Document:

exv10w43

 

    Exhibit
    10.43

 

    EXECUTION
    COPY

 

    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    EMPLOYMENT AGREEMENT WITH EUGENE M. McQUADE

 

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

 

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

 

    SECTION 1.
    TERMS OF EMPLOYMENT

 

    During the Term (as defined in the next sentence) Freddie Mac
    agrees to employ Executive, and Executive agrees to serve
    Freddie Mac, in accordance with the terms provided in this
    Agreement. Unless sooner terminated pursuant to the occurrence
    of an event described in Section 5 hereof, Freddie Mac
    agrees to employ Executive for a three (3) year period
    beginning on September 1, 2004 (the “Commencement
    Date”) and ending on the third anniversary of the
    Commencement Date (such period, the “Initial Term”),
    which shall be extended automatically for an additional
    successive one (1) year period as of the third anniversary
    of the Commencement Date and as of the last day of each
    successive one (1) year period of time thereafter that this
    Agreement is in effect, and such Initial Term and any such
    additional period shall be referred to as the “Term”;
    provided, however, that if, prior to the date which is
    90 days before the last day of the Initial Term or any one
    (1) year Term either party shall give written notice to the
    other that no such automatic extension shall occur, then
    Executive’s employment shall terminate on the last day of
    the Term during which such notice is given (the “Scheduled
    Termination Date”). The Term, and Executive’s
    employment hereunder, may be terminated only as a result of the
    occurrence of the Scheduled Termination Date or in accordance
    with the provisions of Section 5 hereof. The compensation
    and other terms of Executive’s employment as set forth in
    this Agreement are contingent upon the approval of the
    Compensation and Human Resources Committee of the Board of
    Directors or its successor (the “Committee”). The
    terms of this Agreement with respect to benefits that apply upon
    termination of employment are contingent upon the approval of
    Freddie Mac’s regulator, the Office of Federal Housing
    Enterprise Oversight (“OFHEO”).

 

    SECTION 2.
    POSITION AND RESPONSIBILITIES

 

    During the Term, Executive agrees to serve as President and
    Chief Operating Officer of Freddie Mac. In such capacity,
    Executive shall have the same status, privileges, and
    responsibilities normally inherent in such capacity in public
    corporations of similar size and character. Executive shall also
    perform such additional duties, not inconsistent with the
    foregoing, as the Chief Executive Officer of Freddie Mac or the
    Board of Directors of Freddie Mac (the “Board of
    Directors”) may from time to time reasonably assign to him.
    In addition, so

 

    long as Executive remains President and Chief Operating Officer
    through the mailing date for Freddie Mac’s proxy statement
    for Freddie Mac’s first annual meeting that follows the
    Commencement Date, which is currently scheduled for November
    2004, the Board of Directors shall nominate Executive to serve
    on the Board of Directors in such proxy mailing. If so elected,
    Executive agrees to serve as a director on the Board of
    Directors throughout his employment hereunder and to perform
    such duties and responsibilities as are customary for such
    position. As President and Chief Operating Officer, and if
    elected, as director on the Board of Directors, Executive shall
    abide by Freddie Mac’s Code of Conduct and any rules or
    restrictions applicable to senior executives of Freddie Mac
    regarding the purchase or sale of securities of Freddie Mac. In
    the event that the Executive’s employment with Freddie Mac
    terminates for any reason, Executive shall be deemed to have
    resigned, effective as of the date of such termination of the
    Executive’s employment with Freddie Mac, as a member of
    Freddie Mac’s Board of Directors and from all positions,
    titles, duties, authorities and responsibilities arising out of
    or relating to Executive’s employment or Board of
    Director’s membership, including any directorships or any
    fiduciary positions in which Executive was serving at the
    request of, or appointment by, Freddie Mac.

 

    SECTION 3.
    DEVOTION TO DUTIES

 

    During his employment hereunder, Executive agrees to devote
    substantially his full time, attention, and energies to Freddie
    Mac’s business, and not be engaged in any other business
    activity, whether or not such business activity is pursued for
    gain, profit, or other pecuniary advantage. This restriction
    shall not prevent Executive from devoting a reasonable amount of
    time to charitable or public interest activities or from making
    passive investments of his assets in such form or manner as he
    desires, provided that such investments: (i) do not require
    his services in the operations or the affairs of the entities in
    which such investments are made; and (ii) are consistent
    with the applicable provisions of Freddie Mac’s Investment
    Limitations Policy. In the event that the Executive intends to
    serve on a board of directors of another corporation while
    employed at Freddie Mac, Executive must first request the
    written approval of the Committee to serve (which approval shall
    not be unreasonably withheld) and if such approval is obtained,
    the Executive may hold such directorship only so long as it does
    not interfere with the performance by Executive of his duties as
    President and Chief Operating Officer and, if applicable,
    director of Freddie Mac, provided that in no event will
    Executive be permitted to serve on the board of directors of
    more than two (2) corporations other than Freddie Mac.

 

    SECTION 4.
    COMPENSATION

 

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

 

    4.1 Base Salary.  During the Term, Freddie
    Mac shall pay Executive a Base Salary at an annual rate of
    $900,000, which amount may be increased in the discretion of the
    Committee. The Base Salary shall be paid to Executive in equal
    installments throughout the year, consistent with the normal
    payroll practices of Freddie Mac.

 

    4.2 Annual Bonus.  In addition to the Base
    Salary, during each calendar year of Freddie Mac during the Term
    commencing with calendar year 2004, Executive shall have the

    

    2

 

    opportunity to earn an annual cash bonus (the
    “Bonus”), pro-rated in the case of any partial
    calendar year, based on performance criteria determined by the
    Committee. During the Term, the targeted annual Bonus will be
    100% of Base Salary (the “Target Bonus”) and the
    maximum annual Bonus will be 200% of the Target Bonus (the
    “Maximum Bonus”). The annual Bonus in respect of a
    calendar year will only be payable if Executive remains actively
    employed with Freddie Mac through the end of the applicable
    calendar year, and shall be paid to Executive at the same time
    that other senior executives of Freddie Mac are paid their
    annual cash incentive awards. The actual amount of
    Executive’s bonus in respect of any calendar year shall be
    determined based on a variety of subjective and objective
    factors, as determined by the Committee; provided that
    notwithstanding the foregoing, the minimum Annual Bonus payable
    to Executive in respect of calendar year 2004 shall be $400,000.

 

    4.3 Initial Equity Award.  As soon as
    practicable after the commencement of the Term and
    Executive’s employment under this Agreement, Freddie Mac
    shall grant Executive a number of Restricted Stock Units (the
    “Initial RSUs”) pursuant to the Federal Home Loan
    Mortgage Corporation 1995 Stock Compensation Plan, as amended
    (the “Stock Compensation Plan”), which number shall be
    92,650. The Initial RSUs shall vest in three equal annual
    installments of thirty-three and one-third percent
    (331/3%)
    each on each of the first, second and third anniversaries of the
    date of grant, subject to Executive’s continued employment
    with Freddie Mac through the applicable vesting dates. In
    addition, the vesting of the Initial RSUs shall be subject to
    acceleration upon the terms and conditions described in
    Sections 4.4 and 6 of this Agreement. Except as expressly
    provided in this Agreement, all other terms and conditions of
    the Initial RSUs shall be as set forth in the Stock Compensation
    Plan, the resolution making the grant and the related award
    agreement.

 

    4.4 Annual Equity Grants.  During each
    year of the Term commencing with calendar year 2005, Freddie Mac
    shall make a grant to Executive of a long-term equity incentive
    award (the “Annual Equity Grant”) pursuant to the
    Stock Compensation Plan (or any successor plan) at the same time
    annual long-term equity incentive awards are granted to other
    senior executives. Each Annual Equity Grant shall have an
    aggregate value on the date of grant, as determined by the
    Committee, equal to $6,000,000. 50% of each Annual Equity Grant
    shall be restricted stock units (“RSUs”) and 50% of
    each Annual Equity Grant shall be stock options to acquire
    shares of Freddie Mac (“Options”), provided that the
    Committee may in its discretion from time to time, grant a
    higher percentage of the Annual Equity Grant in RSUs. The
    exercise price of the Options shall be determined by the
    Committee in accordance with the terms of the Stock Compensation
    Plan.

 

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

    

    3

 

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

 

    In addition to the foregoing, upon the occurrence of a Change in
    Control (as defined below) during the Term: (a) the Initial
    RSUs, if they were granted to Executive at least twelve months
    prior to such Change in Control, and all other RSUs that were
    granted to Executive pursuant to this Agreement at least twelve
    months prior to such Change in Control shall immediately vest
    and be paid-out subject to any right of Executive to defer
    payment of the Initial RSUs and RSUs under any non-qualified
    deferred compensation arrangement in which senior executives of
    Freddie Mac are permitted to defer payment of restricted stock
    units, (b) all Options that were granted to Executive
    pursuant to this Agreement at least twelve months prior to such
    Change in Control shall immediately vest and remain exercisable
    until the scheduled expiration date applicable to such Options,
    (c) the Initial RSUs, if they were granted to Executive
    less than twelve months prior to such Change in Control, shall
    be cancelled immediately upon the occurrence of such Change in
    Control in consideration for a cash payment by Freddie Mac to
    Executive in the amount of $6,000,000, and (d) with respect
    to each Annual Equity Grant that was granted to Executive less
    than twelve months prior to such Change in Control, all Options
    and RSUs that formed part of such Annual Equity Grant shall be
    cancelled immediately upon the occurrence of the Change in
    Control and in consideration for such cancellation, Freddie Mac
    shall pay to Executive a lump sum cash payment in the amount of
    $6,000,000. For purposes of this Section 4.4, a Change in
    Control shall mean: (i) the acquisition by any person or
    group (within the meaning of Section 13(d)(3) or 14(d)(2)
    of the Securities Exchange Act of 1934, as amended (the
    “Exchange Act”)) of “beneficial ownership”
    (as such term is defined in
    Rule 13d-3
    promulgated under the Exchange Act), whether direct or indirect,
    of securities of Freddie Mac representing 50% or more of the
    combined voting power of Freddie Mac’s then outstanding
    securities, provided, however, that any acquisition by
    (A) Freddie Mac, any employee benefit plan of Freddie Mac
    or any person or entity organized, appointed or established
    pursuant to the terms of any such benefit plan or (B) any
    corporation with respect to which, immediately following such
    acquisition, more than 50% of the total combined voting power of
    such corporation is then beneficially owned, directly or
    indirectly, by the persons who were the beneficial owners of
    Freddie Mac’s outstanding voting securities immediately
    prior to such acquisition in substantially the same proportion
    as their ownership, immediately prior to such acquisition, of
    Freddie Mac’s outstanding voting securities, shall not
    constitute a Change in Control; or (ii) consummation of a
    merger of Freddie Mac unless securities representing more than
    50% of the total combined voting power of the voting securities
    of the successor corporation are, immediately after the
    consummation of such merger, beneficially owned, directly or
    indirectly, in substantially the same proportion, by the persons
    who beneficially owned Freddie Mac’s outstanding voting
    securities immediately prior to such transaction; or
    (iii) if, during any period, a majority of the members of
    the Board of Directors are elected by any person or entity other
    than Freddie Mac’s shareholders or a majority of the
    members of the Board of Directors are appointed by any
    governmental entity, unless (A) such election or
    appointment of the Board of Directors by a governmental entity
    is a result of safety and soundness concerns and
    Executive’s continuing authority and role at Freddie Mac
    (as contemplated by this Agreement) has not been significantly
    diminished or adversely affected, or

    

    4

 

    (B) such election or appointment of the Board of Directors
    by a governmental entity results from safety and soundness
    concerns attributable in significant part to actions of
    Executive.

 

    4.5 Signing Bonus.  Freddie Mac shall pay
    Executive a signing bonus in the amount of $2,000,000. If
    Executive terminates his employment other than for Good Reason
    (as defined below) or if he is terminated for Cause (as defined
    below), within ten (10) days of such termination Executive
    will pay Freddie Mac an amount equal to $2,000,000 multiplied by
    a fraction, the numerator of which is the number of days
    remaining until the Scheduled Termination Date and the
    denominator of which is 1,095.

 

    4.6 Term Life Insurance Policy.  During
    the Term: (a) so long as Executive remains employed by
    Freddie Mac, Freddie Mac shall maintain, at its cost, term life
    insurance on the life of Executive for the benefit of his
    beneficiaries with a face amount equal to $7,000,000, and
    (b) provided that Executive remains employed by Freddie Mac
    through both the Scheduled Termination Date and attainment of
    age 60, upon the later to occur of termination of
    Executive’s employment or Executive’s attainment of
    age 60, Freddie Mac shall deliver to Executive a fully
    paid-up permanent life insurance policy with a face amount equal
    to $2,800,000. In each case, Freddie Mac’s obligation to
    provide such term life insurance and permanent life insurance to
    Executive shall be subject to the provision by Executive of
    proof of Executive’s insurability at standard rates.

 

    4.7 Relocation Expenses.  Freddie Mac will
    reimburse the Executive for reasonable temporary living expenses
    incurred by Executive for up to six (6) months following
    the Commencement Date. If and when the Executive permanently
    relocates to the Washington, D.C. metropolitan area, Freddie Mac
    shall reimburse Executive for all costs reasonably incurred by
    Executive in connection with such relocation, in accordance with
    Freddie Mac’s written relocation policy applicable to
    senior executives of Freddie Mac.

 

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

 

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

 

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

    

    5

 

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

 

    SECTION 5. TERMINATION
    OF EMPLOYMENT

 

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

 

    In the event that Executive is absent from work more than thirty
    consecutive work days due to incapacity or disability, the Board
    of Directors or its designee, after considering such medical
    advice, if any, as the Board of Directors or its designee deems
    appropriate, may determine that, as a result of such incapacity
    or disability, some or all of Executive’s duties and
    responsibilities as described in Section 2 shall be
    delegated to one or more other persons. Such delegation shall
    terminate upon the earliest to occur of: (i) the date or
    event specified by the Board of Directors or its designee;
    (ii) the date on which Executive’s employment under
    this Agreement terminates by reason of Disability (under this
    Section 5.1); or (iii) a determination by the Board of
    Directors or its designee, upon receipt of such medical advice,
    if any, as the Board or its designee deems appropriate, that
    Executive is able to resume the duties and responsibilities so
    delegated. It is expressly understood that any delegation of
    Executive’s duties and responsibilities pursuant to this
    paragraph shall not constitute Good Reason for termination of
    employment by Executive (under Section 5.3 hereof) and
    shall not be deemed a breach or default by Freddie Mac.

 

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

 

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

 

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

 

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

    

    6

 

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

 

    (iii) A change in the reporting structure so that Executive
    reports to any person or entity other than Chief Executive
    Officer of Freddie Mac or the Board of Directors;

 

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

 

    (v) The failure of Freddie Mac, prior to December 31,
    2014, to extend the Term;

 

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

 

    (vii) Failure of the Board of Directors to nominate the
    Executive for election in the proxy mailing for the first annual
    meeting that follows the Commencement Date, or, if nominated,
    the failure of the shareholders to elect him to serve as a
    director;

 

    (viii) During the Term, if Richard Syron ceases to serve as
    Chief Executive Officer of Freddie Mac and someone other than
    the Executive is appointed Chief Executive Officer of Freddie
    Mac as Mr. Syron’s successor, except for the
    appointment of an interim Chief Executive Officer for a period
    not to exceed six (6) months;

 

    (ix) Failure of Freddie Mac to appoint the Executive as
    Chief Executive Officer by September 1, 2007, including as
    a result of Freddie Mac’s decision not to renew the Term
    effective September 1,2007 (a “Non-Appointment
    Event”); or

 

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

 

    5.4 Termination by Freddie Mac without
    Cause.  Prior to the Scheduled Termination Date,
    Freddie Mac may terminate the Term and Executive’s
    employment under this Agreement without Cause (which, for
    purposes of clarification, shall not include a termination of
    the Term or Executive’s employment under this Agreement due
    to Executive’s death or Disability). Any termination by
    Freddie Mac pursuant to this Section 5.4 shall be
    communicated by a written “Notice of Termination”
    addressed to Executive stating that the Term and
    Executive’s employment under this Agreement has been or
    will be terminated.

 

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

 

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

    

    7

 

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

 

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

 

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

 

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

 

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

 

    SECTION 6. COMPENSATION
    UPON TERMINATION

 

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

 

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

 

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

    

    8

 

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

 

    Except as provided in this Section 6.1 and for any vested
    benefits to which Executive is entitled under any benefit plans
    maintained by Freddie Mac in which Executive participated during
    the Term (other than the Freddie Mac Severance Policy and any
    other plan providing for benefits in the nature of severance,
    which Executive is not entitled to participate in by virtue of
    having entered into this Agreement), continuation of health
    insurance benefits under the law commonly referred to as
    “COBRA” and any other similar benefits required to be
    provided by law, Freddie Mac shall have no additional
    obligations to Executive.

 

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

 

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

 

    (i) Base Salary.  Freddie Mac shall pay
    Executive a lump sum cash payment equal to the Base Salary that
    would have been payable to Executive for the longer of
    (a) the period beginning on the termination of the Term and
    Executive’s employment under this Agreement and ending on
    the Scheduled Termination Date if the Executive had remained
    employed during such period and (b) one (1) year (such
    period, the “Severance Period”). All such amounts
    shall be paid to Executive on the effective date of
    Executive’s Release.

    

    9

 

    (ii) Bonus.  Freddie Mac shall pay
    Executive any and all earned but unpaid bonus amounts from the
    most recent complete calendar year of Freddie Mac. In addition,
    Freddie Mac shall pay Executive a lump sum cash payment equal to
    the sum of the Target Bonuses that would have been paid to
    Executive during the Severance Period. All such amounts shall be
    paid to Executive on the effective date of Executive’s
    Release.

 

    (iii) Long-Term Incentives.  On the
    effective date of Executive’s Release, (a) the Initial
    RSUs, if they were granted to Executive at least twelve months
    prior to such termination, and all other RSUs that were granted
    to Executive pursuant to this Agreement at least twelve months
    prior to such termination, shall immediately vest and be
    paid-out subject to any right of Executive to defer payment of
    the Initial RSUs and RSUs under any non-qualified deferred
    compensation arrangement in which senior executives of Freddie
    Mac are permitted to defer payment of restricted stock units,
    (b) the Initial RSUs, if they were granted to Executive
    less than twelve months prior to such termination, shall be
    cancelled immediately upon such termination in consideration for
    a cash payment by Freddie Mac to Executive on the effective date
    of Executive’s Release in the amount of $6,000,000,
    (c) all Options that were granted to Executive pursuant to
    this Agreement at least twelve months prior to such termination
    shall vest and become immediately exercisable and shall remain
    outstanding until the earlier to occur of (A) three
    (3) years following such termination of the Term and
    Executive’s employment under this Agreement and
    (B) the scheduled expiration date applicable to such
    Options, and (d) with respect to each Annual Equity Grant
    that was granted to Executive less than twelve months prior to
    such termination, all Options and RSUs that formed part of such
    Annual Equity Grant shall be cancelled immediately upon the
    occurrence of the termination and in consideration for such
    cancellation, Freddie Mac shall pay to Executive on the
    effective date of Executive’s Release a lump sum cash
    payment in the amount of $6,000,000; provided, however, if
    Executive resigns for Good Reason as a result of a
    Non-Appointment Event or if he otherwise resigns for Good Reason
    during 2007 pursuant to clause (viii) of Section 5.3,
    then the foregoing shall apply to the Initial RSUs and any
    Options and RSUs that were granted to Executive pursuant to this
    Agreement in calendar years 2005 and 2006, but shall not apply
    to any Options and RSUs that were granted to Executive pursuant
    to this Agreement in 2007; and provided, further, if Executive
    resigns for Good Reason as a result of non-renewal of the Term
    by Freddie Mac (other than as a result of a Non-Appointment
    Event), then in lieu of the foregoing, Executive will be
    entitled to credit for one (I) additional year of service
    for vesting purposes with respect to the Initial RSUs and each
    Annual Equity Grant. To the extent there is any inconsistency
    between the terms of the stock compensation plan under which the
    Initial RSUs, the RSUs and the Options were granted on the one
    hand and this Section 6.2(iii), on the other hand, this
    Section 6.2(iii) shall supersede such plans.

 

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

    

    10

 

    The terms of the Pension Plan shall not be affected by this
    Agreement, and this Agreement does not contemplate a payment of
    unvested Pension Plan benefits (or any equivalent thereof).

 

    (v) Health Benefits.  Freddie Mac shall
    provide continued coverage for Executive and his eligible
    dependents under Freddie Mac’s medical, dental and other
    similar welfare benefit plans in which Executive and such
    dependents participated immediately prior to the termination of
    the Term and Executive’s employment under this Agreement
    (the “Continued Benefits”) during the Severance
    Period, or, in the event that Executive’s participation in
    such plans is prohibited or impracticable under the terms of
    such plans, Freddie Mac shall arrange to provide Executive with
    benefits substantially similar to those available under the
    applicable plans in which Executive participated prior to the
    termination of the Term and Executive’s employment under
    this Agreement. In either case, the provision of such benefits
    by Freddie Mac shall be subject to timely payment by Executive
    of all premiums, contributions and other copayments required to
    be paid by senior executives of Freddie Mac under the terms of
    such plans as in effect from time to time (or the equivalent
    thereto in the case Freddie Mac arranges to provide Executive
    with substantially similar benefits to those available under the
    Freddie Mac plans), and shall be considered to be part of, and
    not in addition to, the benefit continuation required by the
    federal law commonly referred to as “COBRA.”
    Notwithstanding the foregoing, such continued coverage (or
    provision of substantially similar benefits) described in this
    paragraph 6.2(v) shall cease prior to the Scheduled
    Termination Date with respect to any plan at the time that
    Executive is eligible to obtain substantially similar coverage
    to that provided by such plan from a subsequent employer.
    Executive shall notify Freddie Mac promptly upon his employment
    with a subsequent employer, and shall provide Freddie Mac with
    such information as Freddie Mac reasonably requests regarding
    his coverage under medical, dental and life insurance plans of
    such employer.

 

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

 

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

 

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

 

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

    

    11

 

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

 

    SECTION 7.
    RESTRICTIONS ON EXECUTIVE

 

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

 

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

 

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

 

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

    

    12

 

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

 

    SECTION 8.
    ASSIGNMENT

 

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

 

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

 

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

 

    SECTION 9.
    MISCELLANEOUS

 

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

 

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

 

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

    

    13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    Remainder of this page intentionally left blank.

    

    14

 

    IN WITNESS WHEREOF, the parties have executed this Agreement as
    of August 3, 2004.

 

	 	 	 
	
 
	
 
	
    FEDERAL HOME LOAN

    MORTGAGE CORPORATION

	
 
	
 
	
 

	
    ATTEST:
	
 
	

    By:
      /s/  Richard
    F. Syron

    

	
 
	
 
	
 

	
    /s/  Ella
    Lee

    

	
 
	

    Title:   CEO

    

	
 
	
 
	
 

	

    By:
      /s/  John
    D. McCoy

    

    

	
 
	
 

	

    Title:  Chairman, Compensation

    & Human Resources Committee

    

    

	
 
	
    /s/  Eugene
    M. McQuade

    
Eugene
    M. McQuade

    

    15exv10w44

 

    Exhibit 10.44

 

	 	 	 	 	 
	
    

	
    CONFIDENTIAL

	
    Date
    
	
 
	
    To
    
	
 
	
 

	
    June 1, 2006
	
 
	
    Eugene M. McQuade
	
 
	
 

	
    From
    
	
 
	
 
	
 
	
 

	
    Geoffrey T. Boisi
	
 
	
 
	
 
	
 

	
    Subject
    
	
 
	
 
	
 
	
 

	
    Your Short-term Incentive Target for 2006 Performance
	
 
	
 

 

 

    This memorandum sets forth the terms and conditions pertaining
    to your annual short-term incentive target under the officer
    short-term incentive program (the “Bonus Program”) for
    2006 performance (payable in 2007). The terms established in
    this memorandum are in lieu of the target Annual Bonus set forth
    in Section 4.2 of your August 3, 2004 Employment
    Agreement with Freddie Mac.

 

    Effective upon the execution date stated below, your annual
    short-term incentive target for the 2006 performance period
    (payable in 2007) under the Bonus Program shall be 180% of
    your base salary earnings (or $1,620,000) (the “Bonus
    Target”) and, as set forth in Section 4.2 of your
    Employment Agreement, the maximum annual short-term incentive
    payment for 2006 shall be 200% of the Bonus Target, provided
    that you remain actively employed with Freddie Mac through the
    end of 2006.

 

    In consideration of receiving the Bonus Target described above,
    you:

 

    1. Waive any rights you have under your Employment
    Agreement with respect to your short-term incentive for 2006
    (payable in 2007), including receipt of the Annual Bonus for
    2006 that otherwise may be payable pursuant to the terms set
    forth in Section 4.2 of your Employment Agreement.

 

    2. Agree that for performance years after 2006, the payment
    of an annual short-term incentive pursuant to the target
    specified in Section 4.2 of your Employment Agreement shall
    not constitute “Good Reason” as defined in
    Section 5.3 of your Employment Agreement (including without
    limitation under Section 5.3(i)).

 

    3. Agree that a termination of employment benefit paid
    pursuant to Section 6 of your Employment Agreement, if any,
    shall be based on the Annual Bonus target set forth in
    Section 4.2 of such Agreement and that the Bonus Target
    established by this Resolution shall not be used to calculate
    any termination of employment benefit that may be paid pursuant
    to any of the terms of your Employment Agreement.

 

    Eugene M. McQuade

    June 1, 2006

    Page 2

 

 

    As a result of your waiver in paragraph 1 above, this
    memorandum shall not be deemed to be an amendment to your
    Employment Agreement.

 

    This memorandum sets forth the entirety of Freddie Mac’s
    and your obligations with respect to the payment of annual
    short-term incentive target for the 2006 performance period
    (payable in 2007), if any, and such terms may be modified only
    by approval of the Compensation and Human Resources Committee of
    the Board and a written agreement entered into by both you and
    Freddie Mac. This memorandum shall be governed by and construed
    in accordance with the laws of the Commonwealth of Virginia,
    without regard to its conflict-of-laws provisions.

 

    Should you agree to the terms set forth herein, please return an
    executed copy of this memorandum to Paul George, Freddie
    Mac’s Executive Vice-President, Human Resources and to
    Robert Bostrom, Freddie Mac’s Executive Vice-President,
    General Counsel and Corporate Secretary.

 

	 	 	 
	
 
	
 
	
    FEDERAL HOME LOAN

    MORTGAGE CORPORATION

	
 
	
 
	
 

	

    Date:           June
    1, 2006

    

	
 
	
    By:  /s/  Geoffrey
    T. Boisi

    
Geoffrey
    T. Boisi

    Chair of the Compensation and 

      Human Resources Committee

	
 
	
 
	
 

	

    Date:           June
    6, 2006

    

	
 
	
    /s/  Eugene
    M. McQuade

    
Eugene
    M. McQuade

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