exv4w1



 



Exhibit 4.1


CERTIFICATE OF DESIGNATION OF TERMS OF

5.50% NON-CUMULATIVE PREFERRED STOCK, SERIES N




	1.	 	Designation, Par Value and Number of Shares.



     The designation of the series of preferred stock of the Federal National
Mortgage Association (“Fannie Mae”) created by this resolution shall be “5.50%
Non-Cumulative Preferred Stock, Series N” (the “Series N Preferred Stock”), and
the number of shares initially constituting the Series N Preferred Stock is
4,500,000*. Shares of Series N Preferred Stock will have no par value and a
stated value and liquidation preference of $50 per share. The Board of
Directors of Fannie Mae, or a duly authorized committee thereof, in its sole
discretion, may reduce the number of shares of Series N Preferred Stock,
provided such reduction is not below the number of shares of Series N Preferred
Stock then outstanding.



	2.	 	Dividends.



     (a)  Holders of record of Series N Preferred Stock (each individually a
“Holder”, or collectively the “Holders”) will be entitled to receive, when, as
and if declared by the Board of Directors of Fannie Mae, or a duly authorized
committee thereof, in its sole discretion out of funds legally available
therefor, non-cumulative quarterly cash dividends which will accrue from and
including September 25, 2003 and will be payable on March 31, June 30,
September 30 and December 31 of each year (each, a “Dividend Payment Date”),
commencing December 31, 2003 at the annual rate of $2.75 per share or 5.50% of
the stated value and liquidation preference of $50 per share. If a Dividend
Payment Date is not a Business Day, the related dividend (if declared) will be
paid on the next succeeding Business Day with the same force and effect as
though paid on the Dividend Payment Date, without any increase to account for
the period from such Dividend Payment Date through the date of actual payment.
A “Business Day” shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in New York, New York are authorized by law to
close. Dividends will be paid to Holders on the record date fixed by the Board
of Directors or a duly authorized committee thereof, which may not be earlier
than 45 days or later than 10 days prior to the applicable Dividend Payment
Date. If declared, the initial dividend, which will be for the period from and
including September 25, 2003 to but excluding December 31, 2003, will be $0.733
per share and will be payable on December 31, 2003 and, thereafter, if
declared, quarterly dividends will be $0.6875 per share. After the initial
dividend, the dividend period relating to a Dividend Payment Date will be the
period from and including the preceding Dividend Payment Date to but excluding
the related Dividend Payment Date. If Fannie Mae redeems the Series N Preferred
Stock, the dividend that would otherwise be payable for the then-current
quarterly dividend period accrued to but excluding the date of redemption will
be included in the redemption price of the shares redeemed and will not be
separately payable. Dividends payable on the Series N Preferred Stock for any
period greater or less than a full dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. The amount of
dividends per share payable at redemption will be rounded to the fourth digit
after the decimal point. (If the fifth digit to the right of the decimal point
is five or greater, the fourth digit will be rounded up by one.)


     (b)  No dividend (other than dividends or distributions paid in shares of,
or options, warrants or rights to subscribe for or purchase shares of, the
common stock of Fannie Mae or any other stock of Fannie Mae ranking, as to the
payment of dividends and the distribution of assets upon dissolution,
liquidation or winding up of Fannie Mae, junior to the Series N Preferred
Stock) may be declared or paid or set apart for payment on Fannie Mae’s common
stock (or on any other stock of Fannie Mae ranking, as to the payment of
dividends, junior to the Series N Preferred Stock) unless dividends have been
declared and paid or set apart (or ordered to be set apart) on the Series N
Preferred Stock for the then-current quarterly dividend period; provided,
however, that the foregoing dividend preference shall not be cumulative and
shall not in any way create any claim or right in favor of the Holders of
Series N Preferred Stock in the event that dividends have not been declared or
paid or set apart (or ordered to be set apart) on the Series N Preferred







	*	 	Plus up to 675,000 additional shares pursuant to the Underwriters’
overallotment option.


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Stock in respect of any prior dividend period. If the full dividend on the
Series N Preferred Stock is not paid for any quarterly dividend period, the
Holders of Series N Preferred Stock will have no claim in respect of the unpaid
amount so long as no dividend (other than those referred to above) is paid on
Fannie Mae’s common stock (or any other stock of Fannie Mae ranking, as to the
payment of dividends, junior to the Series N Preferred Stock) for such dividend
period.


     (c)  The Board of Directors of Fannie Mae, or a duly authorized committee
thereof, may, in its discretion, choose to pay dividends on the Series N
Preferred Stock without the payment of any dividends on Fannie Mae’s common
stock (or any other stock of Fannie Mae ranking, as to the payment of
dividends, junior to the Series N Preferred Stock).


     (d)  No full dividends shall be declared or paid or set apart for payment
on any stock of Fannie Mae ranking, as to the payment of dividends, on a parity
with the Series N Preferred Stock for any period unless full dividends have
been declared and paid or set apart for payment on the Series N Preferred Stock
for the then-current quarterly dividend period. When dividends are not paid in
full upon the Series N Preferred Stock and all other classes or series of stock
of Fannie Mae, if any, ranking, as to the payment of dividends, on a parity
with the Series N Preferred Stock, all dividends declared upon shares of Series
N Preferred Stock and all such other stock of Fannie Mae will be declared pro
rata so that the amount of dividends declared per share of Series N Preferred
Stock and all such other stock will in all cases bear to each other the same
ratio that accrued dividends per share of Series N Preferred Stock (but
without, in the case of any noncumulative preferred stock, accumulation of
unpaid dividends for prior dividend periods) and such other stock bear to each
other.


     (e)  No dividends may be declared or paid or set apart for payment on any
shares of Series N Preferred Stock if at the same time any arrears exist or
default exists in the payment of dividends on any outstanding class or series
of stock of Fannie Mae ranking, as to the payment of dividends, prior to the
Series N Preferred Stock.


     (f)  Holders of Series N Preferred Stock will not be entitled to any
dividends, whether payable in cash or property, other than as herein provided
and will not be entitled to interest, or any sum in lieu of interest, in
respect of any dividend payment.



	3.	 	Optional Redemption.



     (a)  The Series N Preferred Stock shall not be redeemable prior to
September 25, 2008. On or after that date, subject to the notice provisions set
forth in Section 3(b) below and subject to any further limitations which may be
imposed by law, Fannie Mae may redeem the Series N Preferred Stock, in whole or
in part, at any time or from time to time, out of funds legally available
therefor, at the redemption price of $50 per share plus an amount equal to the
amount of the dividend (whether or not declared) for the then-current quarterly
dividend period accrued to but excluding the date of such redemption, but
without accumulation of unpaid dividends on the Series N Preferred Stock for
prior dividend periods. If less than all of the outstanding shares of Series N
Preferred Stock are to be redeemed, Fannie Mae will select the shares to be
redeemed from the outstanding shares not previously called for redemption by
lot or pro rata (as nearly as possible) or by any other method that the Board
of Directors of Fannie Mae, or a duly authorized committee thereof, in its sole
discretion deems equitable.


     (b) In the event Fannie Mae shall redeem any or all of the Series N
Preferred Stock as aforesaid, Fannie Mae will give notice of any such
redemption to Holders of Series N Preferred Stock not less than 30 days prior
to the date fixed by the Board of Directors of Fannie Mae, or duly authorized
committee thereof, for such redemption. Each such notice will state: (1) the
number of shares of Series N Preferred Stock to be redeemed and, if fewer than
all of the shares of Series N Preferred Stock held by a Holder are to be
redeemed, the number of shares to be redeemed from such Holder; (2) the
redemption price; (3) the redemption date; and (4) the place at which a
Holder’s certificate(s) representing shares of Series N Preferred Stock must be
presented upon such redemption. Failure to give notice, or any defect in the
notice, to any Holder of Series N Preferred Stock shall not affect the validity
of the proceedings for the redemption of shares of any other Holder of Series N
Preferred Stock being redeemed.


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     (c)  Notice having been given as herein provided, from and after the
redemption date, dividends on the Series N Preferred Stock called for
redemption shall cease to accrue and such Series N Preferred Stock called for
redemption will no longer be deemed outstanding, and all rights of the Holders
thereof as registered holders of such shares of Series N Preferred Stock will
cease. Upon surrender in accordance with said notice of the certificate(s)
representing shares of Series N Preferred Stock so redeemed (properly endorsed
or assigned for transfer, if the Board of Directors of Fannie Mae, or a duly
authorized committee thereof, shall so require and the notice shall so state),
such shares shall be redeemed by Fannie Mae at the redemption price aforesaid.
Any shares of Series N Preferred Stock that shall at any time have been
redeemed shall, after such redemption, be cancelled and not reissued. In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares without cost
to the Holder thereof.


     (d)  The Series N Preferred Stock will not be subject to any mandatory
redemption, sinking fund or other similar provisions. In addition, Holders of
Series N Preferred Stock will have no right to require redemption of any shares
of Series N Preferred Stock.



	4.	 	Liquidation Rights.



     (a)  Upon any voluntary or involuntary dissolution, liquidation or winding
up of Fannie Mae, after payment or provision for the liabilities of Fannie Mae
and the expenses of such dissolution, liquidation or winding up, the Holders of
outstanding shares of the Series N Preferred Stock will be entitled to receive
out of the assets of Fannie Mae or proceeds thereof available for distribution
to stockholders, before any payment or distribution of assets is made to
holders of Fannie Mae’s common stock (or any other stock of Fannie Mae ranking,
as to the distribution of assets upon dissolution, liquidation or winding up of
Fannie Mae, junior to the Series N Preferred Stock), the amount of $50 per
share plus an amount equal to the dividend (whether or not declared) for the
then-current quarterly dividend period accrued to but excluding the date of
such liquidation payment, but without accumulation of unpaid dividends on the
Series N Preferred Stock for prior dividend periods.


     (b)  If the assets of Fannie Mae available for distribution in such event
are insufficient to pay in full the aggregate amount payable to Holders of
Series N Preferred Stock and holders of all other classes or series of stock of
Fannie Mae, if any, ranking, as to the distribution of assets upon dissolution,
liquidation or winding up of Fannie Mae, on a parity with the Series N
Preferred Stock, the assets will be distributed to the Holders of Series N
Preferred Stock and holders of all such other stock pro rata, based on the full
respective preferential amounts to which they are entitled (but without, in the
case of any noncumulative preferred stock, accumulation of unpaid dividends for
prior dividend periods).


     (c)  Notwithstanding the foregoing, Holders of Series N Preferred Stock
will not be entitled to be paid any amount in respect of a dissolution,
liquidation or winding up of Fannie Mae until holders of any classes or series
of stock of Fannie Mae ranking, as to the distribution of assets upon
dissolution, liquidation or winding up of Fannie Mae, prior to the Series N
Preferred Stock have been paid all amounts to which such classes or series are
entitled.


     (d)  Neither the sale, lease or exchange (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
and assets of Fannie Mae, nor the merger, consolidation or combination of
Fannie Mae into or with any other corporation or the merger, consolidation or
combination of any other corporation or entity into or with Fannie Mae, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 4.


     (e) After payment of the full amount of the distribution of assets upon
dissolution, liquidation or winding up of Fannie Mae to which they are entitled
pursuant to paragraphs (a), (b) and (c) of this Section 4, the Holders of
Series N Preferred Stock will not be entitled to any further participation in
any distribution of assets by Fannie Mae.


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	5.	 	No Conversion or Exchange Rights.



     The Holders of shares of Series N Preferred Stock will not have any rights
to convert such shares into or exchange such shares for shares of any other
class or classes, or of any other series of any class or classes, of stock or
obligations of Fannie Mae.



	6.	 	No Pre-Emptive Rights.



     No Holder of Series N Preferred Stock shall be entitled as a matter of
right to subscribe for or purchase, or have any pre-emptive right with respect
to, any part of any new or additional issue of stock of any class whatsoever,
or of securities convertible into any stock of any class whatsoever, or any
other shares, rights, options or other securities of any class whatsoever,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of dividend.



	7.	 	Voting Rights; Amendments.



     (a)  Except as provided below, the Holders of Series N Preferred Stock will
not be entitled to any voting rights, either general or special.


     (b)  Without the consent of the Holders of Series N Preferred Stock, Fannie
Mae will have the right to amend, alter, supplement or repeal any terms of this
Certificate or the Series N Preferred Stock (1) to cure any ambiguity, or to
cure, correct or supplement any provision contained in this Certificate of
Designation that may be defective or inconsistent with any other provision
herein or (2) to make any other provision with respect to matters or questions
arising with respect to the Series N Preferred Stock that is not inconsistent
with the provisions of this Certificate of Designation so long as such action
does not materially and adversely affect the interests of the Holders of Series
N Preferred Stock; provided, however, that any increase in the amount of
authorized or issued Series N Preferred Stock or the creation and issuance, or
an increase in the authorized or issued amount, of any other class or series of
stock of Fannie Mae, whether ranking prior to, on a parity with or junior to
the Series N Preferred Stock, as to the payment of dividends or the
distribution of assets upon dissolution, liquidation or winding up of Fannie
Mae, or otherwise, will not be deemed to materially and adversely affect the
interests of the Holders of Series N Preferred Stock.


     (c)  Except as set forth in paragraph (b) of this Section 7, the terms of
this Certificate or the Series N Preferred Stock may be amended, altered,
supplemented, or repealed only with the consent of the Holders of at least
two-thirds of the shares of Series N Preferred Stock then outstanding, given in
person or by proxy, either in writing or at a meeting of stockholders at which
the Holders of Series N Preferred Stock shall vote separately as a class. On
matters requiring their consent, Holders of Series N Preferred Stock will be
entitled to one vote per share.


     (d)  The rules and procedures for calling and conducting any meeting of
Holders (including, without limitation, the fixing of a record date in
connection therewith), the solicitation and use of proxies at such a meeting,
the obtaining of written consents, and any other aspect or matter with regard
to such a meeting or such consents shall be governed by any rules that the
Board of Directors of Fannie Mae, or a duly authorized committee thereof, in
its discretion, may adopt from time to time, which rules and procedures shall
conform to the requirements of any national securities exchange on which the
Series N Preferred Stock are listed at the time.



	8.	 	Additional Classes or Series of Stock.



     The Board of Directors of Fannie Mae, or a duly authorized committee
thereof, shall have the right at any time in the future to authorize, create
and issue, by resolution or resolutions, one or more additional classes or
series of stock of Fannie Mae, and to determine and fix the distinguishing
characteristics and the relative rights, preferences, privileges and other
terms of the shares thereof. Any such class or series of stock may rank prior
to, on a parity with or junior to the Series N Preferred Stock as to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of Fannie Mae, or otherwise.


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	9.	 	Priority.



     For purposes of this Certificate of Designation, any stock of any class or
series of Fannie Mae shall be deemed to rank:


     (a)  Prior to the shares of Series N Preferred Stock, either as to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of Fannie Mae, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of Fannie Mae, as the case may be, in
preference or priority to the Holders of shares of Series N Preferred Stock.


     (b)  On a parity with shares of Series N Preferred Stock, either as to the
payment of dividends or the distribution of assets upon dissolution,
liquidation or winding up of Fannie Mae, whether or not the dividend rates or
amounts, dividend payment dates or redemption or liquidation prices per share,
if any, be different from those of the Series N Preferred Stock, if the holders
of such class or series shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of Fannie
Mae, as the case may be, in proportion to their respective dividend rates or
amounts or liquidation prices, without preference or priority, one over the
other, as between the holders of such class or series and the Holders of shares
of Series N Preferred Stock.


     (c)  Junior to shares of Series N Preferred Stock, either as to the payment
of dividends or the distribution of assets upon dissolution, liquidation or
winding up of Fannie Mae, if such class shall be common stock of Fannie Mae or
if the Holders of shares of Series N Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of Fannie Mae, as the case may be, in preference or priority over
the holders of such class or series.


     (d)  The shares of Preferred Stock of Fannie Mae designated “5.25%
Non-Cumulative Preferred Stock, Series D” (the “Series D Preferred Stock”),
“5.10% Non-Cumulative Preferred Stock, Series E” (the “Series E Preferred
Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series F” (the “Series
F Preferred Stock”), “Variable Rate Non-Cumulative Preferred Stock, Series G”
(the “Series G Preferred Stock”), “5.81% Non-Cumulative Preferred Stock, Series
H” (the “Series H Preferred Stock”), “5.375% Non-Cumulative Preferred Stock,
Series I” (the “Series I Preferred Stock”), “Variable Rate Non- Cumulative
Preferred Stock, Series J (the “Series J Preferred Stock”), “Variable Rate
Non-Cumulative Preferred Stock, Series K” (the “Series K Preferred Stock”),
“5.125% Non-Cumulative Preferred Stock, Series L” (the “Series L Preferred
Stock”) and 4.75% Non-Cumulative Preferred Stock, Series M (“the Series M
Preferred Stock”) shall be deemed to rank on a parity with shares of Series N
Preferred Stock as to the payment of dividends and the distribution of assets
upon dissolution, liquidation or winding up of Fannie Mae. Accordingly, the
holders of record of Series D Preferred Stock, the holders of record of Series
E Preferred Stock, the holders of record of Series F Preferred Stock, the
holders of record of Series G Preferred Stock, the holders of record of Series
H Preferred Stock, the holders of record of Series I Preferred Stock, the
holders of record of Series J Preferred Stock, the holders of record of Series
K Preferred Stock, the holders of record of Series L Preferred Stock, the
holders of record of Series M Preferred Stock and the holders of record of
Series N Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon dissolution, liquidation or winding up of Fannie
Mae, as the case may be, in proportion to their respective dividend rates or
amounts or liquidation prices, without preference or priority, one over the
other.



	10.	 	Transfer Agent, Dividend Disbursing Agent and Registrar.



     Fannie Mae hereby appoints EquiServe Trust Company, N.A., as its initial
transfer agent, dividend disbursing agent and registrar for the Series N
Preferred Stock. Fannie Mae may at any time designate an additional or
substitute transfer agent, dividend disbursing agent and registrar for the
Series N Preferred Stock.


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	11.	 	Notices.



     Any notice provided or permitted by this Certificate of Designation to be
made upon, or given or furnished to, the Holders of Series N Preferred Stock by
Fannie Mae shall be made by first-class mail, postage prepaid, to the addresses
of such Holders as they appear on the books and records of Fannie Mae. Such
notice shall be deemed to have been sufficiently made upon deposit thereof in
the United States mail. Notwithstanding anything to the contrary contained
herein, in the case of the suspension of regular mail service or by reason of
any other cause it shall be impracticable, in Fannie Mae’s judgment, to give
notice by mail, then such notification may be made, in Fannie Mae’s discretion,
by publication in a newspaper of general circulation in The City of New York or
by hand delivery to the addresses of Holders as they appear on the books and
records of Fannie Mae.


     Receipt and acceptance of a share or shares of the Series N Preferred
Stock by or on behalf of a Holder shall constitute the unconditional acceptance
by such Holder (and all others having beneficial ownership of such share or
shares) of all of the terms and provisions of this Certificate of Designation.
No signature or other further manifestation of assent to the terms and
provisions of this Certificate of Designation shall be necessary for its
operation or effect as between Fannie Mae and the Holder (and all such others).



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