Exhibit 10.5
SEPARATION AGREEMENT
(XXXXXXX X. XXXXXX)
SEPARATION AGREEMENT, dated as of April 29, 2002, between
WORLDCOM, INC., a Georgia corporation (the "Company"), and XXXXXXX X. XXXXXX
(the "Executive").
SECTION 1. RESIGNATION. The Executive hereby resigns from all directorships,
offices and positions with the Company and its subsidiaries, affiliates and
employee benefit plans and trusts, effective April 29, 2002 (the "Termination
Date"). The Executive will be appointed to serve the Company's board of
directors as non-executive CHAIRMAN EMERITUS at the pleasure of the board, and
also will serve as a consultant as described in Section 9.
SECTION 2. PENSION BENEFITS. Commencing as soon as practicable following May 1,
2002, and on each May 1 thereafter that occurs during the Executive's lifetime,
the Company shall pay the Executive $1,500,000, in cash. Should the Executive be
survived by the individual who is the Executive's spouse on the Termination
Date, the Company shall pay such spouse $750,000 in cash on each May 1 after the
Executive's death that occurs during such spouse's lifetime. These pension
benefits are subject to complete discontinuance pursuant to Section 14.
SECTION 3. OTHER BENEFITS.
(a) The Company shall provide the Executive, at its expense
(and subject to offset for Medicare coverage), with continued medical
and life insurance benefits for the remainder of his lifetime at the
level applicable generally to senior executives of the Company. The
Executive also shall receive (without duplication) such amounts, if
any, to which the Executive may be entitled as of the Termination Date
pursuant to the terms of the employee benefit programs and compensation
programs of the Company (other than severance programs).
(b) The Executive will have use of the Company aircraft for a
maximum of 30 hours per calendar year, subject to reimbursement of the
Company by the Executive on the same basis as is currently in effect
with the Company for personal usage, in order to avoid imputed income.
(c) Subject to Section 6(b), the Executive may retain, at no
additional cost to him, his current Company-issued desktop computer.
(d) The Executive may lease office space from the Company at
its 000 Xxxxx Xxxxxx location on terms and conditions mutually
agreeable to the parties.
SECTION 4. STOCK OPTIONS. Each outstanding option granted to the Executive to
purchase WorldCom group common stock or MCI group common stock (collectively,
"Company Stock") shall become fully vested and exercisable on the Termination
Date, and each such option shall
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remain exercisable until the fifth anniversary of the Termination Date (or, if
earlier, the expiration of such option's original term), except to the extent
the applicable option agreement cannot be amended to permit such extension of
the option's exercise period.
SECTION 5. LOANS. Simultaneously herewith, the Executive shall execute the
letter agreement dated of even date herewith between the Executive and the
Company (the "Letter Agreement") and the related promissory note (the
"Promissory Note"). The Executive further acknowledges and agrees that his
obligations under the letter agreement dated April 2, 2002 (the "April 2 Letter
Agreement"), as modified by the Letter Agreement, shall continue to apply in
full force and effect. The payments due from the Executive under the Promissory
Note are subject to acceleration as described in Section 14.
SECTION 6. RESTRICTIVE COVENANTS.
(a) NON-COMPETITION. Executive acknowledges and recognizes the highly
competitive nature of the businesses of the Company and its affiliates and
accordingly agrees as follows:
(i) For a period of five years following the Termination Date (the
"Restricted Period"), the Executive will not, whether on the Executive's own
behalf or on behalf of or in conjunction with any person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise whatsoever ("Person"), directly or indirectly:
(A) engage in any business which is in competition with the
business of the Company or an affiliate, which shall include
any business which is principally involved in the purchase,
sale or other dealing in any property or the rendering of any
service purchased, sold, dealt in or rendered by the Company
or an affiliate as a material part of the business of the
Company or an affiliate within the same geographic area in
which the Company or an affiliate makes such purchases, sales
or dealings or renders such services (a "Competitive
Business");
(B) enter the employ of, or render any services to, any Person
(or any division or controlled or controlling affiliate of any
Person) in respect of any Competitive Business;
(C) acquire a financial interest in, or otherwise become
actively involved with, any Competitive Business, directly or
indirectly, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant; or
(D) interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the
Termination Date) between the Company or any of its affiliates
and customers, clients, suppliers or investors of the Company
or its affiliates.
(ii) Notwithstanding anything to the contrary in this Agreement,
Executive may directly or indirectly own, solely as an investment, securities of
any Person which are publicly traded on a national or regional stock exchange or
on the over-the-counter market if Executive (A) is not a controlling person of,
or a member of a group which controls, such person and (B) does not, directly or
indirectly, own 5% or more of any class of securities of such Person.
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(iii) During the Restricted Period, Executive will not, whether on
Executive's own behalf or on behalf of or in conjunction with any Person,
directly or indirectly:
(A) solicit or encourage any employee of the Company or its
affiliates to leave the employment of the Company or its
affiliates; or
(B) hire any such employee who was employed by the Company or
its affiliates as of the Termination Date, or, if later,
within the six-month period prior to such date of hire;
provided however, notwithstanding any other provision hereof,
Executive may hire his current secretary, Xxxxx Xxxxxxxxx.
(iv) During the Restricted Period, Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company or its
affiliates any consultant then under contract with the Company or its
affiliates.
(v) It is expressly understood and agreed that although the Executive
and the Company consider the restrictions contained in this Section 6 to be
reasonable, if a final determination is made by a court of competent
jurisdiction or an arbitrator that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
the Executive, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such maximum extent as such court or arbitrator may determine or indicate to be
enforceable. Alternatively, if any such court of competent jurisdiction or
arbitrator finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
(b) CONFIDENTIALITY.
(i) The Executive will not at any time use, divulge or convey any
secret or confidential information, knowledge, or data of the Company or its
affiliates, including information, knowledge or data of third parties as to
which the Company or its affiliates is under an obligation of confidentiality
(as, for example, information supplied to allow the Company to evaluate a
potential acquisition), obtained by the Executive in the course of the
Executive's activities as a director, officer or employee of the Company except
where required to do so by a court of law, by a governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body with apparent jurisdiction over the Executive to order the
Executive to divulge, disclose or make accessible such information. Such
information, knowledge or data includes, but is not limited to, secret or
confidential matters (A) of a technical nature such as, but not limited to,
methods, know-how, formulae, compositions, process, discoveries, machines,
inventions, computer programs and similar items or research projects, (B) of a
business nature such as, but not limited to, information about cost, purchasing,
profits, market, sales or lists of customers, and (C) pertaining to future
developments such as, but not limited to, research and development of future
marketing or merchandising ("Confidential Information"). Such Confidential
Information does not include information, knowledge or data that becomes
publicly known other than through a breach of this Agreement by the Executive.
(ii) On and after the Termination Date the Executive shall (A) not use
of any
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Confidential Information or intellectual property owned or used by the Company,
its subsidiaries or affiliates, (B) immediately destroy, delete, or return to
the Company, at the Company's option, all originals and copies in any form or
medium in the Executive's possession or control (including any of the foregoing
stored or located in the Executive's office, home, laptop or other computer,
whether or not Company property) to the extent that they contain Confidential
Information.
(c) NON-DISPARAGEMENT. The Company and its affiliates shall refrain
from making any statements or comments of a defamatory or disparaging nature to
any third party regarding the Executive, and the Executive shall refrain from
making any statements or comments of a defamatory or disparaging nature to any
third party regarding the Company, any of its affiliates, or any of their
directors, officers, personnel, policies or product; provided, however, that it
shall not be a violation of this Section 6(c) for either party to make truthful
statements when required to do so by a court of law, by any governmental agency
having supervisory authority over the party, or by any administrative or
legislative body with apparent jurisdiction to order the party to divulge,
disclose or make accessible such information.
SECTION 7. SPECIFIC PERFORMANCE. The Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 6 would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach. In
recognition of this fact, the Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to cease making any payments or
providing any entitlement or benefit otherwise required by this Agreement
(including without limitation the payments, entitlements and benefits otherwise
provided pursuant to Sections 2, 3, 4 and 5), and, notwithstanding Section 22,
shall be entitled to bring an action in any court of competent jurisdiction for
the purpose of obtaining equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.
SECTION 8. COOPERATION. The Executive shall provide reasonable cooperation in
connection with any action or proceeding which relates to the Company or any of
its affiliates, including without limitation in connection with any litigation
and disputes arising out of actions or inactions of the Company or any affiliate
of which the Executive has knowledge or information. The Executive further
agrees to cooperate with the Company in supplying data, information, and
expertise within the Executive's special knowledge or competence and otherwise
assist the Company in the protection of the interests of the Company and its
affiliates. The Company shall reimburse the Executive for reasonable
out-of-pocket expenses (such as hotel and travel expenses) incurred by the
Executive in connection with such cooperation following its receipt of the
Executive's appropriately itemized request.
SECTION 9. CONSULTATION. For a period of five years following the Termination
Date, the Executive shall remain available to provide consulting services to the
Company and its affiliates, in particular the Chief Executive Officer of the
Company, on business matters from time to time at the Company's reasonable
request. The Executive acknowledges that all such consulting services will be
performed by the Executive as an independent contractor, and not as an employee,
and that the Executive will not be eligible or entitled to participate, as a
result of the performance of such consulting services, in any Company benefit or
incentive program.
SECTION 10. INDEMNITY. The existing rights of the Executive and obligations of
the Company
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with regard to indemnification of the Executive that are not dependent upon
Executive's continued employment or holding an office or directorship with the
Company or an affiliate, and the indemnification rights under the Company's
current by-laws, shall continue.
SECTION 11. RELEASE. The Executive acknowledges that certain payments provided
for hereunder are in excess of the amounts that the Executive would otherwise be
entitled to receive and that the Company had no obligation to enter into this
Agreement. In consideration of the Company assuming these additional obligations
and entering into this Agreement, and as a material inducement to the Executive
to enter into this Agreement, the parties agree to execute (and not revoke) a
release ("Release") substantially in the form attached hereto as EXHIBIT A. This
Agreement is subject in all respects to Executive's execution (and
non-revocation) of the Release.
SECTION 12. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
SECTION 13. ASSIGNMENT. This Agreement, and all of Executive's rights and duties
hereunder, shall not be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void AB INITIO and of no force and effect. This Agreement may be
assigned by the Company to a person or entity which is a successor in interest
to substantially all of the business operations of the Company. Upon such
assignment, the rights and obligations of the Company hereunder shall become the
rights and obligations of such successor person or entity.
SECTION 14. SET-OFF; BREACH. In the event of any breach of this Agreement by the
Executive, the Company's obligation to pay any amounts to the Executive, whether
under this Agreement or otherwise, and the Company's obligation to make the
arrangements provided under this Agreement, net of any withholding obligations,
shall be subject to set-off by or against, counterclaim or recoupment of,
amounts owed by the Executive to the Company or its affiliates. Without limiting
the generality of the foregoing, in the event of any breach of this Agreement by
the Executive, any default by the Executive on any of the obligations contained
in the Letter Agreement, the Promissory Note or the April 2 Letter Agreement, or
the filing of voluntary or involuntary bankruptcy by the Executive, payment of
the pension benefits described in Section 2 will be permanently discontinued and
all outstanding amounts due to the Company by the Executive will be accelerated
as provided in the Promissory Note.
SECTION 15. NO MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking other
employment, and the Executive shall not be required to pay the Company any
amounts the Executive may receive from such alternative employment.
SECTION 16. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
SECTION 17. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United
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States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below in this Agreement, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to the Company shall be addressed to:
WorldCom, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
With a copy to:
Xxxxxxx X. Xxxxx, Xx., Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Notice to the Executive shall be addressed to:
Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxx 00 Xxxx
Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxxx, Xx., Esq.
Xxxxx and Xxxxx, LLP
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
SECTION 18. WITHHOLDING TAXES. 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.
SECTION 19. ENTIRE AGREEMENT/AMENDMENTS. This Agreement, the Release, the Letter
Agreement and the Promissory Note contain the entire understanding of the
parties with respect to the subject matter hereof; except that the obligations
described in the April 2 Letter Agreement, as modified by the Letter Agreement,
shall continue to apply in all respects. 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 and
therein. This Agreement may not be amended except by written instrument signed
by the parties hereto.
SECTION 20. NO WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
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SECTION 21. ARBITRATION. Except as set forth in Section 7, any dispute,
controversy or claim arising out of or relating to this Agreement shall be
settled exclusively by binding arbitration by a single arbitrator, conducted in
the State of Mississippi in accordance with the rules of the American
Arbitration Association then in effect. If the Executive and the Company are
unable to mutually agree on the arbitrator, the arbitrator shall be chosen in
accordance with the rules of the American Arbitration Association. Judgment may
be entered on the arbitrator's award in any court in the State of Mississippi
having jurisdiction.
SECTION 22. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, without
regard to conflicts of laws principles thereof. The Executive irrevocably
submits to the non-exclusive jurisdiction of the courts of the State of
Mississippi and the courts of the United States located in the State of
Mississippi for the purpose of any action or proceeding arising out of or
relating to this Agreement, and acknowledges that the designated FORA have a
reasonable relation to this Agreement and the parties' relationship to one
another.
SECTION 23. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
WORLDCOM, INC.
/s/ Xxxx X. Xxxxxxxx
--------------------------------------
By: Xxxx X. Xxxxxxxx
President and
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
