conditions and covenants of this Security Agreement lshallenuretothebenefitofandbindthesuccessorsand assigns of the respective parties hereto. This Security l Agreement may not be changed orally, but only by an agreement hinwritingandsignedbythepartyagainstwhomenforcementof any waiver, change, modification or discharge Is sought. The acceptance of this assignment by Secured Party shall not obligate it to perform any duty, covenant or obilgation

                                   !         required to be performed by Debtor under and by virtue of said Contract or any amendments or supplements thereto.

SIGNED this M day of Ab u ' , 1988. ALL CHE CAL PE E HMENT, INC. , f By: 81)* Q

                                                                                                                                                                                                        ~
                                                                                                                                                  *"(Gfantor)

YOObl$innf$ d1 O~0 (Address bf Orantor) E t1 5- e ANDERSON N Y BAW f _- a y

• Af

                                                                                                                                                     ~Litle) h)

( 4

;                                                                                                                          iL_
                        $                                                                              s                  .m  4 hAKhemIE,Inc.

9-All Chemical isotope Enrichment, Inc. WQ August 31, 1989 Mr. Hugh L. Thompson, Jr. Executive Director for Nuclear Materials Safety, Safeguards, and Support Mr. Jerry Swift Mr. Bernard Bordenick Nuclear Regulatory Commission Washington, DC 20555 In the matter of: All Chemical Isotope Enrichment, Inc. Pine Ridge Office Park 702 S. Illinois Avenue, Suite 202B Oak Ridge, Tennessee 37830 Docket No.# 50-603 and 50-604 License No. CPEP-1 and CPEP-2 Gentlemen: I have received from you a copy of the ORDER MODIFYING LICENSES and the ORDER TO SilOW CAUSE WHY LICENSES SHOULD NOT BE REVOKED. Since receiving this correspondence . and on Tuesday, August 29, 1989, I spoke to Mr. Bordenick and Mr. Swift about this matter. Please allow me to briefly summarize this conversation. I advised Mr. Bordonick and Mr. Swift that in my analysis, your action raises three basic questions:

1. Did A1ChemIE deceive the Nuclear Regulatory Commission with regard to information presented on status of our finances, specifically our arrangement with Anderson County Bank?

2. Does A1ChemIE have the cresent day financial ability to proceed with its project in a fashion which will provide adequate protection for national defense and security?

3. Is there any purpose for A1ChemIE's having a license if, in fact, the contract with the Department of Energy has been appropriately terminated?

I advised Mr. Dordenick and Mr. Swift of A1ChomIE's opinion on this matter: Jp.$/h/dE h Pine Ridge Office Park, Sutte 202-8 702 I!!inois Ave., Ook Ridge, TN 37830 (615) 482-0029

. ff . - Mr. Hugh Thompson M' 'Mr. Jerry Swift

1. :Mr. Bernard Bordenick N August 31, 1989

       -Page 2

1. A1ChemIE has not at any time deceived or intended to-deceive the ' NRC with any information presented with regard to the corporate financial status, particularly I will subsequently present the relationship with Anderson County Bank.

                            . documentary-information which will prove and attest that-the A1ChemIE-Anderson County . Bank relationship was smooth and in good standing from November 4, 1988 through the Licensing Hearings and generally up until the late spring of 1989.

2. The A1ChemIE Corporation does have financial capability to-

                  . proceed with its planned scope of operation in a fashion that offers adequate protection for common dafense and security and fully effectuate security plans and arranfpments between A1ChemIE and the NRC.

3. It is A1ChemIE's position that the contract with the DOE has been satisfied by the A1ChemIE Corporation. . We further feel DOE-ORD has taken actions - beyond our control - which have impeded . and intefered with our ability to perform. This matter may require elaborate evidence, which is available to A1ChemIE, and which ' would ' be best preeented in the hearing on this matter.

Gentlemen, I will shortly be sending the formal written response to'your. ORDER MODIFY LICENSES and your ORDER ~TO SHOW CAUSE WHY LICENSES SHOULD NOT BE ' REVOKED. I believe A1ChemIE can show sufficient cause why the Licenses should not'ba revoked and we are ' able to continue with our operations as planned. In that formal response, and by this letter, I will be and am requesting-a Hearing in this matter, where evidence can be presented on issues raised by the Nuclear Regulatory Commission. Gentlemen, throughout A1ChemIE's Technology Transfer effort the Nuclear Regulatory Commission has been fair and intelligent in protecting its reasonable concerns without undue burden to the A1ChemIE has business affairs of the A1ChemIE Corporation. tried at all times and-in all regards to be upfront and fully open with the Nuclear Regulatory Commission regarding all partinent information on the issues between the parties. I look

        . forward to resolving these issues with the Nuclear Regulatory Commission and I hope that we will also reach a resolution with the Depart tent of Energy regarding those issues or conflicts which currently impede the success of this important Technology Transfer.

Respectfully submp)tted, -

                                /s                s LOL '  ..

fitaphen A. Irving i Attorney of Record SAI/bc _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ = --

l' 1 I Construction Permits Acs. CPEP.1, CPEP-2 . Docket hos. 50-603, 50 604 Stephen A. Irving Esq. All Chemical Isotope Enrichment, Inc. t0 g i Pine Ridge Office Fark, 202.B 702 S. 1111nois Avenue Oak Ridge, Tennessee 37830

Dear Mr. Irving:

                                                                                                          }

Enclosed is an Order, effective imediately, modifying Construction Permits hos. i CPEP-1 anc CPEP.2 to require r. notification of the Comission before All Chemical Isotope Enrichment, Inc. (licensee) takes possession of any classified equipment, and requiring the licensee to show cause why Construction Pennits Nos. CPEP.1 and CPEP.2 should not be revoked. The enclosed Order has been issued because I find that I lack reasonable assur. { ance that the licensee can proceed with the proposed activities in compliance j with the Comission's requirements and in such a way as to assure adequate 4 prctection of the comon defense and security of the United States. In accordance with 52.790 of the NRC's " Rules of Practice," Part 2 Title 10, Code of Federal Regulations, a copy of this letter and the enclosed Order will be placed in the NRC's Public Document Room. i The responses directed by this letter and accompanying Order are not subject to the clearance procedures of the Office of Management and Budget, as required by the Paperwork Reduction Act of 1980, PL 96 511. Sincerely, (Egned! Hugh L 'hempter, t, Hugh L. Thompson, Jr. Deputy Executive Director for Nuclear Materials Safety, Safeguards, ano Operations Support

Enclosure:

Order Modifying Licenses CERTIFIED KAIL PETURh RECElFT REQUESTED Distribution: w/ encl. Project M.47 PDR Docket 50 603/50 604 NRC File Center Reg II DWeiss, LFMB DKasun SGDB RGramann, SGIB NM55 R/F IMSB R/F SHO GSjoblom IMF R/F NMSS Office R/F GTroup, RII s REtunningham J5wift CNilsen, RES RBrady, SEC ' RFonner,OG{% FBrown (2) 5 6olch Ekraus % *see previeuMgg , //wy , ,,c , 0FL: OGL: W l jff..../

                                                                                                                                        /IMNS NAME,                    S.M t :j c :    c'k i d t._ *; :                 L r,c st:            G5      iom:                   ;

D$EN81 159 bh$bh P'A!90 f

                                                                                                                             .. _ P _' m,^
                                                                                                                     .9
                                            )/IMh5:

OFC: D /hM55: hM55: g DED5: E:4 E D.?- p et: A u rktte: HTnompstr.

                                      . . . . . . . . . . . . . . . . . . . . . . . . ./. . . . . . . . . . . ...........................
                                                                                                                               . . .. . . . . . . . RME e rne'r o :

DATE:B/#/69 8/ /5)E,9 8//r'/89 8/ /89 mmm_c5WAm n DC

• M ^'"'

(: Constructicr Pemits Ncs. CPEP.1, CPEP.2 - -

  ,            Docket Nos. 50-603, 50 604 Stephen A. Irving Esq.

All. Chemical Isotope Enrichment Ir.c. Pine Ridge Office Park, 202-8 701 S. Illinois Avenue Oak Ridge. Tennessee 37ESO

Dear Mr. Irving:

Enclosed is an Crcer, effective imediately, that Construction Permits Nos. CFEP.1 and CPEP-2 are n.ocified requiring notification of the Commission before licensee takes possession of any classified equipment, and that the licensee show cause why Construction Permits Nos. CPEP-1 and CPEP.2 should not be revoked. The enclosed Order has been issued because I find that.I lack reasonable assur-ance that the licensee can proceed with operations in compliance with the Comission's requirements and in such a way as to assure adequate protection of the common defense and security of the United States. In accordance with 92.790 of the NRC's " Rules of Practice," Part 2. Title 10 Code of Federal Regulations a copy of this letter and the enclosed Order will be placed in the NRC's Public Document Room. The responses directed by this letter and accompanying Order are not subject to the clearance procedures of the Office of Management and Budget. as required by the Paperwork Reduction Act of 1980, PL 96-511. Sincerely, Hugh L. Thompson, Jr. Deputy Executive Director for { Nuclear Materials Safety, Safeguards, 1 and Operations Support

Enclosure:

Order Modifying Licenses CERTIFIED MAIL  ! kETURN RECEIPT REQUESTED Distribution: w/ enc 1. Project M.47 PDR Docket 50 603/50 604 - NRC File Center Reg II DWeiss, LFMB DKasun,5GDB 1 RGramann, SGIB NMSS R/F IMSB R/F SHO GSjoblom IMAF R/F NMSS Office R/F GTroup RII REtonningham JSwift Chilsen, RES RBrady, SEC RFonner, OGC FBrown(2) l Etraus 0FC:I - OGC: IMSF: 1

           . . . . . h 'j                                                     DD/IMNS
                            ........................................... 1...................

l NAME:Je wlft:jc: JGolaberg: LCRouse: GS blom:

           .........................................................h..                                  g................

DAM :b//~// M a L/ /M 8/ /89 8/ /89

           'U    ' ' ' '

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                                               .                       v MME:RECunninFnfliii '               GArlotto:               RMBernero:                                                 HThompse Ni .E., r, H                        6/ /89                  8/ /89                                                     8/ /89 0FFICIAL RECORD COPY

4 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of: ) Docket Nos. 50-603 All Chemical Isotope Enrichment, Inc. ) 50-604 Pine Ridge Office Park, Suite 202-B ) 702 Illinois Avenue ) License Nos. CPEP-1 Oak Ridge, TN 37380 ) CPEP-2 ORDER MODIFYING LICENSES AND. GROER TO SHOW CAUSE WHY LICENSES SHOULD NOT BE REV0KED I All Chemical Isotope Enrichment, Inc. (A1ChemIE or licensee) is the holder of Construction Permits (licenses) numbered CPEP-1 and CPEP-2, issued by the Nuclear Regulatory Commission (NRC) pursuant to 10 CFR Part 50. Construction Permit No. CPEP-1 was issued on February 10, 1989, and was amended on June 20, 1989, to extend its latest date for completion to November 3, 1989. Construction Permit No. CPEP-2 was issued on February 10, 1989, and has a latest date for completion of Merch 31, 1992. Construction Permit No. CPEP-1 authorizes the modification of the existing Centrifuge Plant Demonstration Facility (CPDF) at the U.S. Department of Energy's (DOE) Oak Ridge Gaseous Diffusion Plant. Specifically, CPEP-1 also authorizes the licensee to acquire ownership of and take possession of security-classified gas centrifuge machines and associated classified equipment capable of enriching uranium, to transport the equipment as necessary, and to conduct, in the CPDF, tests using up to two gas centrifuge machines. CPEP-1 also provides for the implementation of security and safeguards measures at CPDF and modification of that facility to enrich stable isotopes. Construction Permit No. CPEP-1 also authorizes the licensee to possess uranium as calibration sources and as contamination on the machines. Construction Permit No. CPEP-2 authorizes the licensee to construct in Oliver Springs, Tennessee, a new facility for the enrichment of stable isotopes, anc to possess uranium as calibration sources and as contamination on gas centrifuge machines and associated equipment brought from the Department of I g 1 __O

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   ,           Energy's Gas Centrifuge Enrichment Plant (GCEP). To date no construction           l activities have been undertaken pursuant to Construction Permit No. CPEP-2.
                                                                                                     .i II The licensee's proposed enrichment of stable isotopes would utilize classified gas centrifuge equipment. Specifically, this gas centrifuge equioment has been tested by the DOE and has been shown to be capable of producing special nuclear material in the form of enriched uranium in such quantity as to be of significance to the common defense and security. Consequently, tMs equipment is a produc-tion facility which must be licensed in accordance with the Atomic Energy Act of        '

1954, as amended (Act) (see Sections liv, 101 and 103). Section 103 production facilities are licensed pursuant to 10 CFR Part 50. Under 10 CFR Part 50, the applicant for a license is required to submit infrmation showing that it is financially qualified to carry out, in acco-dance with the Commission's regulations, the activities for which the licen e is sought. In judging the adequacy of an application, she Commission must find, inter alia, that the applicant is financia'ly qualified, and that the it.suance of a license will not be inimical to the common defense and security. As described in the Federal Register Notice of the construction permit proceeding on this licensing action for CPEP-1 and CPEP-2 (52 FR 15315, April 28, 1988), one of the issues in this construction permit licensing proceeding was whether the applicant (now licensee) is technically and financially qualified to modify and construct the proposed facilities in such a way as to assure adequate protection of the common defense and security. In that proceeding, the licensee provided written evidence and testimony in hearings of the Atomic Safety and Licensing Board. Based upon that information, the staff found that the licensee was technically and financially qualified to modify the existing CPDF facility in such a way as to assure adequate protection of the common defense and security; this finding appears in Construction Permit CPEP-1. A similar process led to a similar finding regarding construction of the proposed facility in Construction Permit CPEP-2.

3 Sincel issuance of the construction permits, certain events and:information materially affect the findings and conclusions required for issuance of the

                            ~ construction permits.

A letter of June 14. 1989, from Elbert M. Cooper, Jr. ,

attorney for -the Anderson. County Bank, (Bank), to A1ChemIE, asserts that AlChemIE has certain. loans with the Anderson County Bank, which loans were due and payable in full on November 4,1988. Further,--it is asserted in the letter that the notes were seven months delinquent on June 4, 1989. Contrary to these assertions, the licensee's submittals to the.NRC staff and the Licensing Board of November 11, 1988, December 19, 1988, and January 4, 9, and 17,1989,

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consistently presented an optimistic picture of, inter alia, its ability to obtsin bank loans. Specifically, AlchemIE failed to' notify the staff or the Licensing Board that its loans with the Bank were delinquent during the l period of the licensing review.

                          .By letter dated June 26, 1989, A1ChemIE notified the Commission that, for protection from creditors, AlchemIE had filed for reorganization in the United States Bankruptcy Court for the Eastern District of Tennessee (Case #89-01095RS-11A). I Pursuant to 10 CFR.S 50.54(f), in a letter dated July 17, 1989, the Director, Office of Nuclear Material Safety and Safeguards, required A1ChemIE to provide in writing, by August 15, 1989, urder oath or affirmation, answers to the request for information which was attached to the letter as Enclosure 1.            The information was required for purposes of determining whether or not A1ChemIE is currently in compliance with the licensing basis for Construction Permits Nos.

CPEP-1 and CPEP-2. On August 15, 1989, documents were received from AlchemIE in response to that request for information. Based upon our review of these documents, AlChemIE has not demonstrated that it is' financially qualified to conduct the activities under its license. By letter of August 11, 1989, DOE advised AlchemIE that the Sales Agreement, (Contract No. DE-R005-880R21776 titled " Centrifuge Equipment Agreement and Bill of Sale," dated November 20, 1987), between DOE and AlchemIE for, inter alia, transfer to AlchemIE of gas centrifuge machines at DOE's Gas Centrifuge Enrichment Plant, was to expire on August 15, 1989, and would not be extended by 00E. DOE indicated that its decision not to extend the Sales Agreement i was " based substantially on the continuing failure of A1ChemIE to meet con-tractual commitments to the DOE, ana the clear indication that AlChemIE is in j m-

r 4 no position now or in the forseeable future to meet those commitments." Finally, DOE stated, "[i]n addition to not extending the Sales Agreement with AlChemIE, the DOE will discontinue discussions with AlchemIE on the sale of centrifuge equipment contained in and the lease of the Centrifuge Plant Demonstration Facility located at the Oak Ridge Gaseous Diffusion Plant." III Based on the above, it appears that the licensee failed to fully and accurately disclose to the staff or the Licensing Board its true financial condition during the licensing review period when it was presenting documents and testimony before the Board. The apparently incomplete and inaccurate information which the licensee did provide led the Staff to find that the licensee was financially qualified to modify and construct the facilities in such a way as to assure adequate protection of the common. defense and security, and to issue Construction Permits Nos. CPEP-1 and CPEP-2.Had the staff known the licensee's true financial condition, the staff would not have issued construction permits to A1ChemIE. The NRC must be able to rely on its licensees to provide complete and accurate information. Section 50.9(a) of 10 CFR Part 50 specifies that information provided to the Commission shall be complete and accurate in ali material respects. Section 186 of the Act provides for revocation of any license for any material false statoent in the application o upon obtaining other information which would warrant the Commission to refuse to grant a license on an original application. The licensee's disregard of the Commission's need for complete and accurate information in this instance cannot and will not be tolerated. Furthermore, the issuance of the construction permits to AlchemIE was based upon the licensee taking possession of the classified gas centrifuge equipment under the terms of the Sales Agreement. A1ChemIE has failed to take possession of the equipment and, based upon DOE's decision not to extend the said Sales Agreement, has no further opportunity to take possession. Without possession of the gas centrifuge machines, the projected activities for which AlChemIE sought licenses cannot occur. Thus, there is no longer any purpose for Construction Permits CPEP-1 and CPEP-2. ' l

V 5 For all the above reasons and because I find that I lack the requisite reasonable assurance that the licensee can proceed with operations under Construction Permits Nos. CPEP-1 and CPEP-2 in compliance with the Commission's regulations and in such a way that there will be adequate protection of the common defense and security, I have determined that Construction Permits Nos. CPEP-1 and CPEP-2 should be modified to require notice to the Commission prior to licensee's taking possession of classified equipment. Furthermore, pursuant to 10 CFR S2.201(c) and 2.204, I find that the~public interest requires that this Order Modifying Licenses be immediately effective and that no prior notice is required. IV Accordingly, pursuant to sections 103, 161b, 161c, 161i, 161o, 182 and 186 of the Atomic Energy Act of 1954, as amended, and the Commission's regulations in I 10 CFR $2.204 and 10 CFR Part 50, IT IS HEREBY ORDERED, EFFECTIVE IMMEDIATELY, THAT CONSTRUCTION PERMITS NOS. CPEP-1 AND CPEP-2 ARE MODIFIED AS FOLLO As Condition III.12 in CPEP-1 and as Condition III.11 in CPEP-2 is added the following: Licensee shall notify in writing the Director, Office of Nuclear Material Safety and Safeguards, 0.5. Nuclear- Regulatory Commission, Washington, D.C. 20555 and the Regional Administrator, NRC Region II,101 Marietta Street, NW, Suite 2900, Atlanta, GA 30323, at least 30 days before taking possession of any classified equipment. V IT IS FURTHER DRDERED THAT LICENSEE SHOW CAUSE WHY CONSTRUCTION PERMITS N05 CPEP-1 AND CPEP-2 SHOULD NOT BE REV0KED. Pursuant to 10 CFR 2.202(b), the licensee may show cause why its licenses should not have been modified and why

         'its licenses should not be revoked, by filing a written answer under oath or affirmation within 20 days af ter the date of issuance of this Order, setting forth the matters of fact and law on which the licensee relies. The licensee may answer this Order, as provided in 10 CFR 2.202(d), by consenting to the pravisions specified in Section IV above.
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l 6 I VI 1 Pursuant to 10 CFR 2.202(b), the licensee may, in its answer filed under Section V, request a hearing. The licensee or any other person adversely affected by this Order may request a hearing within 20 days of its issuance. Any answer to this Order or any request for hearing shall be { { submitted to the Director, Office of Nuclear Material Safety and Safeguards, i j U.S. Nuclear Regulatory Commission, Washington, D.C. 20555. Copies also shall l t ) be sent to the Assistant General Counsel for Hearings and Enforcement at the i same address and to the Regional Administrator, NRC Region II, 101 Marietta Street, NW, Suite 2900, Atlanta, GA 30323. If a person other than the licensee l requests a hearing, that person shall set forth with particularity the manner l in which his interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.714(d). Upon the licensee's consent to the 3 provisions set forth in Section IV of this Order, or upon failure of the I j licensee to file and answer within the specified time, and in the absence of any other request for a hearing, the provisions specified in Section IV above shall be final without further Order or proceedings. AN ANSWER UNDER SECTION V OR A REQUEST FOR HEARING UNDER SECTION VI 0F THIS ORDER SHALL NOT ST IMMEDIATE EFFECTIVENESS OF THIS ORDER. Upon the failure of the licensee to file an answer within the specified time, and in the absence of any other request for a hearing, Construction Permits CPEP-1 and CPEP-2 are revoked and this action shall be final without further Order or proceeding. If a hearing is requested by the licensee or a person whose interest is adversely affected, the Commission will issue an Order designating the time and place of any hearing. If a hearing is held, the issue to be considered at such hearing shall be whether this Order should be sustained. FOR THE NUCLEAR REGULATORY COMMISSION l

                                                  @ned.! Ngh . Demosos, k, Hugh L. Thompson, Jr.

Deputy Executive Director for Nuclear Materials Safety, Safeguards, and Operations Support Dated at Rockville, Maryland this 6 th day of August, 1989 ) l 1 _______-____________________D}}