Document:

Exhibit
10.1

 

 

ASSET
AND FRANCHISE PURCHASE AGREEMENT

(Roth
& Pelan Enterprises, LLC)

 

THIS
ASSET AND FRANCHISE PURCHASE AGREEMENT (“Agreement”) is made and entered into on February 17, 2015, by and among The
Joint Corp., a Delaware corporation (“TJC”), Roth & Pelan Enterprises, LLC, a Nebraska limited liability company
(“Seller”), Timothy Roth, an individual (“Roth,” or a “Member”), Blue Sky & Sunny Days,
Inc., an Arizona corporation (“BSSD” or a “Member”) and Thomas Pelan (“Pelan” or a “Member”
and together with Roth and BSSD, the “Members”).

 

Background:

 

A.               
Seller is a franchisee under franchise agreements with TJC for two Joint franchises (Numbers 48018 (the “7th Avenue
and McDowell Franchise”), and 48025 (the “Tucson Northwest Franchise, and together with the 7th Avenue and McDowell
Franchise, the “Subject Franchises”)).

 

B.                
Seller will sell to TJC and TJC will purchase from Seller all of Seller’s interest in the Subject Franchises.

 

C.                
Roth is also the franchisee under a franchise agreement with TJC for Joint franchise number 48021 (the “License”),
which franchise agreement is being terminated in accordance with Section 15(1) of such agreement.

 

D.               
BSSD and Pelan own all of the issued and outstanding membership interests of Seller, and Roth is the sole director and officer
of BSSD and the ultimate beneficiary of BSSD.

 

E.                
For purposes of clarity, any reference to a “franchise” or a “Subject Franchise,” unless the context clearly
requires otherwise, shall refer to the business being operated under the applicable franchise agreement.

 

NOW,
THEREFORE, in consideration of the mutual agreements, covenants and undertakings herein contained and other valuable consideration,
the adequacy of which is acknowledged by all parties, the parties hereby agree as follows:

 

		1.	Purchase
                                         and Sale

 

(a)               
At the Closing (as hereinafter defined) of the transactions contemplated hereby, Seller shall sell, assign, transfer and deliver
to TJC, and TJC shall purchase and accept from Seller, the Assets, free and clear of any liens, claims (including, without limitation,
title claims and claims of taxing authorities), encumbrances, pledges, security interests or charges of any kind whatsoever, for
the purchase price set forth in Section 2 hereof.

 

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		(b)	For
                                         purposes of this Agreement, “Assets” shall mean:

 

		(i)	the
                                         franchise agreements between Seller and TJC for the Subject Franchises, copies of which
                                         are attached hereto as Exhibits 1 and 2 and made a part hereof,

 

		(ii)	all
                                         equipment, machinery, tools, maintenance supplies, office equipment, leasehold improvements,
                                         furniture, fixtures, inventories and supplies and other similar items of tangible personal
                                         property (together the “Personal Property”) used by Seller in the
                                         Subject Franchises which is more particularly listed and described in Schedule 1(b)(ii)
                                         attached hereto and made a part hereof;

 

		(iii)	all
                                         of Seller’s interest in any membership agreements, prepaid services packages and
                                         other agreements or arrangements Seller has made with patients of the Subject Franchises,
                                         together with any deposits or prepayments made by any patients covered by such agreements
                                         or arrangements to the extent related to services to be performed after Closing;

 

		(iv)	the
                                         trademarks, trade names, copyrights and all other intellectual property rights of Seller
                                         associated with the Subject Franchises and all of Seller’s goodwill attributable
                                         to the Subject Franchises;

 

		(v)	all
                                         telephone numbers and domain names associated with the Subject Franchises;

 

		(vi)	copies
                                         of all medical records with respect to patients of the Subject Franchises and all documents
                                         and records in the possession of Seller pertaining to patients and employees of the Subject
                                         Franchises;

 

		(vii)	to
                                         the extent transferable, all licenses, government approvals and permits and all other
                                         approvals and permits relating to the Subject Franchises;

 

		(viii)	all
                                         of Seller’s interest as tenant (including leasehold improvements) under its leases
                                         for the premises occupied by the Subject Franchises, copies of which are attached hereto
                                         as Exhibits 3 and 4 and made a part hereof; and

 

		(ix)	the
                                         agreements and contracts which TJC has expressly agreed to assume and which are listed
                                         on Schedule 1(b)(ix) (together, the “Assumed Contracts”);

 

		2.	Excluded
                                         Assets

 

Notwithstanding
anything to the contrary contained in this Agreement, it is expressly acknowledged by TJC that Seller will not be conveying to
TJC any cash, cash equivalents, working capital, or accounts receivable (other than accounts receivable under membership agreements
or other arrangements described in Section 1(b)(iii) above, relating to periods after Closing), and any other assets, properties
or rights of Seller owned or used by Seller but not used in or directly related to the Subject Franchises (collectively, the “Excluded
Assets”).

 

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		3.	No
                                         Assumption of Liabilities

 

Except
as expressly provided in this Agreement, TJC shall not assume any debts, liabilities or obligations of either Seller or its shareholders,
members, affiliates, officers, employees or agents of any nature, whether known or unknown, fixed or contingent, including, but
not limited to, debts, liabilities or obligations with regard or in any way relating to any contracts (including, without limitation,
any employee agreements), leases for real or personal property, trade payables, tax liabilities, disclosure obligations, product
liabilities, liabilities to any regulatory authorities, liabilities relating to any claims, litigation or judgments, any pension,
profit-sharing or other retirement plans, any medical, dental, hospitalization, life, disability or other benefit plans, any stock
ownership, stock purchase, deferred compensation, performance share, bonus or other incentive plans, or any other similar plans,
agreements, arrangements or understandings which Seller, or any of its affiliates, maintain, sponsor or are required to make contributions
to, in which any employee of Seller participates or under which any such employee is entitled, by reason of such employment, to
any benefits (collectively the (“Excluded Liabilities”). For the avoidance of doubt, any liability under any lease
for real property for a Subject Franchise, whether or not assumed by TJC, which relates to the period before Closing, shall be
an Excluded Liability.

 

		4.	Payment
                                         of Purchase Price

 

(a)               
The purchase price to be paid by TJC for the Assets (the “Purchase Price”) is $935,000.00, subject to adjustment as
set forth in Section 4(d). $467,500.00 of the Purchase Price is payable to Seller for the Tucson Northwest Franchise and $467,500.00
of the Purchase Price is payable to Seller for the 7th Avenue and McDowell Franchise;

 

(b)              
TJC will pay to Seller the amount of $780,000.00 in cash at Closing;

 

(c)               
At Closing, TJC shall deliver to Seller a promissory note (the “Note”), a copy of which is attached hereto as Exhibit
5, in the principal amount of $155,000, with interest on the unpaid balance at the rate of 1.5% per year. The principal amount
of $25,000 of the Note (with interest thereon) shall be payable 120 days after Closing (provided that Seller complies with Section
25(b) herein), and the remaining principal amount of the Note (and the interest thereon) shall be payable in full on the second
anniversary of Closing; and

 

(d)              
At Closing, the cash portion of the Purchase Price shall be adjusted by appropriate pro-rations for rent, state and local real
estate taxes and transfer taxes, sales tax, prepaid customer contracts (including but not limited to membership agreements and
service packages), service and utility contracts, payroll and employee related payments in respect of periods prior to Closing
(the “Adjustments”). The Parties shall cooperate to determine the amounts of the Adjustments, and shall agree to such
amounts prior to Closing.

 

		5.	Closing

 

Subject
to the satisfaction or waiver of the conditions described in Sections 9 and 10 the closing of the transactions described herein
shall take place no later than February 20, 2015, at such time as the parties agree, and shall occur at the offices of TJC. The
date on which the Closing takes place is referred to in this Agreement as the “Closing Date.” At the Closing, Seller
shall deliver such bills of sale, assignments, certificates and other documents and instruments as may reasonably be requested
by TJC to carry out the transfer and assignment to TJC of the Assets. Following the Closing, the parties shall cooperate fully
with each other and shall make available to the other, as reasonably requested and at the expense of the requesting party, and
to any taxing or regulatory authority, all information, records or documents relating to tax obligations and regulatory compliance
matters of Seller for all periods on or prior to the Closing, and shall preserve all such information, records and documents until
the expiration of any applicable statute of limitations and extensions thereof.

 

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		6.	Representations
                                         and Warranties of Seller and the Members

 

Seller
and Roth hereby jointly and severally represent and warrant to TJC as follows:

 

(a)              Organization.
Seller is a limited liability company duly organized and validly subsisting under the laws of the State of Nebraska, and Seller
has full power and authority to conduct its business as it is now being conducted, and to execute, deliver and perform this Agreement.

 

(b)              Authority.
Seller is not a party to, subject to, or bound by any agreement, judgment, order, writ, injunction, or decree of any court or
governmental body that prevents or impairs the carrying out of this Agreement. The execution, delivery and performance of this
Agreement and all other documents, instruments and agreements contemplated hereby have been duly authorized by all required company
or limited partnership action of Seller. All other actions (including all action required by state law and by the organizational
documents of Seller) necessary to authorize the execution, delivery and performance by Seller of this Agreement, the bills of
sale transferring the Assets, the assignments in connection herewith and the other documents, instruments and agreements necessary
or appropriate to carry out the transactions herein contemplated, have been taken by Seller. Upon the execution of this Agreement
and the other documents and instruments contemplated hereby by Seller and the Members, this Agreement and such other documents
and instruments will be the valid and legally binding obligations of Seller and the Members, enforceable against each of them
in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).

 

(c)               
No Consent or Approval Required. Except as set forth on Schedule 6(c), no authorization, consent, approval or other
order of, declaration to or filing with any governmental body or authority is required for the consummation by Seller of the transactions
contemplated by this Agreement.

 

(d)              
Taxes. Seller has filed when due in accordance with all applicable laws (or properly and timely filed an extension therefor)
all tax returns required under applicable statutes, rules or regulations to be filed by it. As of the time of filing, such returns
were accurate and complete in all material respects. All taxes due with respect to Seller and the Assets, and all additional assessments
received, have been paid. Seller is not delinquent in the payment of any such tax and have not requested any extension of time
within which to file any tax return, which return has not since been filed. There are no federal, state, local or other tax liens
outstanding on any of the Assets being sold hereunder.

 

(e)               
Title to and Condition of Assets. Seller has good and marketable title to (or, with respect to any Assets that are leased,
a valid leasehold interest in) all of the Assets to be acquired by TJC at the Closing, free from any liens, adverse claims, security
interest, rights of other parties or like encumbrances of any nature. The Assets consisting of physical property are in good condition
and working order, normal wear and tear excepted, and function properly for their intended uses.

 

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(f)               
Compliance with Laws. None the Seller nor the Subject Franchises is in violation of, nor are they or any of them subject
to any liability in respect of, any federal, state, county, township, city or municipal laws, codes, regulations or ordinances
(including without limitation those relating to environmental protection, health, hazardous or toxic substances, fire or safety
hazards, occupational safety, labor laws, employment discrimination, subdivision, building or zoning) with respect to the conduct
of the Subject Franchises, nor has Seller received any notices of investigation or violation pertaining to any such matters. Seller
has, and all professional employees or agents of Seller have, all licenses, franchises, permits, authorizations or approvals from
all governmental or regulatory authorities required for the conduct of the Subject Franchises and none of the Seller nor, to the
knowledge of Roth or Pelan, the professional employees or agents of Seller has violated any such license, franchise, permit, authorization
or approval or any terms or conditions thereof.

 

(g)              
Litigation. There is no action, suit or proceeding pending, or to the knowledge of Roth or Pelan, threatened against or
affecting the Assets, or relating to or arising out of, the ownership or operation of the Assets, including claims by employees
of the Subject Franchises.

 

(h)              
Employees. Schedule 6(h) attached hereto contains a complete and correct list of the name, position, current rate
of compensation and any vacation or holiday pay and any other compensation arrangements or fringe benefits, of each current employee
of Seller who is directly employed in the Subject Franchises.

 

(i)                
Contracts. Seller has delivered to TJC copies of any and all material contracts, leases, agreements, software licensing
agreements, or commitments with respect to the Assets or the Subject Franchises. Except as set forth in Schedule 6(i),
no consent or approval of any third party is required for the assignment to TJC of any contracts that TJC is assuming pursuant
to Sections 1(b)(iii), (vi), (viii) and (ix).

 

(j)                
Financial Statements. Seller has delivered to TJC the financial statements (including but not limited to balance sheets
and income and expense statements) for the Subject Franchises as of and for the 12 months ended December 31, 2013, and as of and
for the nine months ended September 30, 2014 and Seller will make available to TJC prior to Closing the financial statements for
the Subject Franchises for the period between September 30, 2014 and the last full month before Closing, and the financial statements
for the subject franchises for and as of the 12 months ended December 31, 2014 (collectively, the “Financial Statements”).
The Financial Statements fairly present in all material respects the financial position and results of operations of the Subject
Franchises as of and for the periods presented.

 

(k)              
Claims. None of the Seller nor the Members has any claim, demand, or cause of action for damages of any kind whatsoever
(collectively, “Claims”), against TJC or its officers, directors, employees, agents, successors and assigns
by reason of any event, occurrence or omission arising under the franchise agreements for, or relating to, the Subject Franchises
or the License.

 

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		7.	TJC’s
                                         Representations and Warranties

 

TJC
represents and warrants to Seller and the Members as follows:

 

(a)               
Organization of TJC. TJC is a corporation duly organized and validly subsisting under the laws of the state of Delaware,
and TJC has full power and authority to conduct its business as it is now being conducted, and to execute, deliver and perform
this Agreement.

 

(b)              
Authorization. TJC is not a party to, subject to or bound by any agreement, judgment, order, writ, injunction, or decree
of any court or governmental body that prevents or impairs the carrying out of this Agreement. The execution, delivery and performance
of this Agreement and all other documents, instruments and agreements contemplated hereby have been duly authorized by TJC’s
Board of Directors. All other actions (including all action required by state law and by the organizational documents of TJC)
necessary to authorize the execution, delivery and performance by TJC of this Agreement, the Note, the bill of sale transferring
the Assets, the assignments in connection herewith and the other documents, instruments and agreements necessary or appropriate
to carry out the transactions herein contemplated, have been taken by TJC. Upon the execution of this Agreement and the other
documents and instruments contemplated hereby by TJC, this Agreement and such other documents and instruments will be the valid
and legally binding obligations of TJC, enforceable against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally, and subject,
as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

(c)               
No Consent or Approval Required. No authorization, consent, approval or other order of, declaration to or filing with any
governmental body or authority, including, without limitation, with respect to environmental matters, is required for the consummation
by TJC of the transactions contemplated by this Agreement.

 

(d)              
No Violation of Other Agreements. Neither the execution and delivery of this Agreement nor compliance with the terms and
conditions of this Agreement by TJC will breach or conflict with any of the terms, conditions or provisions of any agreement or
instrument to which TJC is or may be bound or constitute a default thereunder or result in a termination of any such agreement
or instrument.

 

(e)               
Financial Capability. TJC will have at Closing, sufficient internal funds available to pay the Purchase Price and any fees
or expenses incurred by TJC in connection with the transactions contemplated hereby.

 

		8.	Pre-Closing
                                         Events

 

(a)               
General. Pending Closing, the Parties shall use commercially reasonable efforts to take all actions that may be necessary
to close the Transaction in accordance with the terms of this Agreement (but TJC shall not be required to waive any of the TJC
Closing Conditions, and Seller and the Members shall not be required to waive any of the Seller Closing Conditions).

 

(b)              
Conduct of Business. Pending Closing, Seller and the Members shall:

 

(i)                
conduct the business of the Subject Franchises in the ordinary course and use commercially reasonable efforts to maintain and
grow the business of the Subject Franchises and to preserve their goodwill and advantageous relationships with patients, employees,
suppliers and other persons having business dealings with the Subject Franchises; and

 

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(ii)              
not take any affirmative action that results in the occurrence of an event of default under any contract or agreement to which
Seller is a party and take any reasonable action within Seller’s control that would avoid the occurrence of such default.

 

		(c)	Access
                                         to Information. Pending Closing, Seller and the Members shall:

 

(i)                
cause Seller to afford TJC and its representatives (including its lawyers, accountants, consultants and the like) reasonable access
during normal business hours, but without unreasonable interference with operations, to the Seller’s books and records and
other documents relating to the Subject Franchises;

 

(ii)              
respond to reasonable inquires by TJC and its representatives regarding Seller;

 

(iii)            
cause Seller to furnish TJC and its representatives with all information and copies of all documents concerning Seller that TJC
and its representatives reasonably request; and

 

(iv)            
otherwise cooperate with TJC in its due diligence activities.

 

		(d)	Notice
                                         of Developments. Pending Closing, Seller and the Members shall promptly give Notice
                                         to TJC of:

 

(i)                
any fact or circumstance of which Seller or a Member becomes aware that causes or constitutes a material inaccuracy in or material
breach of any of Seller’s or a Members’ representations and warranties in Article 6 as of the date of this Agreement;

 

(ii)              
any fact or circumstance of which Seller or a Member becomes aware that would cause or constitute a material inaccuracy in or
material breach of any of Seller’s or the either Member’s representations and warranties in Article 6 if those representations
and warranties were made on and as of the date of occurrence or discovery of the fact or circumstance; or

 

(iii)            
the occurrence of any event of which Seller or a Member becomes aware that reasonably could be expected to make satisfaction of
any Seller Closing Condition impossible or unlikely.

 

(e)               
Supplements to Schedules. Pending Closing, Seller may supplement or correct the Schedules to this Agreement as necessary
to insure their completeness and accuracy. No supplement or correction to any Schedule or Schedules to this Agreement shall be
effective, however, to cure any breach or inaccuracy in any of the representations and warranties; but if TJC does not exercise
its right to terminate this Agreement under Section 12 and closes the transaction, the supplement or correction shall constitute
an amendment of the Schedule or Schedules to which it relates for all purposes of this Agreement.

 

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		9.	TJC
                                         Closing Conditions

 

Except
as provided herein, TJC’s obligation to close the transaction is subject to the satisfaction of each of the following conditions
(the “TJC Closing Conditions”) at or prior to Closing:

 

		(a)	Seller’s
                                         and the Members’ representations and warranties in Section 6, as qualified or limited
                                         by any exceptions in the Schedules to Section 6, are true and correct on the Closing
                                         Date as if made at and as of Closing (other than representations and warranties that
                                         address matters as of a certain date, which were true and correct as of that date);

		 	 

		(b)	Seller
                                         and the Members have executed and delivered all of the documents and instruments that
                                         they are required to execute and deliver or enter into prior to or at Closing, and have
                                         performed, complied with or satisfied in all material respects all of the other obligations,
                                         agreements and conditions under this Agreement that they are required to perform, comply
                                         with or satisfy at or prior to Closing;

		 	 

		(c)	no
                                         material adverse change in the Seller’s assets, financial condition, operations,
                                         operating results or prospects has occurred since the date of this Agreement;

		 	 

		(d)	no
                                         suit has been initiated or threatened by a third party since the date of this Agreement
                                         that challenges or seeks damages or other relief in connection with the transaction or
                                         that could have the effect of preventing, delaying, making illegal or otherwise interfering
                                         with the transaction;

		 	 

		(e)	Seller
                                         has obtained a consent to the assignment of, and estoppel letter under, each lease attached
                                         hereto as Exhibits 3 and 4 (the “Assigned Leases”), relating to the
                                         premises of the Subject Franchises, in a form reasonably acceptable to TJC;

		 	 

		(f)	Roth
                                         has executed and delivered to TJC a franchise termination agreement in a form reasonably
                                         acceptable to TJC, relating to the termination of the License;

		 	 

		(g)	Members
                                         have executed and delivered, in a form reasonably acceptable to TJC, a release of all
                                         Claims against TJC, its officers, directors, employees, agents, successors and assigns,
                                         arising prior to the Closing; and

		 	 

		(h)	Seller
                                         has delivered a payoff letter and release of claims from Union Bank.

 

TJC
may waive any condition specified in this Section 9 by a written waiver delivered to Seller or a Member at any time prior to or
at Closing.

 

		10.	Seller’s
                                         Closing Conditions

 

Seller’s
obligation to close the transaction is subject to the satisfaction of each of the following conditions (the “Seller Closing
Conditions”) at or prior to Closing:

 

(a)               TJC’s
representations and warranties in Section 7 were true and correct as of the date of this Agreement and are true and correct on
the Closing Date as if made at and as of Closing;

 

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(b)               TJC
has executed and delivered all of the documents and instruments that it is required to execute and deliver or enter into prior
to or at Closing, and has performed, complied with or satisfied in all material respects all of the other obligations, agreements
and conditions under this Agreement that it is required to perform, comply with or satisfy prior to or at Closing;

 

(c)               no
suit has been initiated or threatened by a third party since the date of this Agreement that challenges or seeks damages or other
relief in connection with the transaction or that could seeks to prevent the transaction.

 

Seller
may waive any condition specified in this Section 10 by a written waiver delivered to TJC at any time prior to or at Closing.

 

		11.	Non-Competition;
                                         Non-Solicitation; Confidentiality

 

(a)               
Definitions. Wherever used in this Section 11, the term “TJC” shall refer to TJC and any affiliate,
subsidiary, or any successor or assign of TJC. Wherever used in this Section, the phrase “directly or indirectly”
includes, but is not limited to, acting, either personally or as principal, owner, shareholder, member, employee, independent
contractor, agent, manager, partner, joint venturer, consultant, or in any other capacity or by means of any corporate or other
device, or acting through the spouse, children, parents, brothers, sisters, or any other relatives, friends, invitees, agents,
or associates of any of the undersigned parties. Wherever used in this Section, the term “employees” shall refer to
employees of TJC; any affiliate, subsidiary, or any successor or assign of TJC; and any franchisee of TJC existing as of the date
of this Agreement and, to the extent allowable by law, any other person that has been an employee (as defined above) in the twelve
(12) months preceding the date of this Agreement. Whenever used in this Section, the term “Confidential Information”
shall be defined as provided in Section 9 of Seller’s franchise agreements with TJC, which provisions are hereby
incorporated by reference.

 

(b)              
Consideration. The undersigned parties acknowledge that consideration for this Agreement has been provided and is adequate.

 

(c)               
Need for this Agreement. The undersigned parties recognize that in the highly competitive business in which TJC and its
affiliates and franchisees are engaged, preservation of Confidential Information is crucial and personal contact is important
in securing new franchisees and employees, and retaining the goodwill of present franchisees, employees, customers, and suppliers.
Personal contact is a valuable asset and is an integral part of protecting the business of TJC. Each Seller and the Members recognize
that each of them has had substantial contact with TJC’s employees, customers, consultants, vendors and suppliers and Confidential
Information. For that reason, Seller and the Members may be in a position to take for his, her or its benefit the goodwill TJC
has with its employees and customers (patients) and Confidential Information now or in the future. If a Seller or a Member at
any time after Closing takes advantage of such Confidential Information or goodwill for its or his own benefit, then the competitive
advantage that TJC has created through its efforts and investment will be irreparably harmed.

 

(d)              
Non-Competition with TJC. Seller and the Members agree that, for thirty six (36) months following the date of Closing,
none of the Seller nor the Members, will have any direct or indirect interest (e.g., through a spouse) as a disclosed or beneficial
owner, investor, partner, director, officer, employee, consultant, representative or agent, or in any other capacity, in any Competitive
Business located or operating within twenty-five (25) miles of any chiropractic clinic owned by TJC or operated by a TJC franchisee.
The term “Competitive Business” means any business which derives more than Ten Thousand Dollars ($10,000.00) of revenue
per year from the performance of chiropractic or related services, or any business which grants franchises or licenses to others
to operate such a business, with the sole exception of (i) a regional developer license granted by TJC or (ii) a franchise operated
under a franchise agreement with TJC.

 

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(e)               
Non-Solicitation of TJC’s Employees. The Seller and each Member agrees that for twelve (12) months after the date
of this Agreement, it, he or she will not directly or indirectly: (a) induce, canvas, solicit, or request or advise any employees,
suppliers, vendors or consultants of TJC, or any TJC franchisee or affiliated professional corporation to accept employment with
any person, firm, or business that competes with any business of TJC or any TJC franchisee or affiliated professional corporation;
or (b) induce, request, or advise any employee of TJC or TJC franchisee or affiliated professional corporation to terminate such
employee’s relationship with TJC or any TJC franchisee or affiliated professional corporation; or (c) disclose to any other
person, firm, partnership, corporation or other entity, the names, addresses or telephone numbers of any of the employees of TJC
or any TJC franchisee or affiliated professional corporation, except as required by law.

 

(f)               
Non-solicitation of TJC’s Customers (Patients). The Seller and each Member agrees that for thirty six (36) months
after the date of this Agreement, it, he or she will not directly or indirectly: (a) induce, canvas, solicit, or request or advise
any customers of TJC or any TJC franchisee or affiliated professional corporation to become customers of any person, firm, or
business that competes with any business of TJC or any TJC franchisee or affiliated professional corporation; or (b) induce, request
or advise any customer of TJC or any TJC franchisee or affiliated professional corporation to terminate or decrease such customer’s
relationship with TJC or any TJC franchisee or affiliated professional corporation; or (c) disclose to any other person, firm,
partnership, corporation or other entity, the names, addresses or telephone numbers of any of the customers of TJC or any TJC
franchisee or affiliated professional corporation, except as required by law.

 

(g)              
Confidential Information. The Seller and each Member agrees at all times following the date of this Agreement, to hold
the Confidential Information in the strictest confidence and not to use such Confidential Information for Seller’s or such
Member’s personal benefit, or the benefit of any other person or entity other than TJC, or disclose it directly or indirectly
to any person or entity without TJC’s express authorization or written consent. Seller and the Members fully understand
the need to protect the Confidential Information and all other confidential materials and agree to use all reasonable care to
prevent unauthorized persons from obtaining access to Confidential Information at any time.

 

(h)              
Tolling. To ensure that TJC will receive the full benefit of this Section 11, the provisions of Subsections (d), (e) and
(f) of this Section 11 will shall be extended by a length of time equal to (i) the period during which Seller or a Member is in
violation of such Seller’s or the Member’s agreements under such Subsections, and (ii) without duplication, any period
during which litigation that TJC institutes to enforce the Seller or a Member’s agreements under such Subsections is pending
(to the extent that Seller or such Member is in violation of Seller’s or Member’s agreements under such Subsections
during this period).

 

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		12.	Termination

 

		(a)	This
                                         Agreement may be terminated by TJC, upon notice to Seller and the Members, if prior to
                                         or at Closing:

 

(i)            
Seller
or either Member defaults in the performance of any of their material obligations under this Agreement and the default is not
cured within five business days after TJC gives notice of the default to Seller and the Members; or

 

(ii)            
any
TJC Closing Condition is not satisfied as of February 20, 2015, or satisfaction of any TJC Closing Condition is or becomes impossible
(other than as a result of TJC’s breach of or failure to perform its obligations under this Agreement), and TJC does not
waive satisfaction of the condition; or

 

(iii)            
Closing
does not occur on or before February 20, 2015 (other than as a result of TJC’s breach of or failure to perform its obligations
under this Agreement).

 

		(b)	This
                                         Agreement may be terminated by Seller or a Member, upon notice to TJC, if prior to or
                                         at Closing:

 

(i)            
TJC
defaults in the performance of any of its material obligations under this Agreement and the default is not cured within five Business
Days after a Seller or a Member gives notice of the default to TJC;

 

(ii)            
any
Seller Closing Condition is not satisfied as of February 20, 2015, or satisfaction of any Seller Closing Condition is or becomes
impossible (other than as a result of Seller’s or a Member’s breach of or failure to perform their obligations under
this Agreement) and Seller does not waive satisfaction of the condition; or

 

(iii)            
Closing
has not occurred by February 20, 2015 (other than as a result of a Seller’s or a Member’s breach of or failure to
perform their obligations under this Agreement); or

 

		(c)	This
                                         Agreement may be terminated by the written agreement of the parties.

 

		(d)	The
                                         right of termination under this Section 12 is in addition to any other rights that a
                                         party may have under this Agreement or otherwise, and a party’s exercise of its
                                         right of termination shall not be considered an election of remedies. Notwithstanding
                                         the termination of this Agreement pursuant to this Section 12, the parties’ confidentiality
                                         obligations under Section 11(g) shall survive termination and continue indefinitely.

 

		13.	Indemnification
                                         of TJC

 

		(a)	Subject
                                         to Sections 15 and 16, Seller and the Members agree, jointly and severally, to indemnify
                                         TJC against and hold TJC harmless from:

 

(i)            
any
loss, liability, damage (but specifically excluding any punitive, consequential, incidental or special damages), cost or expense,
including reasonable attorneys’ fees and cost of investigation (“Loss”) that TJC may suffer or incur that is
caused by, arises out of or relates to any inaccuracy in or breach of any representation and warranty by Seller or a Member in
Section 6 of this Agreement;

 

    	15

    	 

    

 

(ii)            
any
Loss that TJC may suffer or incur that is caused by, arises out of or relates to Seller’s or a Member’s breach of
or failure to perform any of their obligations in this Agreement in any material respect or from the assertion against TJC of
an Excluded Liability;

 

(iii)
            
any Loss that TJC may suffer or incur that is caused by, arises out of or relates to the assertion against TJC of an Excluded
Liability; or

 

(iv)            
any
Loss TJC may suffer or incur that is caused by, arises out of or relates to any franchise agreement to which Roth or any company
owned in whole or in party by Roth is a party, or any related franchise.

 

		(b)	The
                                         benefit of the indemnification obligations of Seller and the Members under this Section
                                         13 shall extend to the respective officers, directors, employees and agents of TJC and
                                         its affiliates.

 

		14.	Indemnification
                                         of Seller

 

		(a)	Subject
                                         to Sections 15 and 16, TJC agrees to indemnify Seller against and hold Seller harmless
                                         from:

 

(i)            
any
Loss that Seller may suffer or incur that is caused by, arises out of or relates to any inaccuracy in or breach of any representation
and warranty by TJC in Section 7 of this Agreement;

 

(ii)            
any
Loss that Seller may suffer or incur that is caused by, arises out of or relates to TJC’s breach of or failure to perform
any of its obligations in this Agreement in any material respect; or

 

(iii)            
any
Loss that Seller may suffer or incur that is caused by, arises out of or relates to TJC’s operation of the Subject Franchises
after Closing.

 

(b)            
The
benefit of TJC’s indemnification obligation under this Section 14 shall extend to the officers, managers, directors, employees
and agents of Seller.

 

		15.	Threshold
                                         and Cap

 

(a)              
In respect of TJC’s assertion of an indemnification claim under Section 13(a)(i), TJC shall not be entitled to indemnification
until the aggregate amount for which indemnification is sought exceeds $5,000 (the “Threshold”). If this Threshold
is reached, TJC may assert an indemnification claim for the full amount of the claim (going back to the first dollar) and may
assert any subsequent indemnification claim under Section 13(a)(i) without regard to any Threshold. The maximum aggregate amount
for which TJC may assert indemnification claims under Section 13 shall be the Purchase Price (the “Cap”). No Threshold
or Cap shall apply, however, in the case of any Loss caused by, arising out of or relating to any fraud or intentional misrepresentation.

 

    	16

    	 

    

 

(b)              
In respect of Seller’s and/or a Member’s assertion of an indemnification claim under Section 14(a)(i), Seller and/or
the Members shall not be entitled to indemnification until the aggregate amount for which indemnification is sought collectively
exceeds $5,000. If this Threshold is reached, Seller and the Members may assert an indemnification claim for the full amount of
the claim (going back to the first dollar) and may assert any subsequent indemnification claim under Section 13(a)(i) without
regard to any Threshold. The maximum aggregate amount for which Seller and/or the Members may assert indemnification claims under
Section 14 shall be the Purchase Price. No Threshold or Cap shall apply, however, in the case of any Loss caused by, arising out
of or relating to any fraud or intentional misrepresentation.

 

(c)              
No threshold shall apply to TJC’s assertion of an indemnification claim under Sections 13(a)(ii), (iii) or (iv) or to Seller’s
or a Member’s assertion of an indemnification claim under Sections 14(a)(ii) or (iii).

 

(d)              
Any indemnification obligations which Seller or a Member agree in writing are their obligations or a court of competent jurisdiction
determines are the obligation of the Seller or either Member shall first be made as a setoff against the amounts owed by TJC under
the Note.

 

		16.	Survival

 

		(a)	An
                                         indemnification claim under Sections 13(a)(i) and 14(a)(i) may be asserted at any time
                                         prior to the second anniversary of the Closing Date, with the exception that:

 

(i)            
an
indemnification claim under Section 13(a)(i) in respect of any inaccuracy in or breach of any of the representations and warranties
in Section 6(d) (“Taxes”) may be asserted at any time prior to the expiration of the applicable statute of limitation;
and

 

(ii)            
an
indemnification claim under Section 13(a)(i) in respect of any inaccuracy in or breach of any of the representations and warranties
in Sections 6(b) (“Authority”) and 6(e) (“Title to and Condition of Assets”), may be asserted at any time
without limit, but only as to indemnification claims related to title to Assets, not condition of Assets.

 

		(b)	An
                                         indemnification claim under Sections 13(a)(ii), (iii) and (iv) and Sections 14(a)(ii)
                                         and (iii) may be asserted at any time without limit.

 

		17.	Notice
                                         of Indemnification Claim

 

(a)              The
indemnified party may assert an indemnification claim by giving written notice of the indemnification claim to the indemnifying
party. The indemnified party’s notice shall provide reasonable detail of the facts giving rise to the indemnification claim
and a statement of the indemnified party’s Loss or an estimate of the Loss that the indemnified party reasonably anticipates
that it will suffer. The indemnified party may amend or supplement its indemnification claim at any time, and more than once,
by written notice to the indemnifying party.

 

(b)              If
or to the extent that the indemnification claim is not in respect of a Third Party Suit, Section 18 shall apply. If or to the
extent that the indemnification claim is in respect of a Third Party Suit, Section 19 shall apply.

 

    	17

    	 

    

 

		18.	Resolution
                                         of Claims

 

(a)              If
the indemnifying party does not object to an indemnification claim during the 30-day period following receipt of the indemnified
party’s notice of its indemnification claim, the indemnified party’s indemnification claim shall be considered undisputed,
and the indemnified party shall be entitled to recover the actual amount of its indemnifiable loss from the indemnifying party,
subject to the Threshold, if any, and the Cap in Section 15(a) or (b).

 

(b)              If
the indemnifying party gives notice to the indemnified party within the 30-day objection period that the indemnifying party objects
to the indemnified party’s indemnification claim, the indemnifying party and the indemnified party shall attempt in good
faith to resolve their differences during the 30-day period following the indemnified party’s receipt of the indemnifying
party’s notice of its objection. If they fail to resolve their disagreement during this 30-day period, either of them may
unilaterally submit the disputed indemnification claim for non-binding arbitration before the American Arbitration Association
in Phoenix, Arizona in accordance with its rules for commercial arbitration in effect at the time, which shall be a condition
precedent to seeking resolution of the disputed indemnification claim before any court of competent jurisdiction. The award of
the arbitrator or panel of arbitrators may include attorneys’ fees to the prevailing party. The prevailing party may enforce
the award of the arbitrator or panel of arbitrators in any court of competent jurisdiction.

 

		19.	Third
                                         Party Suits

 

(a)              TJC
shall promptly give notice to Seller and the Members of any suit, demand, or claim by a third person against TJC, for which TJC
is entitled to indemnification under Section 13(a) (a “Third Party Suit”), which may be given by notice of an indemnification
claim in respect of the Third Party Suit. TJC’s failure or delay in giving this notice shall not relieve Seller or the Members
from their indemnification obligation under this Section 19(a) in respect of the Third Party Suit, except to the extent that Seller
or a Member suffer or incur a loss or are prejudiced by reason of TJC’s failure or delay.

 

(b)              TJC
shall control the defense of any Third Party Suit. Seller and the Members shall be entitled to copies of all pleadings and, at
their expense, may participate in, but not control, the defense and employ their own counsel. Seller and the Members shall in
any event reasonably cooperate in the defense of the Third Party Suit.

 

(c)              TJC’s
settlement of a Third Party Suit shall also be binding on Seller and the Members, in the same manner as if a final judgment in
the amount of the settlement had been entered by a court of competent jurisdiction, if, as part of the settlement, Seller and
the Members receive a binding release providing that any liability of Seller or the Members in respect of the Third Party Suit
is being satisfied as part of the settlement. TJC shall give Seller and the Member at least 30 days’ prior notice of any
proposed settlement, and during this 30-day period Seller or the Member may reject the proposed settlement and instead assume
the defense of the Third Party Suit if:

 

    	18

    	 

    

 

		(i)	the
                                         Third Party Suit seeks only money damages and does not seek injunctive or other equitable
                                         relief against TJC;

		 	 

		(ii)	Seller
                                         and the Members unconditionally acknowledge in writing to TJC that Seller and the Members
                                         are obligated to indemnify TJC in full in respect of the Third Party Suit (except for
                                         any matters that are not subject to indemnification under this Agreement);

		 	 

		(iii)	the
                                         counsel chosen by Seller and the Members to defend the Third Party Suit is reasonably
                                         satisfactory to TJC;

		 	 

		(iv)	Seller
                                         and the Members furnish TJC with security reasonably satisfactory to TJC to assure that
                                         Seller and the Members have the financial resources to defend the Third Party Suit and
                                         to satisfy their indemnification obligation in respect of the Third Party Suit;

		 	 

		(v)	Seller
                                         or a Member actively and diligently defend the Third Party Suit; and

		 	 

		(vi)	Seller
                                         and the Members consult with TJC regarding the Third Party Suit at TJC’s reasonable
                                         request.

 

If Seller
or the Members assume the defense of the Third Party Suit, TJC shall be entitled to copies of all pleadings and, at its expense,
may participate in, but not control, the defense and employ its own counsel.

 

		(d)	Seller
                                         and the Members may settle a Third Party Suit in which, Seller or Member controls the
                                         defense only if the following conditions are satisfied:

 

(i)            
the
terms of settlement do not require any admission by Seller, the a Member or TJC, in respect of any matters subject to indemnification
under Sections 13 or 14 of this Agreement, that in TJC’s reasonable judgment would have an adverse effect on TJC; and

 

(ii)            
as
part of the settlement, TJC receives a binding release providing that any liability of TJC in respect of the Third Party Suit
is being satisfied as part of the settlement.

 

(e)             TJC’s
failure to defend a Third Party Suit shall not relieve Seller or the Members of their indemnification obligation under Section
13 of this Agreement if TJC gives Seller or the a Member at least 30 days’ prior notice of TJC’s intention not to
defend the Third Party Suit and affords Seller and the Members the opportunity to assume the defense without having to satisfy
the conditions in Section 18(c) for assuming the defense.

 

		20.	Expenses

 

Each
party shall pay its own expenses in connection with the negotiation and preparation of this Agreement and the closing of the Transaction.
In the event of termination of this Agreement prior to Closing pursuant to Section 12, each party’s obligation to pay its
own expenses shall be subject to any right of recovery as a result of a default under this Agreement by the other party.

 

    	19

    	 

    

 

		21.	Schedules

 

Nothing
in any Schedule to Section 6 shall be considered adequate to constitute an exception to the related representation and warranty
in Section 6 unless the Schedule describes the relevant facts in reasonable detail. Any exception in a Schedule to Section 6 shall
be considered an exception to any other representation and warranty in Section 6 to which the exception relates if it is reasonably
apparent on its face that the exception in question relates to such other representation and warranty.

 

		22.	Parties’
                                         Review

 

Any
knowledge acquired by a party (or that should have been or could have been acquired) as a result of any due diligence or other
review or investigation in connection with the negotiation and execution of this Agreement and the closing of the transaction
shall not limit that party’s right to rely on the other party’s representations and warranties in this Agreement or
circumscribe that party’s entitlement to indemnification under this Agreement.

 

		23.	Publicity

 

Any
public announcement or similar publicity regarding this Agreement or the transaction shall be issued only as, when and in the
manner and form that TJC determines.

 

		24.	Notices

 

(a)             All
notices under this Agreement shall be in writing and sent by certified or registered mail, overnight messenger service, facsimile
or personal delivery, as follows:

 

		(i)	if
                                         to Roth or Seller, to or in care of:

 

	 	 	Timothy Roth	 
	 	 	9438 North Fireridge
    Trail	 
	 	 	Fountain Hills,
    AZ  85268	 
	 	 	Email:  	tlrproperties@yahoo.com	 
	 	 	Fax:	 	 
	 	 	 	 

 

with
a required copy to:

 

	 	 	Koley Jessen, PC,
    LLO	 
	 	 	1125 S. 103rd St.,
    Suite 800	 
	 	 	Omaha, NE 68124	 
	 	 	Fax:	402-390-9500	 
	 	 	Attention:	Helmut
    E. Brugman	 
	 	 	 	 

 

		(ii)	if
                                         to Pelan, to:

  

	 	 	Thomas Pelan	 
	 	 	21758 E. Santford
    Circle	 
	 	 	Elkhorn, NE 68022	 
	 	 	Fax:	(402) 397-4010	 
	 	 	 	 

 

		(iii)	if
                                         to TJC, to:

 

	 	 	The Joint Corp.	 
	 	 	16767 N. Perimeter
    Dr. Suite 240	 
	 	 	Scottsdale, AZ 85260	 
	 	 	Fax:	(480) 513-7989	 
	 	 	Attention:	Mr. David Orwasher	 
	 	 	 	Chief Operating Officer	 

 

with
a required copy to:

 

	 	 	Johnson and Colmar	 
	 	 	2201 Waukegan Road,
    Suite 260	 
	 	 	Bannockburn, Illinois
    60015	 
	 	 	Fax:	(312) 922-9283	 
	 	 	Attention:	Mr. Craig P. Colmar	 
	 	 	 	 	 

 

    	20

    	 

    

  

(b)             A
notice sent by certified or registered mail shall be considered to have been given five business days after being deposited in
the mail. A notice sent by overnight courier service, facsimile or personal delivery shall be considered to have been given when
actually received by the intended recipient. A party may change its address for purposes of this Agreement by notice in accordance
with this Section 24.

 

		25.	Further
                                         Assurances and Cooperation

 

(a)             The
parties agree to (i) furnish to one another other such further information, (ii) execute and deliver to one another such further
documents and (iii) do such other acts and things that any party reasonably requests for the purpose of carrying out the intent
of this Agreement and the documents and instruments referred to in this Agreement. For 45 days following the Closing, Seller and
the Member shall provide to TJC such assistances as TJC reasonably requests to help ensure a smooth and orderly transition of
ownership of the Subject Franchises.

 

(b)             The
parties acknowledge that TJC may be required to conduct audits of the financial statements of the businesses operated using the
Assets, and the Seller and the Members agree to cooperate with TJC and to provide it with any information reasonably available
to the Seller and the Members to assist TJC and its representatives in conducting such audits. Such information includes, but
is not limited to, the financial books, records and work papers of Seller. The Note shall secure Seller’s performance under
this Section 25(b). In the event that Seller performs under this Section 25(b) in all material respects, TJC shall pay Seller
$25,000 of the principal amount of the Note, plus interest accrued thereon, no later than 120 days after Closing. In the event
that, in TJC’s reasonable judgment, Seller fails to perform its obligations under this Section 25(b) in any material respect,
TJC may reduce the Purchase Price by, and withhold payment of, $25,000 of principal (plus the related interest) under the Note
in accordance with Section 3 of the Note.

 

		26.	Waiver

 

The
failure or any delay by any party in exercising any right under this Agreement or any document referred to in this Agreement shall
not operate as a waiver of that right, and no single or partial exercise of any right shall preclude any other or further exercise
of that right or the exercise of any other right. All waivers shall be in writing and signed by the party to be charged with the
waiver, and no waiver that may be given by a party shall be applicable except in the specific instance for which it is given.

 

    	21

    	 

    

 

		27.	Entire
                                         Agreement

 

This
Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (together with
(i) the Exhibits, (ii) the Schedules and (iii) the parties’ Closing Documents) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written
agreement signed by the party to be charged with the amendment.

 

		28.	Assignment

 

No party
may assign any of its rights under this Agreement without the prior written consent of the other party.

 

		29.	No
                                         Third Party Beneficiaries

 

Nothing
in this Agreement shall be considered to give any person other than the parties any legal or equitable right, claim or remedy
under or in respect of this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the
sole and exclusive benefit of the parties and their respective successors, permitted assigns, heirs and legal representatives.

 

		30.	Construction

 

		(a)	All
                                         references in this Agreement to “Section” or “Sections” refer
                                         to the corresponding section or sections of this Agreement.

		(b)	All
                                         words used in this Agreement shall be construed to be of the appropriate gender or number
                                         as the context requires.

		(c)	Unless
                                         otherwise expressly provided, the word “including” does not limit the preceding
                                         words or terms.

		(d)	The
                                         captions of articles and sections of this Agreement are for convenience only and shall
                                         not affect the construction or interpretation of this Agreement.

 

		31.	Severability

 

The
invalidity or unenforceability of any term or provision, or part of any term or provision, of this Agreement shall not affect
the validity and enforceability of the other terms and provisions of this Agreement, and this Agreement shall be construed in
all respects as if the invalid or unenforceable term or provision, or part, had been omitted. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be unenforceable because it is too broad, such provision
shall be interpreted to be only as broad as is enforceable.

 

    	22

    	 

    

 

		32.	Counterparts

 

This
Agreement may be signed in any number of counterparts (including by facsimile or portable document format (pdf)), all of which
together shall constitute one and the same instrument.

 

		33.	Governing
                                         Law

 

This
Agreement shall be governed by the internal Laws of the State of Arizona, without giving effect to any choice of law provision
or rule (whether of the State of Arizona or any other state) that would cause the laws of any state other than the State of Arizona
to govern this Agreement.

 

		34.	Binding
                                         Effect

 

This
Agreement shall apply to, be binding in all respects upon and inure to the benefit of parties and their respective heirs, legal
representatives, successors and permitted assigns.

 

		35.	Allocation

 

The
Parties hereby agree to allocate the Purchase Price among the Assets in accordance with Schedule 35.  TJC and Seller shall
file Form 8594 with their respective US Federal income tax returns in accordance with such agreement.

 

(signatures
appear on the next page)

 

    	23

    	 

    

 

IN WITNESS
WHEREOF, the Parties hereto affix their signatures and execute this Agreement as of the day and year first above written.

 

 

	Roth & Pelan
    Enterprises, LLC 	 	The Joint Corp.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/
    Timothy Roth	 	By:	/s/
    David Orwasher 	     
	Timothy Roth, Manager	 	David Orwasher,
    Chief Operating Officer	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/
    Timothy Roth	 	 	 	 
	Timothy Roth, Individually	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/
    Thomas Pelan	 	 	 	 
	Thomas Pelan, Individually	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	Blue Sky &
    Sunny Days, Inc.	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/
    Timothy Roth	 	 	 	 
	Timothy Roth, President	 	 	 	 

 

Signature
Page to Asset and Franchise Purchase Agreement

 

    	242014 10K EX 10.18

Exhibit 10.18

FEDERAL HOME LOAN MORTGAGE CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II
Effective January 1, 2014

TABLE OF CONTENTS

Page
		
	Article I
	Establishment of the Plan............................................................................ 1

		
	Article II
	Definitions................................................................................................... 1

		
	Article III
	Eligibility and Participation........................................................................ 4

		
	Article IV
	Supplemental Benefit Credit....................................................................... 6

		
	Article V
	Payment of Benefits.................................................................................... 9

		
	Article VI
	Administration.......................................................................................... 10

		
	Article VII
	Amendment and Termination.................................................................... 12

		
	Article VIII
	Miscellaneous........................................................................................... 13

	
			
	 
	 
	 

FEDERAL HOME LOAN MORTGAGE CORPORATION 
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II
ARTICLE I 
Establishment of the Plan 
1.1    Purpose.  The Corporation hereby adopts the Plan effective as of the Effective Date.  The Plan is a non-qualified plan intended to make up to Executives employer provided contributions and/or benefits under the Transitional Plan and under the Thrift/401(k) Plan to the extent not provided for under the SERP, that Executives lose due to:
(a)    The cap on annual Compensation which can be considered for inclusion under the Transitional Plan and the Thrift/401(k) Plan, as applicable, set by Code section 401(a)(17); and 
(b)    The application of Code section 415.  
The Corporation intends that the Plan shall at all times be maintained on an unfunded basis for federal income tax purposes under the Code, and administered as a “top hat” plan exempt from the substantive requirements of ERISA.  The Plan is intended to provide deferred compensation to a select group of management or highly compensated employees within the meaning of ERISA Sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6).  
No assets will be set aside to fund the Corporation’s liability under the Plan.
1.2    Effective Date.  The Plan is effective as of the Effective Date.
ARTICLE II
Definitions 
For purposes of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise.
2.1    Account.  A bookkeeping record established and maintained under this Plan for each Participant solely to calculate the amount payable to each Participant under the Plan.  The Account shall reflect any Supplemental Benefit Credits, all Deemed Earnings as described in Section 4.4, and all distributions.
2.2    Administrator.  The Compensation Committee of the Board, or any successor to that committee, or such other committee or individual(s) designated by the Board as the Administrator for purposes of the Plan.
2.3    Affiliate.  The Corporation and any corporation which is a member of a controlled group of corporations (as defined in Code section 414(b)) which includes the Corporation, or any trade or business (whether or not incorporated) which is under common control (as defined in Code section 414(c)) with the Corporation, or any service organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code section      414(m)) which includes the Corporation and any other entity required to be aggregated with the 

1

Corporation pursuant to regulations under Code section 414(o), for such period that such relationship exists.
2.4    Beneficiary.   The individual or individuals designated by the Participant to receive benefits under this Plan in the event of the Participant’s death, in accordance with  Section 5.2.
2.5    Board.  The Board of Directors of the Federal Home Loan Mortgage Corporation or such committee thereof delegated to act on its behalf.
2.6    Code.  The Internal Revenue Code of 1986, and amendments thereto.
2.7    Compensation.  An Executive’s “Compensation” as defined in the Transitional Plan or Thrift/401(k) Plan, as applicable.
2.8    Corporation.  The Federal Home Loan Mortgage Corporation, a corporation organized under the laws of the United States, and any entity succeeding to its business which assumes the obligations of this Plan.
2.9    Deemed Earnings.  The net gain or loss, determined on a percentage basis, on the aggregate of the Participant’s Account to be credited with Deemed Earnings, such gain or loss based upon the Participant’s direction of the deemed investment of such accruals in the Investment Funds, in accordance with the terms of Section 4.4, and calculated on a daily basis.
2.10    Default Investment.  The average annual yield of the Money Market Fund of the Transitional Plan.  
2.11    Effective Date.  January 1, 2014.
2.12    Employee.  The term “Employee” shall have the meaning set forth in the Transitional Plan or the Thrift/401(k) Plan, as applicable.  
2.13    Employer.  The Corporation.  Additionally, an Employer shall include a Participating Subsidiary with respect to transferred Employees to whom Section 3.3 (Transfers between Corporation and Participating Subsidiary) applies.
2.14    Employer Contributions.  The Transitional Employer Contributions and Fixed Employer Contributions under the Transitional Plan and the Matching Contributions under the Thrift/401(k) Plan.  
2.15    ERISA.  The Employee Retirement Income Security Act of 1974, as amended.
2.16    Excess Plan.  The Federal Home Loan Mortgage Corporation 2014 Excess Benefit Plan, as may be amended from time to time. 
2.17    Executive.  All Employees who are officers at the level of vice president or above, as determined on the last day of the applicable Plan Year; provided, however, that notwithstanding any other provision in this Plan, an Executive whose status changes to that of a 

2

non-Executive while still employed by the Corporation will be treated as an Executive hereunder until the end of the calendar year in which such change of status occurs.  After such calendar year has ended, such person shall not be eligible to actively participate in this Plan until he or she becomes an Executive and satisfies the other requirements set forth in the Plan.  In the event an Executive’s status changes to that of a non-Executive, the Participant’s Account will be maintained under the Plan (and will continue to be credited with Deemed Earnings in accordance with Section 4.4) until such time as distribution occurs in accordance with Article V hereof.
2.18    Investment Funds.  The investment funds available for the deemed investment and reinvestment of a Participant’s Supplemental Benefit Credit under the Plan in accordance with Section 4.4, which shall correspond with the “Investment Funds” under the Transitional Plan, unless determined otherwise by the Administrator.
2.19    Key Employee.  A Participant who is a “key employee” of the Company as defined in Code section 416(i) (without regard to Code section 416(i)(5)) at any time during the 12-month period ending on December 31.  If a Participant is a Key Employee as of December 31, the Participant will be treated as a Key Employee for the entire 12-month period beginning on the April 1 following that December 31.  For purposes of determining Key Employees, the definition of compensation in Treasury Regulation §1.415(c)-2(d)(3) will apply.
2.20    Participant.  An Executive who has met the eligibility requirements under Section 3.1, who has completed such enrollment process as may be required under Section 3.1, and for whom a Supplemental Benefit Credit has been made under Article IV. An Executive who receives a Supplemental Benefit Credit under this Plan for a Plan Year shall be ineligible to receive an Excess Benefit Credit under the Excess Plan for such Plan Year and shall be ineligible to receive a Thrift/401(k) SERP Benefit under the SERP if the Executive made any Roth Contributions under the Thrift/401(k) Savings Plan during such Plan Year. The Participant’s continued participation in the Plan shall be governed by Article III. 
2.21    Participating Subsidiary.  An Affiliate which (i) is a wholly-owned subsidiary of the Corporation, (ii) has been authorized to be a Participating Subsidiary by the Corporation’s Vice President – Compensation and Benefits (as such title may be amended from time to time), and (iii) has adopted the Plan for the benefit of its eligible employees.  The Corporation’s Vice President – Compensation and Benefits shall have the authority to terminate an Affiliate’s participation as a Participating Subsidiary and Employer as of any date following the Participating Subsidiary’s adoption of the Plan.
2.22    Plan.  This Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan II, as set forth herein, and as the same may hereafter be amended from time to time.
2.23    Plan Year.  The 12 month period from January 1 to December 31.
2.24    Qualifying Termination.  A Participant’s termination of employment with an Employer on account of any of the following:
(a)    Reduction in force;

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(b)    Elimination of position;
(c)    A company divestiture or closure; and
(d)    Retirement (as defined in the Transitional Plan or Thrift/401(k) Plan, as applicable).
2.25    Roth Contribution.  The term “Roth Contribution” shall have the meaning set forth in the Thrift/401(k) Plan.
2.26    Section 415 Limitation. The limitation on annual additions that are permitted to be made to an individual’s account(s) under the Transitional Plan or the Thrift/401(k) Plan, as applicable, pursuant to Code section 415.
2.27    SERP.  The Federal Home Loan Mortgage Corporation Supplemental Executive Retirement Plan, as amended and restated January 1, 2008.
2.28    Spouse.  The person legally married to the Participant on the date of the Participant’s death under the laws of the jurisdiction in which the marriage was entered.
2.29    Supplemental Benefit Credit.  The amount credited to a Participant’s Account for a Plan Year to compensate the Participant for the portion of the Employer Contributions lost due to (a) the Compensation cap as set forth in Code section 401(a)(17), and (b) the Section 415 Limitation, in accordance with the terms set forth in Article IV.
2.30    Termination of Employment.  A separation from the service of the Corporation which constitutes a “separation from service” within the meaning of Treasury Regulation §1.409A-1(h) and any successor or other applicable regulation under Code section 409A. 
2.31    Thrift/401(k) Plan.  The Federal Home Loan Mortgage Corporation Thrift/401(k) Savings Plan, as may be amended from time to time.
2.32    Total and Permanent Disability.  A Participant shall be considered as totally and permanently disabled for purposes of the Plan if the Participant has been determined by the Social Security Administration to be totally disabled.
2.33    Transitional Plan.  The Federal Home Loan Mortgage Corporation Transitional Retirement Savings Plan, as may be amended from time to time.
ARTICLE III
Eligibility and Participation 
3.1    Eligibility for Participation.  Subject to Section 3.2, in order to be eligible for this Plan, an Executive must be eligible to participate in the Transitional Plan or the Thrift/401(k) Plan, provided, however, that the Administrator reserves the discretion to limit an Executive’s ability to participate in this Plan.  In order to become a Participant the Executive shall complete such enrollment process as may be required by the Administrator.  An Executive shall remain a Participant in the Plan until such time as all benefits payable under the Plan have been paid in 

4

accordance with the provisions hereof; provided, however, the foregoing provisions shall not limit the Administrator’s discretion to determine whether an Executive remains eligible to continue to actively participate in the Plan.   
3.2    Eligibility for Supplemental Benefit Credit.  
(a)    In order to be eligible to receive a Supplemental Benefit Credit for a Plan Year (a) the Executive must actively participate in the Transitional Plan or the    Thrift/401(k) Plan for the Plan Year and (b) the Executive’s annual additions to the Transitional Plan or to the Thrift/401(k) Plan for the Plan Year must be limited as a result of (i) the cap on annual Compensation which can be considered for inclusion under the Transitional Plan or Thrift/401(k) Plan, as applicable, set by Code section 401(a)(17)  and/or (ii) the Section 415 Limitation.  Notwithstanding anything to the contrary, an Executive who receives a Supplemental Benefit Credit under this Plan for a Plan Year shall be ineligible to receive an Excess Benefit Credit under the Excess Plan for such Plan Year and shall be ineligible to receive a Thrift/401(k) SERP Benefit under the SERP for such Plan Year if the Executive made any Roth Contributions under the Thrift/401(k) Savings Plan during such Plan Year.    
(b)    Notwithstanding subsection (a) above, in order to be eligible to receive a Supplemental Benefit Credit related to Employer Contributions under the Thrift/401(k) Plan for a Plan Year, the Executive must contribute the maximum amount permitted under the terms of the Thrift/401(k) Plan on a pre-tax or post-tax basis throughout the entire Plan Year (or for the portion of the Plan Year for which the Executive is eligible to participate in the Thrift/401(k) Plan), provided that for the 2014 Plan Year, the maximum contribution must be made on a pre-tax basis.  If an Executive contributes less than such maximum amount for a Plan Year, the Executive will not be eligible to receive a Supplemental Benefit Credit relating to the Matching Contribution under the     Thrift/401(k) Plan for such Plan Year.  Further, if all or a portion of the Executive’s contributions to the Thrift/401(k) Plan are made pursuant to a Roth Contribution, the Executive will participate in this Plan and not the SERP for such Plan Year, provided  that, for administrative and recordkeeping procedures purposes, the Corporation may designate an Executive as a participant in the SERP during a Plan Year in which the Executive makes Roth Contributions and then move the Executive to this Plan during or after such Plan Year.  Notwithstanding anything to the contrary, in no event shall the Supplemental Benefit Credit related to the Thrift/401(k) Plan and the Thrift/401(k) SERP Benefit credited under the SERP result in a duplication of benefits under the SERP and this Plan for a Plan Year. 
(c)    Notwithstanding the foregoing provisions, nothing in this Plan shall prohibit the Administrator from determining, in its discretion, that an Executive is not eligible to receive a Supplemental Benefit Credit for one or more Plan Years.  To the extent that an Executive becomes ineligible to participate in this Plan for a Plan Year, the Executive may be eligible to participate in the Excess Plan to the extent that the Executive satisfies the eligibility requirements under the Excess Plan.  

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3.3    Transfers Between Corporation and Participating Subsidiary.  Notwithstanding any provision above to the contrary, if a Participant transfers employment directly between the Corporation and a Participating Subsidiary, without an intervening break in employment (as determined by the Administrator in accordance with uniform and nondiscriminatory rules), the Participant shall continue to participate under the Plan following such transfer.  Notwithstanding anything to the contrary in this Plan, any transfer of a Participant’s employment between the Corporation and any Affiliate shall be treated in a manner consistent with Code section 409A.
3.4    Participant Consent.  By participating in this Plan, a Participant shall for all purposes be deemed conclusively to have consented to the provisions of the Plan and to all subsequent amendments thereto.
ARTICLE IV
Supplemental Benefit Credit
4.1    Basis of Benefit.
(a)    The Supplemental Benefit Credit for a Plan Year will be determined based on: (i) the Executive’s Plan Year Compensation; (ii) the Compensation cap described in Code section 401(a)(17) for the Plan Year; and (iii) the limitation set forth in Code section 415(c) for the Plan Year.  
(b)    No Supplemental Benefit Credit will be accrued for a Participant for a Plan Year with respect to pay in excess of 200% of a Participant’s “base salary” (as defined in the 2014 Executive Management Compensation Program, or successor thereto), for any year in which the Participant is covered by such program.  Additionally, no Supplemental Benefit Credit related to the Transitional Employer Contributions and Fixed Employer Contributions under the Transitional Plan will be accrued for a Participant for a Plan Year unless the Participant is employed by the Employer on the last day of the Plan Year in question, except as provided in Section 4.3.    
4.2    Supplemental Benefit Credit Calculation.  
(a)    For each Plan Year in which a Participant participates in the Transitional Plan and meets the other requirements set forth in this Plan, the Participant’s Account shall be credited with a Supplemental Benefit Credit in an amount equal to the excess, if any, of (i) over (ii), where:
(i)    is the amount of the Employer Contributions that would have been made to the Transitional Plan for the Plan Year in question without regard to the Section 415 Limitation and the cap described in Code section 401(a)(17) on Compensation under the Transitional Plan, and
(ii)    is the amount of the Employer Contribution that was actually made to the Participant’s account under the Transitional Plan for the Plan Year in question with the application of the limitations, caps, and exclusions referred to in subparagraph (i) above.

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(b)    For each Plan Year in which a Participant participates in the Thrift/401(k) Plan, makes a Roth Contribution under the Thrift/401(k) Plan, and meets the other requirements set forth in this Plan, the Participant’s Account shall be credited with a Supplemental Benefit Credit in an amount equal to the excess, if any, of (i) over (ii), where:
(i)    is the amount of the Employer Contributions that would have been made to the Thrift/401(k) Plan for the Plan Year in question without regard to the Section 415 Limitation and the cap described in Code section 401(a)(17) on Compensation under the Thrift/401(k) Plan, and
(ii)    is the amount of the Employer Contribution that was actually made to the Participant’s account under the Thrift/401(k) Plan for the Plan Year in question with the application of the limitations, caps, and exclusions referred to in subparagraph (i) above.
4.3    Accrual of Supplemental Benefit Credit.  
(a)    The Supplemental Benefit Credit for each Participant as calculated pursuant to Sections 4.1 and 4.2 shall be credited to the Participant’s Account (as to timing) in a manner consistent with that in which an Employer Contribution would have been made by the Corporation on the Participant’s behalf to the Transitional Plan or Thrift/401(k) Plan, as applicable, provided that the Participant will forfeit the Supplemental Benefit Credit related to the Transitional Employer Contributions and Fixed Employer Contributions under the Transitional Plan, and any related Deemed Earnings, if the Participant is not employed by the Employer on the last day of the applicable Plan Year, except as provided in subsections (b) and (c) below.  For the avoidance of doubt, a Participant will not forfeit accrued Supplemental Benefit Credits related to the Matching Contributions under the Thrift/401(k) Plan, or related Deemed Earnings, upon the Participant’s Separation from Service.  Deemed Earnings for a Supplemental Benefit Credit shall not begin accruing until such time as the corresponding Employer Contributions under the Transitional Plan or Thrift/401(k) Plan, as applicable, are credited to Participant accounts under the Transitional Plan or Thrift/401(k) Plan, as applicable, subject to Section 5.3 in the case of Total and Permanent Disability and Section 5.2 in the case of death.
(b)    Notwithstanding subsection (a) above, if a Participant has a Qualifying Termination, the Participant will be eligible to receive a Supplemental Benefit Credit related to the Transitional Employer Contributions and Fixed Employer Contributions under the Transitional Plan pursuant to Sections 4.1 and 4.2 for the Plan Year in which the Qualifying Termination occurs, at the same time and on the same schedule as regularly situated Participants.
(c)    Notwithstanding subsection (a) above, if a Participant experiences a Total and Permanent Disability or dies, the Participant (or the Participant’s Beneficiary in the case of death) will be eligible to receive a Supplemental Benefit Credit related to the Transitional Employer Contributions and Fixed Employer Contributions under the 

7

Transitional Plan pursuant to Sections 4.1 and 4.2 for the Plan Year in which the Participant’s death or Total and Permanent Disability occurs, which amount will be credited to the Participant’s Account at the time of the corresponding accrual to the  Participant’s account for purposes of the Transitional Plan or Thrift/401(k) Plan, as applicable.  Notwithstanding anything to the contrary, if an Executive does not receive a Supplemental Benefit Credit related to the Transitional Employer Contribution and Fixed Employer Contribution under the Transitional Plan because of the Executive’s Termination of Employment during the Plan Year due to a disability, as determined by  the Corporation, and it is subsequently determined that the Executive experienced a Total and Permanent Disability during the Plan Year of the Executive’s Termination of Employment, the Executive will receive the forfeited Supplemental Benefit Credit for the Plan Year of the Executive’s Termination of Employment, which shall be payable in accordance with Section 5.3, with no Deemed Earnings accruing with respect to such amounts.      
(d)    Notwithstanding anything to the contrary, the Participant’s Account will  be retroactively adjusted, to the extent necessary, to reflect any forfeiture of the Supplemental Benefit Credit for such Plan Year, as set forth in subsection (a), or any failure by the Participant to contribute the maximum amount permitted under the terms of the Thrift/401(k) Plan on a pre-tax or post-tax basis throughout the entire Plan Year, as required under Section 3.2(b), and any such adjustment will include a corresponding change in Deemed Earnings on the adjusted amount.  
4.4    Crediting and Debiting of Earnings and Losses.  
(a)    Each Participant’s Account shall be credited or debited, as applicable, with the gains and losses (including, without limitation, interest, dividends, market appreciation, or depreciation) that would have accrued if the Participant’s Account had been invested in the Investment Funds designated by the Participant in accordance with the investment direction procedures prescribed by the Administrator.  The Corporation and its Affiliates, the Board, and the Administrator do not represent or guarantee successful deemed investment of any amounts under the Plan and shall not be required to restore any loss which may result from such deemed investments or lack of investment.  In addition, no one shall be under any obligation to actually invest amounts corresponding to any investment directions provided by a Participant or Beneficiary.  Each Participant and Beneficiary assumes the risk in connection with any decrease in value of his or her Account deemed invested hereunder.  The mechanism by which Participants shall invest their accruals to be credited with earnings and losses, as well as any rules or procedures for such investment (including treatment of earnings should no “investment” election be made by a Participant for a particular Plan Year), shall be determined by the Administrator (or its delegate) in its sole discretion.
(b)    If a Participant does not direct the deemed investment of his or her Account under the Plan, the Participant shall be deemed to have elected to invest his or her Account in the Default Investment.  

8

(c)    A Participant may change any deemed investment directions in accordance with the investment direction procedures prescribed by the Administrator.
(d)    The Administrator may change the deemed Investment Funds at any time.  In addition, any change in the Investment Funds available under the Transitional Plan shall automatically result in a corresponding change in the Investment Funds available under this Plan. Upon any change in the Investment Funds, each Participant shall have the opportunity to select among such new Investment Funds as are designated by the Administrator. In case of failure to elect such new Investment Funds, the Participant shall be deemed to have made an election to invest his or her Account in the investment options then being offered that are most comparable to the Participant’s old investment options.  The decision of comparable investment options shall be made in the sole discretion of the Administrator.
(e)    Notwithstanding anything to the contrary, Deemed Earnings shall cease accruing for a period of time prior to payment of the Participant’s Account balance under Article V for administrative purposes related to distributing Plan benefits, as determined by the Company in its discretion.
4.5    Vesting of Accounts.  Each Participant shall be at all times 100% vested in the amounts credited to such Participant’s Account and Deemed Earnings thereon.
 
ARTICLE V
Payment of Benefits
5.1    Termination of Employment.  Upon a Participant’s Termination of Employment for any reason other than Death or Total and Permanent Disability, a Participant’s Account shall be paid in the form of a lump sum within 90 days after the end of the calendar year in which such Termination of Employment (for reasons other than death or Total and Permanent Disability) occurs (subject to delay in accordance with Section 8.10, if applicable).  As of the date of the Participant’s Termination of Employment (for reasons other than death or Total and Permanent Disability) and thereafter, any accrued balance shall be credited or debited with Deemed Earnings under Section 4.4 using the Default Investment until paid, or such earlier time as described in Section 4.4(e).   
5.2    Death.  
(a)    In the event of a Participant’s death (either prior to or after the Participant’s Termination of Employment), the balance of the Participant’s Account shall be paid to the Participant’s Beneficiary in the form of a lump sum payment within 90 days after the end of the calendar year in which the Participant’s death occurs, without additional Deemed Earnings accruing after date of the Participant’s death.     
(b)    All Beneficiary designations shall be on such forms as are specified by and filed with the Administrator.  Any Beneficiary designation made by the Participant in accordance with this provision may be changed at any time prior to the Participant’s death by filing with the Administrator a notice of such change on the form provided by the Administrator.  In the event of a Participant’s death, if all Beneficiaries designated by the Participant are not then living, or if no valid Beneficiary designation is in effect, the 

9

following shall be deemed to have been designated by the Participant, in the following order of priority: (i) the Participant’s Spouse, if surviving, or, if not, (ii) equally to any surviving children of the Participant, or, if none, (iii) to the Participant’s estate or duly authorized personal representative.
5.3    Total and Permanent Disability.  Except as provided in Section 5.4, if a  Participant experiences a Total and Permanent Disability (either prior to or after the Participant’s Termination of Employment), which qualifies as a “disability” under Code section 409A, the balance of the Participant’s Account shall be paid to the Participant in the form of a lump sum payment within 90 days following the Participant’s Total and Permanent Disability, without additional Deemed Earnings accruing after date of the Participant’s Total and Permanent Disability.  
5.4    Payment of Benefits – Special Rules for 2014.  Notwithstanding anything to the contrary, if a Participant experiences a Total and Permanent Disability in 2014, and the Participant is entitled to a distribution under the Plan upon such Total and Permanent Disability, the Participant’s Account balance will be paid in 2015 (and not 2014 as may otherwise be the case). 
5.5    No Right to Elect Deferrals; No Borrowing; No Hardship Withdrawals.  Neither a Participant nor a Beneficiary may elect to defer (or accelerate) payment of any benefit provided hereunder beyond (or before) the time of payment specified in this Article.  A Participant may not borrow from any amounts accrued on the Participant’s behalf under this Plan.  No hardship withdrawals shall be permitted under the Plan.
5.6    Permissible Accelerations and Delays.  The Corporation reserves the right, exercisable in its sole discretion, to accelerate payments under this Plan to the extent permitted by, and in accordance with, Treasury Regulation §1.409A-3(j)(4).  In addition, the Corporation reserves the right, exercisable in its sole discretion, to delay payments under this Plan to the extent permitted by, and in accordance with, Treasury Regulation §1.409A-2(b)(7).
 
ARTICLE VI
Administration 
6.1    Administrator.  The Plan shall be administered by the Administrator.  The Administrator shall be vested with full authority to make, administer, and interpret such rules and regulations, as it deems necessary to administer the Plan.  Any determination, decision, or action of the Administrator in connection with the construction, interpretation, administration, or application of the Plan shall be final, conclusive, and binding upon all Participants and any and all persons claiming under or through any Participant.  The Administrator shall have the authority to:
(a)    Employ agents to perform services on behalf of the Administrator and to authorize the payment of reasonable compensation for the performance of such services; and

10

(b)    Delegate to designated employees or departments of the Corporation the authority to perform such of the Administrator’s administrative duties hereunder as may be delegated to such employees or departments.
Pursuant to this authority and subject to the right of the Administrator to revoke such delegations in writing at any time, the recordkeeping responsibilities (including the determination to change the measure of Deemed Earnings under Section 4.4) are hereby delegated to the executive in charge of the Human Resources Division of the Corporation and/or such employees of that Division as that executive shall designate.
6.2    Cost.  The Corporation shall pay the costs of administering the Plan.
6.3    Claims Procedure.  The Claims Administrator shall determine Participants’ and Beneficiaries’ eligibility and rights to benefits under the Plan.  In the event that a Participant or Beneficiary does not receive any Plan benefit that is claimed, such Participant or Beneficiary shall be entitled to consideration and review as provided in this Section 6.3.  Such consideration and review shall be conducted in a manner designed to comply with ERISA section 503.  The Claims Administrator shall be the Administrator, or a committee or an employee of the Corporation, designated as Claims Administrator by the Administrator.  The Claims Administrator shall establish claims procedures for processing all claims for benefits under the Plan, including the review of denials or partial denials of claims.
(a)    Claim in Case of Dispute.  In the event of a dispute over benefits, a Participant or Beneficiary may file a written claim with the Claims Administrator provided that such claim is filed within 60 days after the “Notice Date.”  For this purpose, “Notice Date” means:
(i)    in the case where benefits are paid as a lump sum, the date of payment of such lump sum;
(ii)    in any case where the Plan (prior to the filing of a claim for benefits) determines that an individual is not entitled to benefits and the Plan provides written notice to such individual of its determination, the date of the individual’s receipt of such notice; or
(iii)    in any case where the Plan provides an individual with a written statement of his or her Account as of a specific date, the date of the individual’s receipt of such notice.
(b)    Denial of Appeal.  In the event of a denial or partial denial of a claim upon review, the claimant may commence civil action under ERISA section 502(a).   A claim or action:
(i)    to recover benefits allegedly due under the provisions of the Plan or by reason of any law, or
(ii)    to enforce rights under the Plan, or

11

(iii)    to clarify rights to future benefits under the Plan, or
(iv)    that relates to the Plan and seeks a remedy, ruling, or judgment of any kind against the Plan, the Administrator, the Corporation, an Employer, or  any employee or director thereof, 
may not be filed in any court until the claimant has exhausted the Plan’s claim and appeal process for any and all reasons the claimant believes his or her claim should be approved.  

In addition, any claim or action must be filed within 180 calendar days after written notice of the denial or partial denial on review is received by the claimant.  If such claimant fails to bring civil action within the aforementioned 180 calendar days, the claimant shall be foreclosed from commencing any such action.  Any action filed after the 180 day period shall be time-barred.
 
ARTICLE VII
Amendment and Termination
7.1    Amendment.  The Corporation, acting through its Board or the Board’s designee, may at any time amend, modify, or suspend the Plan, in whole or in part, by an instrument in writing, executed by the Board or its designee; provided, however that no amendment, modification, or suspension shall reduce the accrued benefit of any Participant.  Notwithstanding the foregoing, the Corporation may, in its sole discretion and without the Participant’s consent, modify or amend the terms of the Plan, or take any other action it deems necessary or advisable, to cause the Plan to comply with Code section 409A (or an exception thereto).
7.2    Termination.  The Corporation, acting through its Board or the Board’s designee, may at any time terminate this Plan, in whole or in part, by an instrument in writing executed by the Board or its designee; provided, however that:
(a)    No such termination shall reduce the accrued benefit of any Participant; and
(b)    Termination of the Plan shall not accelerate the time of payment of benefits hereunder, nor cease the accrual of Deemed Earnings, unless the Corporation, by action of its Board or designee, shall elect to accelerate the payment of all benefits at the time it terminates the Plan, and such acceleration is permitted under Code section 409A or other applicable law.

12

 
ARTICLE VIII
Miscellaneous
8.1    No Right of Employment.  Nothing in the Plan shall be deemed to grant an Employee any rights other than those specifically outlined in the Plan.  Nothing in the Plan shall be deemed to create any right of, or contract for, employment between an Employee and the Corporation.
8.2    Taxes. All amounts payable hereunder shall be reduced by any and all federal, state, and local income taxes, and employment taxes imposed upon the Participant or his or her Beneficiary that are required to be paid or withheld by the Corporation or Employer.  Any amounts required to be withheld will be withheld out of amounts payable under the Plan or other current wages paid by the Participant’s Employer, as determined by the Company.  The determination of the Corporation or Employer regarding applicable income and employment tax withholding requirements shall be final and binding on each Participant and Beneficiary.
8.3    Anticipation of Benefits.  Neither the Participant nor any Beneficiary or Beneficiaries entitled to payments or any other benefits after the death of the Participant shall have the power to transfer, assign, anticipate, modify, or otherwise encumber in advance any of the payments that may become due hereunder; nor shall any such payments be subject to attachment, garnishment, or execution, or be transferable by operation of law in event of bankruptcy, insolvency, or otherwise.
8.4    Non-Assignability Clause.  It is agreed that neither the Participant, nor his/her Beneficiary, nor any other designee, shall have any right to commute, sell, assign, encumber, or transfer or otherwise convey the right to receive any payments hereunder which payments and right thereto are expressly declared to be non-assignable and non-transferable; and, in the event of any attempted assignment or transfer, the Corporation shall have no further liability  hereunder.
8.5    Prohibition Against Funding.  Any provision for payments hereunder shall be by means of bookkeeping entries on the books of the Corporation and shall not create in the Participant or Beneficiary any right to, or claim against any specific assets of the Corporation, nor shall it result in the creation of any trust or escrow account for the Participant or Beneficiary.  Any Participant or Beneficiary entitled to payment of benefits hereunder shall be a general creditor of the Corporation.
8.6    Gender and Number.  As used herein the masculine pronoun shall include the feminine and neuter genders, the singular shall include the plural, and the plural the singular, unless the context clearly indicates a different meaning.
8.7    Controlling Law.  This Plan and the respective rights and obligations of the Corporation and the Participants, shall be construed under the laws of the Commonwealth of Virginia (other than the choice of law provisions thereof), except to the extent otherwise provided by Federal law.

13

8.8    Severability.  The invalidity or unenforceability of any provision of this Plan shall not affect the other provisions, and the Plan shall be construed in all respects as if any invalid or unenforceable provisions were omitted.
8.9    Recapture.  Notwithstanding any provision of this Plan to the contrary, to the extent that a Participant’s benefit hereunder takes into account pay that is subject to a recapture, clawback, or similar agreement, and such pay is recaptured or clawed back under such agreement, then benefits provided under this Plan that were based upon the recaptured pay shall be either (a) repaid by the Participant (or the Participant’s Beneficiary) to the extent previously distributed, or (b) cancelled by the Administrator, to the extent not yet distributed. 
8.10    Code Section 409A.
(a)    The Plan is intended to comply with the requirements of Code section 409A, and shall in all respects be administered in accordance with Code section 409A.  Notwithstanding anything in the Plan to the contrary, distributions may only be made under the Plan upon an event and in a manner permitted by Code section 409A, and all payments to be made upon a termination of employment under this Plan may only be made upon a “separation from service” as defined under Code section 409A.  In no event shall a Participant, directly or indirectly, designate the calendar year of payment, except as permitted by Code section 409A.
(b)    Notwithstanding anything in the Plan to the contrary, if a Participant’s distribution is to commence, or be paid upon, separation from service, payment of the distribution shall be delayed for a period of six months after the Participant’s separation from service, or death if earlier, if the Participant is a Key Employee as defined under Code section 409A (as determined by the Administrator) and if required pursuant to Code section 409A.  If payment is delayed, the Participant’s distribution shall commence, or be paid, within 60 days of the date that is the six-month anniversary of the Participant’s separation from service.
(c)    Although the Corporation intends to administer the Plan to prevent taxation under Code section 409A, the Corporation does not represent or warrant that the Plan will comply with Code section 409A or any other provision of federal, state, local, or non-United States law.  The Corporation, its Affiliates, and their respective directors, officers, employees, and advisers will not be liable to any person for any tax, interest, or penalties that might be owed with respect to an Account.

14

IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed by its duly authorized officers, this 18 day of February 2015.
	
			
	 
	FEDERAL HOME LOAN

	 
	MORTGAGE CORPORATION

	 
	 

	 
	 

	 
	By:
	/s/ Daniel Scheinkman

	 
	 
	DANIEL SCHEINKMAN

	 
	 
	Vice President — Compensation and Benefits

	 
	 
	 

	 
	 

	ATTEST:
	 

	/s/ Carol Rakatansky
	 

	CAROL RAKATANSKY
	 

	Assistant Secretary
	 

15

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