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EXHIBIT 10.21
AGREEMENT REGARDING POST-CLOSING CONDUCT
THIS AGREEMENT, dated as of _________, 1998, is by and between the
United States Department of the Treasury ("Treasury") on behalf of the United
States Government, the United States Enrichment Corporation ("USEC"), a
federally chartered corporation, the outstanding capital stock of which is held
by the Secretary of the Treasury, on behalf of the United States Government,
United States Enrichment Corporation, a Delaware corporation ("USEC Delaware"),
USEC Inc., a Delaware corporation ("USEC Inc."), and USEC Services Corporation,
a Delaware corporation ("USEC Services") (USEC Delaware, USEC Inc. and USEC
Services collectively, the "USEC Companies" and each a "USEC Company").
References herein to USEC shall be references solely to the corporation itself
and not to the United States Government or any other agencies or
instrumentalities thereof.
WHEREAS, pursuant to the Atomic Energy Act of 1954, as amended by
the Energy Policy Act of 1992 (Pub. L. No. 102-486, 106 Stat. 2776) (the
"Energy Policy Act"), and the USEC Privatization Act, as enacted in the Omnibus
Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. No. 104-134,
110 Stat. 1321, 1321-335) (the "Privatization Act") (collectively, the
"Privatization Legislation"), the Board of Directors of USEC (the "Board") has
determined that the transfer of ownership of the assets and obligations of USEC
to a private corporation and the transfer of the interest of the United States
in USEC to the private sector by means of an initial public offering (the
"Offering") will satisfy the conditions precedent to privatization established
by the Privatization Legislation, and the Secretary of the Treasury has
approved such determination; and
WHEREAS, in connection with the Offering, it is contemplated that
(i) USEC will be merged into USEC Delaware, with USEC Delaware as the surviving
corporation, pursuant to a merger agreement (the "USEC Merger Agreement"); (ii)
each outstanding share of the common stock of USEC will be converted into
shares of the common stock of USEC Delaware; (iii) all of the outstanding
shares of capital stock of USEC Delaware will be sold to certain underwriters
(the "Underwriters") to be named in an underwriting agreement among Treasury,
USEC, USEC Inc., USEC Delaware and the Underwriters (the "Underwriting
Agreement"), at the time and on the date specified in the Underwriting
Agreement (the "Closing"); (iv) USEC Delaware will be merged with a wholly
owned subsidiary of USEC Inc. formed solely for the purpose of such merger,
with USEC Delaware as the surviving corporation, pursuant to a merger agreement
(the "USEC Delaware Merger Agreement"); (v) each outstanding share of the
common stock of USEC Delaware will be converted into shares of the common stock
of USEC Inc.; and (vi) the shares of common stock of USEC Inc. will be offered
to the public by the Underwriters; and
WHEREAS, the USEC Companies desire to enter into a contractually
binding commitment to operate until at least January 1, 2005 the two gaseous
diffusion plants leased to
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the USEC Companies by the Department of Energy (each a "Plant" and collectively
the "Plants") (subject to the terms and conditions specified in this Agreement)
and to undertake any workforce reductions at the Plants during the first two
years after the date of this Agreement in the manner described in this
Agreement; and
WHEREAS, Treasury, USEC and the USEC Companies desire to set forth
certain additional agreements among themselves relating to the Offering;
NOW, THEREFORE, in consideration of the foregoing and the
agreements contained herein, and as one of the inducements for the Secretary of
the Treasury to approve the decision of the Board to privatize USEC by means of
the Offering, the parties hereto hereby agree as follows:
1. Post-Closing Conduct.
(a) USEC and the USEC Companies acknowledge that
certain obligations are imposed upon USEC and the USEC Companies under the
Privatization Legislation. USEC and the USEC Companies shall abide by and
comply with the Privatization Legislation, including without limitation,
Section 3111(b) of the Privatization Act.
(b) From and after the Closing until the third
anniversary of the Closing, the USEC Companies shall not sell, assign, transfer
or otherwise dispose of, in a single transaction or a series of related
transactions, all or substantially all of the uranium enrichment assets and
properties or uranium enrichment operations of the USEC Companies, other than
to USEC Inc. or an entity that is directly or indirectly wholly owned by USEC
Inc.
(c) USEC and the USEC Companies acknowledge that the
provisions of the Privatization Act provide that the Board, with the approval
of the Secretary of the Treasury, shall transfer the interest of the United
States in USEC to the private sector in a manner that provides for the
continuation of the operation of the Plants. Accordingly, from and after the
Closing until at least January 1, 2005, the USEC Companies shall continue
Operation of both of the Plants; provided, however, that this paragraph shall
not restrict the termination by the USEC Companies of the Operation of a Plant
if a Significant Event has occurred with respect to such Plant. For the purpose
of this paragraph, (i) "Operation" shall mean the use of the Plants for the
provision of enrichment services, at a level reasonably determined appropriate
by the USEC Companies, and (ii) a "Significant Event" shall mean: (u) any event
beyond the reasonable control of the USEC Companies including, but not limited
to, fires, floods, acts of God, transportation delays, acts or failures to act
of government authorities or third parties, or inability to secure labor,
materials, equipment or utilities that prevents the continued Operation of a
Plant by the USEC Companies, (v) that the Operating Margin of USEC Inc. is less
than 10% in a twelve consecutive month period, (w) that the long-term corporate
credit rating of USEC Inc. is, or is reasonably expected in the next twelve
months to be, downgraded below an investment grade rating, (x) the Operating
Interest Coverage Ratio of USEC Inc. is less than 2.5x in a twelve consecutive
month period, (y) a decrease in annual worldwide demand for Separative Work
Units to less than 28 million
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Separative Work Units, or (z) a decrease in the average price for long-term
firm contract delivery of Separative Work Units to less than $80 per Separative
Work Unit (in 1998 dollars). For purposes of this paragraph, (i) "Operating
Margin" shall mean (x) earnings plus interest and taxes divided by (y) total
revenue, (ii) "Operating Interest Coverage Ratio" shall mean (x) earnings plus
interest and taxes divided by (y) gross interest expense. Nothing contained in
this Agreement shall be construed to modify any obligation that USEC or the
USEC Companies may have with respect to the Plants under the Lease Agreement
between USEC and the Department of Energy dated as of July 1, 1993, as amended,
or under any state or federal law, rule, regulation, order or permit applicable
thereto.
(d) USEC's Strategic Plan dated September 1997 and
adopted by the Board in January 1998 (the "Strategic Plan") contemplates
certain reductions in the workforce at the Plants through USEC Inc.'s fiscal
year 2000. To the extent commercially practicable, the USEC Companies shall (i)
take steps reasonably calculated in good faith to ensure that workforce
reductions at the Plants through USEC Inc.'s fiscal year 2000 are conducted in
a manner consistent with the Strategic Plan, do not exceed 500 employees, and
are effected in substantially equal parts in each of USEC Inc.'s fiscal years
1999 and 2000, (ii) in each of USEC Inc.'s fiscal years 1999 and 2000, seek to
achieve such workforce reductions through a program of voluntary separation
before instituting a program of involuntary separation, (iii) with respect to
such workforce reductions, provide benefits and take other measures to minimize
workforce disruptions that are no less favorable to the workforce than would
have been the case prior to the privatization of USEC and that are in
accordance with the agreement between USEC and the Department of Energy
concerning worker assistance to be entered into prior to the Closing. The
foregoing provisions (w) shall not be construed to limit employee terminations
for cause or workforce reductions through normal employee attrition, (x) shall
be subject to any applicable collective bargaining agreements involving the
Plants' workforce, (y) shall not be construed to create any third-party
beneficiary rights, (z) shall terminate on the second anniversary of the date
of this Agreement.
(e) From the Closing until the third anniversary of the
Closing, the USEC Companies shall not grant any option, right or warrant to
purchase, acquire, or otherwise receive any direct or indirect interest in, or
economic benefit from, any shares of the stock of USEC Inc. or any securities
convertible into or exercisable or exchangeable for the stock of USEC Inc.,
either through any bonus, profit sharing, compensation, severance, stock
option, stock appreciation right, stock purchase agreement, retirement,
deferred compensation, employment, or other employee benefit agreement, plan,
or other arrangement for the benefit or welfare of any director, officer or
employee of the USEC Companies or otherwise, unless such grant is made pursuant
to an agreement, plan or other arrangement that has been validly approved by
the shareholders of USEC Inc. at a meeting held at least 180 days after the
Closing.
(f) From the Closing until 180 days after the Closing,
the USEC Companies shall not (1) adopt any new, or amend any existing,
compensation, employment or consulting agreements or arrangements for the
benefit or welfare of any person who is listed as an Executive
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Officer in USEC Inc.'s Registration Statement on Form S-1, or (2) increase the
compensation or fringe benefits of any such person as in effect as of the
Closing.
(g) USEC and the USEC Companies shall enter into
agreements with each of their respective officers and directors, under which
each such officer and director shall agree not to, and to use his or her best
efforts to cause members of his or her respective immediate family not to,
purchase shares of the Common Stock of USEC Inc. or otherwise acquire or
receive any direct or indirect interest in, or economic benefit from, any
shares of the Common Stock of USEC Inc. or any securities convertible into or
exercisable or exchangeable for the Common Stock of USEC Inc. during a period
from the Closing until 180 days after the Closing. Copies of all such
agreements shall be provided to Treasury at least 5 business days prior to the
Closing.
(h) From the Closing until the second anniversary of
the Closing, the USEC Companies shall not hire, contract with, or provide
compensation, employment, or other arrangements for the benefit of (i) persons
who are or have been members of the Board of USEC on or prior to the date of
this Agreement, or (ii) entities in which such persons have a direct or
indirect material interest; provided, however, that this Section 1(h) shall not
be construed to limit or alter rights of indemnification or contribution
provided by any written agreements in effect on the date of this Agreement. For
purposes of this Section 1(h), the parties intend that the term "direct or
indirect material interest" shall be construed with reference to Item 404(a) of
SEC Regulation S-K (17 C.F.R. Section 229.404(a)) and the Instructions
thereunder.
(i) For a period of two years after the Closing, the
USEC Companies shall not engage, hire, contract with, or provide compensation,
employment or other arrangement for the benefit of the financial advisors or
law firms that advised the USEC Board of Directors as to the manner and method
of transfer of the United States Government's interest in USEC to the private
sector without the approval of the Board of Directors of USEC Inc.; provided,
however, that this provision shall take effect with respect to each such
advisor or law firm only after the expiration of the terms of their respective
contracts that are in effect on the date hereof; and provided further, that
nothing in this provision shall act to amend, waive or cancel existing
contractual limitations on the provision of services to the USEC Companies by
such advisors or law firms.
2. Cooperation. The USEC Companies shall provide the Treasury and
any other agencies or instrumentalities of the United States Government with
such assistance and information, books, records and other material documents of
USEC existing on the Closing ("Records"), without charge, as may be reasonably
requested by such parties in connection with (i) claims relating to the period
prior to the Closing for which the United States Government may have liability,
or (ii) the privatization of USEC. Such cooperation shall be provided to the
requesting party promptly upon its request and shall include making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The USEC Companies shall retain
all Records for a period of six (6) years following the Closing.
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3. Governing Law; Consent to Jurisdiction. This Agreement, and the
rights and obligations of the parties hereunder, shall be governed by, and
construed and interpreted in accordance with, federal law and not the law of
any state or locality. USEC, the USEC Companies and the Treasury hereby
irrevocably and unconditionally consent and submit to and waive any objection
to the personal and subject matter jurisdiction of, and venue in, the United
States District Court of the District of Columbia or the United States Court of
Federal Claims in any action or preceding arising out or relating to this
Agreement. USEC, the USEC Companies and Treasury agree that such jurisdiction
and venue shall be exclusive with respect to any such action or proceeding
brought by it hereunder. USEC, the USEC Companies and Treasury consent to the
service of copies of the summons and complaint and any other such process which
may be served in any such action or proceeding by certified mail, return
receipt requested, or by any other method permitted by law.
4. Amendment; Waiver. This Agreement may only be amended by an
instrument in writing signed by the parties hereto. Any failure by USEC or the
USEC Companies to comply with any obligation, covenant or agreement herein may
be waived by Treasury, and any failure by Treasury to comply with any
obligation, covenant or agreement herein may be waived by USEC or USEC Inc.;
provided, however, that any such waiver may be made only by a written
instrument signed by the party granting such waiver. Any waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition by a party hereto shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure by any other party hereto.
5. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the specific subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the specific subject
matter hereof.
6. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns.
7. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to the other party as follows:
If to Treasury:
Department of the Treasury
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Attention: Assistant Secretary (Financial Markets)
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If to USEC or the USEC Companies:
United States Enrichment Corporation
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Attention: General Counsel
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its duly authorized representative, all as of
the day and year first above written.
THE UNITED STATES OF AMERICA, acting through
the Secretary of the Treasury, through his duly
authorized designate
By:
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Name:
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Title:
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UNITED STATES ENRICHMENT CORPORATION,
a federally chartered corporation
By:
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Name:
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Title:
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UNITED STATES ENRICHMENT CORPORATION,
a Delaware corporation
By:
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Name:
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Title:
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USEC INC., a Delaware corporation
By:
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Name:
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Title:
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USEC SERVICES CORPORATION, a Delaware
corporation
By:
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Name:
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Title:
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