exv10w37







 




    Exhibit
    10.37



 




    EXECUTION
    COPY



 




    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    EMPLOYMENT AGREEMENT WITH RICHARD F. SYRON



 



    This Agreement provides the terms and conditions of the
    employment of Richard F. Syron (“Executive”) as
    Chief Executive Officer of the Federal Home Loan Mortgage
    Corporation, a government-sponsored enterprise created pursuant
    to the Federal Home Loan Mortgage Corporation Act
    (Title III of the Emergency Home Finance Act of 1970, as
    amended) (“Freddie Mac”).



 



    The provisions of this Agreement represent the understanding of
    Executive and Freddie Mac with respect to the duties,
    responsibilities, and terms of employment for Executive in his
    capacity as Chief Executive Officer of Freddie Mac. In
    consideration of the mutual promises set forth in this
    Agreement, and other valuable consideration, the receipt and
    adequacy of which is hereby acknowledged, Executive and Freddie
    Mac agree as follows:



 




    SECTION 1.
    TERMS OF EMPLOYMENT



 



    During the Term (as defined in the next sentence) Freddie Mac
    agrees to employ Executive, and Executive agrees to serve
    Freddie Mac, in accordance with the terms provided in this
    Agreement. The Term of his Agreement shall be the period
    commencing on December 31, 2003, and ending on the earlier
    to occur of (a) December 31, 2008 (the “Scheduled
    Termination Date”) or (b) the occurrence of an event
    described in Section 5 hereof. The Term, and
    Executive’s employment hereunder, maybe terminated only as
    a result of the occurrence of the Scheduled Termination Date or
    in accordance with the provisions of Section 5 hereof. The
    compensation and other terms of Executive’s employment as
    set forth in this Agreement were contingent upon the approval of
    the Human Resources Committee of the Board of Directors (the
    “Committee”). The termination benefits of the
    Agreement were also contingent upon the prior approval of the
    Office of Federal Housing Enterprise Oversight
    (“OFHEO”), which also has authority to prohibit any
    compensation of any executive officer of Freddie Mac that is not
    reasonable and comparable with that paid by other similar
    businesses to executives doing similar work. Such approvals were
    obtained from the Committee on December 4, 2003 and from
    OFHEO on December 5, 2003.



 




    SECTION 2.
    POSITION AND RESPONSIBILITIES



 



    During the Term, Executive agrees to serve as Chief Executive
    Officer of Freddie Mac. In such capacity, Executive shall be the
    highest-ranking officer of Freddie Mac and shall have the same
    status, privileges, and responsibilities normally inherent in
    such capacity in public corporations of similar size and
    character. Executive shall also perform such additional duties
    as the Board of Directors of Freddie Mac (the “Board of
    Directors”) may from time to time reasonably assign to him.
    In addition, for so long as Executive remains Chief Executive
    Officer, the Board of Directors shall nominate him as a director
    of Freddie Mac and, provided he is elected as a director, shall
    elect him to serve as Chairman of the Board of Directors. If so
    elected, Executive agrees to serve as Chairman of the Board of
    Directors throughout his employment hereunder and to perform
    such duties and responsibilities as are customary for such
    position. As Chief Executive Officer and Chairman of the Board
    of Directors, Executive shall abide by Freddie Mac’s Code
    of Conduct and any rules or restrictions applicable to senior













 






    executives of Freddie Mac regarding the purchase or sale of
    securities of Freddie Mac. In addition, Executive shall actively
    assist Freddie Mac in developing a succession plan for the
    replacement of Executive as Chief Executive Officer by a
    successor chief executive officer (the “Successor
    CEO”) of Freddie Mac to occur prior to the Scheduled
    Termination Date. Upon the appointment of the Successor CEO,
    Executive shall cease to be Chief Executive Officer of Freddie
    Mac and shall remain Chairman of the Board of Directors through
    the Scheduled Termination Date (such period during which
    Executive serves as Chairman of the Board of Directors following
    the appointment of the Successor CEO, the “Transition
    Period”), and shall continue to perform such duties and
    responsibilities as are customary for the Chairman of the Board
    of Directors. During the Transition Period, Executive shall
    continue to be an employee of Freddie Mac entitled to receive
    the compensation and benefits payable during the Term of this
    Agreement on the terms and conditions set forth in this
    Agreement, and the provisions relating to the termination of
    Executive’s employment set forth in this Agreement shall
    continue to apply.



 




    SECTION 3.
    DEVOTION TO DUTIES



 



    During his employment hereunder, Executive agrees to devote
    substantially his full time, attention, and energies to Freddie
    Mac’s business, and not be engaged in any other business
    activity, whether or not such business activity is pursued for
    gain, profit, or other pecuniary advantage. This restriction
    shall not prevent Executive from devoting a reasonable amount of
    time to charitable or public interest activities or from making
    passive investments of his assets in such form or manner as he
    desires, provided that such investments: (i) do not require
    his services in the operations or the affairs of the entities in
    which such investments are made; and (ii) are not made in
    entities that compete with Freddie Mac or otherwise cause or
    create a conflict of interest or the appearance of a conflict of
    interest on the part of Executive, unless the stock (or other
    voting security) or any such entity is listed on a national
    securities exchange or traded in the over-the-counter market and
    the Executive owns no more than one (1) percent of the
    outstanding voting securities thereof. In addition, this
    restriction shall not prevent Executive from serving on the
    boards of directors of two other corporations subject to the
    approval of the Board of Directors in each case (which approval
    has been given as to the two boards set forth on Exhibit A
    attached hereto) and continued compliance by Executive with
    Freddie Mac’s Code of Conduct.



 




    SECTION 4.
    COMPENSATION



 



    In consideration for all services to be rendered by Executive
    under this Agreement, Freddie Mac shall pay Executive total
    compensation consisting of the following:



 



    4.1  Base Salary. During the Term, Freddie Mac
    shall pay Executive a Base Salary at an annual rate of
    $1,100,000, which amount may be increased in the discretion of
    the human resources committee of the Board of Directors or its
    successor (the “Committee”). The Base Salary shall be
    paid to Executive in equal installments throughout the year,
    consistent with the normal payroll practices of Freddie Mac.



 



    4.2  Annual Bonus. In addition to the Base
    Salary, during each calendar year of Freddie Mac during the Term
    commencing with calendar year 2004, Executive shall have the
    opportunity to earn an annual cash bonus (the
    “Bonus”), pro-rated in the case of any partial




    

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    calendar year, based on performance criteria determined by the
    Committee. During the Term, the targeted annual Bonus will be
    120% of Base Salary (the “Target Bonus”) and the
    maximum annual Bonus will be 200% of the Target Bonus (the
    “Maximum Bonus”). The annual Bonus in respect of a
    calendar year will only be payable if Executive remains actively
    employed with Freddie Mac through the end of the applicable
    calendar year, and shall be paid to Executive at the same time
    that other senior executives of Freddie Mac are paid their
    annual cash incentive awards. The actual amount of
    Executive’s bonus in respect of any calendar year shall be
    determined based on a variety of subjective and objective
    factors, as determined by the Committee; provided, that,
    notwithstanding the foregoing the minimum Annual Bonus payable
    to Executive in respect of calendar year 2004 shall be
    $1,320,000.



 



    4.3  Initial Equity Award. As soon as
    practicable after the commencement of the Term and
    Executive’s employment under this Agreement and in no event
    later than December 31,2003 (assuming that the Term and
    Executive’s employment under this Agreement has commenced
    prior to such date), Freddie Mac shall grant Executive a number
    of Restricted Stock Units (the “Initial RSUs”)
    pursuant to the Federal Home Loan Mortgage Corporation 1995
    Stock Compensation Plan, as amended (the “Stock
    Compensation Plan”) having a value on the date of grant, as
    determined by the Committee, of $8,800,000. The Initial RSUs
    shall vest in three equal annual installments of thirty-three
    and one-third percent
    (331/3%)
    each on each of the first, second and third anniversaries of the
    date of grant, subject to Executive’s continued employment
    with Freddie Mac through the applicable vesting dates. In
    addition, the vesting of the Initial RSUs shall be subject to
    acceleration upon the terms and conditions described in
    Sections 4.4 and 6 of this Agreement. Except as expressly
    provided in this Agreement, all other terms and conditions of
    the Initial RSUs shall be as set forth in the Stock Compensation
    Plan, the resolution making the grant and the related award
    agreement.



 



    4.4  Annual Equity Grants. During each year of
    the Term, Freddie Mac shall make a grant to Executive of a
    long-term equity incentive award (the “Annual Equity
    Grant”) pursuant to the Stock Compensation Plan (or any
    successor plan) at the same time annual long-term equity
    incentive awards are granted to other senior executives. Each
    Annual Equity Grant shall have an aggregate value on the date of
    grant, as determined by the Committee, equal to $8,800,000. 50%
    of each Annual Equity Grant shall be restricted stock units
    (“RSUs”) and 50% of each Annual Equity Grant shall be
    stock options to acquire shares of Freddie Mac
    (“Options”), provided that the Committee may in its
    discretion from time to time, grant a higher percentage of the
    Annual Equity Grant in RSUs. The exercise price of the Options
    shall be determined by the Committee in accordance with the
    terms of the Stock Compensation Plan.



 



    The RSUs shall vest on the fifth anniversary of the date of
    grant, and the Options shall vest in four equal annual
    installments of approximately 25% each beginning on the first
    anniversary of the date of grant, in each case subject to
    Executive’s continued employment with Freddie Mac through
    the applicable vesting date, provided that the Committee may in
    its discretion from time to time (a) permit the
    acceleration of the vesting of the RSUs or the Options and
    (b) provide for a different vesting schedule for the RSUs
    or Options, provided, however, that in no event shall the
    vesting schedule applicable for the RSUs provide for a vesting
    period longer than five years and in no event shall the vesting
    schedule applicable to the Options provide for the Options to
    vest less frequently than 25% each year over a four year vesting
    period. In addition, the vesting of the Options and RSUs shall
    be subject to acceleration upon the terms and




    

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    conditions described in the following paragraph and
    Section 6 of this Agreement. Except as expressly provided
    in this Agreement, all other terms and conditions of the RSUs
    and Options shall be as set forth in the Stock Compensation
    Plan, the resolution making the grant and the related award
    agreement.



 



    In addition to the foregoing, upon the occurrence of a Change in
    Control (as defined below) during the Term: (a) the Initial
    RSUs, if they were granted to Executive at least twelve months
    prior to such Change in Control, and all other RSUs that were
    granted to Executive pursuant to this Agreement at least twelve
    months prior to such Change in Control shall immediately vest
    and be paid-out subject to any right of Executive to defer
    payment of the Initial RSUs and RSUs under any non-qualified
    deferred compensation arrangement in which senior executives of
    Freddie Mac are permitted to defer payment of restricted stock
    units, (b) all Options that were granted to Executive
    pursuant to this Agreement at least twelve months prior to such
    Change in Control shall immediately vest and remain exercisable
    until the scheduled expiration date applicable to such Options,
    (c) the Initial RSUs, if they were granted to Executive
    less than twelve months prior to such Change in Control, shall
    be cancelled immediately upon the occurrence of such Change in
    Control in consideration for a cash payment by Freddie Mac to
    Executive in the amount of $8,800,000, and (d) with respect
    to each Annual Equity Grant that was granted to Executive less
    than twelve months prior to such Change in Control, all Options
    and RSUs that formed part of such Annual Equity Grant shall be
    cancelled immediately upon the occurrence of the Change in
    Control and in consideration for such cancellation, Freddie Mac
    shall pay to Executive a lump sum cash payment in the amount of
    $8,800,000. For purposes of this Section 4.4, a Change in
    Control shall mean: (i) any person or group (within the
    meaning of Section 13(d)(3) or 14(d)(2) of the Securities
    Exchange Act of 1934, as amended (the “Exchange Act”))
    becomes the “beneficial owner” (as such term is
    defined in
    Rule 13d-3
    promulgated under the Exchange Act), directly or indirectly, of
    securities of Freddie Mac representing 50% or more of the
    combined voting power of Freddie Mac’s then outstanding
    securities, other than (A) beneficial ownership by Freddie
    Mac, any employee benefit plan of Freddie Mac or any person or
    entity organized, appointed or established pursuant to the terms
    of any such benefit plan and (B) beneficial ownership by
    any person or group with respect to which more than 50% of the
    total combined voting power of such person or group is
    beneficially owned, directly or indirectly, by the persons who
    beneficially owned Freddie Mac’s outstanding voting
    securities immediately prior to such acquisition; or
    (ii) consummation of a merger of Freddie Mac unless
    securities representing more than 50% of the total combined
    voting power of the voting securities of the successor
    corporation are, immediately after the consummation of such
    merger, beneficially owned, directly or indirectly, in
    substantially the same proportion, by the persons who
    beneficially owned Freddie Mac’s outstanding voting
    securities immediately prior to such transaction, or
    (iii) if, during any period, a majority of the members of
    the Board of Directors are elected by any person or entity other
    than Freddie Mac’s shareholders or a majority of the
    members of the Board of Directors are appointed by any
    governmental entity.



 



    4.5  Term Life Insurance Policy. During the
    Term: (a) so long as Executive remains employed by Freddie
    Mac, Freddie Mac shall maintain, at its cost, term life
    insurance on the life of Executive for the benefit of his
    beneficiaries with a face amount equal to $10,000,000, and
    (b) provided that Executive remains employed by Freddie Mac
    through the Scheduled Termination Date, upon the later to occur
    of the Scheduled Termination Date and Executive’s
    attainment of age 65, Freddie Mac shall deliver to Executive a
    fully paid-up permanent life insurance policy




    

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    with a face amount equal to $4,000,000. In each case, Freddie
    Mac’s obligation to provide such term life insurance and
    permanent life insurance to Executive shall be subject to the
    provision by Executive of proof of Executive’s insurability
    at standard rates.



 



    4.6  Relocation Expenses. Freddie Mac shall
    reimburse Executive for all costs reasonably incurred by
    Executive in connection with Executive’s relocation to the
    Washington, D.C. metropolitan area, in accordance with Freddie
    Mac’s written relocation policy applicable to senior
    executives of Freddie Mac.



 



    4.7  Other Compensation. Executive shall be
    eligible to participate in all other incentive and other
    compensation programs adopted from time to time by Freddie Mac
    and generally applicable to senior executives, subject to the
    applicable terms, conditions and limitations of such programs.



 



    4.8  Executive Benefits. During the Term,
    Executive shall be entitled to participate in all executive and
    employee benefit plans or programs of Freddie Mac at a level
    that is commensurate with his position and duties with Freddie
    Mac. Freddie Mac does not guarantee the adoption or continuance
    of any particular executive or employee benefit plan or program
    during the Term and Executive’s participation in any such
    plan or program shall be subject to the provisions, rules and
    regulations applicable thereto.



 



    4.9  Perquisites. During the Term, Executive
    shall be entitled to participate in all special benefit or
    perquisite programs generally available from time to time to
    senior executives of Freddie Mac, on the terms and conditions
    then prevailing under each such program and shall be entitled to
    a number of weeks of paid vacation on an annualized basis equal
    to the number of weeks of paid vacation per year applicable to
    senior executives of Freddie Mac in accordance with its vacation
    policy as in effect from time to time.



 



    4.10  Expenses. Freddie Mac shall pay or
    reimburse Executive for all ordinary and necessary business
    expenses that Executive reasonably incurs in performing his
    duties under this Agreement, subject to the presentment by
    Executive of appropriate vouchers in accordance with Freddie
    Mac’s normal executive policies for expense verification.



 




    SECTION 5.
    TERMINATION OF EMPLOYMENT



 



    5.1  Termination Due to Disability. In the
    event of any Disability of Executive during the Term and his
    employment under this Agreement that causes him to become
    eligible to receive benefits under Freddie Mac’s long-term
    disability policy in which Executive participates,
    Executive’s employment under this Agreement shall terminate
    as of the date of such eligibility. For purposes of this
    Agreement, “Disability” shall have the meaning
    applicable to senior executives who participate in Freddie
    Mac’s long-term disability policy in which Executive
    participates.



 



    In the event that Executive is absent from work more than thirty
    consecutive work days due to incapacity or disability, the Board
    of Directors or its designee, after considering such medical
    advice, if any, as the Board or its designee deems appropriate,
    may determine that, as a result of such incapacity or
    disability, some or all of Executive’s duties and
    responsibilities as described in Section 2 shall be
    delegated to one or more other persons. Such delegation shall




    

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    terminate upon the earliest to occur of: (i) the date or
    event specified by the Board of Directors or its designee;
    (ii) the date on which Executive’s employment under
    this Agreement terminates by reason of Disability (under this
    Section 5.1); or (iii) a determination by the Board of
    Directors or its designee, upon receipt of such medical advice,
    if any, as the Board or its designee deems appropriate, that
    Executive is able to resume the duties and responsibilities so
    delegated. It is expressly understood that any delegation of
    Executive’s duties and responsibilities pursuant to this
    paragraph shall not constitute Good Reason for termination of
    employment by Executive (under Section 5.3 hereof) and
    shall not be deemed a breach or default by Freddie Mac.



 



    5.2  Termination Due to Death. In the event of
    Executive’s death prior to the Scheduled Termination Date,
    the Term and Executive’s employment under this Agreement
    shall terminate as of the date of Executive’s death.



 



    5.3  Termination for Good Reason. Prior to the
    Scheduled Termination Date, Executive may terminate the Term and
    his employment under this Agreement for Good Reason by giving
    the Board of Directors thirty (30) days prior written
    notice of his intent to terminate. Such notice shall set forth
    in reasonable detail the facts and circumstances claimed to
    provide a basis for such termination. The Term and
    Executive’s employment under this Agreement shall terminate
    upon the expiration of the
    30-day
    notice period.



 



    For purposes of this Agreement, “Good Reason” shall
    mean, without Executive’s express written consent, the
    occurrence of anyone or more of the following:



 



    (i)  A reduction in Executive’s then current Base
    Salary or Target Bonus or Maximum Bonus opportunity;



 



    (ii)  The removal by the Board of Directors of
    Executive from the position of Chief Executive Officer of
    Freddie Mac or Chairman of the Board of Directors or otherwise
    from the Board of Directors;



 



    (iii)  A material diminution or change in
    Executive’s duties or responsibilities as contemplated by
    Section 2 of this Agreement;



 



    (iv)  A change in the reporting structure so that
    Executive reports to any person or entity other than the Board
    of Directors;



 



    (v)  A request by Freddie Mac that Executive resign
    his employment, unless such resignation is requested as a result
    of conduct by Executive that would constitute Cause (as defined
    below);



 



    (vi)  Executive is not elected to the Board of
    Directors or, if Executive is so elected, Executive is not
    appointed as Chairman of the Board of Directors;



 



    (vii)  The failure of Freddie Mac to obtain the
    assumption in writing of its obligation to perform this
    Agreement by any successor to all or substantially all of the
    assets of Freddie Mac within 15 days after the occurrence
    of a Change in Control (as defined in Section 4.4);




    

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    (viii)  A material breach of this Agreement by Freddie
    Mac.



 



    Notwithstanding the foregoing, Executive expressly acknowledges
    and agrees that it shall not constitute Good Reason as defined
    in this Section 5.3 (including without limitation under
    5.3(ii), (iii) or (viii)) if, during the Term, a Successor
    CEO who is reasonably acceptable to Executive is appointed, and
    Executive ceases to be Chief Executive Officer and remains
    Chairman of the Board of Directors under the circumstances
    described in Section 2 of this Agreement.



 



    5.4  Termination by Freddie Mac without Cause.
    Prior to the Scheduled Termination Date, Freddie Mac may
    terminate the Term and Executive’s employment under this
    Agreement without Cause (which, for purposes of clarification,
    shall not include: (a) a termination of the Term or
    Executive’s employment under this Agreement due to
    Executive’s death or Disability, or (b) if a Successor
    CEO is appointed during the Term, Executive ceases to be Chief
    Executive Officer and remains Chairman of the Board of Directors
    under the circumstances described in Section 2 of this
    Agreement). Any termination by Freddie Mac pursuant to this
    Section 5.4 shall be communicated by a written ”Notice
    of Termination” addressed to Executive stating that the
    Term and Executive’s employment under this Agreement has
    been or will be terminated.



 



    5.5  Termination for Cause. Prior to the
    Scheduled Termination Date, Freddie Mac may terminate the Term
    and Executive’s employment under this Agreement for Cause.
    The Term and Executive’s employment under this Agreement
    shall terminate upon the determination by the Board of Directors
    of the existence of Cause.



 



    For purposes of this Agreement, “Cause” shall mean the
    occurrence of one or more of the following:



 



    (i)  Executive commits a felony or any crime involving
    moral turpitude;



 



    (ii)  In carrying out his duties, Executive engages in
    conduct that constitutes gross neglect or gross misconduct or
    any material violation of applicable Freddie Mac rule or policy,
    including any policy relating to investment by Freddie Mac
    employees in securities, the violation of which amounts to gross
    neglect or gross misconduct;



 



    (iii)  A material breach of this Agreement by
    Executive; or



 



    (iv)  Any other willful or malicious misconduct on the
    part of Executive that is substantially injurious to Freddie Mac.



 



    In each case, Cause shall not exist unless and until Freddie Mac
    has delivered to Executive a copy of a resolution duly adopted
    by a majority of the entire Board of Directors (excluding the
    Executive if Executive is a Board member) at a meeting of the
    Board of Directors called and held for such purpose (after
    reasonable notice to the Executive and an opportunity for
    Executive, together with counsel, to be heard before the Board
    of Directors), finding that in the good faith opinion of the
    Board of Directors an event set forth in subclauses (i), (ii),
    (iii) or (iv) has occurred and specifying the
    particulars thereof in detail. Notwithstanding the foregoing,
    during the period commencing on the date Freddie Mac notifies
    the Executive that it intends to call a meeting of the Board of
    Directors to terminate the Term and Executive’s employment




    

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    under this Agreement for Cause until such meeting is held,
    Freddie Mac may reduce Executive’s responsibilities and
    duties and any such reduction or diminishment in
    Executive’s responsibilities and duties during such period
    shall not give rise to “Good Reason.”



 




    SECTION 6.
    COMPENSATION UPON TERMINATION



 



    6.1  Disability or Death. In the event the Term
    and Executive’s employment under this Agreement is
    terminated prior to the Scheduled Termination Date by reason of
    Executive’s Disability (under Section 5.1 hereof) or
    by reason of Executive’s death (under Section 5.2
    hereof), Freddie Mac’s obligations to Executive (or his
    assigns as provided in Section 8.2 hereof) shall be as
    follows:



 



    (i)  Base Salary. Executive’s Base Salary
    shall be paid to Executive (or his assigns) through the end of
    the month in which the termination of employment occurs within
    five (5) days following such termination. Freddie Mac shall
    have no further obligation to make payments of Base Salary to
    Executive (or his assigns).



 



    (ii)  Bonus. Freddie Mac shall pay Executive
    (or his assigns) any and all earned but unpaid bonus amounts
    from the most recent completed calendar year of Freddie Mac. In
    addition, Freddie Mac shall pay Executive (or his assigns) a
    prorated percentage of Executive’s Target Bonus for the
    calendar year in which the employment termination occurs, based
    upon the number of months elapsed in such year through the last
    day of the month in which such termination occurs. All such
    amounts shall be paid to Executive (or his assigns) within
    thirty (30) days after the termination of the Term and
    Executive’s employment under this Agreement.



 



    (iii)  Long-Term Incentives. At the date of
    termination of the Term and Executive’s employment under
    this Agreement for Disability or death, the Initial RSUs and all
    other RSUs awarded to Executive pursuant to this Agreement shall
    immediately vest and be paid-out, subject to any right of
    Executive to defer payment of such Initial RSUs or RSUs under
    any non-qualified deferred compensation arrangement in which
    senior executives of Freddie Mac are permitted to defer payment
    of restricted stock units, and all Options granted to Executive
    pursuant to this Agreement shall become immediately exercisable
    and shall remain outstanding: (A) in the event such
    termination occurs as a result of Executive’s death, until
    the earlier to occur of (1) the third anniversary of such
    termination of employment and (2) the scheduled expiration
    date applicable to such Options, and (B) in the event such
    termination occurs as a result of Executive’s Disability,
    until the scheduled expiration date applicable to such Options.
    To the extent there is any inconsistency between the terms of
    the long term incentive plan under which the Initial RSUs, the
    RSUs and the Options were granted on the one hand and this
    Section 6.1(iii), on the other hand, this
    Section 6.1(iii) shall supersede such plans.



 



    Except as provided in this Section 6.1 and for any vested
    benefits to which Executive is entitled under any benefit plans
    maintained by Freddie Mac in which Executive participated during
    the Term (other than the Freddie Mac Severance Policy and any
    other plan providing for benefits in the nature of severance,
    which Executive is not entitled to participate in by virtue of
    having entered into this Agreement), continuation of health
    insurance benefits under




    

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    the law commonly referred to as “COBRA” and any other
    similar benefits required to be provided by law, Freddie Mac
    shall have no additional obligations to Executive.



 



    (iv)  Long Term Disability Benefits. In
    addition, in the event that such termination of the Term and
    Executive’s employment hereunder occurs as a result of
    Executive’s Disability, Freddie Mac shall provide Executive
    with long-term disability benefits equal to 70% of
    Executive’s Base Salary during the period beginning on the
    first day of the month that immediately follows the month in
    which such termination occurred through the earlier to occur of
    (a) the Scheduled Termination Date or (b) the date
    Executive no longer has a Disability. Notwithstanding the
    foregoing, Freddie Mac’s obligation to provide such long
    term disability benefits to Executive shall be subject to the
    provision by Executive of proof of Executive’s insurability
    at standard rates.



 



    6.2  For Good Reason or by Freddie Mac without
    Cause. In the event the Term and Executive’s employment
    under this Agreement is terminated prior to the Scheduled
    Termination Date by Executive for Good Reason (under
    Section 5.3 hereof), or by Freddie Mac without Cause (under
    Section 5.4 hereof), Freddie Mac’s obligations to
    Executive shall be as follows, in each case, subject to
    Executive’s execution of a general release and waiver in a
    form provided to Executive by Freddie Mac which conforms to the
    requirements of the officer severance policy in effect as of the
    date hereof (the “Release”):



 



    (i)  Base Salary. Freddie Mac shall pay
    Executive a lump sum cash payment equal to the Base Salary that
    would have been payable to Executive for the period beginning on
    the termination of the Term and Executive’s employment
    under this Agreement and ending on the Scheduled Termination
    Date if the Executive had remained employed during such period.
    All such amounts shall be paid to Executive on the effective
    date of Executive’s Release.



 



    (ii)  Bonus. Freddie Mac shall pay Executive
    any and all earned but unpaid bonus amounts from the most recent
    complete calendar year of Freddie Mac. In addition, Freddie Mac
    shall pay Executive a lump sum cash payment equal to the sum of
    the Target Bonuses that would have been paid to Executive in
    respect of each calendar year of Freddie Mac that ends during
    the period beginning on the termination of the Term and
    Executive’s employment under this Agreement and ending on
    the Scheduled Termination Date. All such amounts shall be paid
    to Executive on the effective date of Executive’s Release.



 



    (iii)  Long-Term Incentives. On the effective
    date of Executive’s Release, (a) the Initial RSUs, if
    they were granted to Executive at least twelve months prior to
    such termination, and all other RSUs that were granted to
    Executive pursuant to this Agreement at least twelve months
    prior to such termination, shall immediately vest and be
    paid-out subject to any right of Executive to defer payment of
    the Initial RSUs and RSUs under any non-qualified deferred
    compensation arrangement in which senior executives of Freddie
    Mac are permitted to defer payment of restricted stock units,
    (b) the Initial RSUs, if they were granted to Executive
    less than twelve months prior to such termination, shall be
    cancelled immediately upon such termination in consideration for
    a cash payment by Freddie Mac to Executive on the effective date
    of Executive’s Release in the amount of $8,800,000,
    (c) all Options that were granted to Executive pursuant to
    this Agreement at least twelve months prior to such termination
    shall vest and become immediately exercisable and shall remain
    outstanding until the earlier to occur of




    

    9








 






    (A) three (3) years following such termination of the
    Term and Executive’s employment under this Agreement and
    (B) the scheduled expiration date applicable to such
    Options, and (d) with respect to each Annual Equity Grant
    that was granted to Executive less than twelve months prior to
    such termination, all Options and RSUs that formed part of such
    Annual Equity Grant shall be cancelled immediately upon the
    occurrence of the termination and in consideration for such
    cancellation, Freddie Mac shall pay to Executive on the
    effective date of Executive’s Release a lump sum cash
    payment in the amount of $8,800,000. To the extent there is any
    inconsistency between the terms of the stock compensation plan
    under which the Initial RSUs, the RSUs and the Options were
    granted on the one hand and this Section 6.2(iii), on the
    other hand, this Section 6.2(iii) shall supersede such
    plans.



 



    In addition, in the event such termination of the Term and
    Executive’s employment hereunder occurs prior to the date
    on which Freddie Mac grants Executive his Annual Equity Grant
    for calendar year 2004, in lieu of such grant Freddie Mac shall
    pay Executive, on the effective date of Executive’s
    Release, a lump sum cash payment in the amount of $8,800,000.



 



    (iv)  Supplemental Nonqualified Retirement
    Plans. Executive shall participate in and receive benefits
    under Freddie Mac’s non-qualified Supplemental Executive
    Retirement Plan (the “SERP”) in accordance with the
    terms of such plan; provided that, for purposes of this
    Section 6.2, if upon Executive’s termination of
    employment he is not entitled to the “Restoration
    Benefit” (as such term is defined in the SERP) under the
    SERP solely because he is not yet vested under the FHLMC
    Employees’ Pension Plan (“Pension Plan”), then
    Freddie Mac will pay Executive the Restoration Benefit that
    would have been payable under the SERP as of the date of such
    termination without regard to such vesting requirement, and
    Executive will be entitled to the Make Up Contribution (as
    defined in the SERP) in accordance with the terms of the SERP.
    The terms of the Pension Plan shall not be affected by this
    Agreement, and this Agreement does not contemplate a payment of
    unvested Pension Plan benefits (or any equivalent thereof).



 



    (v)  Health Benefits. Freddie Mac shall provide
    continued coverage for Executive and his eligible dependents
    under Freddie Mac’s medical, dental and other similar
    welfare benefit plans in which Executive and such dependents
    participated immediately prior to the termination of the Term
    and Executive’s employment under this Agreement (the
    “Continued Benefits”) during the period commencing on
    the termination of the Term and Executive’s employment
    under this Agreement and ending on the Scheduled Termination
    Date, or, in the event that Executive’s participation in
    such plans is prohibited or impracticable under the terms of
    such plans, Freddie Mac shall arrange to provide Executive with
    benefits substantially similar to those available under the
    applicable plans in which Executive participated prior to the
    termination of the Term and Executive’s employment under
    this Agreement. In either case, the provision of such benefits
    by Freddie Mac shall be subject to timely payment by Executive
    of all premiums, contributions and other co-payments required to
    be paid by senior executives of Freddie Mac under the terms of
    such plans as in effect from time to time (or the equivalent
    thereto in the case Freddie Mac arranges to provide Executive
    with substantially similar benefits to those available under the
    Freddie Mac plans), and shall be considered to be part of, and
    not in addition to, the benefit continuation required by the
    federal law commonly referred to as “COBRA.”
    Notwithstanding the foregoing, such continued coverage (or
    provision of substantially similar benefits) described in this
    paragraph 6.2(v) shall cease prior to the




    

    10








 






    Scheduled Termination Date with respect to any plan at the time
    that Executive is eligible to obtain substantially similar
    coverage to that provided by such plan from a subsequent
    employer. Executive shall notify Freddie Mac promptly upon his
    employment with a subsequent employer, and shall provide Freddie
    Mac with such information as Freddie Mac reasonably requests
    regarding his coverage under medical, dental and life insurance
    plans of such employer.



 



    Except as provided in this Section 6.2 and for any vested
    benefits to which Executive is entitled under any benefit plans
    maintained by Freddie Mac in which Executive participated during
    the Term (other than the Freddie Mac Severance Policy and any
    other plan providing for benefits in the nature of severance,
    which Executive is not entitled to participate in by virtue of
    having entered into this Agreement), continuation of health
    insurance benefits under the law commonly referred to as
    “COBRA” and any other similar benefits required to be
    provided by law, Freddie Mac shall have no additional
    obligations to Executive.



 



    6.3  Termination for Cause. In the event the
    Term and Executive’s employment under this Agreement is
    terminated by Freddie Mac for Cause (under Section 5.5
    hereof), Freddie Mac’s obligations to Executive shall be as
    follows:



 



    (i)  Base Salary. Freddie Mac shall pay
    Executive within five (5) days following such termination
    his earned but unpaid Base Salary through the date of the
    termination of the Term and Executive’s employment under
    this Agreement.



 



    (ii)  Bonus. Freddie Mac shall pay Executive
    within thirty (30) days following such termination any
    earned but unpaid bonus from the most recent complete calendar
    year of Freddie Mac. Executive shall not be entitled to any
    portion of his bonus in the year in which employment termination
    occurs.



 



    Except as provided in this Section 6.3 and for any vested
    benefits to which Executive is entitled under any benefit plans
    maintained by Freddie Mac in which Executive participated during
    the Term (other than the Freddie Mac Severance Policy and any
    other plan providing for benefits in the nature of severance,
    which Executive is not entitled to participate in by virtue of
    having entered into this Agreement), continuation of health
    insurance benefits under the law commonly referred to as
    “COBRA” and any other similar benefits required to be
    provided by law, Freddie Mac shall have no additional
    obligations to Executive.



 



    6.4  Termination following the Scheduled
    Termination Date. In the event Executive remains employed by
    Freddie Mac through the Scheduled Termination Date and the
    termination of the Term and, thereafter, Executive terminates
    his employment with Freddie Mac by reason of his retirement (and
    Freddie Mac at the time of such termination of employment by
    reason of Executive’s retirement could not have terminated
    the employment of Executive for Cause), (a) all RSUs
    awarded to Executive pursuant to this Agreement shall vest
    immediately as of the date of Executive’s retirement, but
    such RSUs shall be paid-out at the time such RSUs would have
    vested and been paid-out to Executive had his employment with
    Freddie Mac not been terminated, or at such earlier time as the
    Committee in its discretion may permit, subject to any right of
    Executive to defer payment of such RSUs under any non-qualified
    deferred compensation arrangement in which senior executives of
    Freddie Mac are permitted to defer payment of restricted stock
    units and (b) all Options granted to Executive pursuant to
    this




    

    11








 






    Agreement shall become immediately exercisable and shall remain
    outstanding until the scheduled expiration date applicable to
    such Options.



 



    Except as provided in this Section 6.4 and for any vested
    benefits to which Executive is entitled under any benefit plans
    maintained by Freddie Mac in which Executive participated during
    the Term (other than the Freddie Mac Severance Policy and any
    other plan providing for benefits in the nature of severance,
    which Executive is not entitled to participate in by virtue of
    having entered into this Agreement), continuation of health
    insurance benefits under the law commonly referred to as
    “COBRA” and any other similar benefits required to be
    provided by law, Freddie Mac shall have no additional
    obligations to Executive.



 




    SECTION 7.
    RESTRICTIONS ON EXECUTIVE



 



    7.1  Disclosure of Information. Executive
    recognizes that he has access to and knowledge of confidential
    and proprietary information of Freddie Mac and/or its customers
    which is essential to the performance of his duties under this
    Agreement. Except as required by law, Executive shall not,
    during or after his employment of Freddie Mac, in whole or in
    part, disclose such information to any person, firm,
    corporation, association or other entity (other than
    (i) to, or as directed by, Freddie Mac or (ii) during
    his employment by Freddie Mac, as he shall determine to be in
    the best interests of Freddie Mac) for any reason or purpose
    whatsoever or use such information for his own or another’s
    purposes, unless and until such information has become generally
    known to the public.



 



    Executive agrees to hold as Freddie Mac’s property, all
    memoranda, books, papers, letters, and other data in any way
    relation to Freddie Mac’s business and affairs, whether
    made by him or otherwise coming into his possession, and on
    termination of his employment, or on demand of Freddie Mac at
    any time, to deliver the same to Freddie Mac.



 



    7.2  Covenant Not to Compete. During
    Executive’s employment under this Agreement, and for two
    (2) years following the termination of his employment under
    this Agreement, without prior written consent of the Board of
    Directors (which shall not be unreasonably withheld), Executive
    shall not compete with Freddie Mac or interfere with, disrupt or
    attempt to disrupt the relationship, contractual or otherwise,
    between Freddie Mac and any customer, client, supplier or
    consultant of Freddie Mac. For purposes of this Agreement,
    prohibited competition shall mean becoming an employee, officer,
    consultant or director of, or being an investor (representing
    more than a five (5) percent equity interest) in, any
    entity or person engaged in a business that directly competes
    with all or some material portion of the business that directly
    competes with all or some material portion of the business then
    engaged in by Freddie Mac.



 



    In addition, Executive agrees that for the one (1) year
    period following the termination of employment under this
    Agreement, he shall not directly or indirectly, on his own
    behalf of or on behalf of any other person, corporation,
    partnership, firm, financial institution or other business
    entity, solicit or induce any person who, at the time of such
    solicitation or inducement, is employed as an officer (or the
    equivalent) of Freddie Mac to leave or cease their employment
    relationship with Freddie Mac for any reason whatsoever or hire
    or otherwise engage such employees of Freddie Mac; provided that
    this section shall not be construed as a prohibition on




    

    12








 






    the ability of Executive to provide references on an officer (or
    equivalent) to persons or entities with which Executive has no
    affiliation.



 




    SECTION 8.
    ASSIGNMENT



 



    8.1  Assignment by Freddie Mac. This Agreement
    may and shall be assigned or transferred to, and shall be
    binding upon and shall inure to the benefit of any successor of
    Freddie Mac, and any such successor shall be deemed substituted
    for Freddie Mac for all purposes of this Agreement. As used in
    this Agreement, the term “successor” shall mean any
    person, firm, corporation, or business entity which at any time,
    whether by merger, purchase, operation of law or otherwise,
    acquires all or essentially all of the assets or business of
    Freddie Mac. Notwithstanding such assignment, Freddie Mac shall
    remain, with such successor, jointly and severally liable for
    all its obligations hereunder.



 



    8.2  Assignment by Executive. This Agreement
    shall inure to the benefit of and be enforceable by
    Executive’s personal or legal representatives, executors,
    administrators, heirs, distributes devisees, and legatees. If
    Executive shall die while any amounts payable to Executive
    hereunder remain outstanding, all such amounts, unless otherwise
    provided herein, shall be paid in accordance with the terms of
    this Agreement to Executive’s devisees, legatees, or other
    designee or, in the absence of such designee, to
    Executive’s estate.



 



    The rights and duties of Executive hereunder are personal and
    may not be assigned or transferred.



 




    SECTION 9.
    MISCELLANEOUS



 



    9.1  Entire Agreement. This document contains
    the entire Agreement of the parties relating to the subject
    matter hereof.



 



    9.2  Representations. Subject to approval by
    the HRC and, to the extent applicable OFHEO, Freddie Mac
    represents and warrants that it is fully authorized and
    empowered to enter into this Agreement and that the performance
    of its obligations under this Agreement will not violate any
    agreement between it and any other person or organization.
    Executive represents that he is fully authorized and empowered
    to enter into this Agreement and that the performance of his
    obligations hereunder will not violate any agreement between him
    and any other person, firm or organization.



 



    Executive hereby represents and warrants to Freddie Mac that
    Executive is not bound by the terms of any agreement with any
    previous employer or other party to refrain from competing,
    directly or indirectly, with the business of such previous
    employer or other party that would be violated by
    Executive’s entering into this Agreement and/or providing
    services to Freddie Mac pursuant to the terms of this Agreement.
    Executive further represents and warrants that Executive’s
    performance of all the terms of this Agreement and as an
    employee of Freddie Mac does not and will not breach any
    agreement to keep in confidence proprietary information,
    knowledge or data acquired by Executive in confidence or in
    trust prior to Executive’s employment with Freddie Mac.
    Executive will not disclose to Freddie Mac or induce Freddie Mac
    to use any confidential or proprietary information or material
    belonging to any previous




    

    13








 






    employer or others. Executive will not hereafter grant anyone
    any rights inconsistent with the terms of this Agreement.



 



    9.3  Modification. This Agreement shall not be
    amended except by mutual agreement of the parties in a written
    instrument executed by the parties hereto or their legal
    representatives.



 



    9.4  Exclusive Remedies. This Agreement is
    intended to encompass all obligations of Freddie Mac to
    Executive: (a) for compensation and benefits in respect of
    his employment, and (b) arising out of the termination of
    his employment. Executive shall not be entitled to any
    compensation, benefits, damages or other remedies not provided
    for herein. Executive hereby waives, to the maximum extent
    permitted by law, the right to bring any action against Freddie
    Mac, in law, equity or otherwise for compensation for his
    employment, other than for the enforcement of Freddie Mac’s
    obligations to pay the compensation, benefits and other amounts
    provided for herein.



 



    9.5  Taxes. Freddie Mac may withhold from any
    payments made under this Agreement all applicable taxes,
    including but not limited to income, employment and social
    insurance taxes, as shall be required by law.



 



    9.6  Severability. In the event that any
    provision or portion of this Agreement shall be determined to be
    invalid or unenforceable for any reason, the remaining
    provisions of this Agreement shall be unaffected thereby and
    shall remain in full force and effect.



 



    9.7  Notice. Any notices, requests, demands and
    other communications provide for by this Agreement shall be
    sufficient if in writing and if sent by registered or certified
    mail to Executive at the last address he filed in writing with
    Freddie Mac or, in the case of Freddie Mac, addressed to the
    Secretary of Freddie Mac, and sent to its principal executive
    offices.



 



    9.8  Governing Law. The provisions of this
    Agreement shall be construed and enforced in accordance with the
    laws of the Commonwealth of Virginia.



 




    Remainder
    of this page intentionally left blank.




    

    14








 






    IN WITNESS WHEREOF, the parties have executed this Agreement as
    of December 6, 2003.



 


	 	 	 
	
 
	
 
	
    FEDERAL HOME LOAN

    MORTGAGE CORPORATION

	
 
	
 
	
 

	
    ATTEST:

    

    /s/  Mollie
    D. Roy


    


    Assistant Secretary
	
 
	

By:  /s/  John B. McCoy







Title:    Chairman — Compensation Committee





	
 
	
 
	
 

	
 
	
 
	
    /s/  Richard
    F. Syron


    
Richard
    F. Syron




















 







    Exhibit A



 



    The Board of Directors has approved Executive’s service on
    the following two boards of directors:



 



    1. John Hancock Financial Services, Inc./Manulife Financial
    Corporation



 



    2. Thermo Electron Corporation