EXHIBIT 10.69
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is an amendment and restatement, effective as of the 29th
day of July, 2004, of the Employment Agreement made and entered into as of the
28th day of April, 1999, by and between USEC Inc., a Delaware corporation (the
"Company"), and William H. Timbers, Jr. (the "Executive").
WHEREAS, the Company desires to provide for the service and employment of
the Executive with the Company and the Executive wishes to perform services for
the Company, all in accordance with the terms and conditions provided herein;
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. Employment and Term.
(a) The Company agrees to employ the Executive, and the Executive agrees
to remain in the employ of the Company in accordance with the terms and
provisions of this Agreement for the period set forth below (the "Employment
Period").
(b) The Employment Period of this Agreement will commence as of the date
hereof (the "Effective Date") and continue until December 31, 2009, unless
sooner terminated as hereinafter provided. Notwithstanding the foregoing, upon
the occurrence of a "Change in Control," as defined in the USEC Inc. 1999 Equity
Incentive Plan (the "Equity Incentive Plan"), during the Employment Period, this
Agreement shall continue in effect for a period of not less than three years
from the date of the Change in Control, unless sooner terminated as hereinafter
provided. References herein to the Employment Period shall refer to both the
initial term and any extended term hereunder resulting from a Change in Control.
The Employment Period shall end on the Date of Termination (as hereinafter
defined).
(c) The Company also hereby agrees that the Executive currently serves as
a director on the Board of Directors of the Company (the "Board"), and as a
director and Chief Executive Officer of each Subsidiary (as defined below), and
the Executive hereby accepts such appointments. As used herein, the term
"Subsidiaries" shall mean all corporations a majority of capital stock of which
entitling the holder thereof to vote is owned by the Company or a Subsidiary.
Subject to any requirements of applicable law, the Executive shall be deemed to
have resigned all such appointments and all other board and committee
appointments with the Company, its affiliates and its employee benefit plans as
of the date on which his employment with the Company terminates for any reason
and shall execute any documents necessary or desirable to reflect such
resignation.
(d) The principal location at which the Executive will perform his duties
will be the Company's principal executive offices in Bethesda, Maryland.
2. Position; Duties. Commencing as of the Effective Date and continuing
during the Employment Period, the Executive shall serve as President and Chief
Executive Officer
of the Company and shall have such responsibilities, duties and authority as are
specified in the Company's charter and/or bylaws and as specified, from time to
time, by the Board. The Executive shall report directly to the Board. The
Executive shall devote substantially all of his working time and efforts to the
business and affairs of the Company and shall not engage in activities that
interfere with such performance; provided, however, that this Agreement shall
not be interpreted to prohibit the Executive from managing his personal
investments and affairs, engaging in charitable activities, serving as a member
of any board of directors of which he is currently a member or, subject to prior
approval of the Board, serving on any other board of directors so long as, in
the reasonable determination of the Board, such activities do not interfere with
the performance of his duties hereunder.
3. Compensation. The Executive shall receive the following compensation for his
services hereunder to the Company:
(a) Salary. The Company shall pay to the Executive an annual base salary
("Annual Base Salary") at a rate not less than $710,000 for the Company's 2004
fiscal year, such salary to be paid in conformity with the Company's policies
relating to salaried employees. During the Employment Period, this salary may be
(but is not required to be) increased from time to time, subject to and in
accordance with an annual performance review by the Board.
(b) Annual Incentive Program. The Executive shall be a participant in the
Company's annual incentive program as in effect from time to time (the "Annual
Incentive Program") at a level commensurate with his position, and shall be
entitled to receive such amounts (each, a "Bonus") as may be authorized,
declared and paid by the Company pursuant to the terms of such program and the
performance goals established by the Compensation Committee of the Board. For
each fiscal year, the target amount for the Executive's Bonus under the Annual
Incentive Plan shall be at least 100% of the Executive's Annual Base Salary for
such fiscal year.
(c) Long-Term Incentive Plan. The Executive shall be a participant in the
Equity Incentive Plan, and any other long-term equity or cash compensation
programs as the Board may provide for the Company's senior management
(collectively, the "LTIP") at a level commensurate with the Executive's
position.
(d) Employee Benefit Plans; Perquisites; Fringe Benefits. During the
Employment Period, the Executive shall be eligible to participate, on a basis
commensurate with his position, in all employee benefit plans, including
supplemental benefit plans, welfare plans, practices, policies and programs,
perquisites and other fringe benefits applicable to senior management of the
Company. Such benefits shall include, but not be limited to, an annual budget
for financial planning in an amount equal to $30,000 (subject to increase in the
discretion of the Board). A one-year "reach back" and "reach forward" will apply
to the financial planning budget so that, for example, the Executive could use
$40,000 during the first year of the Employment Period, but would then be
limited to $20,000 for the second year. The Company shall provide the Executive
with supplemental executive retirement benefits pursuant to the terms of the
- 2 -
USEC, Inc. Supplemental Executive Retirement Plan (the "SERP"), as modified by
Appendix A hereto (which shall form a part of this Agreement).
(e) Life Insurance. The Company shall increase the amount of life
insurance provided to the Executive under the whole life policies it maintains
as of the date hereof on the life of the Executive so that the policies provide
the Executive with life insurance equal to 3-1/3 times his Annual Base Salary as
of the Effective Date. The Company shall pay the premiums for such insurance
until the Date of Termination, at which time the Company's obligations to pay
such premiums shall terminate; provided, however, that in the event that the
Executive remains employed by the Company until expiration of the Employment
Term or the Executive's employment is terminated by the Company (other than for
Cause, as hereinafter defined), or by the Executive for Good Reason, as
hereinafter defined, the Company shall pay up the insurance policies in full
(based on the projected dividend rate), and transfer ownership of such policies
to the Executive, to the extent permitted by such policies. If for any reason
(a) the Executive's the life insurance policies cannot be continued, the Company
will provide the Executive with mutually agreed upon equivalent benefits, or (b)
the policies cannot be paid up in full and transferred to the Executive as
required by the preceding provisions of this Section 3(e), the Company will make
a cash payment to the Executive of equal value.
(f) Expenses. The Company agrees to reimburse the Executive for all
reasonable expenses, including those for travel and entertainment, properly
incurred by him in the performance of his duties under this Agreement in
accordance with policies established from time to time by the Company.
4. Termination of Employment.
(a) Death; Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Company or the Executive may terminate the Executive's employment on account of
the Executive's Disability. For purposes hereof, "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
senior executive officers as in effect at the time the Executive's disability is
incurred.
(b) By the Company for Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement "Cause" shall mean:
(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 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
- 3 -
(iii) the willful failure or refusal by the Executive to
substantially perform his duties or responsibilities (other than (x) any
such failure resulting from the Executive's incapacity due to Disability,
or (y) any such actual or anticipated failure after the issuance of a
Notice of Termination (as defined below) by the Executive for Good Reason
(as defined below)) 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 duties.
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
not in good faith and without reasonable belief that his 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 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 is curable, only if the Executive has been provided a
period of ten (10) business days from receipt of such notice to cease the
actions or inactions, and he has not done so; (B) an opportunity shall have been
provided for the Executive, together with his counsel, to be heard before the
Board; 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 finding that in the good faith opinion of a majority of the
nonmanagement members of the Board he was guilty of conduct set forth in clause
(i) or (iii) above, and specifying the particulars thereof in reasonable detail.
(c) By the Executive for Good Reason. The Executive may terminate his
employment during the Employment Period for Good Reason. For purposes of this
Agreement, "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) any material breach by the Company of its obligations under this
Agreement, including but not limited to (x) a reduction in the Executive's
Base Salary as such salary may be increased from time to time thereafter,
and (y) the Company's requiring the Executive to be based anywhere other
than the offices that constitute the Company's corporate headquarters
and/or the Company's principal executive offices;
(ii) either (A) the Executive is removed from any of his positions
set forth in Section 2 hereof for any reason other than (I) by reason of
death or Disability, or (II) for Cause, or (B) the failure to elect or
re-elect the Executive to any position with the Company (including
membership on the Board or the Boards of Directors of the Subsidiaries);
(iii) the Executive is assigned any duties inconsistent with the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities as in effect as of
the Effective Date (excluding
- 4 -
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly following
notice thereof given by the Executive);
(iv) the failure to assume this Agreement by any successor to the
Company;
(v) any purported termination of the Executive's employment that is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (d) below, which termination for purposes of
this Agreement shall be ineffective;
(vi) any relocation of the Executive's principal office location
after a Change in Control, to a location that is more than 25 miles from
his principal office location immediately prior to the Change in Control;
or
(vii) termination of employment by the Executive that is determined
by a majority of the nonmanagement members of the Board to be deemed to
constitute Good Reason.
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 within 90 days of the Executive's having actual knowledge of the
occurrence of one of such events, stating that the Executive intends to
terminate employment for Good Reason.
(d) Notice of Termination. Any termination of the Executive's employment
(other than by reason of death) shall be communicated by Notice of Termination
to the other party hereto in accordance with Section 11(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination," means a written
notice that indicates the specific termination provision in this Agreement
relied upon, sets 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 specifies 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.
(e) Date of Termination. "Date of Termination" shall mean:
(i) if the Executive's employment is terminated by reason of
Disability, or by the Executive for Good Reason, other than a termination
pursuant to Section 4(c)(iv) of the definition of Good Reason, the date
specified in the Notice of Termination (which shall not be less than 30
nor more than 60 days from the date such Notice of Termination is given);
- 5 -
(ii) if the Executive's employment is terminated by the Company for
Cause or without Cause, or by the Executive for other than Good Reason,
the date the Notice of Termination is received;
(iii) if the Executive's employment is terminated by the Executive
for Good Reason pursuant to Section 4(c)(iv) hereof, the date upon which
any succession referred to therein becomes effective;
(iv) if the Executive's employment is terminated by reason of death,
the date of death; and
(v) if the Executive's employment is terminated by reason of the
expiration of the Employment Period, the last day of the Employment
Period.
5. Obligations of the Company upon Termination.
(a) Termination by the Executive for Good Reason or by the Company Other
than for Cause. If the Executive's employment is terminated by the Executive for
Good Reason or by the Company other than for Cause:
(i) the Company shall pay to the Executive, within 10 days following
the Date of Termination, a lump sum amount in cash equal to the sum of:
(A) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid;
(B) an amount equal to the Executive's Bonus for the fiscal
year prior to the Date of Termination, to the extent such Bonus has
been earned but not paid, and for the fiscal year that includes the
Date of Termination, the product of (a) the Executive's Target Bonus
(or, if the Executive's Date of Termination occurs within two years
after a Change in Control, the amount of the Bonus to which the
Executive would be entitled assuming that he continued to be
employed for the entire fiscal year and all applicable performance
goals or objectives were achieved at the maximum level) and (b) a
fraction, the numerator of which shall be the number of days from
the beginning of such fiscal year to and including the Date of
Termination and the denominator of which shall be three hundred and
sixty-five (365); and
(C) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not previously
paid.
The amounts specified in clauses (A), (B) and (C) hereof shall be hereinafter
referred to as the "Accrued Obligations";
(ii) the Company shall pay to the Executive, within 10 days
following the Date of Termination, a lump sum amount, in cash, equal to
three times the
- 6 -
sum of the Final Average Salary and the Final Average Bonus, where (A) the
"Final Average Salary" means the average of the Executive's Annual Base
Salary as in effect for each of the three calendar years preceding the
Date of Termination (provided that if the Executive's Date of Termination
occurs within two years after a Change in Control, the Executive's Final
Average Salary shall not be less than Executive's Annual Base Salary in
effect immediately prior to the Date of Termination, not taking into
account any reduction in Annual Base Salary made in contemplation of the
Executive's termination) and (B) the "Final Average Bonus" means the
average of the Bonuses awarded to the Executive pursuant to the Annual
Incentive Program with respect to the three calendar years preceding the
Date of Termination (provided that if the Executive's Date of Termination
occurs within two years after a Change in Control, the Executive's Final
Average Bonus shall not be less than the Executive's most recent target
annual Bonus as of the Date of Termination);
(iii) subject to the Executive's continued compliance with Section 9
hereof, the Company shall continue life, disability, accident and health
insurance benefits, (including supplemental health and life insurance
benefits) substantially similar to those that the Executive was receiving
immediately prior to the Date of Termination (or if applicable, prior to
the Change in Control, or thereafter, if higher) until the third
anniversary of the Date of Termination; provided, however, that (A) in the
event the Company is unable to provide such benefits, the Company shall
make annual payments to the Executive in an amount such that following the
Executive's payment of applicable taxes thereon, the Executive retains an
amount equal to the cost to the Executive, net of any cost that would
otherwise be borne by the Executive if the benefits were provided by the
Company, of obtaining comparable life, disability, accident and health
insurance coverage and (B) the Company's obligation to provide continued
life insurance shall not apply with respect to the life insurance policies
transferred to (or a cash payment made to) the Executive pursuant to
Section 3(e) hereof. Benefits otherwise receivable by the Executive
pursuant to this Section 5(a)(iii) shall be reduced to the extent
comparable benefits are actually received from a subsequent employer
during the three year period following termination, and any such benefits
actually received by the Executive shall be reported to the Company;
(iv) the Company shall furnish the Executive with office space and
administrative support for two years following the Date of Termination;
provided, however, that if the Executive becomes employed with another
employer, the Company shall cease to provide the Executive with such
office space and administrative support;
(v) the Company shall credit the Executive with one additional year
of service for purposes of the SERP so that the Executive's SERP benefit
will be calculated as if the Executive were one year older at the Date of
Termination; and
(vi) all of the Executive's stock options (vested or nonvested)
shall become exercisable and shall remain exercisable for the longer of
one year and
- 7 -
the number of years, including fractional portions thereof, that would
have remained in the Employment Period until its expiration, but in no
event shall such period exceed the maximum term of the stock options; and
all restrictions pertaining to the Executive's restricted stock or other
equity based awards shall lapse on the Date of Termination.
If the Company terminates the Executive's employment for other than Cause,
or the Executive terminates employment for Good Reason, the Executive agrees
that he shall be available to consult with the Company with respect to general
business matters and strategic issues upon such terms and conditions as shall be
mutually agreed upon by the parties hereto.
(b) Termination By Reason of Death or Disability. If the Executive's
employment shall be terminated by reason of the Executive's death or Disability,
then the Company shall pay the Executive the amounts and benefits described in
clauses (a)(i), (iii), (v) and (vi) above.
(c) Termination By Reason of Expiration of the Employment Period. If the
Executive's employment shall be terminated by reason of the expiration of the
Employment Period:
(i) the Company shall pay to the Executive, within 10 days following
the Date of Termination, the Accrued Obligations;
(ii) subject to the Executive's continued compliance with Section 9
hereof, the Company shall continue life, disability, accident and health
insurance benefits (including supplemental health and life insurance
benefits) substantially similar to those that the Executive was receiving
immediately prior to the Date of Termination until the last day of the
18th month following the Date of Termination; provided, however, that (A)
in the event the Company is unable to provide such benefits (other than
disability benefits), the Company shall make annual payments to the
Executive in an amount such that following the Executive's payment of
applicable taxes thereon, the Executive retains an amount equal to the
cost to the Executive, net of any cost that would otherwise be borne by
the Executive, of obtaining comparable life, accident and health insurance
coverage, (B) in the event that the Company is unable to provide
disability benefits to the Executive on commercially reasonable terms, the
Company shall pay to the Executive an amount such that after the payment
of applicable taxes thereon is equal to the net cost to the Company of
providing such coverage to the Executive during the eighteen month period
immediately preceding the Date of Termination, and (C) the Company's
obligation to provide continued life insurance shall not apply with
respect to the life insurance policies transferred to (or a cash payment
made to) the Executive pursuant to Section 3(e) hereof. Benefits otherwise
receivable by the Executive pursuant to this Section 5(c)(ii) shall be
reduced to the extent comparable benefits are actually received from a
subsequent employer during the one and one-half year period following
- 8 -
termination, and any such benefits actually received by the Executive
shall be reported to the Company;
(iii) the Company shall furnish the Executive with office space and
administrative support for one year following the Date of Termination;
provided however, that if the Executive becomes employed with another
employer, the Company shall cease to provide the Executive with such
office space and administrative support;
(iv) all of the Executive's stock options shall become exercisable
and shall remain exercisable for the longer of one year and the number of
years, including fractional portions thereof, that would have remained in
the Employment Period until its expiration, but in no event shall such
period exceed the maximum term of the stock options; and all restrictions
pertaining to the Executive's restricted stock or other equity based
awards shall lapse on the Date of Termination.
If the Executive's employment is terminated by reason of the expiration of
the Employment Period, the Executive agrees that he shall be available to
consult with the Company with respect to general business matters and strategic
issues upon such terms and conditions as shall be mutually agreed upon by the
parties hereto.
(d) Termination by the Company for Cause or By the Executive for Other
Than Good Reason. Subject to the provisions of Section 6 of this Agreement, if
the Executive's employment shall be terminated by the Company for Cause or by
the Executive for other than Good Reason, death or Disability, in either case,
during the Employment Period, the Company shall have no further obligations to
the Executive under this Agreement other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination, earned bonuses and
any amount of compensation previously deferred by the Executive, in each case to
the extent previously unpaid, and the Executive shall have no further
obligations to the Company under this Agreement other than pursuant to Section 9
of this Agreement. All of the Executive's stock options that have not yet become
exercisable shall expire and all of the Executive's restricted stock awards and
other restricted equity based awards as to which the applicable restrictions
have not yet lapsed shall be forfeited on the Date of Termination.
(e) Certain Tax Consequences. Whether or not the Executive becomes
entitled to the payments and benefits described in this Section 5, if any of the
payments or benefits (including the payments(s) provided for by this section
5(e)) received or to be received by the Executive in connection with a change in
ownership or control of the Company (a "Statutory Change in Control"), as
defined in section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), or the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Statutory Change in Control or any
person affiliated with the Company or such person) (collectively, the "Severance
Benefits") will be subject to any excise tax (the "Excise
- 9 -
Tax") imposed under section 4999 of the Code, the Company shall pay to the
Executive an additional amount equal to the Excise Tax (the "Excise Tax
Payment").
For purposes of determining whether any of the Severance Benefits will be
subject to the Excise Tax and the amount of such Excise Tax:
(i) all of the Severance Benefits shall be treated as "parachute
payments" within the meaning of Code section 280G(b)(2), and all "excess
parachute payments" within the meaning of Code section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless, in the opinion of tax
counsel selected by the Company's independent auditors and reasonably
acceptable to the Executive, such other payments or benefits (in whole or
in part) do not constitute parachute payments, including by reason of Code
section 280G(b)(4)(A), or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered,
within the meaning of Code section 280G(b)(4)(B), in excess of the "Base
Amount" as defined in Code section 280G(b)(3) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax; and
(ii) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Code section 280G(d)(3) and (4).
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined (the
"Reduced Excise Tax"), the difference of the Excise Tax Payment and the Reduced
Excise Tax. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive's
employment (including by reason of any payment the existence or amount of which
could not be determined at the time of the Excise Tax Payment), the Company
shall make an additional Excise Tax Payment in respect of such excess (plus any
interest or penalties payable by the Executive with respect to such excess) at
the time that the amount of such excess is finally determined. The Executive and
the Company shall each reasonably cooperate with the other in connection with
any administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Severance Benefits.
(f) Other Fees and Expenses. With respect to a termination of Executive's
employment prior to a Change in Control, if the Executive is the prevailing
party, he shall be entitled to recover from the Company all reasonable legal
fees and expenses incurred in contesting or disputing any termination of
employment or in seeking to obtain or enforce any right or benefit to which he
is entitled under this Agreement. With respect to a termination of Executive's
employment following a Change in Control, the Company shall pay the Executive's
reasonable legal fees and expenses provided the Executive has acted in good
faith in connection with any such dispute. In all events, the Company shall
- 10 -
bear its own fees and expenses in connection with any dispute, whether occurring
before or after a Change in Control.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit plan, program,
policy or practice provided by the Company and for which the Executive may
qualify (except with respect to any benefit to which the Executive has waived
his rights in writing), nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other contract or agreement entered
into after the Effective Date with the Company. Amounts that are vested benefits
or that the Executive is otherwise entitled to receive under any benefit plan,
policy, practice or program of, or any contract or agreement entered into after
the date hereof with, the Company at or subsequent to the Date of Termination,
shall be payable in accordance with such benefit plan, policy, practice,
program, contract or agreement, except as explicitly modified by this Agreement.
7. Full Settlement; Mitigation. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action that the Company may have against the
Executive or others. The Executive shall not be required to mitigate the amount
of any payment or benefit provided for in Sections 3(e) and 5 hereof by seeking
other employment or otherwise, nor (except as specifically provided in Section 5
hereof) shall the amount of any payment or benefit provided for in Sections 3(e)
and 5 hereof be reduced by any compensation earned by the Executive as the
result of employment by another employer or by retirement benefits after the
Date of Termination, or otherwise.
8. Arbitration. Except as otherwise provided in Section 9 hereof, the parties
agree that any dispute, claim, or controversy based on common law, equity, or
any federal, state, or local statute, ordinance, or regulation (other than
workers' compensation claims) arising out of or relating in any way to the
Executive's employment, the terms, benefits, and conditions of employment, or
concerning this Agreement or its termination and any resulting termination of
employment, including whether such dispute is arbitrable, shall be settled by
arbitration. This agreement to arbitrate includes but is not limited to all
claims for any form of illegal discrimination, improper or unfair treatment or
dismissal, and all tort claims. The Executive shall still have a right to file a
discrimination charge with a federal or state agency, but the final resolution
of any discrimination claim shall be submitted to arbitration instead of a court
or jury. The arbitration proceeding shall be conducted under the employment
dispute resolution arbitration rules of the American Arbitration Association in
effect at the time a demand for arbitration under the rules is made. The
decision of the arbitrator(s), including determination of the amount of any
damages suffered, shall be exclusive, final, and binding on all parties, their
heirs, executors, administrators, successors and assigns.
9. Confidential Information; Non-Solicitation; Non-Competition. (a) The
Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret, proprietary, or confidential materials, knowledge, data or any other
information relating to the Company or any of its affiliated companies, and
their respective businesses ("Confidential
- 11 -
Information"), which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
that shall not have been or now or hereafter have become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). During the Employment Period and (a) for a period of five
years thereafter with respect to Confidential Information that does not include
trade secrets, and (b) any time thereafter with respect to Confidential
Information that does include trade secrets, the Executive shall not, except
with the prior written consent of the Company or as may otherwise be required by
law or legal process, communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated by it.
(b) In addition, the Executive shall not, at any time during the
Employment Period and for a period of one year thereafter (i) engage or become
interested as an owner (other than as an owner of less than 5% of the stock of a
publicly owned company), stockholder, partner, director, officer, employee (in
an executive capacity), consultant or otherwise in any business that is
competitive with any business conducted by the Company or any of its affiliated
companies during the Employment Period or as of the Date of Termination, as
applicable or (ii) recruit, solicit for employment, hire or engage any employee
or individual consultant of the Company or any person who was an employee or
individual consultant of the Company within two (2) years prior to the Date of
Termination. The Executive acknowledges that these provisions are necessary for
the Company's protection and are not unreasonable, since he would be able to
obtain employment with companies whose businesses are not competitive with those
of the Company and its affiliated companies and would be able to recruit and
hire personnel other than employees of the Company. The duration and the scope
of these restrictions on the Executive's activities are divisible, so that if
any provision of this paragraph is held or deemed to be invalid, that provision
shall be automatically modified to the extent necessary to make it valid.
The Executive acknowledges that a violation or attempted violation on the
Executive's part of this Section 9 will cause irreparable damage to the Company,
and the Executive therefore agrees that the Company shall be entitled as a
matter of right to an injunction, out of any court of competent jurisdiction,
restraining any violation or further violation of such promises by the Executive
or the Executive's employees, partners or agents. The Executive agrees that such
right to an injunction is cumulative and in addition to whatever other remedies
the Company may have under law or equity.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable hereunder if the Executive had
continued to live, all such amounts, unless
- 12 -
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there is
no such designee, to the Executive's estate.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as defined above and
any successor to its business and/or assets that assumes and agrees to perform
this Agreement by operation of law, or otherwise. Prior to a Change in Control,
the term "Company" shall also mean any affiliate of the Company to which the
Executive may be transferred and the Company shall cause such successor employer
to be considered the "Company" and to be bound by the terms of this Agreement
and this Agreement shall be amended to so provide. Following a Change in
Control, the term "Company" shall not mean any affiliate of the Company to which
Executive may be transferred unless the Executive shall have previously approved
of such transfer in writing, in which case the Company shall cause such
successor employer to be considered the "Company" and to be bound by the terms
of this Agreement and this Agreement shall be amended to so provide. Failure of
the Company to obtain an assumption and agreement as described in this Section
10(c) prior to the effective date of a succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
under this Agreement if the Executive were to terminate the Executive's
employment for Good Reason, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to the conflict of laws
provisions thereof. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and such
officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return-receipt requested, postage prepaid, addressed as follows:
- 13 -
If to the Executive:
William H. Timbers, Jr.
c/o USEC Inc.
2 Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817-1818
If to the Company:
USEC Inc.
2 Democracy Center
6903 Rockledge Drive
Bethesda, Maryland 20817-1818
Attention: Vice President, Human Resources
or to such other address as either party shall have furnished to the other in
writing in accordance with this Agreement. Notice and communications shall be
effective when actually received by the addressee.
(c) If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
(d) The Company may withhold from any amounts payable under this Agreement
such federal, state and local taxes as may be required to be withheld pursuant
to any applicable law or regulation.
(e) This Agreement, together with the SERP, contains the entire
understanding of the parties with respect to the subject matter herein and
supersedes any prior agreements between the Company and the Executive. There are
no restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein.
(f) To the extent, and only to the extent, that a payment or benefit paid
or provided under this Agreement would also be paid or provided under the terms
of an applicable plan, program or arrangement, such applicable plan, program or
arrangement will be deemed to have been satisfied by the payment made or benefit
provided under this Agreement.
(g) This Agreement may be signed in several counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
- 14 -
IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the day and year first above written.
USEC Inc.
By: /s/ John R. Hall
---------------------------------------
John R. Hall
Chairman, Compensation Committee
Board of Directors
/s/ W. Lance Wright
---------------------------------------
W. Lance Wright
Vice President, Human Resources
and Administration
EXECUTIVE
/s/ William H. Timbers, Jr.
---------------------------------------
William H. Timbers, Jr.
- 15 -
APPENDIX A
SERP RETIREMENT BENEFIT
The Executive's retirement benefit under the SERP shall be calculated and
paid in accordance with the terms of the SERP, subject to the following
modifications and clarifications, which shall apply notwithstanding any contrary
terms contained in the SERP:
1. Final Average Compensation: The Executive's Final Average Compensation
shall be the average of his highest three years (whether or not consecutive) of
Compensation out of his last eight years of employment by the Company.
Notwithstanding the foregoing:
(a) the aggregate amount of annual bonus compensation included in the
Executive's Final Average Compensation shall not exceed 175% of the
aggregate amount of Annual Base Salary included in the Executive's
Final Average Compensation; and
(b) subject to the preceding clause (a), the amount of annual bonus
compensation used to determine the Executive's Final Average
Compensation shall be deemed to equal the average of the highest
annual bonuses paid to the Executive for any three calendar years
out of the Executive's last eight years of employment.
The Executive's annual bonus for a calendar year shall be the amount of bonus
earned with respect to such calendar year regardless of whether it is paid after
the end of such calendar year.
2. SERP Benefit Upon Termination of Employment on or After December 31,
2009: If the Executive's Termination of Employment occurs on or after December
31, 2009, the Executive's Termination of Employment shall be treated as Normal
Retirement and his benefit under the SERP shall be calculated in accordance with
Section 4.2 of the SERP, and no reduction to the Benefit Objective shall apply
to reflect that Termination of Employment occurred before the Executive attained
age 62 (i.e. no 3% per year reduction or other reduction shall apply to the
Benefit Objective). The Executive shall be entitled to immediate payment of his
SERP benefit upon such Termination of Employment.
3. SERP Benefit Upon Termination of Employment By the Company Without
Cause or By the Executive for Good Reason: In the event that the Executive's
employment is terminated by the Company without Cause or by the Executive for
Good Reason, the Executive shall be entitled to a benefit under the SERP that is
calculated in accordance with Section 4.2 of the SERP and as a benefit
commencing at age 60,
i
provided that no reduction to the Benefit Objective shall apply to reflect that
Termination of Employment occurred before the Executive attained age 62 (i.e. no
3% per year reduction or other reduction shall apply to the Benefit Objective).
The Executive shall receive immediate payment of his SERP benefit upon such
Termination of Employment in the form of a lump sum cash payment. The amount of
such lump sum cash payment shall be calculated in accordance with Section 6 of
this Appendix A and shall take into account Section 8 of this Appendix A.
4. SERP Benefit Upon Voluntary Termination of Employment By the Executive
Without Good Reason: In the event Executive voluntarily terminates his
employment with the Company before December 31, 2009 other than for Good Reason
and other than by reason of death or Disability, the Executive's benefit under
the SERP shall be calculated in accordance with Section 4.3 of the SERP. The 3%
reduction provided for by Section 4.3 of the SERP shall be applied to the
Benefit Objective of 60% of the Executive's Final Average Compensation, so that,
by way of example, if the Executive voluntarily terminated employment with the
Company without Good Reason and other than by reason of death or disability upon
attaining age 58, the Benefit Objective would be reduced to 52.8% of the
Executive's Final Average Compensation. The Executive shall receive immediate
payment of his SERP benefit upon such Termination of Employment in the form of a
lump sum cash payment. The amount of such lump sum cash payment shall be
calculated in accordance with Section 6 of this Appendix A.
5. SERP Benefit Upon Termination of Employment By Reason of Death or
Disability: In the event Executive's employment with the Company terminates by
reason of Disability, Executive's benefit under the SERP shall be determined and
paid in the same manner as if Executive had terminated his employment with the
Company for Good Reason (provided, however, that in lieu of the additional year
of age which would otherwise be credited under Section 8 of this Appendix,
Executive shall be credited with three additional years of age if his
termination due to Disability occurs prior to age 57, two additional years if it
occurs after age 56 and prior to 59, and one additional year if it occurs after
age 59 and prior to age 60). If the Executive's employment with the Company
terminates by reason of death, the Executive's designated beneficiary (or
beneficiaries) shall be paid an immediate lump sum death benefit equal to 85% of
the lump sum SERP benefit that the Executive would have received had he
terminated employment with the Company as of his date of death for Good Reason
and received his benefit under the SERP in the form of an immediate lump sum
payment. If the Executive does not designate a beneficiary (or beneficiaries),
his spouse shall be his beneficiary and if he does not have a spouse, his estate
shall be his beneficiary.
6. Form of Payment of SERP Benefit; Early Retirement: The Executive's
entire SERP benefit shall be paid in the form of a lump sum cash payment payable
immediately upon Termination of Employment, regardless of the reason for
termination. The lump sum value of the portion of the Executive's SERP benefit
that is attributable to pre-2001 service shall be calculated using the UP-1984
Table of Mortality set back four years and the immediate interest rate published
by the PBGC to value lump sums as of the first day of the calendar year
coinciding with or immediately preceding the date of payment. The
- ii -
lump sum value of the portion of Executive's SERP benefit that is attributable
to post-2000 service shall be calculated using the mortality table specified by
Revenue Ruling 2001-62 (or successor thereto) and an interest rate assumption of
6.25%. Lump sum values shall be calculated based on an immediate annuity
commencing at age 60 (age 62 in the case of a voluntary termination of
employment by the Executive where his SERP benefit is determined under Section 4
of this Appendix) or Executive's age upon Termination of Employment, if later.
If the Executive's Termination of Employment occurs prior to age 60 (age 62 in
the case of a voluntary termination of employment by the Executive where his
SERP benefit is determined under Section 4 of this Appendix), the Executive's
lump sum benefit at age 60 (age 62 in the case of a voluntary termination of
employment by the Executive where his SERP benefit is determined under Section 4
of this Appendix) shall be discounted from age 60 (age 62 in the case of a
voluntary termination of employment by the Executive where his SERP benefit is
determined under Section 4 of this Appendix) to the date of payment using a
6.25% interest rate assumption and no mortality assumption.
7. Pre-2001 SERP Benefit: The portion of Executive's SERP benefit
attributable to pre-2001 service shall be equal to 60% of the Executive's Final
Average Compensation as of December 31, 2000 (determined without regard to the
modifications set forth in paragraph 1 of this Appendix), and shall not be
subject to reduction to reflect any Termination of Employment prior to age 62.
8. Additional SERP Credit Upon Termination Without Cause or for Good
Reason: In accordance with Section 5(a)(v) of the Agreement, the Executive shall
receive an additional one year of age credit for purposes of calculating his
SERP benefit in the event his employment terminated by the Company without Cause
or if Executive terminates his employment for Good Reason.
9. Reduction for Primary Social Security Benefits: For purposes of
calculating the Executive's SERP benefit, the reduction for Primary Social
Security Benefits provided for by clause (a) of Section 4.2 of the SERP and
clause (b) of Section 4.3 of the SERP shall not apply until the later of the
date of the Executive's Termination of Employment and the date he attains (or
would attain) age 62.
Capitalized terms used in this Appendix A shall have the meanings assigned to
such terms in the Employment Agreement and the SERP, as the case may be.
- iii -