CONFIDENTIAL
Exhibit 99.3
CONFIDENTIAL
August 23, 2005
Re: Separation Agreement for Xxx Xxxxxxx
Dear Xxx:
As we have discussed, you will be leaving Xxxxxx Mae on January 2, 2006.
In order to address issues relating to your work status and the termination of your employment
with Xxxxxx Xxx, and to resolve and release fully and completely any claims between you and Xxxxxx
Mae arising from your employment or the termination of that employment, you and Xxxxxx Xxx have
agreed to the terms of this Separation Agreement (the “Agreement”).
a. | Pay you, within fifteen (15) days of Xxxxxx Mae’s receipt of your executed Agreement, but no earlier than the first business day following your Termination Date, a lump sum amount equivalent to 52 weeks of your current base pay ($472,000) plus four weeks pay per year of service with Xxxxxx Mae (for a maximum of 26 weeks) for a total of 78 weeks of your current base pay, ($708,000); | ||
b. | Pay you a lump sum AIP award for 2005 at target, subject to adjustment for corporate performance to the same extent as an adjustment for corporate performance is made for other Executive Vice Presidents. You will not be entitled to any AIP award for 2006 or later years. In addition, with respect to the second installment of PSP 17, both installments of PSP 18 and 19, and a pro-rata (2/3) portion of PSP 20, you will be entitled to payment to the extent the Compensation Committee or the Board of Directors determines that these PSP awards are payable to other Executive Vice Presidents. You will not be |
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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August 23, 2005
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entitled to any PSP payments other than as described in the preceding sentence. The pro rata AIP award and PSP payouts will be paid to you, if at all, when other Executive Vice Presidents receive their AIP and PSP awards, provided such payments to you are not subject to Section 409A of the Internal Revenue Code (“Section 409A”) or, if subject to Section 409A, would be consistent with the requirements of Section 409A, as determined by Xxxxxx Mae. If the payment of a pro rata AIP award and/or PSP payout to you in accordance with the preceding sentence would be subject to Section 409A and, if paid in accordance with the preceding sentence, would not be consistent with the requirements of Section 409A, as determined by Xxxxxx Xxx, then such payment due to you will be made at the first time thereafter as is administratively practicable consistent with Section 409A. | |||
c. | Continue your existing medical and/or dental coverage for a maximum period of five years (60 months), if you elect such continuation of coverage. If you elect such continuation of coverage, for the first eighteen (18) months (or until discontinuation of the coverage, if earlier) you will pay only the portion of the premium that you would have paid as an active employee. For the remainder of the coverage continuation period, terminating at the end of five years (60 months) or upon discontinuation of the coverage if earlier, you will be required to pay the full premium that would be required of you for coverage continuation in accordance with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). The coverage to which you would be entitled under COBRA is included in the continuation of coverage described in this paragraph — that is, you will not be entitled to any additional COBRA coverage at the end of the coverage continuation period described in this paragraph; | ||
d. | Subject to paragraph (h) below, provide you with up to $18,000 in outplacement services from a firm chosen by Xxxxxx Mae. These outplacement services must be used within twelve (12) months of the Termination Date. You may not receive cash in lieu of such outplacement services; | ||
e. | Accelerate fully, as of the Termination Date, the vesting of any stock options that you may xxxx. The exercise period for each of your vested options (whether vested by acceleration or pursuant to the regular vesting schedule) shall be extended to the option’s expiration date. You understand that, if the option exercise period ends on a holiday or weekend, your last opportunity to exercise the option will be the last business day of the exercise period. In addition, you understand that after the expiration date these options will expire; | ||
f. | Subject to paragraph (h) below, accelerate fully, as of the Termination Date, the vesting of any restricted stock that you may have; | ||
g. | Subject to paragraph (h) below and in accordance with the provisions of Xxxxxx Mae’s financial counseling program, payment of the fee for financial counseling services to you for 2006; and | ||
h. | If you sign a general release on your Termination Date substantially in the form of the attached General Release upon Termination of Employment, in consideration for your continued employment between the date of this Agreement and your Termination Date and the other terms of this Agreement, pay or provide the benefits described in Paragraphs 2(d), 2(f) and 2(g) above. |
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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August 23, 2005
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personal and representative capacities, from any and all claims, complaints, charges, debts,
liens, liabilities, demands, obligations, acts, agreements, causes of action, suits, costs,
expenses (including attorneys’ fees), damages (whether pecuniary, actual, compensatory, punitive or
exemplary) and liabilities of any nature or kind whatsoever in law or equity or otherwise, whether
now known or unknown, existing or arising in the future, arising out of or in any way connected
with your employment with Xxxxxx Mae or the termination of that employment, even if you would not
have entered into this Agreement had you known that such claim(s) existed. Notwithstanding the
above release, you retain any rights or claims arising after you sign this Agreement, as well as
the right to take action to enforce the terms of this Agreement. You understand and agree that this
release means you are giving up the right to xxx Xxxxxx Xxx on any claim or cause of action
released.
8.
Release includes all Claims Under Federal, State, Local and Common Law. Your release as set forth
in Paragraph 7 of this Agreement includes, but is not limited to: (i) any claims under any federal
statute, ordinance, regulation or executive order, as amended, including, but not limited to, Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42
U.S.C. Section 1981, the Equal Pay Act, the Age Discrimination in Employment Act, the Older Worker
Benefit Protection Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the
Xxxxxxxx-Xxxxx Act, the Employee Retirement Income Security Act, the Rehabilitation Act of
1973, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act
and Executive Order 11246; (ii) any claims under any state or local statute, ordinance or
regulation, as amended, including, but not limited to, the District of Columbia Human Rights Act,
the District of Columbia Family and Medical Leave Act, the Virginia Human Rights Law, the Maryland
Fair Employment Practices Act, and any workers’ compensation claims; and (iii) any claims under
common law, including, but not limited to, claims for breach of contract, wrongful discharge and
tort. You represent and reaffirm that you knowingly and voluntarily waive any rights and claims
under the federal Age Discrimination in Employment Act of 1967, as amended, and under the other
specific statutes stated in this section. You also represent that you have not suffered any
work-related injury for which you have not already filed a claim, and that you have fully complied
with your reporting obligations under Xxxxxx Mae’s Code of Business Conduct, Anti-Fraud Policy and
Ethical Responsibility Policy.
9. No Complaints or Charges. You represent that you have not filed any complaints or
charges against Xxxxxx Mae or any of the other Releasees with any federal, state, local court,
agency or arbitration forum. You waive any and all rights to recover in any lawsuit, judicial
action or administrative or other proceeding relating to Xxxxxx Xxx brought on your behalf by the
U.S. Equal Employment Opportunity Commission, the U.S. Department of Labor, the Office of Federal
Contract Compliance Programs, the District of Columbia Commission on Human Rights, the District
of Columbia Department of Human Rights and Minority Business Development or any
other federal, state or local administrative or fair employment rights enforcement agency. You
agree that if any administrative agency or court maintains or assumes jurisdiction of any charge or
complaint against any of the Releasees on your behalf, you will promptly request that agency or
court to withdraw from the matter. By entering into this Agreement, you further withdraw any
pending complaints and charges initiated by or relating to you in Xxxxxx Mae’s Office of Corporate
Justice, federal, state, local court, agency or arbitration forum.
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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that it will not construe any assertion of attorney client or work product privilege
applicable to you individually as failure to cooperate. You understand that Xxxxxx Mae’s
privileges may only be asserted or waived by Xxxxxx Mae.
14. Consideration Period and Consultation with an Attorney. You acknowledge that you have
been provided a period of twenty-one (21) days in which to consider whether or not to execute this
Agreement. You also acknowledge that you have been advised in writing to consult with an attorney
before executing this Agreement and that you have had a fair and full opportunity to do so as well
as to consult with a tax advisor concerning, inter alia, the possible application of Section 409A
to this Agreement. Further, you agree that Xxxxxx Xxx is not responsible for any expenses that
you may have incurred or may incur in consulting with an attorney.
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Separation Agreement (AK)1
Xxx X. Xxxxxxx
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execution of this Agreement Xxxxxx Mae rehires you, you agree that you will return to Xxxxxx Xxx
all of the lump sum amounts paid to you except for an amount equal to your base pay for the number
of weeks elapsed between the Termination Date and your rehire. You and Xxxxxx Mae understand and
agree that in the event that you are rehired, neither the return of a portion of the severance
payment nor the fact of your rehire will impair or in any way affect the validity or enforceability
of this Agreement.
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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(a) | Xxxxxx Mae shall promptly submit this Agreement to the Director for his review and approval of those terms hereof relating to termination of employment and shall seek diligently to obtain such approval; and | ||
(b) | No such provisions shall become effective unless and until the Director’s approval thereof shall have been obtained. |
(a) | You represent that you have not assigned or transferred, or purported to assign or transfer, to any person or entity and claim related to Xxxxxx Xxx, or any portion thereof or interest therein. | ||
(b) | The failure of either party hereto to insist upon strict compliance by the other party with any term, covenant or condition hereof shall not be deemed a waiver of such terms or conditions, nor shall any waiver or relinquishment or failure to insist upon strict compliance of any right or power hereunder at any one time or more be deemed a waiver or relinquishment of such right or power at any other time or times. | ||
(c) | Xxxxxx Mae shall deduct from all amounts payable under this Agreement, including amounts payable under benefits and plans described in Paragraph 2, all federal, state, local and other taxes required by law to be withheld with respect to such payments. | ||
(d) | The laws of the District of Columbia shall govern this Agreement. In the event that any provision of this Agreement shall be invalid and legally unenforceable, the same shall not affect in any respect the validity and enforceability of the remainder of this Agreement. In the event that the provisions of any section of this Agreement shall be held to be invalid or unenforceable in any respect, such section shall nevertheless be construed and applied so as to be valid and enforceable to the maximum extent permitted by law or in equity. | ||
(e) | Except as provided otherwise herein, this Agreement supersedes any prior written or oral employment agreement between you and Xxxxxx Xxx, and any such agreement is terminated effective upon execution of this Agreement. You and Xxxxxx Mae understand and agree that the terms and conditions of this Agreement constitute the full and complete understandings, agreements and promises of the parties, and that there are no oral or written understandings, agreements, promises or inducements made or offered with respect to the subject matter covered herein other than those set forth in writing in this Agreement, and this Agreement merges and supersedes any and all prior agreements, understandings and representations on the subject matter covered herein, with the sole exception of Xxxxxx Xxx benefit plans and stock option and restricted stock award documents referenced herein. No modification of this Agreement |
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Separation Agreement (AK)1
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shall be valid unless in writing and signed by each of the parties hereto. | |||
(f) | You and Xxxxxx Xxx agree that the terms, conditions and details of this Agreement are unique and are addressed to the specific circumstances of your relationship and shall in no event provide a precedent, policy or practice for treatment of other employees of Xxxxxx Mae in the future. | ||
(g) | Notwithstanding any provisions to the contrary that may be contained in this Agreement, nothing in this Agreement or in the attached General Release Upon Termination of Employment is intended to terminate or limit the protections afforded to you, your heirs, your personal representatives or your estate that are provided in the Indemnification Agreement between Xxxxxx Xxx and you and any applicable Director and Officer Insurance. |
PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT CONTAINS A GENERAL RELEASE OF KNOWN AND UNKNOWN
CLAIMS.
/s/ Xxx X. Xxxxxxx
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8/23/05 | |||||
Xxx X. Xxxxxxx
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Date | |||||
/s/ Xxxxxxx Xxxxxxxxx
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8/23/05 | |||||
Xxxxxxx Xxxxxxxxx
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Date | |||||
XXXXXX MAE |
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Senior Vice President — Human Resources |
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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Release of all Claims. The undersigned covenants not to xxx, and fully and forever releases
and discharges Xxxxxx Mae and its affiliates, divisions, successors and assigns, along with its
past and present trustees, officers, directors, insurers, shareholders, agents and employees, as
well as any past, present or successor Xxxxxx Xxx pension or benefit plan and its trustees,
administrators, fiduciaries, insurers and agents (collectively, the “Releasees”), in their personal
and representative capacities, from any and all claims, complaints, charges, debts, liens,
liabilities, demands, obligations, acts, agreements, causes of action, suits, costs, expenses
(including attorneys’ fees), damages (whether pecuniary, actual, compensatory, punitive or
exemplary) and liabilities of any nature or kind whatsoever in law or equity or otherwise, whether
now known or unknown, existing or arising in the future, arising out of or in any way connected
with the undersigned’s employment with Xxxxxx Mae or the termination of that employment, even if
the undersigned would not have given this Release had she known that such claim(s) existed.
Notwithstanding the above release, the undersigned retains any rights or claims arising after she
signs this Release, as well as the right to take action to enforce the terms of the Agreement. The
undersigned understands and agrees that this Release means that she is giving up the right to xxx
Xxxxxx Xxx on any claim or cause of action released.
Release includes all Claims Under Federal, State, Local and Common Low. This Release
includes, but is not limited to: (i) any claims under any federal statute, ordinance, regulation or
executive order, as amended, including, but not limited to, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, 42 U.S.C. Section 1981, the Equal
Pay Act, the Age Discrimination in Employment Act, the Older Worker Benefit Protection Act, the
Americans with Disabilities Act, the Fair Labor Standards Act, the Xxxxxxxx-Xxxxx Act, the Employee
Retirement Income Security Act, the Rehabilitation Act of 1973, the Worker Adjustment and
Retraining Notification Act, the Family and Medical Leave Act and Executive Order 11246; (ii) any
claims under any state or local statute, ordinance or regulation, as amended, including, but not
limited to, the District of Columbia Human Rights Act, the District of Columbia Family and Medical
Leave Act, the Virginia Human Rights Law, the Maryland Fair Employment Practices Act, and any
workers’ compensation claims; and (iii) any claims under common law, including, but not limited to,
claims for breach of contract, wrongful discharge and tort. The undersigned represents and
reaffirms that she knowingly and voluntarily waives any rights and claims under the federal Age
Discrimination in Employment Act of 1967, as amended, and under the other specific statutes stated
in this section. The undersigned also represents that she has not suffered any work-related injury
for which she has not already filed a claim, and that she has fully complied with her reporting
obligations under Xxxxxx Mae’s Code of Business Conduct, Anti-Fraud Policy and Ethical
Responsibility Policy.
No Complaints or Charges. The undersigned represents that she has not filed any complaints
or charges against Xxxxxx Mae or any of the other Releasees with any federal, state, local court,
agency or arbitration forum. The undersigned waives any and all rights to recover in any lawsuit,
judicial action or administrative or other proceeding relating to Xxxxxx Xxx brought on her behalf
by the U.S. Equal Employment Opportunity Commission, the U.S. Department of Labor, the Office of
Federal Contract Compliance Programs, the District of Columbia Commission on Human Rights, the
District of Columbia Department of Human Rights and Minority Business Development or any other
federal, state or local administrative or fair employment rights enforcement agency. The
undersigned agrees that if any
administrative agency or court maintains or assumes jurisdiction of any charge or complaint against
any of the Releasees on the undersigned’s behalf, the undersigned will promptly request that agency
or court to withdraw from the matter. By entering into this Agreement, the undersigned further
withdraws any pending complaints and charges initiated by or relating to the undersigned in Xxxxxx
Mae’s Office of Corporate Justice, federal, state, local court, agency or arbitration forum.
Form of
Separation Agreement (AK)1
Xxx X. Xxxxxxx
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Cooperation. The undersigned agrees that she will fully cooperate with any investigation
conducted by Xxxxxx Mae, by its auditor, by OFHEO (as defined in Paragraph 20 of the Agreement), or
by any federal, state or local government authority relating to Xxxxxx Xxx. Nothing contained in
this Agreement precludes the undersigned from communicating or cooperating with any federal, state
or local governmental authority or from taking any action required by law. Xxxxxx Mae agrees that
it will not construe any assertion of attorney client or work product privilege applicable to the
undersigned individually as failure to cooperate. The undersigned understands that Xxxxxx Mae’s
privileges may only be asserted or waived by Xxxxxx Mae.
[Witness]
Form of
Separation Agreement (AK)1