Document:

exv10w8

 

EXHIBIT 10.8

INDEMNIFICATION AGREEMENT dated as of          

between FEDERAL NATIONAL MORTGAGE ASSOCIATION

(“Fannie Mae”), and          (“Indemnitee”)

     WHEREAS, Section 6.02 of Article 6 of the Bylaws of Fannie Mae (the
“Amendment”) approved by the stockholders at the Annual Meeting, May 21, 1987
and by the Board of Directors on that same date requires Fannie Mae to
indemnify directors and officers of Fannie Mae provided certain conditions are
met;

     WHEREAS, this indemnification bylaw amendment and this Indemnification
Agreement (“Agreement”) represent a response to recent changes in the market
for directors’ and officers’ liability insurance and the increasing threat of
potential litigation which the directors and officers of all companies face in
carrying out their responsibilities;

     WHEREAS, this Amendment and this Agreement are designed to assist the
corporation in obtaining and retaining qualified individuals to serve as
directors and officers by providing them with assurance of protection against
costly litigation; and

     WHEREAS, Fannie Mae is not subject to a particular state corporation code;
nonetheless, the proposed amendment incorporates by reference the standards for
indemnification permitted under the Delaware General Corporation Law because
that statute represents the most modern formulation of corporate indemnity
powers and has been used as a model by other jurisdictions;

     Now, therefore, in consideration of the Indemnitee’s continued service as
a director or officer of Fannie Mae, the parties hereto agree as follows:

     1.     Indemnification. (a) To the fullest extent permitted by the Delaware
General Corporation Law for a corporation subject to such law (a copy of
Section 145 is attached as Exhibit 1), as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits a Delaware corporation to provide broader indemnification
rights than said law permitted such corporation to provide prior to such
amendment), Fannie Mae hereby indemnifies and holds harmless the Indemnitee
against any and all claims, liabilities, and expenses (including attorneys’
fees, judgments, fines, and amounts paid in settlement) actually and reasonably
incurred and arising from any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative
(collectively referred to as “Claims”), to which the Indemnitee shall have
become subject by reason of having held the position of director or officer of
Fannie Mae, or having allegedly taken or omitted to take any action in
connection with any such position. However, the foregoing indemnification
shall not apply to:

                   (i)     any breach of the Indemnitee’s duty of loyalty to
Fannie Mae or its stockholders;

                   (ii)     any act or omission by Indemnitee not in good faith or which involves
intentional misconduct or where Indemnitee and reasonable cause to believe his
or her conduct was unlawful;

                   (iii)     any transaction from which the Indemnitee derived
any improper personal benefit; or

                   (iv)     any fines or other obligations or fees imposed by law or otherwise
which Fannie Mae is prohibited by Delaware law or other applicable law from
paying as indemnity or for any other reason.

          (b)     The decision concerning whether Indemnitee has satisfied the foregoing
shall be made by the Board of Directors by a majority vote of a quorum
consisting of members of the Board of Directors (“Members”) who are not parties
to the action, suit, or proceeding giving rise to the claim for indemnity. If
such a quorum is not obtainable, or if obtainable, where a quorum of
disinterested Members so directs, the determination may be made either by
independent legal counsel in a written opinion or by a vote of the
stockholders.

 

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     2.     Indemnification for Service on Nonprofit Boards. This Agreement shall
cover the Indemnitee for service on the board of directors or similar governing
body of a nonprofit institution, (i) where the Indemnitee serves without
compensation from such institution, and (ii) at the request of Fannie Mae as
evidenced by a memorandum, substantially in the form attached hereto as Exhibit
2, signed by the Chairman of the Board or the President acknowledging that the
Indemnitee’s membership on such board furthers Fannie Mae’s community service
objectives, provided, however, that the Indemnitee is not entitled to
indemnification from Fannie Mae for any portion of the loss for which he or she
is, in fact, reimbursed by insurance or otherwise or for claims based on
actions or occurrences subsequent in time to the Indemnitee’s termination of
service as a director or officer of Fannie Mae.

     3.     Continuation of Indemnity. All agreements and obligations of Fannie
Mae contained herein shall continue during the period the Indemnitee is a
director or officer of Fannie Mae and shall continue thereafter with respect to
any possible Claims based on the fact that the Indemnitee was a director or
officer of Fannie Mae. This Agreement shall be binding upon all successors and
assigns of Fannie Mae (including any transferee of all or substantially all of
its assets and any successor by merger or operation of law) and shall inure to
the benefit of the heirs, personal representatives and estate of the
Indemnitee.

     4.     Notification and Assumption of Defense. Promptly after receipt by the
Indemnitee of notice of the commencement of any action, suit, or proceeding,
Indemnitee shall notify Fannie Mae of the commencement thereof if a claim in
respect thereof is to be made against Fannie Mae under this Agreement. With
respect to any such action, suit, or proceeding as to which Indemnitee notifies
Fannie Mae of the commencement thereof:

          (a)     Fannie Mae will be entitled to participate therein at its own expense.

          (b)     Except as otherwise provided below, to the extent that it may wish,
Fannie Mae, individually or jointly with any other indemnifying party similarly
notified, will be entitled to assume the defense thereof, and to designate
counsel and such counsel designated by Fannie Mae shall be counsel of record.
Such counsel shall be acceptable to Indemnitee or to a majority of indemnitees
if there are more than one, but Indemnitee’s consent shall not be unreasonably
withheld. Upon notice from Fannie Mae to Indemnitee of its election so to
assume the defense thereof, Fannie Mae’s obligation to the Indemnitee under
this Agreement will terminate with respect to any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense thereof
other than as provided below. Indemnitee will have the right to employ his or
her counsel in such action, suit or proceeding, in addition to counsel
designated by Fannie Mae, but the fees and expenses of such counsel incurred
after notice from Fannie Mae of its assumption of the defense thereof shall be
at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee
has been authorized by Fannie Mae, (ii) the Indemnitee or Fannie Mae shall have
reasonably concluded that there may be a conflict of interest between Fannie
Mae and the Indemnitee in the conduct of the defense of such action and the
Indemnitee or Fannie Mae shall have been so advised in writing by counsel, or
(iii) Fannie Mae shall not in fact have designed counsel to assume the defense
of such action, in each of which cases the reasonable fees and expenses of
counsel shall be at the expense of Fannie Mae.

          (c)     Fannie Mae will not be liable to the Indemnitee under this Agreement
for any amounts paid in settlement of any action or claim effected without its
written consent. Fannie Mae will not settle any action or claim effected
without its written consent. Fannie Mae will not settle any action or claim in
any manner which would impose any penalty or limitation on the Indemnitee
without the Indemnitee’s written consent. Neither Fannie Mae nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.

     5.     Advancement of Expenses. The Board of Directors shall authorize the
advancement of funds to Indemnitee for reasonable expenses, provided Indemnitee
provides a written undertaking to repay such advance in substantially the form
attached hereto as Exhibit 3 if it is later determined that the Indemnitee does
not satisfy the standard of conduct required for indemnification. Indemnitee
agrees to reimburse Fannie Mae for all reasonable expenses paid by Fannie Mae
in defending any civil or criminal action, suit

 

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or proceeding against Indemnitee in the event, and only to the extent,
that it shall be ultimately determined that Indemnitee is not entitled to be
indemnified by Fannie Mae for such expenses under the provisions of this
Agreement. The Board of Directors may, at its discretion, require that
Indemnitee post collateral to guarantee repayment of expenses actually advanced
if the Board of Directors later determines that the Indemnitee is not entitled
to indemnification under this Agreement.

     6.     Separability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever (i)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not by themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (ii) to the fullest
extent possible, the provisions of this agreement (including, without
limitation all portions of any paragraph of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent of the parties that Fannie Mae provide protection to Indemnitee to
the fullest enforceable extent.

     7.     Other Provisions.

          (a)     This Agreement shall be interpreted and enforced in accordance with
the laws of the District of Columbia except that issues concerning the
interpretation of Section 145 of the Delaware General Corporation Law or any
successor Delaware statute concerning indemnification of directors and officers
shall be interpreted in accordance with the laws of the state of Delaware.

          (b)     This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one document.

          (c)     This Agreement shall not be deemed an employment contract between
Fannie Mae and any Indemnitee who is an officer of Fannie Mae, and, if the
Indemnitee is an officer of Fannie Mae, the Indemnitee specifically
acknowledges that the Indemnitee may be discharged at any time for any reason,
with or without cause, and with or without severance compensation, except as
may be otherwise provided in a separate written contract between the Indemnitee
and Fannie Mae.

          (d)     Upon a payment to the Indemnitee under this Agreement, Fannie Mae
shall be subrogated to the extent of such payment to all of the rights of the
Indemnitee to recover against any person for such liability, and the Indemnitee
shall execute all documents and instruments required and shall take such other
actions as may be necessary to secure such rights, including the execution of
such documents as may be necessary for Fannie Mae to bring suit to enforce such
rights.

          (e)     No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.

	 	 	 
	 	
FEDERAL NATIONAL MORTGAGE ASSOCIATION
	 	 	 
	 	By	
 
	 	 	

Chairman of the Board and Chief Executive Officer
	 	 	 
	 	 	

Indemniteeexv10w9

 

EXHIBIT 10.9

FEDERAL NATIONAL MORTGAGE ASSOCIATION

SUPPLEMENTAL PENSION PLAN

(Effective January 1, 1994)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	ARTICLE I. – PURPOSE	 	 	1	 
	 	1.1	
Establishment
	 	 	1	 
	 	1.2	
Purpose
	 	 	1	 
	 	1.3	
Compliance
	 	 	1	 
	ARTICLE II. – DEFINITIONS	 	 	2	 
	 	2.1	
Administrator
	 	 	2	 
	 	2.2	
Board
	 	 	2	 
	 	2.3	
Code
	 	 	2	 
	 	2.4	
Committee
	 	 	2	 
	 	2.5	
Corporation
	 	 	2	 
	 	2.6	
ERISA
	 	 	2	 
	 	2.7	
Executive
	 	 	2	 
	 	2.8	
Qualified Plan Benefit
	 	 	2	 
	 	2.9	
Participant
	 	 	2	 
	 	2.10	
Plan
	 	 	3	 
	 	2.11	
Retirement Plan
	 	 	3	 
	 	2.12	
Unrestricted Benefit
	 	 	3	 
	ARTICLE III. – ELIGIBILITY AND PARTICIPATION	 	 	3	 
	 	3.1	
Eligibility
	 	 	3	 
	 	3.2	
Benefits
	 	 	3	 
	 	3.3	
Cost of Living Adjustments to Retirement Plan
	 	 	4	 
	 	3.4	
Commencement of Benefit Payments
	 	 	4	 
	 	3.5	
Form of Benefit Payments
	 	 	4	 
	ARTICLE IV. – ADMINISTRATION	 	 	5	 
	 	4.1	
Administration
	 	 	5	 
	 	4.2	
No Liability of Committee Members
	 	 	5	 
	 	4.3	
Claims Procedures
	 	 	5	 

- i -

 

TABLE OF CONTENTS CONTINUED

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	ARTICLE V. – MISCELLANEOUS	 	 	7	 
	 	5.1	
General Creditor Status	 	 	7	 
	 	5.2	
Change in Control or other Discontinuance
	 	 	8	 
	 	5.3	
Non-Alienation of Benefits
	 	 	8	 
	 	5.4	
Payments to Persons other than Participants
	 	 	8	 
	 	5.5	
Amendment or Termination
	 	 	9	 
	 	5.6	
Effect of Trust Fund
	 	 	9	 
	 	5.7	
Unfunded Plan; Governing Law
	 	 	9	 
	 	5.8	
Taxes
	 	 	9	 
	 	5.9	
Other Plans
	 	 	9	 
	 	5.10	
Gender
	 	 	10	 
	 	5.11	
Captions
	 	 	10	 
	 	5.12	
Effective Date
	 	 	10	 

- ii -

 

FEDERAL NATIONAL MORTGAGE ASSOCIATION

SUPPLEMENTAL PENSION PLAN

Effective as of January 1, 1994

ARTICLE I.

PURPOSE

     1.1     Establishment. The Federal National Mortgage Association (the
“Corporation”) establishes this Federal National Mortgage Association
Supplemental Pension Plan effective as of January 1, 1994 for the benefit of
its eligible employees.

     1.2     Purpose. The Corporation intends by the adoption of this Plan to
recognize the value to the Corporation of past and present services of a select
group of managerial or highly compensated employees who are eligible to
participate and to encourage their continued service with the Corporation by
making more adequate provision for their future retirement security. The
establishment of this Plan is made necessary by certain limitations on benefits
which are imposed by the Code on the Federal National Mortgage Association
Retirement Plan for Employees Not Covered Under Civil Service Retirement Law.

     1.3     Compliance. This Plan is intended to be an unfunded plan for purposes
of the Code and Title I of ERISA. It is the Corporation’s intent that this
Plan be exempt from ERISA’s provisions to the maximum extent permitted by law.
To the extent this Plan is an excess benefit plan (as defined in Section 3(36)
of ERISA), it shall be exempt from coverage entirely. This Plan is intended to
be an unfunded “top-hat” plan maintained primarily for a select group of
management or highly-compensated employees under Sections 201(2), 301(a)(3),
and 401(a)(1) of ERISA, and therefore is not subject to participation and
vesting, funding and fiduciary requirements under ERISA.

 

 

ARTICLE II.

DEFINITIONS

     When used herein, the following terms shall have the following meanings:

     2.1     “Administrator” means the Benefit Plans Committee.

     2.2     “Board” means the Board of Directors of the Federal National Mortgage
Association.

     2.3     “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.

     2.4     “Committee” means the Benefit Plans Committee of the Corporation
appointed in accordance with the terms of the Retirement Plan.

     2.5     “Corporation” means the Federal National Mortgage Association.

     2.6     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

     2.7     “Executive” shall mean any officer or other member of the management
group of the Corporation.

     2.8     “Qualified Plan Benefit” shall mean the monthly normal, early,
deferred vested, disability or preretirement survivor annuity benefit that is
permitted to be paid to or on behalf of a Participant under the terms of the
Retirement Plan including, but not limited to, those provisions of the
Retirement Plan necessary in order for the Retirement Plan to comply with
Sections 401(a)(17) and 415 of the Code.

     2.9     “Participant” means any Executive employee of the Corporation who is
entitled to receive a benefit under this Plan.

- 2 -

 

     2.10     “Plan” means this Supplemental Pension Plan of Federal National
Mortgage Association.

     2.11     “Retirement Plan” means the Federal National Mortgage Association
Retirement Plan for Employees Not Covered Under Civil Service Retirement Law,
as amended from time to time.

     2.12     “Unrestricted Benefit” shall mean the monthly normal, early, deferred
vested, disability or preretirement survivor annuity benefit, as the case may
be, which may be paid to or on behalf of a Participant in accordance with the
terms of the Retirement Plan as in effect on the date of the determination, but
determined with the following modifications: (i) the terms of the Retirement
Plan included solely to comply with Sections 401(a)(17) and 415 of the Code
shall be disregarded; and (ii) “Earnings” under the Retirement Plan (determined
without regard to the terms of the Retirement Plan included solely to comply
with Section 401(a)(17) of the Code) shall include amounts of compensation
deferred under the Federal National Mortgage Association Career Deferred
Compensation Plan and the Federal National Mortgage Association Elective
Deferred Compensation Plan that would have seen included in Earnings had such
amount not been deferred under such Plans.

ARTICLE III.

ELIGIBILITY AND PARTICIPATION

     3.1     Eligibility. Each Executive employee of the Corporation whose
Qualified Plan Benefit under the Retirement Plan is less than his or her
Unrestricted Benefit shall be eligible to participate in this Plan. As a
condition of initial and continued participation in the Plan, an eligible
Executive must complete and submit to the Administrator any and all forms as
may be required by the Administrator, including, but not limited to, authorization to withhold from other compensation payable by
the Corporation to the Executive any applicable taxes resulting from
participation in the Plan.

     3.2     Benefits. A Participant (or surviving spouse of a deceased
Participant) who is eligible to commence receiving a benefit under the Retirement Plan shall receive a benefit under

- 3 -

 

this Plan equal to the Participant’s Unrestricted Benefit reduced by (i) the Participant’s Qualified
Plan Benefit (including for this purpose the annual amount of any payment which
he or she is then entitled to receive from the Corporation pursuant to Section
4.1(g) of the Federal National Mortgage Association Career Deferred
Compensation Plan and/or the Federal National Mortgage Association Elective
Deferred Compensation Plan or any successor provision to said section of said
plans), and (ii) the actuarial equivalent value of the vested benefits accrued
under the Executive Pension Plan of the Federal National Mortgage Association.

     All benefit offsets described in preceding clauses (i) and (ii) of this
Section 3.2 shall be determined by the Administrator in its sole discretion and
taking into account all applicable actuarial adjustments. Such benefit offsets
shall be based, if necessary, upon actuarial assumptions similar to those used
for computing benefits payable at a different time or different form under the
Retirement Plan.

     3.3     Cost of Living Adjustments to Retirement Plan. A cost of living
adjustment to benefits paid by the Retirement Plan shall automatically adjust
the amount of benefits payable by this Plan, unless the Board or Committee
determines otherwise.

     3.4     Commencement of Benefit Payments. Benefits shall commence at the same
time as Participant’s (or surviving spouse’s) benefits commence under the
Retirement Plan. Furthermore, any suspension or termination of benefits
payable from the Retirement Plan shall also result in a suspension or
termination of benefits under this Plan. In no event will any benefit under
the Plan be payable to a Participant prior to the later of (i) the date of his
termination of employment with the Corporation or (ii) the date he attains age
55.

     3.5     Form of Benefit Payments. Payments under this Plan shall be made
monthly to a Participant, the Participant’s surviving spouse, or the
Participant’s contingent annuitant (determined in accordance with the
Participant’s benefit election under the Retirement Plan) in the same form of
payment and at the same time as the Participant’s benefit is payable under the
Retirement Plan. Notwithstanding the foregoing, in the event that the
Administrator determines that a Participant must elect the form and timing of
benefits under this Plan earlier than the date such election must be made under
the Retirement Plan in order to conform the Plan’s operation to tax laws and
interpretations affecting the intended operation of the Plan, then the
Administrator

- 4 -

 

may adopt additional rules and requirements regarding the
election of the timing and form of payment of benefits under the Plan.

ARTICLE IV.

ADMINISTRATION

     4.1     Administration. The Plan shall be administered by the Committee. The
Committee shall have all powers necessary to carry out the provisions of the
Plan, including, without reservation, discretionary authority to interpret the
provisions of the Plan, and the power to delegate to other persons the duty to
perform administrative matters and the discretionary authority to interpret the
provisions of the Plan.

     4.2     No Liability of Committee Members. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his or her behalf in his or her capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the
Corporation shall indemnify and hold harmless each employee, officer or
director of the Corporation to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim) arising out of any act or omission to
act in connection with the Plan unless arising out of such person’s own fraud
or bad faith; provided, however, that approval of the Board shall be required
for the payment of any amount in settlement of a claim against the Committee or
any member of the Committee.

     4.3     Claims Procedures. Claims for benefits under the Plan shall be
submitted in writing to and decided by the person designated by the Committee.
A claimant or his duly authorized representative may review pertinent documents
and may submit issues and comments in writing prior to the time when a decision
is rendered on the claim. Under normal circumstances a final decision on a
claimant’s request for benefits shall be made within ninety (90) days after
receipt of the claim. However, if special circumstances require an extension
of time to process a claim, a final decision may be deferred up to one hundred
eighty (180) days

- 5 -

 

after receipt of the claim if prior to the end of the initial
ninety (90) day period the claimant is furnished written notice of the special
circumstances requiring the extension and the anticipated date of a final
decision. If the claim is denied, within the applicable period of time set out
above, the claimant shall receive written notification of the denial, which
notice shall set forth in a manner reasonably calculated to be understood by
such claimant (i) the specific reason or reasons for the denial, (ii) specific
reference to the pertinent provision of the Plan on which the denial is based,
(iii) a description of any additional material or information necessary for the
claimant to perfect such claim and an explanation of why such material or
information is necessary, and (iv) an explanation of the Plan’s review
procedure. If such a notice is not furnished and such claim has not been
allowed within the ninety (90) day period after receipt of the claim, such
claim shall be deemed to have been denied.

     In the event a claim is denied or in the event no action is taken on the
claim within the above-described period(s) of time, the following procedure
shall be used:

	 	(a)	 	First, in the event that the claimant does not timely receive
the above-described written notification, the claimant’s request for
benefits shall be deemed to be denied as of the last day of the
relevant period and the claimant shall be entitled to a full review
of his or her claim in accordance with the following provisions of
this Section.
	 
	 	(b)	 	Second, a claimant is entitled to a full review of his or her
claim after actual or constructive notification of a denial. A
claimant or the authorized representative of claimant desiring a
claim review must make a written request to the Committee requesting
such a review, which request shall contain all information which the
claimant wishes the Committee to consider. Incident to the review,
the claimant or the claimant’s authorized representative will have
the right to inspect all documents pertaining to the claim and to
submit issues and comments in writing. The Committee may conduct
any independent investigation which it deems necessary to render
its decision.

     A request for a review must be filed with the Committee within sixty (60)
days after the denial of the claim for benefits was actually or constructively
received by the claimant. If no

- 6 -

 

request is received within the sixty (60) day
time limit, the denial of benefits will be final. However, if a request for
review of a denied claim is timely filed, the Committee must render its
decision under normal circumstances within sixty (60) days of the receipt of
the request for review. However, if special circumstances require an extension
of time, the decision may be delayed if prior to expiration of the initial
sixty (60) day period the claimant is notified of the extension, but must in
any event be rendered no later than one hundred twenty (120) days after the
receipt of the request. If the decision on review is not furnished the
claimant within the applicable time period(s) set out above, the claim shall be
deemed denied on the last day of the relevant period. All decisions of the
Committee shall be in writing setting forth in a manner reasonably calculated
to be understood by the claimant the specific reasons for whatever action has
been taken, and the provisions of the Plan on which the decision is based. A
claimant shall be precluded from bringing suit for benefits unless a review of
the claimant’s benefit claim has been properly requested and an adverse
decision on review received. For all purposes of the Plan, said decisions on
claims (where no review is requested) and decisions or review (where review is
requested) shall be final, binding and conclusive on all interested persons as
to participation and benefit eligibility, the computation of the employee’s
amount of benefit and as to any other matter of fact or interpretation relating
to the Plan.

ARTICLE V.

MISCELLANEOUS

     5.1     General Creditor Status. To the extent that any person acquires a
right to receive payments from the Corporation under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Corporation and such person shall have only the unsecured promise of the
Corporation that such payment shall be made. All payments to be made hereunder
shall be paid from the general funds of the Corporation and no special or
separate fund shall be established and no segregation of assets shall be made
to assure payment of such amounts. Participants and their surviving spouses
shall have no right, title or interest in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan.

- 7 -

 

All such
assets shall be the property solely of the Corporation and shall be subject to
the claims of the Corporation’s unsecured general creditors.

     5.2     Change in Control or other Discontinuance. The obligations of the
Corporation under the Plan shall be binding upon any successor corporation or
organization resulting from the merger, consolidation or other reorganization
or from any reincorporation or change of name of the Corporation, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Corporation. The Corporation agrees that it will
make appropriate provision for the preservation of Participant’s rights under
the Plan in any agreement or plan which it may enter into or adopt to effect
such merger, consolidation, reorganization, reincorporation, change of name or
transfer of assets.

     5.3     Non-Alienation of Benefits. To the extent permitted by law,
Participants and their surviving spouses shall not have the right to alienate,
anticipate, commute, sell, assign, transfer, pledge, encumber or otherwise
convey the right to receive any payments under the Plan, and any payments under
the Plan or rights thereto shall not be subject to the debts, liabilities,
contracts, engagements or torts of Participants or their surviving spouses nor
to attachment, garnishment or execution, nor shall they be transferable by
operation of law in the event of bankruptcy or insolvency. Any attempt,
whether voluntary or involuntary, to effect any such action shall be null, void
and of no effect.

     5.4     Payments to Persons other than Participants. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his or her affairs because of illness or accident, or is a minor, or
has died, then any payment due to such person or his or her estate (unless a
prior claim therefor has been made by a duly appointed legal representative), may, if
the Committee so directs the Corporation (or trustee in the event a trust fund
is established in connection with the Plan), be paid to his spouse, child, a
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Plan, any trust fund established in
accordance with Section 5.6 hereof and the Corporation therefor.

- 8 -

 

     5.5     Amendment or Termination. The Board may, with prospective or
retroactive effect, amend, suspend, or terminate the Plan or any portion
thereof at any time, and delegates to the Committee the authority to adopt
amendments which may be necessary or appropriate to facilitate the
administration, management and interpretation of the Plan or to conform the
Plan thereto, provided any such amendment does not significantly affect the
cost to the Corporation of maintaining the Plan. However, no amendment,
suspension or termination of the Plan shall without the consent of a
Participant impair or adversely affect any benefits accrued under the Plan as
of the date of such action (determined as if the Participant then employed had
terminated his employment as of the date of such amendment, suspension or
termination).

     5.6     Effect of Trust Fund. The Corporation shall be responsible for the
payment of all benefits to the employees as provided under the Plan. The
Corporation may (but shall not be required to) establish one or more trusts,
with such trustees as the Committee may approve, for the purpose of providing
for the payment of such benefits. Although a trust may be irrevocable, its
assets shall be held for payment of the Corporation’s general creditors in the
event of the Corporation’s bankruptcy or insolvency. To the extent any
benefits provided under the Plan are paid from a trust, the Corporation shall
have no further obligation to pay that portion of the benefit due. If not paid
from the trust, the benefits shall remain the obligation of the Corporation.

     5.7     Unfunded Plan; Governing Law. As provided in Section 1.3, the Plan is
intended to constitute an excess benefit plan and/or an unfunded deferred
compensation arrangement for a select group of management or highly
compensated personnel and all rights thereunder shall be governed by and
be construed in accordance with the laws of the District of Columbia.

     5.8     Taxes. The amount of any taxes required to be withheld from a
Participant’s distribution by any federal, state, or local government shall be
deducted from the distribution. The Participant shall bear any and all
federal, state, or local or other taxes imposed on amounts accrued under or
distributed from the Plan. The Corporation does not represent or guarantee
that any particular federal or state, income, payroll, personal property or
other tax consequences will result from participation in the Plan.

     5.9     Other Plans. Benefits payable under the Plan shall not be deemed
salary or other compensation to the Participant for the purpose of computing
benefits to which he may be

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entitled under any other plan or arrangement of the
Corporation. Notwithstanding any provision of the Plan to the contrary, no
benefit (or portion of a benefit) shall be payable as a result of participation
in the Plan to the extent a benefit is payable to or on behalf of such
participant under a plan, program or agreement with purposes similar to those
of this Plan and the payment of the benefit (or portion of such benefit) under
this Plan would provide a benefit to or on behalf of the participant which
duplicates the benefit payable under such other plan, program or agreement.

     5.10     Gender. Whenever used in the Plan, the masculine gender includes the
feminine.

     5.11     Captions. The captions preceding the Sections of the Plan have been
inserted solely as a matter of convenience and in no way define or limit the
scope or intent of any provision of the Plan.

     5.12     Effective Date. The Plan shall become effective as of January 1,
1994.

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