[Title] LEASE AGREEMENT FOR SPECIAL NUCLEAR MATERIAL BETWEEN THE GOVERNMENT OF JAPAN AND THE UNITED STATES ATOMIC ENERGY COMMISSION ACTING FOR AND ON BEHALF OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA

LEASE AGREEMENT FOR SPECIAL NUCLEAR MATERIAL BETWEEN THE GOVERNMENT OF JAPAN AND THE UNITED STATES ATOMIC ENERGY COMMISSION ACTING FOR AND ON BEHALF OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA

THIS LEASE AGREEMENT (hereinafter referred to as the "Lease") is entered into this 30th day of October, 1964, by and between the Government of JAPAN (hereinafter called the "Lessee") and the UNITED STATES ATOMIC FNERGY COMMISSION (hereinafter called the "Commission") acting for and on behalf of the Government of the United States of America.

WHEREAS, The Parties hereto desire to establish the terms and conditions applicable to the lease of special nuclear material to the Lessee pursuant to the Agreement for Cooperation; and WHEREAS, this Lease is authorized by and executed under the Agreement for Cooperation;

NOW, THEREFORE, the Parties hereto do mutually agree as follows:

ARTICLE I DEFINTIONS

As used in the Lease:

a. The term "Act" means the United States Atomic Energy Act of 1954, as amended.

b. The term "Agreement for Cooperation" means the Agreement for Cooperation between the Government of Japan and the Government of the United States of America Concerning Civil Uses of Atomic Energy, signed at Washington on June 16, 1958, as amended by the protocol Amending the Agreement for Cooperation between the Government of Japan and the Government of the United States of America Concerning Civil Uses of Atomic Energy, signed at Washington on October 9, 1958, and the Protocol Amending the Agreement for Cooperation between the Government of Japan and the Government of the United States of America Concerning Civil Uses of Atomic Energy, signed at Washington on August 7, 1963, and as the said Agreement for Cooperation, as amended, may be amended or supersede.

c. The terms "Atomic Energy Commission", "Commission" or "AEC" mean the United States Atomic Energy Commission or any duly authorized representative thereof.

d. The term "base charge" means the United States dollar amount per unit of special nuclear material in standard form and specification in effect as of the time any particular transaction under this Lease takes place, as set forth in schedules published by the Commission in the United States Federal Register from time to time.

e. The term "Commission facility" means a laboratory, plant, office, or other establishment operated by or on behalf of the Commission.

f. The term "Commission's established specifications" means the specifications for purity and other physical or chemical properties of special nuclear material, as published by the Commission in the United States Federal Register from time to time.

g. The terms "consumed" or "consumption" include the reduction in value of material due to blending of different assays of special nuclear material, or other alteration of the isotopic ratio, and the disposition of material in such manner that it cannot be economically recovered for further use.

h. The term "persons acting for or on behalf of the Commission" includes employees and contractors of the Commission, and employees of such contractors, who implement or participate in the implementation of this Lease pursuant to their employment or their contracts with the Commission.

i. The term "source material" means (1) uranium, thorium, or any other material which is determined by the Commission to be source material; or (2) ores containing one or more of the foregoing materials, in such concentration as the Commission may by regulation determine from time to time.

j. The term "special nuclear material" means (1) plutonium, uranium-233, uranium enriched in the isotope 233 or in the isotope 235, and any other material which the Commission determines to be special nuclear material, but does not include source material; or (2) any material artificially enriched by any of the foregoing, but does not include source material. Unless the context otherwise indicates, the term "material" refers to "special nuclear material" as defined herein.

k. The term "value" means the United States dollar amount determined by multiplying the applicable Commission base charge by the number of units, or fractions thereof, of special nuclear material involved, whether or not such material is in standard form and specification.

l. The term "worth" means the United States dollar amount determined by multiplying the applicable Commission unit price for normal or depleted uranium by the number of units, or factions thereof, of normal or depleted uranium involved. The Commission's applicable unit price for normal or depleted uranium will be fixed in accordance with established Commission pricing policy then in effect.

m. The term "established Commission pricing policy" means any applicable price or charge in United States dollars in effect at the time any particular transaction under this Lease takes place (i) published by the Commission in the United States Federal Register, or (ii) in the absence of such a published figure, determined in accordance with the Commission's pricing policies. A statement of such pricing policies will be furnished the Lessee upon request. The Commission's published prices and charges, as well as its pricing policies, may be amended from time to time.

n. The term "Standard Form" means the chemical form of special unclear material, as published by the Commission in the United States Federal Register from time to time.

ARTICLE II SCOPE

a. 1. This Lease is subject to all of the terms, conditions, provisions, and guarantees contained in the Agreement for Cooperation.

2. Unless otherwise provided herein, or in a written agreements between the Commission and the Lessee, the terms and conditions contained herein shall, as from July 1, 1963, apply to material delivered and related services furnished by the Commission to the Lessee on and after the said date pursuant to his order, and to the material leased under all leases of Special Nuclear Material between the Commission and the Lessee as of June 30 1963.

b. 1. The Lessee shall order material pursuant to this Lease through the execution and submission of a special nuclear material order form prescribed by the Commission.

2. The Lessee shall specify on his order whether he desires the ordered material to be furnished (a) directly to Lessee, (b) through a Commission licensed United States firm who is a Lessee of the Commission (hereinafter referred to as the "United States Contractor") engaged or arranged for by the Lessee for processing and/or fabrication and preparation or other purpose, or (c) otherwise.

c. Acceptance of the Lessee's order for material by or on behalf of the Commission shall constitute the Commission's commitment to lease the material specified in such order subject to the terms of the said order and of this Lease.

d. Nothing herein shall be deemed to obligate the Lessee to order material or to obligate the Commission to lease material to the Lessee, or to provide services for the Lessee with respect to the material.

ARTICLE III TITLE

Except as otherwise provided herein or as may be otherwise agreed by the Parties hereto, title to all material furnished to or received by the Lessee subject to this Lease shall at all times be and remain in the Government of the United States of America.

ARTICLE IV TERM OF LEASE, TERMINATION AND CANCELLATION

a. Except as otherwise provided herein, the Lessee shall have the right to possess and use material covered by this Lease until June 30, 1967; it being understood that the Parties intend to negotiate in due time concering a renewal of this Lease or an appropriately amended lease or agreement.

b. The expiration, suspension, or termination, in whole or in part, of the Agreement for Cooperation shall automatically result in the expiration of this Lease and any orders for material shall be of no further force or effect as to the affected material.

c. The Lessee may cancel any order for material under this Lease by notice in writing to the Commission at any time prior to delivery of the material; provided that the Lessee shall pay a cancellation charge for the costs incurred by the Commission in connection with such order, as determined in accordance with established Commission pricing policy in effect at the time such costs are incurred.

d. Either party may cancel this Lease at any time if the other party fails or neglects to fulfill its obligations hereunder or under the Agrement for Cooperation.

e. In the event that the Lessee for any reason is unable to use any material leased hereunder for the purpose for which the said material was leased, the Lessee shall promptly notify the Commission and shall return the said material in accordance with the terms hereof except as may be otherwise hereafter agreed by the Parties.

ARTICLE V MATERIAL TO BE FURNISHED BY THE COMMISSION; SERVICE CHARGES

a. Except as otherwise provided herein, special nuclear material subject to this Lease shall be furnished to the Lessee or its designated United States Contractor in Standard Form in accordance with the Commission's established specifications.

b. 1. The Lessee shall pay the Commission's service charges, if any, for withdrawal and packaging, and for any other special service rendered pursuant to the Lessee's order, with respect to material subject to this Lease to be furnished the Lessee directly.Unless such charge or charges are agreed to in the order executed by the Lessee and the Commission for material, the Lessee shall pay the Commission its charges for the services rendered pursuant to the Lessee's order as determined in accordance with established Commission pricing policy in effect at the time such services are rendered. The Lessee shall also pay the equivalent of a use-charge for the period covered by such services and for the value of material consumed in rendering of such special services.

2. In the case of material ordered hereunder by the Lessee which is to be furnished through a United States Contractor engaged or arranged for by the Lessee, arrangements shall be made by the Lessee or a user authorized by the Lessee for such Contractor to make payment of the Commission's service charges, if any, for withdrawal and packaging, and for any other special service to be rendered pursuant to the Lessee's order. Arrangements for the payment of the use-charge, as hereinafter provided, for the period covered by such services, and value of the material consumed in rendering such special services shall also be made by the Lessee or a user authorized by the Lessee with the said Contractor.

c. 1. If the material ordered hereunder is furnished directly to the Lessee and does not conform to the specifications set forth in an order executed by the Lessee and the Commission or, if no such specifications are set forth, to the commission's established specifications, the responsibility and liability of the Government of the United States of America, the Commission, and persons acting for or on behalf of the Commission shall be limited solely to correcting such discrepancies by delivery at a mutually agreeable port of export in the United States of America of material which does conform to the applicable specifications, in exchange for the non-conforming material.

2. In the case of material ordered hereunder by the Lessee which is furnished the Lessee's designated United States Contractor prior to delivery to the Lessee by the Commission, the responsibility and liability of the Commission concerning non-conformity to the specifications of the said material shall be governed by the arrangements between the Commission and the said Contractor.

d. It is recognized that material furnished under this Lease as enriched uranium (U-235) may be consumed in such manner as to reduce the isotopic ratio thereof to the extent that the leased material is no longer special nuclear material as defined herein. Except as provided herein, the resulting normal or depleted uranium will be, and remain, subject to the pro-visions of this Lease as if the material were special nuclear material; provided that the Lessee's obligations for loss or consumption of, and for use-charges with respect to, such material, shall be computed using the worth of the normal or depleted uranium, and provided further that if in lieu of returning such material directly to a Commission facility as provided in this Lease, the Lessee desires to transfer such material to another person authorized and approved by the Commission for this purpose, and to terminate his obligations with respect thereto, the Commission may, at its option, transfer title to such material in exchange for the Lessee's payment of the worth thereof.

e. The Lessee shall not blend special nuclear material subject to this Lease without prior consent of the Commission.

f. The Lessee shall segregate physically all material subject to this Lease from any other source material and special nuclear material in the Lessee's possession unless otherwise expressly agreed by the Parties.

ARTICLE VI RETURN OF MATERIAL TO THE COMMISSION: SPECIAL CHARGES FOR COMMISSION SERVICES

a. 1. Except as otherwise may be agreed by the Parties hereto, the Lessee will return all material subject to this Lease upon the expiration or earlier termination of this Lease, provided, however, that the Lessee shall have the right to return such material at any time prior to such date.

2. Unless waived by the Commission, the Lessee shall give the Commission at lest sixty (60) days prior written notice of intent to return material to the Commission specifying the form and specification of such material.

b. Except as otherwise provided herein, or as may be mutually agreed, material subject to this Lease which is returned directly to the Commission shall, after having been processed in facilities acceptable to the Commission, be in the Standard Form and meet the Commission's established specifications for return of material, in effect as of the date of this Lease.

c. Material transferred beyond the jurisdiction of the Lessee with the consent of the Commission, regardless of the form and/or specification of such material, shall be deemed to have been returned to the Commission, if such transferee, the Commission, and the Lessee have excecuted an agreement covering the material so transferred.

d. In the event that no reprocessing facilities other than the Commission's are available to the Lessee and acceptable to the Commission, or in the event the Lessee established to the satisfaction of the Commission that the charge for processing in acceptable non-Commission facilities would exceed the value of special nuclear material recoverable, the commission will accept the return of material in a form and/or specification other than those provided in paragraph b above. In such event, the Lessee shall have the option to (i) pay a service charge for processing such returned material so as to enable it to satisfy the Commission's established specifications in effect as of the date of this Lease, or (ii) pay a sum equal to the value or worth of such material plus a special service charge, determined in accordance with Commission pricing policy then in effect for handling, storage and/or disposal of the material.The service charge for processing referred to in this paragraph, shall include the commission's charge for processing, as determined in accordance with the established Commission pricing policy then in effect, and an amount, as determined by the Commission, for the value or worth of the material consumed during processing. Whenever material returned by the Lessee is subject to processing charges under this paragraph, the Lessee shall continue to pay the use-charge on such material until expiration of normal processing period as determined by the Commission.

e. It is understood by the Parties hereto that in the event described in paragraph d above, the Lessee may request chemical processing for material leased hereunder. It is further understood by the Parties that upon such request of the Lessee, the Commission will make a determination as to whether it can undertake to perform such service, and ,if determined affirmatively, under what terms and conditions such service is performed, taking into consideration such factors as the availability of: a) acceptable commercial facilities to perform the service, b) Commission facilities, and c) comparable services by the Commission to United States rector licensees.

f. Material subject to this Lease returned directly to the Commission in the form of uranium hexafluoride shall be shipped only in cylinders of appropriate size as specified by the Commission. The quantity of such material shipped in a container shall not be less than the Commission-established minimum loading for the type of cylinder used.

g. 1. All material returned to the Commission shall be transported under appropriate safeguards prescribed by the Commission against hazards to health and safety to a port of entry into the United States of America to be designated by the Commission after consultation with the Lessee. The Commission shall thereupon perform those actions required to authorize the import of such material. Unless otherwise mutually agreed by the Parties, the Lessee shall thereafter arrange for a carrier, subject to such terms, charges, conditions, and licenses as may be required, to transport such material on f. o. b. commercial conveyance to the Commission facility or location specified by the Commission, and shall be responsible for all costs of such transportation.

2. The Commission will notify the Lessee promptly after receipt of the Lessee's notice of intent to return material as to the acceptability of such material for return under this Lease, and if appropriate as to the Commission facility or location designated for return of this material.

3. The Lessee, at the time of shipment of material, shall notify the Commission of the date and method of shipment, expected dates of arrival at a port of entry and of delivery of such material to the Commission facility.

h. The Commission shall issue an appropriate written receipt which will evidence such return of material hereunder.

ARTICLE VII PAYMENT FOR MATERIAL LOST AND CONSUMED

a. Except as otherwise provided herein, the lessee shall be responsible for and shall reimburse the Commission for any loss or consumption of material, whether or not such loss or consumption in due to the fault or neglect of the Lessee, or any other cause occurring from the time of delivery of such material to the Lessee and until such material has been returned to the Commission as provided herein.

b. The Lessee shall make reports to the Commission, on forms as prescribed by the Commission, to accurately reflect all losses or consumption of material as then known to the Lessee. In reporting material as lost or consumed, the Lessee shall make reasonable effort to accurately fix the time of such loss or consumption on the basis of a specific occurrence or in accordance with accepted procedures and methods of calculating loss or consumption.

c. The Lessee may, and shall, when required by the Commission, make periodical payments, subject to Article XII, paragraph c of this Lease for material lost or consumed. Except as otherwise provided herein the amount due to the Commission for material lost or consumed shall be the value or worth of such material computed in accordance with this Lease, as of the time of such loss or consumption.

ARTICLE VIII USE-CHARGE PAYMENT

Except as otherwise provided herein, the Lessee agrees to pay the Commission a use-charge for material subject to this Lease, as provided in Article X below. The rate of use-charge shall be the Commission's published rate of annual (365 days) use-charge in effect for the period covered by the Commission's invoice.

ARTICLE IX OTHER AUTHORITY

Nothing in this Lease shall be deemed to obligate the Lessee to pay the Commission's charges with respect to materials and/or services subject to this Lease, or to observe other specific provisions of this Lease, if the Commission, in accordance with statutory or other authority available to it, determines, after consultation with the Lessee, that such charges or other provisions are not applicable.

ARTICLE X ESTABLISHMENT OF SPECIAL NUCLEAR MATERIAL LEASE ACCOUNT

a. The Commission will establish a special nuclear material lease account for the Lessee to which will be debited, as provided herein, the amount or amounts equal to the value or worth of the material subject to this Lease. Such account will be credited, as provided herein, with the amount or amounts equal to the value or worth of the material returned or paid for, in accordance with this Lease. The daily balance of this account shall be used for computing the amount due to the Commission for use-charges. The value or worth of material reflected in this account after credit for the value or worth of material returned and for payments for material lost or consumed shall represent the amount due to the Commission for material not returned or paid for. In the event material paid for as having been lost or consumed is later re-established in the Lessee's account, the said account shall be debited as of the date of refund (or appropriate setoff) of such payment to the Lessee as provided in Article XII, paragraph c of this Lease, with the amount or amounts equal to the value or worth of such material at the time of such re-establishment in the Lessee's account.

b. Except as otherwise provided in this Lease, the Lessee's accout will be debited for material furnished as of the date material is delivered to the Lessee.

c. The Lessee's account will be credited for material returned directly to the Commission or transferred beyond the jurisdiction of the Lessee only when the material is returned or transferred in accordance with Article VI of this Lease. Except as otherwise provided in this Lease, the Lessee's account will be credited for material returned directly to the Commission as of the date the material is delivered to a location specified by the commission pursuant to this Lease. Credit for material transferred beyond the jurisdiction of the Lessee will be made as of the date to be mutually agreed. Credit for material paid for will be made as of the date payment is received by the Commission.

d. Whenever the Commission changes any applicable base charge as provided in Article XI below, the value or worth of material recorded in the Lessee's account will be recomputed at the new base charge; provided that the value or worth of material lost or consumed as of the date of such change shall not be recomputed. Subsequent to the effective date of the change in the applicable base charge, the new base charge will be used, in determining the value or worth of material lost or consumed and for computing the value or worth of material subject to use-charges.

e. The Lessee will be notified of the debits and credits made to his account as the result of shipments and transfers of material, and of any changes in the value or worth of material in such account as a result of changes in the applicable base charges. The Lessee will promptly notify the Commission of any disagreement with, discrepancies, or errors in such notices.

f. The Lessee will submit such transfer documents covering receipts and shipments, and reports of loss or consumption, and inventory, with respect to material subject to this Lease, as the Commission may prescribe, and shall maintain and make available to the Commission for financial audit, upon reasonable notice, adequate records pertaining to the receipt, possession, transfer, or use of material subject to this Lease.

ARTICLE XI CHANGES IN RATE OF USE-CHARGE, BASE CHARGES, AND SPECIFICATIONS

a. The rate of use-charge, the base charges, Standard Form, and/or the specifications for material furnished pursuant to this Lease are subject to change by the Commission in accordance with the Act.

b. Any changes in the rate of use-charge, the base charges, Standard Form, and/or the specifications shall be effective on either July 1 or January 1 as stated in a notice of change published by the Commission, provided that at least thirty day' prior notice of such changes is given the Lessee, by publication or otherwise, and provided further that the Commission may reduce the rate of use charge or the base charges at any time by a notice of change published by the Commission and without prior notice to the Lessee.

ARTICLE XII PERFORMANCE OF AEC OBLIGATIONS; BILLING

a. The Commission may fulfill its obligations under this Lease through the operator of any of its facilities.

b. Billings for amounts due to the Commission under this Lease will ordinarily be made

(1) following the performance of any service, and

(2) semi-annually for use-charges and for charges for loss or consumption of material.

c. All billings and payments made pursuant to Article VII of this Lease for losses and consumption are subject to adjustment to recognize actual or calculated amounts, enrichment, isotopic content, and specifications of material involved. Whenever the Lessee has paid for material reported as having been lost or consumed and such material is later re-established in the Lessee's account, the Commission shall refund to the Lessee (or appropriately set off against any amounts due to the Commission) the amount paid by the Lessee for such material. Except as stated in paragraph d below, the adjustments provided for in this paragraph will not subject the Lessee or the Commission to liability for interest.

d. All bills rendered by or on behalf of the Commission are due sixty (60) days from the date of invoice and shall be paid in currency of the United States of America. Failure to receive payment within sixty (60) days after the date of invoice shall entitle the Commission to an additional charge at six percent per annum on such amount.

ARTICLE XIII INJURY OR DAMAGE

a. Neither the Government of the United States of America, the Commission nor persons acting for or on behalf of the Commission make any warrant or other representation, express or implied, that material furnished under this lease (a) will not result in injury or damage when used for the purpose for which furnished, or any other purposes to which the Parties hereto may subsequently agree within the scope of the Agreement for Cooperation, or (b) will accomplish the results for which it is requested from the Commission.

b. With respect to the material to be leased hereunder, the Lessee shall indemnify and save harmless the Government of the United States of America against any and all liability (including third party liability) for any cause whatsoever arising out of the production or fabrication, the transportation, the ownership, the lease, and the possession and use of such special nuclear material after the material is delivered to the Lessee pursuant to Article XV, paragraph b (2) or to a transporter arranged for by the Lessee pursuant to paragraph a of the said Article. Nothing in this Article shall deprive the Lessee or any other person of any rights under section 170 of the Act.

ARTICLE XIV TIME OF DELIVERY

The Commission will make reasonable efforts to deliver material at the time or times stated in orders for material subject to this Lease, but neither the Government of the United States of America, the Commission, nor persons acting for or on behalf of the Commission shall be subject to any liability for any failure to do so.

ARTICLE XV DELIVERY

a. With respect to material ordered hereunder which is to be furnished the lessee directly, the Commission shall deliver the material ordered, on f.o.b. commercial conveyance at a facility of the Commission, to a transporter arranged for by the Lessee. Delivery of material or containers to a transporter arranged for by the Lessee shall be deemed delivery of such material or containers to the Lessee for purposes of the Lease. Subject to such terms, charges, conditions, and licenses as the Commission may require, the transporter shall transport the material to a port of export in the United States of America to be designated by the Commission after consultation with the Lessee. The Commission shall thereupon perform those actions required to authorize the export of the material to the Lessee at such designated port. All costs of domestic and overseas transportation (including costs of containers and packaging) and of storing such materials, as well as all arrangements for physically handing such material in connection with its shipment shall be the responsibility of the Lessee and not the Commission. At the time of delivery of material to the transporter, the Lessee or its duly authorized agent shall sign an appropriate written receipt therefor, whereupon the lease of such material shall commence and the Lessee shall assume full and complete responsibility for the material.

b. With respect to material ordered hereunder which is to be furnished a United States Contractor engaged or arranged for by the Lessee for purposes of processing and/or fabrication and preparation or of other services on behalf of the Lessee.

(1) The Commission shall make available to the said United States Contractor, on f.o.b. commercial conveyance at a facility of the Commission, the said material, subject to such terms, charges, conditions, and licenses as the Commission may require.

(2) Upon completion of the processing and/or fabrication and preparation of the material by the said Contractor, or in case of other services, at a time to be mutually agreed and upon receipt by the Commission of the written certificate of the said Contractor's determination of the isotopic content and quantity of special nuclear material as required by Article XVIII, paragraph c of this Lease, the Lessee shall arrange for a transporter who, after thirty (30) days' written notice by the Lessee to the Commission and subject to such terms, charges, conditions, and licenses as the Commission may require, shall transport and deliver the material to a port of export in the United States of America to be designated by the Commission after consultation with the Lessee. The Commission shall thereupon perform those actions required to effect the delivery and authorize the export of such material to the Lessee at such designated port. All costs of domestic and overseas transportation and delivery (including costs of containers and packaging) and of storing such material, as well as all arrangements for physically handling such material in connection with such delivery shall be the responsibility of the Lessee and not the Commission. The Lessee or its duly authorized agent shall accept delivery of such material at the designated port of export, and shall sign an appropriate written receipt therefor, whereupon the lease of such material shall commence and the Lessee shall assume full and complete responsibility for the special nuclear material contained therein.

ARTICLE XVI CYLINDERS AND EQUIPMENT

a. Except as otherwise agreed, shipments of material subject to this Lease to the Lessee, and the return of such materials to the Commission, shall be made only in containers and/or equipment acceptable to the Commission. The Commission may, but shall not be required to, furnish containers and equipment for shipping such material.

b. Any non-AEC-owned cylinders, containers, and equipment furnished or utilized by the Lessee will meet current Commission specifications and practices as to safety, design criteria, cleanliness, and freedom from contamination, of which the Commission shall be the sole judge. The Commission will endeavor to return non-AEC-owned cylinders, containers, and other equipment to the Lessee in a reasonable time, but will not be responsible for any loss of or damage to such cylinders, containers, or equipment except as may result from its fault or negligence. Such return shipments by the Commission will be made on f.o.b. commercial conveyance at the Commission facility.

c. Whenever material is shipped to the Commission, and the Commission elects to decontaminate the containers, railroad cars, trucks, or other shipping vehicles or the Commission's unloading area and machinery, because the containers, or the material or the method of shipment failed to meet the health and safety standards prescribed by the Commission or any other United States Government agencies having jurisdiction over such matters, the Lessee shall be responsible to the Commission for the full cost of such decontamination as determined by the Commission in accordance with established Commission pricing policy.

ARTICLE XVII ASSIGNMENT

The Lessee may not assign this Lease, or any order for material subject to this Lease, without the express written approval of the Commission.

ARTICLE XVIII DETERMINATION OF MATERIAL QUANTITIES AND PROPERTIES; SETTLEMENT OF MEASUREMENT DIFFERENCES; ADJUSTMENTS OF USE CHARGES

a. Transfers Directly To Or From The Commission. This paragraph sets forth provisions and procedures for determination of quantities and properties of material subject to this Lease transferred directly to or from the Commission, (where no processing is involved) and for the resolution of measurement differences resulting from such determination, including the use of an "Umpire". (For the purpose of this paragraph, the terms "shipper" and "receiver" shall refer to the Commission and the Lessee or vice versa as the case may be.)

1. The Commission samples obtained using the Commission's procedures will be the official samples and shall be binding upon the Commission, the Lessee and the umpire unless the Commission and the Lessee agree upon the use of other samples.

2. If the receiver does not accept the shipper's quantities and/or properties stated on the AEC transfer form for such material, the receiver shall, within sixty (60) days after the receipt of the material of the AEC transfer form for such material, whichever is later, submit a written or telegraphic notice of disagreement to the shipper. The notice of disagreement shall include measurement date supporting the disagreement. If such notice of disagreement is not submitted within such sixty (60) days the shipper's measuments will be final and binding upon both Parties. The receiver shall not use or dispose of the material in any manner until the difference is resolved unless such use or disposition is mutually agreed to by the Commission and the Lessee; provided that nothing herein shall prevent the receiver from handling the material as necessary for storage or protection against health and safety hazards.

3. If the disagreement is not resolved by mutual agreement, the following procedures shall apply:

(a) If the disagreement concerns bulk measurement (i.e., total volume, gross and net weight, total piece count or any other measurement made on the entire quantity of material involved), repeat measurements shall be performed by an umpire mutually agreed to by both Parties at a mutually agreed upon site. The umpire's results will be conclusive on both Parties. The Party whose original measurement result is furthest from the umpire's result will beat the umpire's charges; provided that, in the event the umpire's result is equidistant between the shipper's and the receiver's results, the Parties will each bear one-half of the umpire's charges.

(b) if the disagreement concerns results obtained from analysis of a sample, an official sample will be submitted to an umpire mutually agreed upon for analysis. The umpire's results will be conclusive on both Parties.

(i) In the case of a disagreement with respect to specification limits based on an official sample, the receiver will bear the umpire's charges if the umpire's result is within specification limits, and the shipper will pay the umpire's charges if the umpire's result is not within specification limits,

(ii) In the case of a disagreement concerning quantitative determinations on an official sample, the umpire's result will be used and the Party whose result is furthest from the umpire's result will pay the umpire's charges; provided that, in the event the umpire's result is equidistant between the shipper's and the receiver's results, the Parties will each bear one-half of the umpire's charges.

4. The period of time during which use-charges shall accrue under this Lease with respect to material subject to a measurement disagreement hereunder shall be adjusted as follows:

(a) Where the disagreement pertains to material delivered to the Lessee and is resolved by the umpire in favor of the Lessee, no use-charge shall accrue between the date of receipt of notice of disagreement and the date of resolution or the date of use or disposition of material by the Lessee (when mutually agreed upon), whichever occurs first. Provided, how-ever, that where the disagreement pertains to specifications of the material and is resoled by the umpire in favor of the Lessee, no use-charge shall accrue unless the Lessee accepts the material, uses, or disposes of the material (when mutually agreed upon) or fails to return it after resolution of the disagreement within a reasonable time.

(b) Where the disagreement pertains to material returned directly to the Commission, no use-charge shall accrue between the date of receipt of the shipment and the Lessee's receipt of notice of disagreement. Use-charges shall accrue between the Lessee's receipt of notice of disagreement and the date of resolution or the date of use or disposition of the material by the Commission (when mutually agreed upon), whichever occurs first, unless the disagreement is resolved in favor of the Lessee.

(c) where an umpire is used and the umpire's result is equidistant from those of the Parties, no use-charge shall accrue for one-half of the period between the date of receipt of notice of disagreement and the date of resolution or the date of use or disposition of the material by the Lessee or the Commission (when mutually agreed upon), whichever occurs first.

(d) Where the disagreement is resolved by mutual agreement, the period of use-charge shall be included in and settled by mutual agreement.

The above use-charges shall apply to the total of the material whose quantity or other characteristics is involved, and not to the amount represented by any difference of the measurements.

b. Material Returned For Processing.

The quantity and properties of irradiated material subject to this Lease and returned directly to the Commission under a contract providing for chemical processing and financial settlement, will be determined in accordance with the provisions and procedures agreed upon in such contract.

c. Material Furnished Through a "United States Con-tractor".

With respect to material ordered hereunder which is furnished a United States Contractor engaged or arranged for by the Lessee for purposes of processing and/or fabrication and preparation, or of other services on behalf of the Lessee, the following shall apply:

(1) The Lessee shall cause the said Contractor to submit to the Commission a written certificate of the said Contractor's determinatfon of the quantity of special nuclear material contained in the processed and/or fabricated and prepared, or otherwise serviced material, and of its isotopic content. Unless otherwise agreed by the Parties hereto, the per cent of the isotope uranium-235 in any enriched uranium either processed and/or fabricated and prepared, or otherwise serviced by the Lessee's United States Contractor shall be deemed to be the same as the uranium-235 isotopic enrichment of the uranium made available by the Commission to the said Contractor and certificate shall be written accordingly. The quantity of special nuclear material contained in the processed and/or fabricated and prepared, or other-wise serviced material shall be as determined by the United States Contractor and set forth in such certificate as such quantity may be accepted by the Lessee and thereafter accepted or revised by the Commission after any reviews or analyses which the Commission may deem appropriate.

(2) The provisions and procedures governing, as between the Commission and the said Con-tractor, the determination of quantities and properties of the said material, and the resolution of measurement differences resulting from such determination shall be those established by the arrangement between the Commission and the said Contractor.

ARTICLE XIX PATENT INDEMNIFICATION

Unless expressly waived in writing by the Commission, the Lessee agrees to indemnify the Government of the United States of America, the Commission, and persons acting for or on behalf of the Commission against liability, including costs and expenses incurred, for infringement of any letters Patent occurring in the course of the performance of any service, analysis or test performed for the Lessee as a result of following specific instructions of the Lessee in connection therewith.

ARTICLE XX RIGHT TO USE AND PUBLISH INFORMATION

The Commission shall have the right to publish and use any information or date developed by the Comission or persons acting for or on behalf of the Commission as the result of any service, analysis or test performed hereunder for the Lessee.

ARTICLE XXI OTHER CONTRACTS AND AGREEMENTS

This Lease contemplates the possibility of separate contracts between the Lessee and the Commission for processing services of irradiated material which are subject to this Lease, and/or agreements between the Lessee and the Commission under which material subject to this Lease is made available to the Commission for its benefit, which may provide for suspension or termination of usecharges and suspension, termination, or revision of other obligations hereunder, and/or for measurement of amounts of material which the Lessee is returning. Except for such suspension, termination, revision, or the use of measurement data in determining amounts of material returned for which the Lessee will be allowed credit hereunder, the Lessee's obligations under this Lease for material subject to this Lease shall continue notwithstanding the existence of such separate contract or contracts.

ARTICLE XXII OFFICIALS NOT TO BENEFIT

I

t is understood that, in accordance with the laws of the United States of America, no member of Congress or resident commissioner of the United States of America shall be admitted to or share any part of this Lease or any benefit that may arise therefrom.

ARTICLE XXIII NOTICES

a. Any notices required by this Lease of the Lessee shall be submitted in writing to the Commission addressed to:

Director Division of International Affairs United States Atomic Energy Commission Washington D.C., 20545

b. Any notices required by this Lease of the Commission shall be submitted in writing to the Lessee addressed to:

Counselor Embassy of Japan

2520 Massachusetts Avenue, N.M.

Washington D.C., 20008

ARTICLE XXIV ADDITIONAL PROVISIONS

Notwithstanding the provisions of Article II, paragraph a 2 of this Lease, this Lease shall not apply to or affect the lease of material under agreements of the Parties signed November 23, 1956 and May 8, 1957 referred to as JA/L/1 and JA/L/2 respectively.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement,

Done, at Washington, in duplicate in the Japanese and English languages this 30th day of October, 1964.

FOR THE GOVERNMENT OF JAPAN

BY:(Signed) Kiyohiko Tsurumi

TITIE:Counselor, Embassy of Japan

FOR THE UNITED STATES ATOMIC ENERGY COMMISSION ACTING FOR AND ON BEHALF OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA BY:(Signed) Dixon B. Hoyle TITIE:Acting Director, Division of International Affairs

(Japanese letter)

October 30, 1964

Dear Mr. Kratzer: I refer to the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was singed today, and wish to state the following understandings which have been reached during our negotiations leading to the conclusion of the Agreement:

1. With reference to paragraph b 2 of Article V, paragraph g 1 of Article VI and paragraphs a and b (2) of Article XV of the Lease Agreement, it is understood that, with respect of special nuclear materials subject to the Lease Agreement distributed or to be distributed to an authorized user in Japan, such authorized user will engage the transporter of such material and pay the costs of such transporter as well as the Commission's service charges, if any, for withdrawal and packaging, and for any other special service to be rendered pursuant to the Lessee's order. It is further understood, however, that the Government of Japan will continue to be responsible, under the Lease Agreement, to the United States Atomic Energy Commission for assuring that transportation arrangements in connection with delivery and return of such material are adequately provided for and that the costs of transporter, as well as the Commission's service charges, if any, for withdrawal and packaging and for any other special service to be rendered pursuant to the Lessee's order, are paid.

2. At such time as the Lessee may be in a position to exercise the option provided for in Article VI, paragraph d (ii) of the Lease Agreement, the Parties will consider, if the Lessee so requests, purchase by the Lessee of such special nuclear material as may be involved. This is to confirm that Article III and Article VI, paragraph a 1 of the Lease Agreement specifically provide for consideration by the Parties of possible purchase by the Lessee of special nuclear material that might be subject to the provisions of Article VI, paragraph d (ii). Further, since the Agreement for Cooperation between the Government of Japan and the Government of the United States of America Concerning Civil Uses of Atomic Energy, signed June 16, 1958, as amended, provides that the Commission will sell or lease, as may be agreed, enriched uranium for reactors constructed in Japan pursuant to the afore-mentioned Agreement for Cooperation, and assuming that the Commission's current policy of selling enriched uranium for use in reactors remains unchanged, no difficulty is foreseen in reaching an unchanged, consistent with the Agreement for Cooperation, for the sale at some future date of special nuclear material transferred to the Lessee under the Lease Agreement.

3. With reference to Article XIII, paragraph b of the Lease Agreement, it is understood that if and when any amendment is made to sections 11r and 170d of the United States Atomic Energy Act of 1954, as amended, the Lessee and the Commission will consult with each other on problems which may, as a result of such amendment, arise out of the application of the said article of the Lease Agreement.

4. With reference to Article XIX of the Lease Agreement, it is understood that, should special nuclear material be leased pursuant to the Lease Agreement at some future time for use in other than research and material test reactors, the Parties shall consider the advisability of the user's providing the Government of the United States of America with an explicit indemnification against any liability for infringement of any Letters Patent which might arise out of the use of such material.

5. With reference to Article XXII of the Lease Agreement, it is understood that the article is not intended to mean that the Lessee shall, without its consent, be subject to the jurisdiction of the courts of the Government of the United States of America. In no way however, is the forgoing understanding in tended to alter the general rules followed in the United States with respect of suits involving foreign Governments.

It would be greatly appreciated of you would confirm the above understandings.

Sincerely yours, (Signed) Kiyohiko Tsurumi

Kiyohiko Tsurumi Counselor Embassy of Japan

Mr. Myron B. Kratzer, Director

Division of International Affairs Atomic Energy Commission

Whashington, D.C. 20545

(U.S. letter)

October 30, 1964

Dear Mr. Tsurumi: I refer to your letter dated today in connection with the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was signed today, in which you state the following understanding on certain matters in respect of the Agreement.

1. (Identical as paragraph 1 of Japanese letter)

2. (Identical as paragraph 2 of Japanese letter)

3. (Identical as paragraph 3 of Japanese letter)

4. (Identical as paragraph 4 of Japanese letter)

5. (Identical as paragraph 5 of Japanese letter)

I would like to take this opportunity to confirm our understandings of the matters set forth above.

Sincerely yours, (Signed) Dixon B. Hoyle for Myron B. Kratzer, Director Division of International Affairs

Mr. Kiyohiko Tsurumi Counselor Embassy of Japan

2520 Massachusetts Avenue, N.W.

Washington, D.C.2008

(U.S. letter)

October 30, 1964

Dear Mr. Tsurumi: I refer to the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was signed today, and wish to set forth the following understandings on certain matters in respect of the Agreement.

The Lease Agreement shall be construed according to the laws applicable in the Federal Courts of the United States of America for contracts in the United States of America to which the Government of the United States is a party.

It is understood that the foregoing provision is not intended to mean that the Government of Japan shall, without its consent, be subject to the jurisdiction of the courts of the Government of the United States of America. In no way, however, is the foregoing understanding intended to alter the general rules followed in the United States with respect to suits involving foreign Governments.

I would greatly appreciate it if you would confirm our understanding of the matters set forth above.

Sincerely yours, (Signed) Dixon B. Hoyle for Myron B. Kratzer, Director Division of International Affairs

Mr. Kiyohiko Tsurumi

Counselor Embassy of Japan

2520 Massachusetts Avenue, N.W. Washington, D.C.20008

(Japanese letter)

October 30, 1964

Dear Mr. Kratzer: I refer to your letter dated today in connection with the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was signed today, in which you set forth the following understandings on certain matters in respect of the Agreement.

The Lease Agreement shall be construed according to the laws applicable in the Federal Courts of the United Stated of America for contracts in the United States of America to which the Government of the United States is a party.

It is understood that the foregoing provision is not intended to mean that the Government of Japan shall, without its consent, be subject to the jurisdiction of the courts of the Government of the United States of America. In no way, however, is the foregoing understanding intended to alter the general rules followed in the United States with respect to suits involving foreign Governments.

I would like to take this opportunity to confirm our understanding of the matters set forth above.

Sincerely yours, (Signed) Kiyohiko Tsurumi

Kiyohiko Tsurumi Counselor Embassy of Japan

Mr. Myron B. Kratzer, Director

Division of International Affairs Atomic Energy Commission

Washington, D.C. 20545

(Japanese letter)

Dear Mr. Kratzer:I, on behalf of the Japanese Government, have the honour to refer to Article X, paragraph f of the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was signed today, and wish to state the understanding that the said article provides for nothing more than the presentation by the Japanese Government to the Commission of records and other documents referred to in the said article for documentary examination for the purpose of material accounting.

The foregoing understanding, however, does not necessarily imply that the Japanese Government will not accept the request of the United States Government to make inspection, and the Japanese Government will be ready to consider such request on a case-by-case basis.

It would be greatly appreciated if you would confirm the understanding mentioned in the first paragraph of this letter.

Yours sincerely, (Signed) Kiyohiko Tsurumi

Kiyohiko Tsurumi Counselor Embassy of Japan

Mr. Myron B.Kratzer, Director

Division of International Affairs Atomic Energy Commission

Washington, D.C. 20545

(U.S. letter)

October 30, 1964

Dear Mr. Tsurumi: I, on behalf of the United States Atomic Energy Commission, have the honour to refer to your letter dated today in connection with Article X, paragraph f of the Lease Agreement for Special Nuclear Material between the Government of Japan and the United States Atomic Energy Commission Acting for and on Behalf of the Government of the United States of America, which was signed today. I have further the honour to confirm the understanding stated in the letter that the said article provides for nothing more than the presentation by the Japanese Government to the Commission of records and other document referred to in the said article for documentary examination for the purpose of material accounting.

Yours sincerely, (Signed) Dixon B. Hoyle for Myron B. Kratzer,

Director Division of International Affairs

Mr. Kiyohiko Tsurumi

Counselor Embassy of Japan

2520 Massachusetts Avenue, N. W. Washington, D. C. 20008