exv10w14










 




    Exhibit 10.14



 




    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    NONQUALIFIED STOCK OPTION AGREEMENT



 



    NONQUALIFIED STOCK OPTION AGREEMENT is dated
              ,
    2004 (“Grant Date”) by and between the Federal Home
    Loan Mortgage Corporation (the “Corporation”) and
                          
    (the “Grantee”), pursuant to the Federal Home Loan
    Mortgage Corporation 1995 Stock Compensation Plan (the
    “Plan”):



 



    1.  Grants.  (a) Nonqualified
    Stock Options.  The Corporation has granted to
    Grantee a Nonqualified Stock Option (the “Option”) to
    purchase
              
    (     ) shares of the
    Common Stock of the Corporation ($.21 par value) at a
    purchase price of
    $          
    per share. The Option is subject to all applicable provisions of
    the Plan and to the terms and conditions set forth herein. The
    Option is not intended to constitute an incentive stock option
    within the meaning of Section 422 of the Internal Revenue
    Code of 1986, as amended.



 



    (b)  Dividend Equivalents.  The
    Corporation also has granted to Grantee the right to receive
    from the Corporation an amount equivalent to the dividends
    declared on the number of shares of Common Stock with respect to
    which the Option is exercised or has expired, the record dates
    for which dividends have occurred during the period the Option
    was outstanding (“Dividend Equivalents”), subject to
    Section 3 hereof. Such Dividend Equivalents shall be
    subject to all terms and conditions (including forfeitures)
    otherwise applicable to the Option. Payment of such Dividend
    Equivalents shall be made in cash upon exercise of the Option
    (in whole or in part) or, to the extent that the Option is not
    exercised, upon the Expiration Date (as defined below).
    Notwithstanding the foregoing, the amount so payable shall be
    reduced by the amount of all Federal, state, local and other
    taxes that may be required to be withheld by the Corporation
    with respect to such payment.



 



    (c)  Coordination with Plan.  All of
    the terms, conditions and other provisions of the Plan are
    hereby incorporated by reference into this Nonqualified Stock
    Option Agreement (the “Agreement”). Capitalized terms
    used in this Agreement but not defined herein shall have the
    same meanings as in the Plan. If there is any conflict between
    the provisions of this Agreement and the provisions of the Plan,
    the provisions of the Plan shall govern. Grantee acknowledges
    receipt of a copy of the Plan and hereby agrees to be bound by
    the Plan (as presently in effect or hereafter amended) and this
    Agreement, and by all decisions and determinations of the
    Compensation and Human Resources Committee of the Board of
    Directors (including any delegate) (the “Committee”)
    thereunder.



 



    2.  Rights of Exercise.  (a)
    Exercisability and Expiration Date.  The Option
    may be exercised by Grantee, in whole or in part, at any time or
    from time to time within a period beginning on the first
    anniversary of the Grant Date and ending on the day prior to
    tenth anniversary of the Grant Date (the “Expiration
    Date”); provided, however, that, except as provided in
    Paragraph 2(c) below, such Option: (i) may not be
    exercised unless Grantee is at the time of exercise an employee
    of the Corporation and shall have been such continuously from
    the date hereof to the date of such exercise; (ii) may not
    be exercised unless Grantee has been an employee of the
    Corporation for not less than one year; and (iii) shall be
    exercisable only at the




    

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    times and to the extent set forth below:



 


	 	 	 
	
 
	
 
	
    Additional percentage of shares in

    

	
    During the period

    
	
 
	
    respect of which the

    

	

    commencing


	
 
	

    Option may be exercised



	 

	

    1st
    anniversary of the Grant Date


	
 
	
    25%

	

    April 1, 2006


	
 
	
    25%

	

    April 1, 2007


	
 
	
    25%

	

    April 1, 2008


	
 
	
    25%









 



    Except as provided in this Agreement, the Option may not be
    exercised at any time other than as specified in this
    Section 2, and shall expire if not exercised in full on or
    before the Expiration Date.



 



    (b)  Form of Exercise.  The Option
    shall be exercised by Grantee giving notice of such exercise to
    the Corporation (or its designee), in such form as the
    Corporation may require in its sole discretion. Such notice
    shall specify the number of shares to be purchased and shall be
    accompanied by full payment of the purchase price of such
    shares, plus an additional amount equal to the Federal, state,
    local and other taxes required to be withheld by the Corporation
    with respect to delivery of the shares of Common Stock for which
    the Option is exercised (the “Exercise Price”).
    Payment of the Exercise Price shall be made (i) in cash,
    (ii) in shares of Common Stock of the Corporation having a
    “Fair Market Value” (as defined in the Plan) on the
    date of exercise at least equal to such purchase price, or
    (iii) in a combination of cash and shares of the
    Corporation’s Common Stock. In addition, such Exercise
    Price may be paid by irrevocably instructing such broker-dealer
    as may be designated by the Corporation to sell part or all of
    the shares to be purchased, simultaneously with such exercise or
    as soon as practicable thereafter, at the market in a
    broker’s transaction (within the meaning of
    section 4(4) of the Securities Act of 1933, as amended),
    the proceeds of which sale shall be at least equal to the
    Exercise Price for the shares to be purchased, plus applicable
    transaction costs, and to remit to the Corporation an amount
    equal to such Exercise Price.



 



    (c)  (i) Upon Death While
    Employed.  In the event of the death of Grantee
    while in the employ of the Corporation but prior to the
    Expiration Date, any restrictions on exercise otherwise
    applicable to the Option under Paragraph 2(a) shall lapse
    immediately and Grantee’s Beneficiary shall have the right
    to exercise the unexercised portion of the Option during the
    thirty-six month period that begins as of the date of death (but
    ends not later than the Expiration Date); provided, however,
    that, at the end of such thirty-six month period, the Option
    shall cease to be exercisable.



 



    (ii) Upon Disability.  In the event
    Grantee ceases to be an employee of the Corporation prior to the
    Expiration Date by reason of Disability (as defined in the
    Plan), any restrictions on exercise otherwise applicable to the
    Option, under Paragraph 2(a), shall lapse immediately and
    Grantee shall have the right to exercise the unexercised portion
    of the Option at any time prior to the Expiration Date.



 



    (iii) Upon a Qualifying Retirement.  In
    the event Grantee ceases to be an employee of the Corporation
    prior to the Expiration Date by reason of a Qualifying Retirement




    

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    (as defined below), any restrictions on exercise otherwise
    applicable to the Option under Paragraph 2(a)(i) and
    (ii) shall lapse immediately but restrictions on exercise
    under Paragraph 2(a)(iii) (if any) shall continue, and
    Grantee may exercise such Option in accordance with
    Paragraph 2(a)(iii) at any time prior to the Expiration
    Date. For purposes of this Agreement, a “Qualifying
    Retirement” shall mean Grantee’s ceasing to be an
    employee of the Corporation (whether or not such Termination is
    a “Retirement” as defined in the Plan), other than a
    Termination by the Corporation for Gross Misconduct (as defined
    in Corporate Policy
    No. 3-254.1
    (as may be amended or replaced from time to time) as determined
    by the CEO or a Termination subject to Section 2(c)(i) or
    (ii), at least one year after the date of grant of the Option,
    if, at the time of such Termination, (A) Grantee has
    attained (or exceeded) age 55 and has at least ten years of
    service with the Corporation or has attained (or exceeded)
    age 62 and at least five years of service with the
    Corporation, and (B) Grantee has executed and is subject to
    a written agreement containing such non-competition,
    non-solicitation, and other covenants in form and substance
    satisfactory to CEO in order to protect to the maximum extent
    practicable the confidential and proprietary business
    information of the corporation and its subsidiaries, affiliates
    or joint ventures. The Corporation’s remedies under any
    such agreement may include but shall not be limited to
    cancellation and forfeiture of the unexercised portion of the
    Option. For purposes of this Section 2(c)(iii), “years
    of service” shall be defined (and calculated) in the same
    manner as “year of qualifying service” under the
    Federal Home Loan Mortgage Corporation Employees’ Pension
    Plan.



 



    (iv) Forfeiture.  In the event Grantee
    ceases to be an employee of the Corporation prior to the
    Expiration Date for any reason other than death, Disability or
    Qualifying Retirement, the portion of the Option which, as of
    the date of termination, remains subject to the exercise
    restrictions shall be forfeited, and Grantee shall have ninety
    days after the date of Termination in which to exercise any
    portion of the Option which, as of the date of Termination, was
    exercisable, during which
    ninety-day
    period the restrictions on exercise under Paragraph 2(a)(i)
    shall not apply.



 



    (v) Upon Death After Employment.  In the
    event of the death of Grantee after Grantee has ceased to be in
    the employ of the Corporation but at a time that any portion of
    the Option remains exercisable under clauses (ii), (iii) or
    (iv) of this Paragraph 2(c), any restrictions on
    exercise otherwise applicable to such portion of the Option
    under Paragraph 2(a) shall lapse immediately and
    Grantee’s Beneficiary shall have the right to exercise the
    unexercised portion of the Option during the thirty-six month
    period that begins as of the date of death; provided, however,
    that, at the end of such thirty-six month period, the Option
    shall cease to be exercisable (the provisions of
    clauses (ii) and (iii) of this Paragraph 2(c)
    notwithstanding). The foregoing notwithstanding, nothing
    contained in this Paragraph 2(c) shall be deemed to permit
    the exercise of any portion of the Option after the Expiration
    Date.



 



    3.  Dividend Equivalents.  (a)
    Generally.  Dividend Equivalent rights granted
    under Paragraph 1(b) hereof confer upon Grantee a right to
    receive Dividend Equivalents in respect of the Option, as
    follows:



 



    (i) Relating to Cash Dividends.  If the
    Corporation declares and pays any cash dividend or distribution
    on Common Stock, the record date of which occurs while all or a




    

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    portion of the Option remains outstanding, the Corporation shall
    credit to a bookkeeping account maintained on behalf of Grantee,
    as promptly as practicable after the payment date of such
    dividend or distribution, a cash amount equal to the amount of
    cash actually paid as a dividend or distribution per share of
    Common Stock multiplied by the number of shares subject to the
    Option on such record date.



 



    (ii) Relating to Extraordinary Stock Dividends, Stock
    Splits, and Other Extraordinary Dividends Resulting in
    Adjustments to Options.  If the Corporation
    declares and pays a dividend or distribution in the form of
    Common Stock payable on Common Stock, or if there occurs a
    forward stock split of the Common Stock, or if there occurs
    another extraordinary dividend resulting in an adjustment under
    Paragraph 4(c) hereof, the record date of which occurs
    while all or a portion of the Option remains outstanding, the
    Corporation shall not credit any dividend equivalents to
    Grantee’s bookkeeping account in connection therewith,
    except as otherwise determined by the Committee in accordance
    with Paragraph 4(c).



 



    (b)  Forfeiture.  In the event any
    portion of an Option is forfeited, the Dividend Equivalents
    theretofore credited to Grantee’s bookkeeping account in
    respect of that portion of the Option shall likewise be
    forfeited.



 



    4.  Miscellaneous.  (a)
    Limitations on Transfer.  Neither the Option
    nor any of Grantee’s rights or interests therein shall be
    assignable or transferable by Grantee other than by will or the
    laws of descent and distribution or to a designated Beneficiary
    in the event of the Participant’s death. During the
    lifetime of Grantee the Option shall be exercisable only by
    Grantee (or his guardian or legal representative). The Option
    shall not be pledged or encumbered in any way and shall not be
    subject to execution, attachment or similar legal process. Other
    provisions of this Agreement notwithstanding, the portion of the
    Option which is not at that time subject to a risk of forfeiture
    upon termination of the employment of the Grantee to the
    Corporation shall be transferable, solely for estate-planning
    purposes, if and to the extent that rules adopted by the
    Committee and then in effect permit such transfers (the
    “Rules”), and subject to the terms and conditions set
    forth in such Rules. In addition, each agreement evidencing an
    option granted to Grantee under the Plan and outstanding at the
    Date of the Grant of the Option is hereby amended by inserting
    the preceding sentence as additional text at the end of any
    provision setting forth limitations on transferability.



 



    (b)  No Right to Continued
    Employment.  Nothing contained herein or in the
    Plan shall be construed as giving Grantee any right to be
    retained in the employ of the Corporation, or interfere in any
    way with the right of the Corporation to terminate the
    employment of Grantee at any time, with or without cause,
    without incurring any liability to Grantee due to the inability
    of Grantee thereafter to exercise the Option.



 



    (c)  Adjustments.  In the event of
    any change in the Common Stock of the Corporation by reason of
    any stock dividend, recapitalization, reorganization, merger,
    consolidation, spin-off, combination or exchange of shares, or
    similar corporate transaction or event that affects the Common
    Stock such that the Committee determines that an adjustment to
    the Option is appropriate, then the Committee will adjust the
    terms of the Option in a manner that is equitable to prevent
    substantial dilution or enlargement of the rights of Grantee.
    Any such




    

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    adjustment shall be effective and binding for all purposes under
    the Option. The Committee shall give notice of such adjustment
    to Grantee.



 



    (d)  Surrender of Options.  If
    permitted or required by the Committee, the Option may be
    surrendered by Grantee conditioned on the grant of a new option
    for the same or different number of shares, or shall be
    surrendered by the Grantee as a condition to the grant of such a
    new option. Upon such surrender, and to the extent thereof, the
    Option shall be of no further force or effect.



 



    (e)  No Stockholder Rights.  Grantee
    shall have no rights as a stockholder of the Corporation with
    respect to any shares of Common Stock subject to the Option
    prior to the valid exercise of the Option.



 



    (f)  Legal Effect.  This Agreement
    shall be legally binding when executed by the Corporation and
    delivered to Grantee. This Agreement is governed by applicable
    federal law and, to the extent not governed by federal law, the
    laws of the Commonwealth of Virginia (without regard to
    conflicts of law provisions), and is deemed executed in the
    Commonwealth of Virginia.



 



    (g)  General.  This Agreement shall
    be binding upon the heirs, executors, administrators and
    successors of the parties. This Agreement constitutes the entire
    agreement between the parties with respect to the Option, and
    supersedes any prior agreements or documents with respect to the
    Option. Copies of this Agreement shall not represent additional
    obligations of the Corporation. No amendment, alteration,
    suspension, discontinuation or termination of this Agreement
    which may impose any additional obligation upon the Corporation
    or impair the rights of Grantee with respect to the Option shall
    be valid unless in each instance such amendment, alteration,
    suspension, discontinuation or termination is expressed in a
    written instrument duly executed in the name and on behalf of
    the Corporation and by Grantee.



 



    Date of grant of the Nonqualified Stock Option:
              ,
    2004.



 



    FEDERAL HOME LOAN MORTGAGE

    CORPORATION



 


			
	 	    By:
	
    






    Michael Hager

    Senior Vice President

    Human Resources




    

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