exv10w7







 




    Exhibit 10.7



 




    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    PERFORMANCE RESTRICTED STOCK UNITS AGREEMENT



 



    This PERFORMANCE RESTRICTED STOCK UNITS AGREEMENT is dated
                          
    (the “Grant Date”) by and between the Federal Home
    Loan Mortgage Corporation (the “Corporation”) and
                          
    (the “Grantee”), pursuant to the Federal Home Loan
    Mortgage Corporation 2004 Stock Compensation Plan (the
    “Plan”).



 



    1.  Grant of Performance Restricted Stock Units and
    Receipt by Grantee.



 



    (a)  Grant. The Corporation hereby confirms the
    grant, under and pursuant to the Plan, including
    Sections 7.4 and 8.1 thereof, to Grantee on the date hereof
    of
               Performance
    Restricted Stock Units (the “PRSUs”). The PRSUs are
    subject to all of the terms and conditions set forth in the
    Plan, the relevant resolution of the Compensation and Human
    Resources Committee of the Board of Directors and this
    Performance Restricted Stock Units Agreement (the
    “Agreement”). The Corporation shall maintain a
    bookkeeping account for Grantee (the “Account”)
    reflecting the number of PRSUs then credited to Grantee
    hereunder as a result of such grant of PRSUs and any additional
    PRSUs attributable to Dividend Equivalents (not paid out in
    cash) as described in Section 5 hereof.



 



    (b)  Restrictions. Grantee acknowledges and
    agrees that: (i)  until a PRSU has become earned in
    accordance with Section 2(a) and vested in accordance with
    Section 2(b), such PRSU shall be subject to a risk of
    forfeiture as provided in the Plan and Section 2 hereof;
    (ii)  until such time as each PRSU becomes earned and
    vested and is settled, such PRSU shall be generally
    nontransferable, as provided in the Plan and Section 3
    hereof; (iii)  Grantee is subject to the
    Corporation’s Code of Conduct and related policies on
    insider trading which restrict Grantee’s ability to sell
    shares of the Corporation’s Common Stock received in
    settlement of PRSUs, which may include “blackout”
    periods during which Grantee may not engage in such sales; and
    (iv)  the PRSUs, and certain gains realized by Grantee
    upon settlement of the PRSUs, are subject to forfeiture in the
    event Grantee fails to meet applicable requirements relating to
    non-competition, non-solicitation of employees and others, and
    other provisions protecting the Corporation’s business, as
    set forth in Section 6 hereof.



 



    (c)  Coordination with Plan. All of the terms,
    conditions and other provisions of the Plan are hereby
    incorporated by reference into this 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. A copy of the Plan is
    available on the Human Resources homepage of the
    Corporation’s intranet site. Grantee 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 delegatee) (the “Committee”)
    thereunder.













 






    2.  Earning, Vesting and Forfeiture.



 



    The PRSUs shall be forfeited and shall not be settled unless
    they have both been earned and become vested under this
    Section 2.



 



    (a)  Performance Condition to the Earning of the
    PRSUs. The PRSUs shall be deemed earned at such time as the
    Committee has determined that the Performance Goal (as defined
    in this Section 2(a)) has been met. The Performance Goal
    shall be that the performance of the Corporation’s
    management during calendar year 2007 improves the
    Corporation’s competitive position when considering the
    Corporation’s shareholders, Mission Objectives, and safety
    and soundness considerations. The determination of whether the
    Performance Goal has been met shall be in the sole and absolute
    discretion of the Committee, and the Committee’s
    determination shall be final. The Committee shall make this
    determination before the first anniversary of the date of grant
    of the PRSUs.



 



    (b)  Vesting Date. Subject to
    Sections 2(c), 2(d), 2(e) and 2(f), the vesting schedule
    for PRSUs that have been earned under Section 2(a) shall be
    as follows:



 


			
	 	    • 
	
    25% of such PRSUs shall vest on the first anniversary of the
    Grant Date;

	 
	 	    • 
	
    an additional 25% of such PRSUs shall vest on the second
    anniversary of the Grant Date;

	 
	 	    • 
	
    an additional 25% of such PRSUs shall vest on the third
    anniversary of the Grant Date; and

	 
	 	    • 
	
    the remaining 25% of such PRSUs shall vest on the fourth
    anniversary of the Grant Date.




 



    Each PRSU credited as a result of Dividend Equivalents under
    Section 5(a)(ii) and (iii) (“Dividend Equivalent
    PRSU”) shall vest at the time of vesting of the forfeitable
    PRSU which gives rise, directly or indirectly, to the crediting
    of such Dividend Equivalent PRSU, or shall be immediately vested
    if credited on a previously vested PRSU.



 



    (c)  Death or Disability. If Grantee terminates
    employment with the Corporation as a result of Grantee’s
    death or Disability (as defined in the Plan), all PRSUs not
    previously forfeited shall be deemed earned (i.e., the PRSUs
    will be deemed earned if such termination precedes the
    Committee’s determination regarding achievement of the
    Performance Goal), and all earned but unvested PRSUs shall vest
    and become nonforfeitable immediately upon such termination.



 



    (d)  Retirement Other Than Qualifying Normal
    Retirement. If Grantee terminates employment with the
    Corporation due to Retirement (as defined in the Plan) other
    than a Qualifying Normal Retirement (as defined below), the
    earning and/or vesting of any unvested PRSUs may be accelerated
    at the discretion of the Committee; if the Committee does not
    accelerate such earning and/or vesting, the unearned and/or
    unvested PRSUs will be forfeited.



 



    (e)  Qualifying Normal Retirement. If Grantee
    terminates employment with the Corporation due to a Qualifying
    Normal Retirement (as defined below), all previously earned but
    unvested PRSUs shall not be forfeited at that time but shall
    continue to settle under Section 4 below after a Qualifying
    Normal Retirement in accordance with the dates in the vesting
    schedule in




    

    2








 






    Section 2(b) above.  For purposes of this
    Agreement, a “Qualifying Normal 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), at least one year after the date of grant
    of the PRSUs, if, at the time of such Termination,
    (A)  Grantee has attained (or exceeded) age 62
    and has at least five years of service, and
    (B)  Grantee has executed and is subject to a written
    agreement containing such non-competition, non-solicitation, and
    other covenants, and a release of the Corporation, in form and
    substance satisfactory to the Chief Executive Officer in order
    to protect the business relationships and confidential and
    proprietary business information of the Corporation. A
    “Qualifying Normal Retirement” shall not include a
    Termination by the Corporation for Gross Misconduct (as defined
    in Corporate Policy
    No. 3-254.1
    or 3-254, as
    applicable (as it may be amended or replaced from time to time)
    as determined by the Chief Executive Officer or a Termination
    subject to Section 2(c). The Corporation’s remedies
    under any such agreement may include but shall not be limited to
    the forfeiture of PRSUs not theretofore settled. For purposes of
    this Section 2(e), “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.



 



    (f)  Special Circumstances Terminations. If the
    Corporation terminates Grantee’s employment due to Special
    Circumstances (as defined below), all previously earned but
    unvested PRSUs shall not be forfeited at that time but shall
    settle under Section 4 below after Termination in
    accordance with dates in the vesting schedule in
    Section 2(b) above. For purposes of this Agreement,
    “Special Circumstances” shall mean Grantee’s
    ceasing to be an employee of the Corporation by action of the
    Corporation, other than the following Termination events: a
    Termination by the Corporation for Gross Misconduct (as defined
    in Corporate Policy
    No. 3-254.1
    or 3-254, as
    applicable, as it may be amended or replaced from time to time)
    as determined by the Chief Executive Officer, a Termination for
    violating any standard of performance, conduct or attendance
    embodied in Exhibit A to Corporate Policy
    No. 3-214
    (as it may be amended or replaced from time to time) as
    determined by the Chief Executive Officer, or a Termination
    subject to Section 2(c), 2(d) or 2(e); provided, however,
    “Special Circumstances” shall exist only if, at the
    time of such Termination, (A)  Grantee’s position
    with the Corporation was eliminated due to a reorganization or
    job relocation or Grantee’s employment was terminated due
    to a restructuring or other no-fault displacement as determined
    in the absolute and sole discretion of the Chief Executive
    Officer, and (B)  Grantee has executed and is subject
    to a written agreement containing such non-competition,
    non-solicitation, and other covenants, and a release of the
    Corporation, in form and substance satisfactory to the Chief
    Executive Officer in order to protect the business relationships
    and confidential and proprietary business information of the
    Corporation.



 



    (g)  Other Terminations. If Grantee terminates
    employment with the Corporation for any reason other than death,
    Disability, Retirement (to the extent subject to
    Section 2(d) above), or Qualifying Normal Retirement, or if
    the Corporation terminates Grantee’s employment for any
    reason other than Special Circumstances, any unvested PRSUs,
    whether or not earned, will be forfeited.



 



    3.  Nontransferability. Until PRSUs have
    settled under Section 4 hereof, the PRSUs and
    Grantee’s rights and interests therein shall be subject to
    the restrictions on transferability and related terms set forth
    in Section 6.6 of the Plan.




    

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    4.  Settlement. PRSUs granted hereunder,
    together with PRSUs credited as a result of Dividend Equivalents
    under Section 5(a)(ii) and (iii), shall be settled by
    delivery of one share of the Corporation’s Common Stock
    ($0.21 par value) for each PRSU being settled. Settlement of
    each PRSU granted hereunder shall occur for PRSUs that have been
    earned upon the vesting of such PRSU under Section 2,
    provided, however, that, in the case of Qualifying Normal
    Retirement pursuant to Section 2(e) or Termination by the
    Corporation due to Special Circumstances pursuant to
    Section 2(f), settlement of each such PRSU shall instead
    occur at the time the PRSU becomes vested under
    Section 2(b) (i.e., the time PRSUs would have become vested
    under Section 2(b) if Grantee’s employment by the
    Corporation had not terminated). Notwithstanding the previous
    sentence, if Grantee completed an Election Form for Deferral of
    Restricted Stock Units (the “Deferral Election”)
    regarding this Agreement prior to the Grant Date, settlement of
    each such PRSU granted hereunder shall occur in accordance with
    the terms of the Deferral Election. The terms set forth or
    incorporated in this Agreement notwithstanding, if, under U.S.
    federal income tax laws as presently in effect or hereafter
    amended, and regulations thereunder, any rights or elections of
    Grantee with respect to the PRSUs would result in Grantee’s
    constructive receipt of income relating to the PRSUs prior to
    their actual settlement by the Corporation, such rights or
    elections, and any reserved power of the Corporation, shall be
    automatically modified and limited to the extent necessary such
    that Grantee will not recognize taxable income prior to the
    settlement of the PRSUs. In particular, distribution to a
    “key employee” as specified in
    Section 409A(a)(2)(B)(i)
    of the Internal Revenue Code upon a Disability may in some cases
    have to be delayed for six months after Termination, and the
    Corporation shall have no power to accelerate the distribution
    of shares of Common Stock except in conformity with
    Section 409A and regulations thereunder.



 



    5.  Dividend Equivalents and Adjustments.



 



    (a)  Dividend Equivalents. Dividend Equivalents
    shall be paid or credited on PRSUs (other than PRSUs that, at
    the relevant record date, previously have been settled or
    forfeited) in accordance with Section 7.6 of the Plan, as
    follows:



 


			
	 	    (i)  
	
    Cash Dividends. If the Corporation declares and pays a
    dividend or distribution on Common Stock in the form of cash,
    then an amount of cash shall be paid to Grantee, as promptly as
    possible after the payment date for such dividend or
    distribution, equal to the number of PRSUs credited to
    Grantee’s Account hereunder as of the record date for such
    dividend or distribution multiplied by the amount of cash
    actually paid as a dividend or distribution on each outstanding
    share of Common Stock at such payment date.




 


			
	 	    (ii)  
	
    Non-Common Stock Dividends. If the Corporation declares
    and pays a dividend or distribution on Common Stock in the form
    of property other than shares of Common Stock, then a number of
    additional PRSUs shall be credited to Grantee’s Account as
    of the payment date for such dividend or distribution equal to
    the number of PRSUs credited to the Account as of the record
    date for such dividend or distribution multiplied by the Fair
    Market Value of such property actually paid as a dividend or
    distribution on each outstanding share of Common Stock at such





    

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    payment date, divided by the Fair Market Value of a share of
    Common Stock at such payment date.

	 
	 	    (iii)  
	
    Common Stock Dividends and Splits. If the Corporation
    declares and pays a dividend or distribution on Common Stock in
    the form of additional shares of Common Stock, or there occurs a
    forward split of Common Stock, then a number of additional PRSUs
    shall be credited to Grantee’s Account as of the payment
    date for such dividend or distribution or forward split equal to
    the number of PRSUs credited to the Account as of the record
    date for such dividend or distribution or split multiplied by
    the number of additional shares of Common Stock actually paid as
    a dividend or distribution or issued in such split in respect of
    each outstanding share of Common Stock.




 



    The foregoing notwithstanding, any payment of Dividend
    Equivalents 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. In addition,
    the Committee may vary the manner and terms of crediting
    Dividend Equivalents from that specified in clause (i),
    (ii)  or (iii)  above, for administrative
    convenience or any other reason, provided that the Committee
    determines that any alternative manner and terms result in
    equitable treatment of Grantee.



 



    (b)  Adjustments to PRSUs. The number of PRSUs
    credited to Grantee’s Account shall be appropriately
    adjusted, in order to prevent substantial dilution or
    enlargement of Grantee’s rights with respect to PRSUs, to
    reflect any changes in the number and kind of outstanding shares
    of Common Stock resulting from any event referred to in
    Section 4.4 of the Plan, taking into account any PRSUs
    credited to Grantee in connection with such event under
    Section 5(a) hereof.



 



    6.  Additional Forfeiture Provisions.



 



    (a)  Forfeiture of PRSUs and Gains Realized Upon
    Prior Settlement of PRSUs. The PRSUs are subject to
    the following additional forfeiture conditions, to which
    Grantee, by accepting the PRSUs, agrees. If any of the events
    specified in Section 6(b) occurs (a “Forfeiture
    Event”), all of the following forfeitures will result, such
    forfeitures to be effective at the time of the occurrence of the
    Forfeiture Event:



 


			
	 	    (i)  
	
    The PRSUs then outstanding, whether or not vested, will be
    immediately forfeited and canceled upon the occurrence of the
    Forfeiture Event; and




 


			
	 	    (ii)  
	
    Grantee will be obligated to repay to the Corporation, within
    five business days after demand is made therefor by the
    Corporation, the total amount of After-Tax Gain (as defined
    herein) realized by Grantee upon any settlement of the PRSUs
    that occurred on or after the date that is 12 months prior
    to the occurrence of the Forfeiture Event. For purposes of this
    Section, the term “After-Tax Gain” shall mean, in
    respect of a given settlement of PRSUs, the product of
    (X)  the Fair Market Value per share delivered at the
    date of such settlement (without regard to





    

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    any subsequent change in the market price of shares) times
    (Y) the number of shares delivered in such settlement,
    provided that, if the settlement occurred in a calendar year
    prior to the Corporation making demand for repayment, such
    product shall be reduced by a percentage equal to Grantee’s
    marginal tax rate at the time of settlement as reasonably
    determined by the Committee. Such repayment may be in cash or in
    shares having a Fair Market Value at the repayment date equal to
    the After-Tax Gain.




 



    (b)  Events Triggering Forfeiture. The
    forfeitures specified in Section 6(a) will be triggered
    upon the occurrence of the following Forfeiture Event at any
    time during Grantee’s employment by the Corporation or
    during the noncompetition period following Termination of
    Employment specified in any agreement between the Corporation
    and Grantee in existence at the Date of Grant (the
    “Restrictive Covenant Agreement”):



 



    Grantee, directly or indirectly, seeks or accepts employment
    with or provides professional services, directly or indirectly,
    to a “Competitor” in violation of the Restrictive
    Covenant Agreement. For purposes of this Section 6(b) and
    the second sentence of Sections 2(e) and 2(f), references
    to the “Corporation” include any subsidiary, affiliate
    or joint venture of the Corporation.



 



    The non-occurrence of the Forfeiture Event set forth herein is a
    condition to Grantee’s right to realize and retain value
    from the PRSUs, and shall remain a condition regardless of any
    subsequent change or challenge to or termination of such other
    agreement referenced herein, and the consequences hereunder if
    Grantee engages in an activity giving rise to any such
    Forfeiture Event are the forfeitures specified in
    Section 6(a).



 



    (c)  Monitoring Compliance. In order to
    allow the Corporation to monitor Grantee’s compliance with
    the conditions imposed under this Section 6, beginning with
    Grantee’s Termination of Employment Grantee shall provide
    written notice to the Executive Vice-President, Human Resources,
    of the identity of each new employer with whom Grantee accepts
    employment or of any other entity to which Grantee provides
    professional services, together with Grantee’s new job
    title and a brief description of job duties, during the
    noncompetition period specified in the Restrictive Covenant
    Agreement.



 



    7.  Other Terms Relating to PRSUs.



 



    (a)  Fractional PRSUs and Shares. The number of
    PRSUs credited to a Grantee’s Account shall include
    fractional PRSUs calculated to at least three decimal places,
    unless otherwise determined by the administrator (which shall be
    the Human Resources Division, unless otherwise specified by the
    Committee). Upon settlement of PRSUs, Grantee shall be paid, in
    cash, an amount equal to the value of any fractional share that
    would have otherwise been deliverable in settlement of such
    PRSUs.



 



    (b)  Statements. An individual statement of
    each Grantee’s Account will be made available to each
    Grantee in such form and in such manner as the administrator may




    

    6








 






    determine. Such statements may include information such as the
    amount of PRSUs credited to Grantee’s Account, transactions
    therein during the period covered by the statement, and other
    information deemed relevant by the administrator. Such statement
    may include information regarding other plans and compensatory
    arrangements for Grantee. A Grantee’s statements shall be
    deemed a part of this Agreement, and shall evidence the
    Corporation’s obligations under the Plan, including the
    number of PRSUs credited as a result of Dividend Equivalents (if
    any). Any statement containing an error shall not, however,
    represent a binding obligation to the extent of such error,
    notwithstanding the inclusion of such statement as part of this
    Agreement.



 



    (c)  Tax Withholding. The Corporation may make
    such provisions and take such steps as it may deem necessary or
    appropriate for the withholding of all Federal, state, local and
    other taxes required by law to be withheld upon the earning and
    vesting or settlement of PRSUs including, but not limited to,
    (i)  reducing the number of shares of Common Stock
    otherwise to be delivered to Grantee at that time, based on
    their value determined in accordance with Section 9.3(a) of
    the Plan, to permit deduction of the amount of any such
    withholding taxes from the amount otherwise payable under the
    Plan, (ii)  deducting the amount required to be
    withheld from any other amount then or thereafter payable to
    Grantee, a beneficiary or legal representative, and
    (iii)  requiring Grantee, a beneficiary or legal
    representative to pay to the Corporation the amount required to
    be withheld as a condition of delivering Common Stock in
    settlement of the PRSUs or any other distributions related
    thereto.



 



    8.  Miscellaneous.



 



    (a)  Modifications. The Corporation acting
    through the Committee shall have the authority to modify or
    remove any or all restrictions or conditions on the earning,
    vesting or settlement of the PRSUs whenever it may determine
    that, by reason of a change in applicable laws or other change
    in circumstances arising after the date hereof, or for any other
    reason, such action is appropriate.



 



    (b)  Binding Agreement. 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 PRSUs, and supersedes
    any prior agreements or documents with respect to the PRSUs. No
    amendment, alteration, suspension, discontinuation or
    termination of this Agreement which may impose any additional
    obligation upon the Corporation or materially impair the rights
    of Grantee with respect to the PRSUs 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 party
    to be bound thereby. The foregoing notwithstanding, equitable
    adjustments to the PRSUs under Section 5(b), including
    those resulting from a transaction in which the
    Corporation’s Common Stock is no longer publicly traded,
    and changes that affect only the timing of federal income or
    other taxation to Grantee for compensation received hereunder,
    shall not be deemed material impairments and therefore shall not
    require approval of Grantee.



 



    (c)  Beneficiary Designations. All designations
    of Beneficiary shall be on such forms as are specified by and
    filed with the administrator. Any Beneficiary designation made by




    

    7








 






    Grantee in accordance with this provision may be changed from
    time to time, without the consent of any previously designated
    Beneficiary (but subject to any spousal consent as may be
    required), by filing with the administrator a notice of such
    change on the form provided by the administrator and such change
    of Beneficiary designation shall become effective upon receipt
    by the administrator. In the event Grantee’s Beneficiary
    would otherwise become entitled to a distribution hereunder, and
    all Beneficiaries designated by Grantee are not then living, or
    if no valid Beneficiary designation is in effect, Grantee’s
    estate or duly authorized personal representative shall be
    deemed to have been designated by Grantee.



 



    (d)  No Security Interest or
    Trust Created. Any provision for distribution in
    settlement of Grantee’s Account hereunder shall be by means
    of bookkeeping entries on the books of the Corporation and shall
    not create in Grantee or any Beneficiary any right to, or claim
    against any, specific assets of the Corporation, nor result in
    the creation of any trust or escrow account for Grantee or any
    Beneficiary. Grantee or any Beneficiary entitled to any
    distribution hereunder shall be a general creditor of the
    Corporation.



 



    (e)  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 forfeiture of the PRSUs.



 



    (f)  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 PRSUs prior to the
    settlement of the PRSUs.



 



    (g)  Notices. Any notice hereunder to the
    Corporation shall be in writing and addressed to it at its
    office, 8250 Jones Branch Drive, McLean, VA 22102, Attn: Human
    Resources Division, and any notice to Grantee shall be in
    writing and addressed to him or her at the latest address
    appearing in the records of the Corporation, subject to the
    right of either party to designate in writing another address at
    any time hereafter.



 



    (h)  Legal Effect. This Agreement shall be
    legally binding when (i)  executed by the Corporation
    attaching the typed name and title of its authorized officer as
    a legally binding electronic signature and
    (ii)  delivered to Grantee who has consented and
    agrees to its terms electronically (or in such other manner as
    the Corporation may provide). 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.




    

    8








 






    IN WITNESS WHEREOF, the Corporation has caused this Agreement to
    be executed by attaching the typed name and title of its
    authorized officer as a legally binding electronic signature as
    of the day and year first above written, and Grantee has
    consented to and has acknowledged receipt of the Agreement
    electronically (or in such other manner as the Corporation may
    provide).



 



    FEDERAL HOME LOAN




    MORTGAGE CORPORATION



 



    /s/  Paul
    G. George







			
	 	    By:  
	
    Paul G. George





    Executive Vice President




    Human Resources




    

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