|
Exhibit 99.3
CONFIDENTIAL
August 23, 2005
Re: Separation Agreement for Ann Kappler
Dear Ann:
As we have discussed, you will be leaving Fannie Mae on January
2, 2006.
In order to address issues relating to your work status and the
termination of your employment with Fannie Mae, and to resolve and
release fully and completely any claims between you and Fannie Mae
arising from your employment or the termination of that employment,
you and Fannie Mae have agreed to the terms of this Separation
Agreement (the "Agreement").
1. Effective Date and Work Status . Your employment
with Fannie Mae will terminate on January 2, 2006
("Termination Date"), unless the term of employment is ended
earlier in accordance with Paragraph 5. Until the termination
you will remain in the position of Executive Vice President and
General Counsel, except that if Fannie Mae appoints another General
Counsel prior to January 2, 2006 you will remain employed by
Fannie Mae with your current pay and benefits, including those
described in this Agreement, in a senior advisory capacity. You
agree that, through the Termination Date, you will not engage in
any activity that is in any way detrimental to Fannie Mae.
Detrimental activities include, but are not limited to, acts of
disloyalty or dishonesty and breaches of any fiduciary obligation
to Fannie Mae. You agree to abide by all Fannie Mae policies in
effect at all times up to and including the Termination Date. These
policies include, but are not limited to, those set forth in the
Policies and Procedures site, the Code of Business Conduct, the
Agreement on Ideas, Inventions and Confidential Information and any
applicable departmental guidelines. You agree that, effective as of
the Termination Date, you resign as an officer and an employee of
Fannie Mae, such resignation being evidenced by your execution of
this Agreement.
2. Fannie Mae Consideration . In exchange for your
promises, covenants and undertakings set forth in this Agreement,
Fannie Mae will:
|
|
a.
|
|
Pay you, within fifteen (15) days of Fannie
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 Fannie 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
Ann M. Kappler
Page 2 of 10
August 23, 2005
|
|
|
|
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 Fannie 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 Fannie Mae,
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
Fannie 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 nave. 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 Fannie 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
Ann M. Kappler
Page 3 of 10
August 23, 2005
3. Acknowledgement of Consideration . You
acknowledge that, absent your entry into this Agreement, you would
not be entitled to the consideration set forth in Paragraph 2
of this Agreement. You further acknowledge that Fannie Mae’s
provision of this consideration is made in exchange for the full,
final and complete release of any and all claims that you may have
against Fannie Mae.
4. Vacation Pay/Benefit Rights . Within fifteen
(15) days of the Termination Date, Fannie Mae will pay you a
lump sum, less legally required deductions, for any accrued but
unused vacation leave you may have as of the Termination Date,
consistent with Fannie Mae policy. Fannie Mae also agrees to be
bound by all benefit rights to which you are entitled as a result
of your employment with Fannie Mae. These benefits include
retirement, pension plan, 401K plan, ESOP, as well as any life
insurance program. For the avoidance of doubt, (i) you have no
vested right to any benefit and will receive no benefit under
Fannie Mae’s Executive Pension Plan, and (ii) you will
retain ownership of any life insurance policies owned by you but
will be responsible for the payment of any premiums for periods
after 2006.
5. Early Termination . You agree that your
employment by Fannie May shall terminate earlier than the term
provided in the Agreement in the event of (i) your death,
(ii) your becoming eligible for and receiving disability
benefits, or (iii) termination by Fannie Mae of your
employment for misconduct or any breach by you of any provision of
this Agreement. If your employment is so terminated, other than as
provided in clause (iii) of this Paragraph 5, you (or
your executors or administrators) (a) shall be paid, within
15 days of such termination, a lump sum payment equal to your
base pay for the period from the date of actual termination through
January 2, 2006 plus the benefit described in
Paragraph 2(a), and you will also be entitled to the other
benefits of Paragraph 2 determined as follows: (I) the
AIP and PSP amounts described in Paragraph 2(b) shall be paid, if
at all, in accordance with Paragraph 2(b); (II) the
coverage continuation described in Paragraph 2(c) shall be
available commencing at the actual date of termination;
(III) the twelve-month period described in Paragraph 2(d) will
be measured from the actual date of termination; (IV) the
option and restricted stock acceleration described in Paragraphs
2(e) and 2(f) shall occur as of the actual date of termination,
subject in the case of the restricted stock vesting to clause
(VI) below; (V) the benefit described at Paragraph 2(g)
will be provided in accordance with its terms, subject to clause
(VI) below; and (VI) the provisions of Paragraph 2(h)
shall be applied by substituting "actual date of termination" for
"Termination Date." If during the term of employment you become
entitled to and thereafter receives disability benefits under the
Short-Term Disability Program or the Long-Term Disability Insurance
Plan (or any successor plan) paid for by Fannie Mae, the amount
otherwise payable to you shall be reduced (but not below zero) by
the amount of any such disability benefits received by you, but
only to the extent such benefits are attributable to payments made
by Fannie Mae. Subject to the foregoing provisions of this
Paragraph 5, if your employment terminates pursuant to the
provisions of this Paragraph, your "Termination Date" will be the
date of such termination.
6. Voluntary Election . You acknowledge that your
decision to enter into this Agreement is wholly voluntary and
without any pressure or influence by Fannie Mae. You further
acknowledge that you have carefully read and fully understand all
of the provisions of this Agreement.
7. Release of all Claims . You covenant not to sue,
and fully and forever release and discharge Fannie 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
Fannie Mae pension or benefit plan and its trustees,
administrators, fiduciaries, insurers and agents (collectively, the
"Releasees"), in their
Form of Separation Agreement (AK)1
Ann M. Kappler
Page 4 of 10
August 23, 2005
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 Fannie 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 sue Fannie Mae 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 Sarbanes-Oxley 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 Fannie 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 Fannie Mae or
any of the other Releasees with any federal, state, local court,
agency or arbitration forum. You waive any and all rights to r
|
