CHANGE IN CONTROL
AGREEMENT
AGREEMENT (this
“Agreement”) by and between USEC Inc., a Delaware
corporation (the “Company”) and
(the “Executive”) dated and effective as of
, ___.
WHEREAS, the
Executive is currently an employee of the Company;
WHEREAS, the Board
of Directors of the Company has determined that it is essential to
the best interests of the Company and its shareholders to foster
the continued employment of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as
defined in Section 1 hereof) of the Company;
WHEREAS, the Board
of Directors of the Company has determined that appropriate steps
should be taken to reinforce and encourage the continued attention
and dedication of the Executive in the Executive’s assigned
duties without distraction in the face of potentially disturbing
circumstances arising from any possible Change in Control of the
Company; and
WHEREAS, the Board
of Directors of the Company has concluded that the interests of the
Company described above can be best satisfied by agreeing to make
certain payments to the Executive if the Executive’s
employment is terminated during a protected period prior to or
following a Change in Control;
NOW, THEREFORE,
the parties hereto hereby agree as follows:
1.
Definitions . As used in this Agreement, the following terms
shall have the meanings set forth below:
“Affiliate”
shall mean (i) any entity that, directly or indirectly, is
controlled by the Company, (ii) any entity in which the
Company has a significant equity interest and (iii) an
affiliate of the Company, as defined in Rule 12b-2 promulgated
under Section 12 of the Exchange Act, in each case as
determined by the Committee.
“Board”
shall mean the Board of Directors of the Company or, in the case of
any subsidiary of the Company, the board of directors, board of
control, board of managers or other governing body of such
subsidiary.
“Cause”
shall mean any of the following:
(i) the engaging
by the Executive in willful misconduct that is injurious to the
Company or its Affiliates;
(ii) the
embezzlement or misappropriation of funds or material property of
the Company or its Affiliates by the Executive, or the conviction
of the Executive of a felony or the entrance of a plea of guilty or
nolo contendere by the Executive to a felony; or
(iii) the willful
failure or refusal by the Executive to substantially perform his or
her duties or responsibilities that continues after demand for
substantial performance is delivered by the Company to the
Executive that specifically identifies the manner in which the
Company believes the Executive has not substantially performed his
or her duties (other than (a) any such failure resulting from
the Executive’s incapacity due to Disability, or (b) any
such actual or anticipated failure after the issuance of a Notice
of Termination by the Executive for Good Reason).
For purposes of
this definition, no act, or failure to act, on the
Executive’s part shall be considered “willful”
unless done, or omitted to be done, by him or her not in good faith
and without reasonable belief that his or her action or omission
was in the best interest of the Company. Notwithstanding the
foregoing, the Executive’s employment shall not be deemed to
have been terminated for Cause unless (A) a reasonable notice
shall have been given to him or her setting forth in reasonable
detail the reasons for the Company’s intentions to terminate
for Cause, and if such termination is pursuant to clause
(i) or (iii) above and the damage to the Company or its
Affiliates is curable, only if the Executive has been provided a
period of ten business days from receipt of such notice to cease
the actions or inactions, and he or she has not done so; (B) an
opportunity shall have been provided for the Executive together
with his or her counsel, to be heard before the Board of Directors
of the Company; and (C) if such termination is pursuant to
clause (i) or (iii) above, delivery shall have been made
to the Executive of a Notice of Termination from the Board of
Directors of the Company finding that in the good faith opinion of
a majority of the non-management members of the Board of Directors
of the Company he or she was guilty of conduct set forth in clause
(i) or (iii) above, and specifying the particulars
thereof in reasonable detail. Any determination of Cause made by
the Company in accordance with the foregoing procedure shall be
made by the Company, in its sole discretion. Any such determination
shall be final and binding on the Executive.
“Change in
Control” shall mean the following and shall be deemed to have
occurred if any of the following events shall have
occurred:
(i) any
“Person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act or Persons acting as a group (other than
(A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
and (C) any corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions
as their ownership of Shares), is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company by
reason of having acquired such securities during the 12-month
period ending on the date of the most recent acquisition (not
including any securities acquired directly from the Company or its
Affiliates) representing thirty percent (30%) or more of the total
voting power of the Company’s then outstanding voting
securities;
(ii) the majority
of members of the Company’s Board is replaced during any
12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board
before the date of the appointment;
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(iii) there is
consummated a merger or consolidation of the Company or any
subsidiary of the Company with any other corporation or other
entity, resulting in a change described in clauses (i), (ii), (iv),
(v), or (vi) of this definition, other than (A) a merger
or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) more than
sixty percent (60%) of the total voting power of the voting
securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person, directly
or indirectly, acquired forty percent (40%) or more of the total
voting power of the Company’s then outstanding securities
(not including any securities acquired directly from the Company or
its Affiliates);
(iv) a liquidation
of the Company involving the sale to any Person or Persons acting
as a group of at least forty percent (40%) of the total gross fair
market value of all of the assets of the Company immediately before
the liquidation;
(v) the sale or
disposition by the Company or any direct or indirect subsidiary of
the Company to any Person or Persons acting as a group (other than
any subsidiary of the Company) of assets that have a total fair
market value equal to forty percent (40%) or more of the total
gross fair market value of all of the assets of the Company and its
subsidiaries (taken as a whole) immediately before such sale or
disposition (or any transaction or related series of transactions
having a similar effect), other than a sale or disposition by the
Company or any direct or indirect subsidiary of the Company to an
entity, at least sixty percent (60%) of the total voting power of
the voting securities of which is beneficially owned by
shareholders of the Company in substantially the same proportions
as their beneficial ownership of the Company immediately prior to
such sale;
(vi) the sale or
disposition by the Company or any direct or indirect subsidiary of
the Company to any Person or Persons acting as a group (other than
any subsidiary of the Company) of a subsidiary or subsidiaries of
the Company credited under GAAP with forty percent (40%) or more of
the total revenues of the Company and its subsidiaries (taken as a
whole) in the current fiscal year or in any of the two most
recently completed fiscal years (or any transaction or related
series of transactions having a similar effect), other than a sale
or disposition by the Company or any direct or indirect subsidiary
of the Company to an entity, at least sixty percent (60%) of the
total voting power of the voting securities of which is
beneficially owned by shareholders of the Company in substantially
the same proportions as their beneficial ownership of the Company
immediately prior to such sale; or
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(vii) a change of
the kind described in clauses (i), (ii), (iii), or (iv) of
this definition with respect to any Material Subsidiary (with such
determination made by replacing “Company” with
“Material Subsidiary” in each instance in such
clauses); provided, however, that for purposes of applying this
provision to clause (i) of this definition, a “Change in
Control” shall not be deemed to occur solely as a result of a
Person or Persons acting as a group becoming the beneficial owner
(as determined under clause (i) of this definition) of less
than fifty percent (50%) of the ownership interests of a Material
Subsidiary, but shall be deemed to occur if such Person or Persons
acting as a group thereafter become the beneficial owner (as
determined under clause (i) of this definition) of fifty
percent (50%) or more of the ownership interests of such Material
Subsidiary.
“Code”
shall mean the Internal Revenue Code of 1986, as
amended.
“Committee”
shall mean the Compensation Committee of the Company’s Board
of Directors.
“Disability”
shall mean that the Executive has become totally and permanently
disabled as defined or described in the Company’s long term
disability benefit plan applicable to executive officers as in
effect at the time the Executive’s disability is
incurred.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
“Good
Reason” shall mean, without the Executive’s express
written consent, any of the following, unless such act or failure
to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(i) the Executive
is removed from the Executive’s position (with the Company or
any Material Subsidiary) as in effect immediately prior to the
start of the Protected Period for any reason other than (A) by
reason of death, Disability or Retirement or (B) for Cause;
provided that such action results in a material diminution of
Executive’s authority, duties or responsibilities with the
Company and its subsidiaries, taken as a whole;
(ii) the Executive
is assigned any duties inconsistent in a material respect with the
Executive’s position (including status, offices, and
reporting relationships with the Company or any Material
Subsidiary), authority, duties or responsibilities as in effect
immediately prior to the start of the Protected Period (or
thereafter if increased) if such assignment results in a material
diminution of such Executive’s authority, duties or
responsibilities with the Company and its subsidiaries, taken as a
whole;
(iii) the Company
materially breaches the agreement under which the Executive
provides services;
(iv) the
Executive’s annual base salary or annual bonus opportunity
(determined on an aggregate basis for the Company and its
subsidiaries) as in effect immediately prior to the start of the
Protected Period (or thereafter if higher) is materially reduced
(except for across-the-board reductions similarly affecting all
senior executives of the Company and of any Material Subsidiary and
all senior executives of any Person in control of the
Company);
(v) the failure of
the Company to obtain an agreement that materially satisfies
Section 9 hereof;
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(vi) any
relocation of the Executive’s principal place of business
from its location as of the date immediately preceding the start of
the Protected Period, by more than fifty (50) miles; or
(vii) any
purported termination of the Executive’s employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 3(b) hereof, which termination for purposes
of this Agreement shall be ineffective.
Notwithstanding
the foregoing, a termination shall not be treated as a termination
for Good Reason unless the Executive shall have delivered a Notice
of Termination stating that the Executive intends to terminate
employment for Good Reason within ninety (90) days, and such
Termination must occur within two years, of the Executive’s
having actual knowledge of the initial occurrence of one or more of
such events, provided, in each such event, the Company fails to
cure within thirty (30) days of receipt of such Notice of
Termination. For purposes of this Agreement, any good faith
determination of “Good Reason” or good faith
determination of the Company’s failure to cure within the
thirty (30) day period made by the Executive shall be
conclusive.
“Material
Subsidiary” shall mean any subsidiary of the Company
(a) whose total assets represent forty percent (40%) or more
of the total gross fair market value of all of the assets of the
Company and its subsidiaries (taken as a whole) at any time in the
current fiscal year or in any of the two most recently completed
fiscal years or (b) credited under GAAP with forty percent
(40%) or more of the total revenues of the Company and its
subsidiaries (taken as a whole) in the current fiscal year or in
any of the two most recently completed fiscal years.
“Protected
Period” shall mean the period that begins upon the earlier of
(i) three months before the date of any (and each) Change in
Control or (ii) the date the Company or any Material
Subsidiary enters into a binding agreement with respect to a Change
in Control (subject to customary closing conditions), and ends
three years after the date of such Change in Control.
“Retirement”
shall mean the Executive’s Separation from Service initiated
by the Executive after attainment by the Executive of age
sixty-five (65).
“Section 409A
Penalties” shall have the meaning set forth in
Section 14 of this Agreement.
“Specified
Employee” shall mean any person described in
Section 409A(a)(2)(B)(i) of the Code and Treasury
Regulation Section 1.409A-1(i) as determined from time to
time by the Committee in its discretion.
“Shares”
shall mean shares of common stock, $0.10 par value, of the Company,
or such other securities of the Company as may be designated by the
Committee from time to time.
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“subsidiary”
shall mean, with respect to any Person (the “parent”)
at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which
would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date,
as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which
securities or other ownership interests representing more than
fifty percent (50%) of the equity or more than fifty percent (50%)
of the ordinary voting power or, in the case of a partnership, more
than fifty percent (50%) of the general partnership interests are,
as of such date, or were, prior to a Change of Control, owned,
controlled or held, or (b) that is, or was prior to a Change
of Control, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. For purposes of this paragraph,
“Controlled” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to
exercise voting power, by contract, or otherwise.
“Termination
of Employment” shall mean and be interpreted in a manner
consistent with the definition of “separation from
service” within the meaning of Section 409A(a)(2)(A)(i)
of the Code and Treasury Regulation Section 1.409A-1(h).
The Company retains the right and discretion to specify, and may
specify, whether a Termination of Employment occurs for individuals
providing services to the Company immediately prior to an asset
purchase transaction in which the Company is the seller, who
provide services to a buyer after and in connection with such asset
purchase transaction; provided, such specification is made in
accordance with the requirements of Treasury
Regulation Section 1.409A-1(h)(4).
2. Term of
Agreement . The term of this Agreement will commence as of the
date hereof (the “Effective Date”) and shall continue
in effect until the third anniversary of the Effective Date, unless
further extended or sooner terminated as hereinafter provided.
Commencing on the first anniversary of the Effective Date, and on
each anniversary of such date thereafter (each, an
“Anniversary Date”), the term shall automatically be
extended for one additional year unless the Board of Directors of
the Company gives notice to the Executive, at least two months
prior to such Anniversary Date, that it does not wish to extend the
term. Notwithstanding the foregoing, upon the occurrence of a
Change in Control during the term of this Agreement, this Agreement
shall continue in effect for a period of three years from the date
of such Change in Control, unless sooner terminated as hereinafter
provided.
3.
Termination During a Protected Period .
(a) Upon a
Termination of Employment during any Protected Period by the
Company without Cause, or by the Executive for Good Reason, the
Executive shall be entitled to the benefits provided in
Section 4 hereof.
(b)
Notice of Termination . Following a Change in Control (and
prior thereto if reasonably anticipated to be within a Protected
Period), any purported Termination of Employment by the Company or
by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
shall specify the Date of Termination. The failure by the Executive
or the Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company
under this Agreement or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights under this
Agreement.
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(c) Date
of Termination . Following a Change in Control (and prior
thereto if reasonably anticipated to be within a Protected Period),
“Date of Termination” shall mean the date within the
term of the Agreement specified in the Notice of Termination, which
shall not be less than thirty (30) nor more than sixty
(60) days from the date such Notice of Termination is given
(except for a termination pursuant to paragraph (v) of the
definition of Good Reason, in which event the date upon which any
succession referred to therein becomes effective shall be deemed
the Date of Termination, or a Termination of Employment by the
Company for Cause, in which event the date such notice is received
shall be the Date of Termination).
4.
Compensation upon Termination without Cause or for Good
Reason . Upon any Termination of Employment of the Executive by
the Company without Cause (other than because of death, Disability
or Retirement), or any Termination of Employment by the Executive
for Good Reason, in any case, during any Protected Period, in lieu
of any severance benefits Executive would otherwise be eligible to
receive under any employment agreement with the Company or any
subsidiary or under the Company’s or any subsidiary’s
severance plan, if any, as in effect immediately prior to the
earlier of the Change in Control or the Executive’s
Termination of Employment, the Executive shall be entitled to the
following benefits and payments:
(a) A cash
lump sum payment (payable within ten days of the Date of
Termination) of full base salary through the Date of Termination at
the rate in effect at the time the Notice of Termination is given
or, if higher, at the rate in effect immediately prior to the
reduction giving rise (pursuant to clause (iv) of the
definition of Good Reason) to such termination, plus all other
amounts to which the Executive is entitled under any compensation
or benefit plan of the Company or any subsidiary at the time such
payments are due under the terms of such plans;
(b) A cash
lump sum payment (payable within ten (10) days of the Date of
Termination) equal to two (2) times the sum of the Final
Salary and the Final Average Bonus. “Final Salary”
means the Executive’s annual base salary as in effect on the
Date of Termination or, if higher, the Executive’s annual
base salary in effect immediately pr
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