Document:

exv10w20

 

EXHIBIT
10.20

PROCEDURES FOR DEFERRAL AND DIVERSIFICATION OF AWARDS

     The following guidelines for deferral and diversification of awards (“Awards”) under the PSP
have been adopted by the Benefit Plans Committee pursuant to Section 5.3 of the Fannie Mae Stock
Option Plan of 1993 (the “Plan”), and pursuant to authority granted by the Fannie Mae Board of
Directors (the “Board”) on November 18, 1997:

     1. An individual who has received an Award and who has been designated as eligible by the
Board or by the Chairman of the Board to request deferral of such an Award (a “Participant”) may
make an election (“Election”) to defer receipt of an Award.

     2. The Election must specify (a) the date on which amounts in the Participant’s Account
(as defined in paragraph 5 below) attributable to the Award deferred by such Election shall be paid
or begin to be paid to the Participant pursuant to paragraph 16 below, and (b) the method of such
payment. The payment date must be at least one year from the date that an Award would have been
paid to a Participant, but for the Participant’s Election to defer receipt of such Award. The
Participant may not change the payment date or method specified in his or her Election. In place of
a specific date on which distributions under these guidelines will be paid or begin, a Participant
may elect to have distributions paid or begin upon his or her Retirement1 or death.

     3. Once made, an Election may not be modified or revoked by the Participant.

 

			
	1	 	Unless otherwise defined herein, all capitalized terms are as
defined in the Fannie Mae Stock Compensation Plan of 1993 (the “Plan”).

AMENDED 1/1/2008

 

 

     4. An Election to defer receipt of an Award must be approved (a) by the Chairman of the
Board, in the case of a Participant other than the Chairman of the Board, or (b) by the Chairman of
the Compensation Committee, in the case of the Chairman of the Board.

     5. Fannie Mae (the “Company”) shall establish for each Participant a bookkeeping account
(“Account”) to record deferrals and subsequent adjustments under these guidelines. Each Participant
shall have a separate Account. Within a Participant’s Account, each Award deferred under these
guidelines shall be accounted for separately. Each Account shall be credited and debited as
described below.

     6. On the date that an Award would have been paid to a Participant, but for the
Participant’s Election to defer receipt of such Award, the Participant’s Account shall be credited
with the number of shares of the Company’s common stock (“Deemed Shares”) that would have been
payable under such Award.

     7. Within 30 days of the end of each quarter, a Participant’s Account shall be credited
with an amount equal to the dividends that would have been paid with respect to any Deemed Shares
credited at the end of such quarter to his or her Account if such Deemed Shares had they been
issued and outstanding (“Deemed Dividends”). Upon crediting to a Participant’s Account, such Deemed
Dividend shall be converted to shares (or a partial share) of Common Stock using the Fair Market
Value on the last day of the most recently ended quarter as the date of valuation to calculate the
number of shares (or the partial share) to be so credited.

     8. For purposes of these guidelines, “Fair Market Value” shall mean the per share value of
Common Stock as determined by using the mean between the high and low selling prices of Common
Stock on the day preceding date of valuation (or, if the New York Stock Exchange (“NYSE”) is not
open or the Common Stock is not trading that day, the most recent prior date that the NYSE was open
for trading and the Common Stock was traded) as reported for such date on the table entitled “NYSE
— Composite Transactions” contained in the Wall Street Journal.

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     9. If any of the following events occurs, appropriate adjustments will be made with
respect to any Deemed Shares and shares attributable to Deemed Dividends in a Participant’s
Account: (a) any extraordinary dividend or other extraordinary distribution in respect of Common
Stock (whether in the form of cash, Common Stock, other securities or other property), (b) any
recapitalization, stock split (including a stock split in the form of a stock dividend), reverse
stock split, reorganization, merger, combination, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of the Company, (c) any issuance of
warrants or other rights to purchase shares of Common Stock or other securities of the Company
(other than to employees) at less than 80 percent of fair value on the date of such issuance, or
(d) any other like corporate transaction or event in respect of the Common Stock or a sale of
substantially all the assets of the Company.

     10. A Participant may elect to have Deemed Shares and Deemed Dividends previously credited
to his or her Account converted into a cash credit, provided that such election must be approved
(a) by the Chairman of the Board, in the case of a Participant other than the Chairman of the
Board, or (b) by the Chairman of the Compensation Committee, in the case of the Chairman of the
Board. Such cash credit shall be equal to the Fair Market Value, on the date of conversion, of such
Deemed Shares and, upon crediting, will be deemed to be invested in a hypothetical portfolio chosen
by the Participant from among such investment options as the Benefit Plans Committee (“Committee”)
may designate as available under these guidelines (the “Deemed Investment Portfolio”).”

     11. Amounts credited to a Participant’s Account pursuant to paragraph 10 above shall be
adjusted for the deemed gain or loss with respect to the Deemed Investment Portfolio (the “Deemed
Earnings”). The Deemed Earnings with respect to each investment option in a Deemed Investment
Portfolio shall be determined by reference to the total actual return on such investment option for
the period in question.

     12. A Participant’s Account shall be reduced by any payments made to the Participant, his
or her beneficiary, estate or representative.

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     13. If a Participant elects, pursuant to paragraph 10 above, to have cash credited to his
or her Account, he or she shall also designate a Deemed Investment Portfolio, and shall allocate
the amount credited to his or her Account as a result of such Election among the investment options
offered in the Deemed Investment Portfolio in integral multiples of five percent. A Participant
shall so designate a Deemed Investment Portfolio by directly contacting the investment advisor with
responsibility for administering the Deemed Investment Portfolio (the “Investment Administrator”).
A Participant may change such allocation at any time by notice to the Investment Administrator, in
accordance with such procedures as may be established by the Investment Administrator. By
allocating amounts to a Deemed Investment Portfolio, a Participant directs the Investment
Administrator to notify the Company of such allocation and any changes thereto.

     14. The Company shall have no responsibility for the performance of any hypothetical
investment options selected by a Participant.

     15. All entries to a Participant’s Account shall be bookkeeping entries only and shall not
represent a special reserve or otherwise constitute a funding of the Company’s unsecured promise to
pay any amounts hereunder. All payments to be made under these guidelines shall be paid from the
general funds of the Company. Participants and their beneficiaries 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 these guidelines. All such assets shall be the property solely of the Company and shall be
subject to the claims of the Company’s unsecured general creditors. To the extent a Participant or
any other person acquires a right to receive payments from the Company under these guidelines, such
right shall be no greater than the right of any unsecured general creditor of the Company, and such
person shall have only the unsecured promise of the Company that such payments shall be made.

     16. Except as otherwise provided in paragraphs 23 and 27 below, all payments from an
Account will be made or will commence as soon as practicable after the payment date selected by the
Participant pursuant to paragraph 2 above.

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     17. Except as provided in paragraph 19 below, payment from a Participant’s Account with
respect to Deemed Shares or Deemed Dividends credited thereto shall be made in shares of Common
Stock. Payments from a Participant’s Account with respect to cash credited to such Account pursuant
to paragraph 10 above, and as adjusted by Deemed Earnings thereon, shall be made in cash.

     18. A Participant may elect to receive payments hereunder in one of the following methods:

	 	a.	 	a single payment,
	 
	 	b.	 	annual installments over a period of years (selected by the
Participant) not to exceed 15, with the amount of each annual
installment calculated by dividing the balance of the Account at the
end of the prior year by the number of installments remaining to be
paid, or
	 
	 	c.	 	an initial installment of an amount specified by the Participant
followed by annual installments over a period of years not to exceed
15 and commencing in a year selected by the Participant, with each
annual installment calculated by dividing the balance of the Account
at the end of the prior year by the number of installments remaining
to be paid.

     19. If any annual installment (other than the last installment), calculated as set forth
in paragraph 18 above, would result in the payment of a fractional share of Common Stock, such
annual installment shall be reduced to the next lowest whole number of shares of Common Stock. If,
as part of the final installment payment, a fractional share of Common Stock would be paid, then in
lieu thereof the Fair Market Value of such fractional share on the date the payment is calculated
shall be paid in cash.

     20. Notwithstanding any other provision of these guidelines to the contrary, a Participant
or beneficiary may receive a payment with respect to his or her Account upon a finding by the
Committee in its sole discretion (a) that an unanticipated emergency caused by

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an event beyond the control of such Participant or beneficiary has occurred and that such emergency
would result in financial hardship to such Participant or beneficiary if early payment were not
permitted, or (b) that the continued participation of a Participant who is employed by the federal
government or that of a state or municipality creates a serious hardship for the Participant
because of the conflict of interest or ethics rules of such government. The amount that may be paid
pursuant to clause (a) above shall not exceed the amount necessary to meet such financial hardship
as determined by the Committee in its sole discretion. The entire balance in the Participant’s
Account may be paid pursuant to clause (b) above. The Committee shall have the right to require
such Participant or beneficiary to submit such documentation as it deems appropriate for the
purpose of determining the existence, cause and extent of such hardship.

     21. Notwithstanding any other provision in these guidelines to the contrary, the Company
may apply, at a Participant’s request, such Participant’s Account or a portion thereof in
accordance with the provisions of the Fannie Mae Estate Enhancement Plan.

     22. The Company shall have the right to deduct from any payment to be made pursuant to
these guidelines any federal, state or local taxes required by law to be withheld.

     23. In the event of the death of a Participant, an amount equal to the balance of the
Participant’s Account shall be paid to the Participant’s beneficiary in a single payment within 30
days after the date of such death.

     24. Each Participant shall designate a beneficiary to whom an amount equal to any balance
in the Participant’s Account shall be payable on the Participant’s death. A Participant may also
designate an alternate beneficiary to receive such payment in the event that the designated
beneficiary cannot receive payment for any reason. In the event no designated or alternate
beneficiary can receive such payment for any reason, payment will be made to the Participant’s
surviving spouse, if any, or if the Participant has no surviving spouse, then to the following
beneficiaries if then living in the following order of priority: (a) to the Participant’s children
(including adopted children and stepchildren) in equal shares, (b) to the Participant’s parents in
equal shares, (c) to the Participant’s brothers and sisters in

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equal shares and (d) to the Participant’s estate. Each Participant may at any time change his or
her beneficiary designation. A change of beneficiary designation must be made in writing and
delivered to the Committee for such purposes. The interest of any beneficiary who predeceases the
Participant will terminate unless otherwise specified by the Participant.

     25. Upon a Participant’s Retirement, payments from the Participant’s Account will be made
as the Participant specified in his or her Election.

     26. Upon Termination of Service of a Participant, the balance of such Participant’s
Account shall be paid to the Participant in a single payment as soon as practicable after such
Termination of Service, unless the Participant elected, in his or her Election, not to have such a
single payment provision apply.

     27. If a Participant’s employment with the Company is terminated other than by reason of
Retirement or death and the Participant, in his or her Election, elected to have the balance of his
or her Account paid, or begin to be paid, after Retirement, and not in a single payment under
paragraph 26, the Participant’s date of “Retirement” shall be deemed to be the earliest date on
which the Participant could have retired and become entitled to an immediate annuity under the
Federal National Mortgage Association Retirement Plan For Employees Not Covered Under Civil Service
Retirement Law or under the Civil Service Retirement Law, whichever is applicable, had the
Participant continued in the employ of the Company until such date.

     28. Claims for benefits under these guidelines shall be filed with the Committee. If any
Participant or other person claims to be entitled to a benefit under these guidelines and the
Committee determines that such claim should be denied in whole or in part, the Committee shall
notify such person of its decision in writing. Such notification will be written in a manner
calculated to be understood by such person and will contain (a) specific reasons for the denial,
(b) specific reference to pertinent provisions of these guidelines, (c) a description of any
additional material or information necessary for such person to perfect such claim and an
explanation of why such material or information is necessary and (d) information as to the steps to
be taken if the person wishes to submit a request for review.

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Such notification will be given within 90 days after the claim is received by the Committee. If
such notification is not given within such period, the claim will be considered denied as of the
last day of such period, and such person may request a review of his claim.

     29. Within 60 days after the date on which a person receives a written notice of a denied
claim (or, if applicable, within 60 days after the date on which such denial is considered to have
occurred) such person (or his duly authorized representative) may (a) file a written request with
the Committee for a review of his denied claim and of pertinent documents and (b) submit written
issues and comments to the Committee. The Committee will notify such person of its decision in
writing. Such notification will be written in a manner calculated to be understood by such person
and will contain specific reasons for the decision as well as specific references to pertinent
provisions of these guidelines. The decision on review will be made within 60 days after the
request for review is received by the Committee. If the decision on review is not made within such
period, the claim will be considered denied.

     30. These guidelines shall be administered by the Committee. The Committee shall have all
powers necessary to carry out the provisions of these guidelines, including, without reservation,
the power to delegate administrative matters to other persons and to interpret these guidelines in
a manner consistent with its express provisions.

     31. The Company may at any time by action of the Board of Directors terminate these
guidelines. Upon termination of these guidelines, no further Elections shall be permitted, but
Awards subject to prior Elections will be granted under the terms of these guidelines, and each
Participant’s Account as it then exists will be maintained, credited and paid pursuant to the
provisions of these guidelines and the Participant’s prior Elections.

     32. The Company may at any time amend these guidelines in any respect, (a) in the case of
amendments which have a material effect on the cost to the Company of maintaining these guidelines,
by action of the Board of Directors, or (b) with respect to any other amendments, by action of the
Committee; provided, however, that no such amendment shall adversely affect the rights of
Participants or their beneficiaries to any amounts

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previously credited to the Participants’ Accounts prior to the adoption of any such amendment.

     33. To the extent permitted by law, Participants and beneficiaries shall not have the
right to alienate, anticipate, commute, sell, assign, transfer, pledge, encumber or otherwise
convey the right to receive any payments under these guidelines, and any payments under these
guidelines or rights thereto shall not be subject to the debts, liabilities, contracts, engagements
or torts of Participants or beneficiaries 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.

     34. Nothing contained in these guidelines shall be construed as conferring upon a
Participant the right to continue in the employ of the Company as an officer or in any other
capacity.

     35. These guidelines shall be construed and administered under the laws of the District of
Columbia.

     36. The provisions of these guidelines are effective only with respect to those Awards
deferred under these guidelines on or prior to December 31, 2004 and not materially modified after
October 4, 2004 (“Grandfathered Amounts”). Such Grandfathered Amounts shall be administered and
distributed pursuant to the terms of these guidelines, subject only to such amendments, if any, as
do not constitute a “material modification” for purposes of Section 1.409A-6(a)(4) of the Treasury
Regulations. Such Grandfathered Amounts are intended to be grandfathered for purposes of Section
409A of the Internal Revenue Code (the “Code”) and therefore exempt from Section 409A of the Code.
In determining which Awards were deferred as of December 31, 2004, the rules of Section
1.409A-6(a)(3) of the Treasury Regulations will apply. For the avoidance of doubt, no deferrals of
any Award shall be permitted under these guidelines after December 31, 2004 except for the
continued deferral of any Grandfathered Amounts consistent with the requirements of Section 409A of
the Code.

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EXHIBIT
10.21

FEDERAL NATIONAL MORTGAGE ASSOCIATION

ELECTIVE DEFERRED COMPENSATION PLAN

ARTICLE I

Establishment and Purpose

     1.1 Establishment. The Federal National Mortgage Association (the “Company”) established,
effective as of December 20, 1978, a deferred compensation plan known as the Federal National
Mortgage Association Executive Optional Deferred Compensation Plan (hereinafter referred to as the
“Executive Plan”), and amended the Executive Plan as of November 1982. The Company amended and
restated the Executive Plan, effective as of November 15, 1983. The amended and restated plan was
designated the “Federal National Mortgage Association Optional Deferred Compensation Plan”
(hereinafter referred to as the “Optional Plan”), which plan was further amended and restated,
effective as of January 1, 1985. The Optional Plan was amended and restated in its entirety,
effective for all purposes and in all respects as of September 16, 1986, as two plans. The amended
and restated plans are designated the “Federal National Mortgage Association Career Deferred
Compensation Plan” and the “Federal National Mortgage Association Elective Deferred Compensation
Plan.” With respect to amounts elected to be deferred under the Optional Plan, as in effect prior
to September 16, 1986, to a date prior to the “Retirement” of the “Participant” (as such terms were
defined in such plan) making such election, the rights and obligations of the Company, such
Participants and their beneficiaries shall be determined under the Federal National Mortgage
Association Elective Deferred Compensation Plan. For all deferrals for Deferral Years after 1999,
the rate of return for accounts relating to such deferrals will be based on the Participant’s
choice among several hypothetical investment funds. If a Participant (other than an Inactive
Participant) so elects on or after August 1, 2000, the rate of return on accounts relating to
deferrals for Deferral Years prior to 2000, calculated beginning on the business day following the
election, will be based on the Participant’s choice among several hypothetical investment funds and
not on the Company’s cost of funds. For all deferral elections made for Deferral Years beginning in
2000 and thereafter and, if a

Amended Effective 11/15/2004

 

 

Participant has elected during the period established by the Committee for accounts relating to
deferrals made before 2000, the rate of return on deferrals, calculated beginning as of January 1,
2000 will be based on the Participant’s choice among several hypothetical investment funds and not
on the Company’s cost of funds. The terms and conditions of the Federal National Mortgage
Association Elective Deferred Compensation Plan are set forth herein.

     1.2 Purpose. The purpose of the Federal National Mortgage Association Elective Deferred
Compensation Plan is to attract and retain certain individuals of outstanding competence as
employees or as members of the Board of Directors of the Company or both by permitting such
individuals to elect to defer a portion of their compensation from the Company to a later date or
event.

ARTICLE II

Definitions

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

     2.1 “Award” shall mean the amount of money, if any, earned in accordance with the provisions
of the Federal National Mortgage Association Annual Incentive Plan, the Portfolio Bonus Plan, the
Multifamily Bonus Plan, the REO Bonus Plan and such other incentive and bonus plans designated by
the Committee.

     2.2 “Board of Directors” shall mean the Board of Directors of the Company.

     2.3 “Committee” shall mean the Benefit Plans Committee provided for in Section 6.1.

     2.4 “Company” shall mean Federal National Mortgage Association.

     2.5 “Compensation” shall mean (i) in the case of an Executive, his or her regular basic
salary, excluding any Awards or other forms of additional compensation and (ii) in the case of a
Director, the annual retainer and all fees (excluding any reimbursed expenses) payable to such
individual in his or her capacity as a member of the Board of Directors in any calendar year;
provided, however, that in the case of an individual who becomes a Participant in accordance with
Section 3.2(b), “Compensation” for the year in which such individual first becomes eligible to
participate in the Plan shall mean only that Compensation of such individual payable with respect
to the portion of the calendar year during which he or she was eligible to participate in the Plan.

 

     2.6 “Deferral Year” shall mean each calendar year as to which an election is made to defer
Compensation or an Award, or both, in accordance with the provisions of Section 3.3 of the Plan.

     2.7 “Deemed Earnings” shall mean the deemed gain or loss with respect to the Deemed Investment
Portfolio. The Deemed Earnings with respect to each investment option in a Deemed Investment
Portfolio shall be determined by reference to the total actual return, net of applicable fees and
expenses, on such investment option for the period in question.

     2.8 “Deemed Investment Portfolio” shall mean a hypothetical portfolio chosen by the
Participant from among such investment options as the Executive Vice President and Chief Financial
Officer, or his designee, may designate as available under the Plan.

     2.9 “Director” shall mean any member of the Board of Directors who receives Compensation in
his or her capacity as a member of such Board of Directors.

     2.10 “Executive” shall mean any officer or other member of the management group of the Company
who is among the top 15% of the most highly compensated Company employees and whose regular basic
salary is at least equal to the minimum qualifying salary established each year by the Senior Vice
President of Human Resources or his designee.

     2.11 “Inactive Participant” shall mean a Participant who, on August 1, 2000, is neither an
employee nor a Director of the Company, and who has not deferred any Compensation or Award in any
Deferral Year beginning after 1999.

     2.12 “Incentive Plan” shall mean the Federal National Mortgage Association Annual Incentive
Plan, the Portfolio Bonus Plan, the Multifamily Bonus Plan, the REO Bonus Plan and such other
incentive and bonus plans designated by the Committee.

     2.13 “Investment Administrator” shall mean the investment advisor with responsibility for
administering the Deemed Investment Portfolio.

     2.14 “Participant” shall mean any Executive or Director who becomes a Participant in the Plan
as provided in Section 3.2 of the Plan.

     2.15 “Plan” shall mean the Federal National Mortgage Association Elective Deferred
Compensation Plan.

     2.16 “Retirement” shall mean (i) in the case of an Executive, separation from the employ of
the Company either under conditions entitling him or her to an immediate annuity under the Federal
National Mortgage Association Retirement Plan for Employees Not Covered Under Civil

 

Service Retirement Law or under the Civil Service Retirement Law, which ever is applicable to such
Executive, or under conditions entitling him or her to long-term disability benefits under any
disability payment plan paid for by the Company, including disability insurance, on account of the
inability to perform service for the Company due to a physical or mental ailment and (ii) in the
case a Director, any termination from the membership of the Board of Directors.

     2.17 “Termination of Service” shall mean, in the case of an Executive, termination of
employment with the Company other than by reason of Retirement or death.

ARTICLE III

Eligibility and Participation

     3.1 Eligibility. All Executives and Directors shall be eligible to participate under the Plan.

     3.2 Participation.

          (a) An individual eligible to participate in the Plan under Section 3.1 may become a
Participant for any calendar year by executing an irrevocable deferral election (on a form
prescribed by the Committee) with respect to his or her Compensation for such calendar year or with
respect to his or her Award to be paid during the next succeeding calendar year, or both. Except as
provided in Sections 3.2(b) and 3.2(c), such election shall be executed on or before the fifth
business day in December of the preceding calendar.

          (b) With respect to an individual who first becomes eligible to participate in the Plan under
Section 3.1 after the beginning of a calendar year by reason of (i) the commencement of employment
by the Company as an Executive, (ii) the promotion from a non-executive position to a position as
an Executive or (iii) an election or appointment to the Board of Directors, such individual may
become a Participant for the remainder of such year by executing an irrevocable deferral election
(on a form prescribed by the Committee) with respect to his or her Compensation within thirty (30)
days of the date such individual receives notice from the Company that he or she is eligible to
participate after becoming an Executive or Director, as applicable.

          (c) An individual eligible to participate in the Plan under Section 3.1 who becomes a
participant in an Incentive Plan after the beginning of a calendar year may, within thirty

 

(30) days of becoming a participant in such plan, execute an irrevocable deferral election (on a
form prescribed by the Committee) with respect to his or her Award to be paid in the next
succeeding calendar year. Such individual shall thereby become a Participant for the remainder of
such year, if such individual is not already a Participant by virtue of having executed an
irrevocable deferral election with respect to his Compensation for such year pursuant to Section
3.2(a) or 3.2(b).

     3.3 Deferral Election.

          (a) As a condition of participation under the Plan:

     (i) An Executive must agree to defer at least one thousand dollars ($1,000) of
Compensation for each calendar year as to which such Executive elects to defer
Compensation. The amount of Compensation deferred must be in increments of one
thousand dollars ($1,000). The maximum amount that may be deferred for any
calendar year under this Plan alone or in combination with the Federal National
Mortgage Association Career Deferred Compensation Plan by a Participant who is
an Executive is fifty percent (50%) of the Compensation (including any amount
deferred under this Plan or the Federal National Mortgage Association Career
Deferred Compensation Plan and any amount which, pursuant to the election of
the Executive, the Company has contributed to any cash deferred arrangement
qualified under Section 401(k) of the Internal Revenue Code) of such
Participant for such calendar year.

     (ii) An Executive must agree to defer a specified percentage or dollar amount
of his or her Award for each calendar year as to which such Executive elects to
defer his or her Award. Such deferred amount may be determined as a fixed
percentage of the Award, a percentage of the excess over a specified dollar
amount, a specified maximum dollar amount or in such other manner as may be
provided by the Committee from time to time. A Participant who is an Executive
may elect to defer for any calendar year up to one hundred percent (100%) of
the Award (including any amount deferred under this Plan) of such Participant
for such calendar year.

     (iii) A Director must agree to defer at least an amount equal to twenty-five
percent (25%) of Compensation for each calendar year as to which such Director

 

elects to defer Compensation. The amount of Compensation deferred must be in
increments of twenty-five (25%) of Compensation for such calendar year. A
Participant who is a Director may elect to defer for any calendar year up to
one hundred percent (100%) of the Compensation (including any amount deferred
under this Plan) of such Participant for such calendar year.

          (b) An election made under this Plan with respect to Compensation shall relate only to
Compensation for the succeeding calendar year, or to Compensation for the remainder of a calendar
year if Section 3.2(b) applies, and a separate election must be made in order to defer Compensation
during any subsequent year. In the event of a failure to make a timely election to defer as to
Compensation for any year, no portion of the Participant’s Compensation for such year may be
deferred under this Plan.

          (c) An election made under this Plan with respect to an Award shall relate only to an Award to
be paid during the second succeeding calendar year, or to an Award to be paid during the first
succeeding calendar year if Section 3.2(c) applies, and a separate election must be made in order
to defer compensation during any subsequent year. In the event of a failure to make a timely
election to defer as to an Award for any year, no portion of the Executive’s Award for such year
may be deferred under this Plan.

          (d) Each deferral election under Section 3.2 shall (in accordance with Sections 5.2, 5.3, and
5.4) also designate:

     (i) the date or event after which payment is to commence, which shall be stated
as the January of a given year or the January commensurate with or next
following the event;

     (ii) the method of payment;

     (iii) for all deferral elections made for Deferral Years beginning in or after
2000, a Deemed Investment Portfolio; and

     (iv) the beneficiary to receive any payments if the Participant dies before
receiving all amounts to which he or she is entitled under the Plan.

If the Participant fails to designate a Deemed Investment Portfolio as required under Sections
3.3(d)(iii) and 4.1(c), Participant’s deferral shall be allocated among the hypothetical investment
options in accordance with the Participant’s most recent Deemed Investment Portfolio designation.
If the Participant has not previously made a Deemed Investment Portfolio

 

designation, the Participant’s deferral shall be allocated to the Advantus Money Market Portfolio
(or the successor fund designated by the Chief Financial Officer of the Company or his or her
designee), and the deferral shall remain allocated to such Portfolio until such time as the
Participant changes the allocation under the procedures set forth in Section 4.1(c)(i).

ARTICLE IV

Participant’s Account

     4.1 Accounts.

          (a) The Company shall establish bookkeeping accounts to record the deferrals under this Plan.
Each Participant shall have a separate account for each Deferral Year, and each account shall be
increased and decreased as provided in this section.

          (b) During the Deferral Year, the Company shall credit each Participant’s account for that
year as follows:

     (i) The amount of Compensation deferred under Section 3.2(a) by each
Participant who is an Executive shall be credited to such Participant’s account
on a biweekly basis, by crediting, at the end of each such biweekly period,
one-twenty-sixth of the total annual deferral, or on such other basis as may be
determined by the Chief Financial Officer of the Company. The amount of
Compensation deferred under Section 3.2(b) by each Participant who is an
Executive shall be credited to such Participant’s account on a biweekly basis,
by crediting at the end of each such biweekly period of participation, an
amount determined by dividing the total amount the Participant has elected to
defer under Section 3.1 by the number of biweekly periods remaining in the
calendar year at the time the Executive first became eligible to participate,
or on such other basis as may be determined by the Chief Financial Officer of
the Company. If as a result of participation in this plan, an Executive is
prevented from electing the maximum deferral under the Federal National
Mortgage Association Retirement Savings Plan for Employees (“RSP”) then an
additional amount shall be credited to the account of such Participant who is
an Executive as of December 31 of the Deferral Year, equal to the amount the

 

Company would have contributed as a match to the RSP for such Deferral Year
with respect to Compensation deferred under Section 3.2 of this Plan had such
Participant elected to make the maximum permissible Participant Contributions
(as such term is used in the RSP) to such Retirement Savings Plan during the
Deferral Year with respect to his or her Compensation deferred under Section
3.2 of this Plan.

     (ii) The amount of the Award deferred under Section 3.2(a) or 3.2(c) by each
Participant who is an Executive shall be credited to such Participant’s account
on the date such Award would have been paid to such Executive had its receipt
not been deferred under the Plan.

     (iii) The amount of Compensation deferred under Section 3.2 by each Participant
who is a Director shall be credited to such Participant’s account by a monthly
crediting at the end of each month of an amount obtained by multiplying the
amount of Compensation which would have been payable to such Participant in
such amount (determined without regard to such Participant’s deferral election
under Section 3.2) by the percentage of Compensation (25%, 50%, 75% or 100%)
such Participant has elected to defer in the Deferral Year.

     (c) With respect to all accounts relating to deferrals for Deferral Years after 1999 and, if
the Participant has elected during the period established by the Committee to have this Section
4.1(c) apply, for accounts relating to deferrals for Deferral Years prior to 2000:

     (i) A Participant shall designate a Deemed Investment Portfolio, and shall
allocate, the amount credited to his or her account As a result of deferral
elections among the hypothetical investment options offered for inclusion in a
Deemed Investment Portfolio. A Participant shall so designate a Deemed
Investment Portfolio by directly contacting the Investment Administrator. A
Participant may change such allocation at any time by notice to the Investment
Administrator, in accordance with such procedures as may be established by the
Investment Administrator.

 

     (ii) The Participant’s accounts to which this Section 4.1(c) applies shall be
adjusted periodically for Deemed Earnings, beginning January 1, 2000.

     (iii) A Participant’s account (reduced in accordance with Section 4.1(e)) shall
continue to be adjusted in accordance with this Section 4.1(c) during (A) any
installment payment period which may have been elected by the Participant under
Section 5.3(a), (B) any installment payment period in connection with a
financial hardship withdrawal approved by the Committee pursuant to Section
5.3(b) or 5.5(c), and (C) the period following the Participant’s death but
prior to the payment of the balance of the Participant’s accounts pursuant to
Section 5.4.

     (iv) If a Participant elects to have this Section 4.1(c) apply to an account
relating to a deferral for any Deferral Year prior to 2000, such election must
apply to the Participant’s accounts for all such Deferral Years in this Plan
and in the Federal National Mortgage Association Career Deferred Compensation
Plan. Notwithstanding the foregoing, such election shall not apply to the
Participant’s account for Deferral Year 1981 or 1982 if such account is subject
to a fixed, permanent rate of return, unless the Participant signs a special
agreement specified by the Committee applying the election to such account.

     (d) For any deferrals for Deferral Years prior to 2000 for which a Participant has not
elected during the period established by the Committee to have Section 4.1(c) apply:

     (i) The amount determined in Sections 4.1(b)(i) and 4.1(b)(ii) (for each
Participant who is an Executive) or Section 4.1(b)(iii) (for each Participant
who is a Director), as the case may be, shall be increased as of the last day
of any month during the Deferral Year by the amount obtained by multiplying the
account balance as of the first day of such month by one-twelfth of the rate
equivalent to the average annual percent cost of money borrowed by the Company
through issuance of debentures (having a maturity of one year or longer) in the
first three quarters of the year preceding the Deferral Year.

     (ii) The rate established in Section 4.1(d)(i) above shall remain in effect

 

for the Deferral Year. For all years subsequent to the Deferral Year, the rate
will be readjusted annually and will be determined by calculating the average
annual percent cost of money borrowed by the Company through the issuance of
debentures (having a maturity of one year or longer) for the twelve-month
period immediately preceding the year with respect to which the interest rate
will be effective.

     (iii) In all years following the Deferral Year, the Participant’s account will
be increased as of the last day of each month by an amount equal to the account
balance as of the first day of such month multiplied by one-twelfth of the rate
as established under Section 4.1(d)(ii) for that year. A Participant’s account
(reduced in accordance with Section 4.1(e)) shall continue to be increased in
accordance with this Section 4.1(d) during any installment payment period which
may have been elected by the Participant under Section 5.3(a) or approved by
the Committee under Sections 5.3(b) or 5.4.

          (e) The Participant’s account shall be reduced by any payments made to the Participant, his or
her beneficiary, estate or representative. If Section 4.1(c) applies to such account, each payment
shall be made from the Participant’s account on a pro rata basis from among the hypothetical
investments designated for such account by the Participant under Section 4.1(c)(i). If Section
4.1(c) does not apply to such account, each payment shall be made from the account maintained as
set forth above in Section 4.1(d).

          (f) In the event that, as a result of participation in this Plan by any Participant who is an
Executive, the benefits payable to him or her under the Federal National Mortgage Association
Retirement Plan for Employees Not Covered Under Civil Service Retirement Law (the “Retirement
Plan”) or any other qualified plan sponsored by the Company under which benefits are determined by
reference to the rate of salary paid to such Participant during a specified period of time
preceding such Participant’s retirement are lower than the benefits which would have been payable
to such Participant had he or she not been a Participant in the Plan, then the Company shall make
monthly payments to the Participant, or, if applicable, to his or her beneficiary entitled to
receive benefits under such Retirement Plan or other qualified plan, of an amount equal to such
reduction. With respect to any non-qualified employee benefit or welfare plans sponsored by the
Company under which the amount of any benefit is based on the rate of salary paid to an employee,

 

a Participant’s rate of salary for the purposes of such non-qualified employee benefit or welfare
plan shall include any amount of Compensation deferred under this Plan but not any Award, unless
otherwise specifically provided in such plan.

     4.2 Funding Prohibitions. All entries in a Participant’s account shall be bookkeeping entries
only and shall not represent a special reserve or otherwise constitute a funding of the Company’s
unsecured promise to pay any amounts hereunder. All payments to be made under the Plan shall be
paid from the general funds of the Company. Participants and their beneficiaries 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. All such assets shall be the property solely of the Company and
shall be subject to the claims of the Company’s unsecured general creditors. To the extent a
Participant or any other person acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of any unsecured general creditor of the
Company and such person shall have only the unsecured promise of the Company that such payments
shall be made.

ARTICLE V

Payment

     5.1 Payment of Account. Payment of amounts credited to a Participant’s account shall be made
in the manner and at the time or times specified herein. All payments shall be made by Company
check. The normal payment schedule will consist of one payment in January of each year.

     5.2 Commencement of Payment. When the Participant makes the deferral election under Section
3.2 for a Deferral Year, he or she shall also elect the time at which payment of the amounts
credited to the account established for such Deferral Year shall commence. The earliest time a
Participant may elect to have payment commence shall be the January following the Deferral Year.
Such election of the time of commencement of payment of an amount credited to the account
established for a Deferral Year may be changed by the Participant, provided that such change is
made at least twelve months before the commencement of any payment from such account and that the
commencement of any payment specified in such change is at least twelve months from the date of
such change. Any such change of the time of commencement of

 

payment shall be made in the manner specified by the Committee. Payment of amounts credited to such
account shall commence in the January coincident with or next following the date or event specified
by the Participant in such election, or, if changed, in the most recent change pursuant to this
Section 5.2.

     5.3 Method of Payment.

          (a) The Participant shall elect to have the balance of each of his or her accounts paid out in
one of the following methods: (1) a single lump sum; (2) annual installments over a period of years
(selected by the Participant) not to exceed 15; or (3) an initial installment of an amount
specified by the Participant followed by annual installments over a period of years not to exceed
15 and commencing in a year selected by the Participant. Annual installments will be calculated by
dividing the balance of the account at the end of the prior year by the number of installments
remaining to be paid.

          (b) When the Participant makes the deferral election under Section 3.2 for a Deferral Year, he
or she shall also elect the method of payment for the account established for such Deferral Year.
Such election of payment method for a Deferral Year may be changed by the Participant, provided
that such change is made at least twelve months before the commencement of any payment from such
account. Any such change of the payment method shall be made in the manner specified by the
Committee. Payment of amounts credited to such account shall commence in the January coincident
with or next following the date or event specified by the Participant in such election, or, if
changed, in the most recent change pursuant to this Section 5.2. Notwithstanding any other
provision of the Plan to the contrary, a Participant or beneficiary may withdraw an amount from one
or more of his or her accounts upon a finding by the Benefit Plans Committee (or, as provided in
Section 6.1, the Compensation Committee of the Board of Directors) in its sole discretion (i) that
an unanticipated emergency that is caused by an event beyond the control of such Participant or
beneficiary has occurred and that such emergency would result in severe financial hardship to such
Participant or beneficiary if early withdrawal were not permitted, or (ii) that the continued
participation of a Participant who is employed by the federal government or that of a state or
municipality creates a serious hardship for the Participant because of the conflict of interest or
ethics rules of such government. The amount that may be withdrawn pursuant to clause (i) above
shall not exceed the amount necessary to meet such financial hardship as determined by the Benefit
Plans Committee (or the Compensation Committee) in its sole

 

discretion. The entire balance in the Participant’s accounts may be withdrawn pursuant to clause
(ii) above. The Benefit Plans Committee (or the Compensation Committee) shall have the right to
require such Participant or beneficiary to submit such documentation as it deems appropriate for
the purpose of determining the existence, cause and extent of such hardship.

     5.4 Payment on Death

          (a) Notwithstanding any provisions of the Plan to the contrary, in the event of the death of
any Participant, the balance in each of the Participant’s accounts shall be paid to the
Participant’s beneficiary in a single lump sum payment within thirty (30) days after the date of
such death.

          (b) Each Participant shall designate a beneficiary to whom any balance in each account under
this Plan shall be payable on his or her death. A Participant may also designate an alternate
beneficiary to receive such payment in the event that the designated beneficiary cannot receive
payment for any reason. In the event no designated or alternate beneficiary can receive such
payment for any reason, payment will be made to the Participant’s surviving spouse, if any, or if
the Participant has not surviving spouse, then to the following beneficiaries if then living in the
following order of priority: (i) to the Participant’s children (including adopted children and
stepchildren) in equal shares, (ii) to the Participant’s parents in equal shares, (iii) to the
Participant’s brothers and sisters in equal shares, and (iv) to the Participant’s estate. Each
Participant may at any time change any beneficiary designation. A change of beneficiary designation
must be made in writing and delivered to the Committee or its delegate for such purposes. The
interest of any beneficiary who dies before the Participant will terminate unless otherwise
specified by the Participant.

     5.5 Payment on Retirement or Termination of Service.

          (a) Upon a Participant’s Retirement, payments from the Participant’s accounts will be made as
the Participant specified in the deferral election, pursuant to Section 3.3(d), or if changed, in
the most recent change pursuant to Section 5.2 or 5.3.

          (b) Upon the Termination of Service of a Participant who is an Executive, the balance in each
of such Participant’s account(s) shall be paid to the Participant in a single lump sum payment in
the January following Termination of Service, unless, in the case of a Participant’s accounts for
Deferral Years after 1996, the Participant has elected not to have the foregoing lump sum payment
provision apply in his or her deferral election(s), or, in the case of a Participant’s

 

accounts for Deferral Years prior to 1997, the Participant has elected in writing, on or before
August 16, 1996, not to have the foregoing lump sum payment provision apply, but to have payments
from his or her accounts made as he or she specified in his or her deferral elections pursuant to
Section 3.3(d). In the event of such an election by a Participant with respect to accounts for
Deferral Years prior to 1997, any reference to “retirement” in the Participant’s deferral elections
with respect to such Deferral Years shall be deemed to refer to the earliest date on which the
Participant could have retired and become entitled to an immediate annuity under the Federal
National Mortgage Association Retirement Plan For Employees Not Covered Under Civil Service
Retirement Law or under the Civil Service Retirement Law, whichever is applicable, had such
Participant continued in the employ of the Company until such date. An election made pursuant to
this Section 5.5(b) may be changed by the Participant, provided that such change is made at least
twelve months prior to any payment from the account or accounts in question. Any change of election
shall be made in the manner specified by the Committee.

          (c) Notwithstanding Sections 5.5(a) and (b) above, a Participant may withdraw an amount from
one or more of his or her accounts prior to the January following his or her Termination of Service
upon a finding by the Benefit Plans Committee (or, as provided in Section 6.1, the Compensation
Committee of the Board of Directors) in its sole discretion that (i) an unanticipated emergency
that is caused by an event beyond the control of such Participant has occurred and that such
emergency would result in severe financial hardship to such Participant or beneficiary if early
withdrawal were not permitted or (ii) the continued participation of a Participant who is employed
by the federal government or that of a state or municipality creates a serious hardship for the
Participant because of the conflict of interest or ethics rules of such government. The amount that
may be withdrawn pursuant to clause (i) above shall not exceed the amount necessary to meet such
financial hardship as determined by the Benefit Plans Committee (or the Compensation Committee) in
its sole discretion. The entire balance in the Participant’s accounts may be withdrawn pursuant to
clause (ii) above. The Benefit Plans Committee (or the Compensation Committee) shall have the right
to require such Participant to submit such documentation as it seems appropriate for the purpose of
determining the existence, cause, and extent of such hardship.

 

ARTICLE VI

Administration

     6.1 Administration. The Plan shall be administered by the Benefit Plans Committee; provided,
however, that all decisions affecting officers having the title of Executive Vice President or a
higher ranking title shall be made by the Compensation Committee of the Board of Directors. The
Benefit Plans Committee shall consist of not less than three and not more than seven persons, each
of whom shall be appointed by, shall remain in office at the will of, and may be removed (with or
without cause) by the Board of Directors of the Company. The Benefit Plans Committee shall have all
powers necessary to carry out the provisions of the Plan, including, without reservation, the power
to delegate administrative matters to other persons and to interpret the Plan in a manner
consistent with its express provisions.

ARTICLE VII

Miscellaneous

     7.1 Termination of Plan. The Company may at any time by action of its Board of Directors
terminate this Plan. Upon termination of the Plan, no further deferrals will be permitted, and the
Participant’s Compensation will be restored on a non-deferred basis. Each Participant’s accounts as
they then exist will be maintained, credited and paid pursuant to the provisions of this Plan and
the Participant’s elections.

     7.2 Amendment. The Company may at any time amend this Plan in any respect, (i) in the case of
amendments which have a material effect on the cost to the Company of maintaining the Plan, by
action of its Board of Directors or, (ii) with respect to any other amendments, by action of the
Committee; provided, however, that no such amendment shall adversely affect the rights of
Participants or their beneficiaries to any amounts credited to the Participant’s accounts with
respect to any Deferral Year which has commenced prior to the adoption of any such amendment.

     7.3 No Alienation of Benefits. To the extent permitted by law, Participants and beneficiaries
shall not have the right to alienate, anticipate, commute, sell, assign, transfer, pledge, encumber
otherwise convey the right to receive any payments under this Plan, and any payments under this
Plan or rights thereto shall not be subject to the debts, liabilities, contracts, engagements

 

or torts of Participants or beneficiaries 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.

     7.4 No Rights to Continued Employment. Nothing contained herein shall be construed as
conferring upon an Executive the right to continue in the employ of the Company as an Executive or
in any other capacity, or as conferring upon a Director the right to continue as a member of the
Board of Directors.

     7.5 Headings. The headings of paragraphs are included solely for convenience of reference and
shall not control the meaning or interpretation of any of the provisions of the Plan.

     7.6 Applicable Law. The Plan shall be construed and administered under the laws of the
District of Columbia.

     7.7 Plan Frozen as of December 31, 2004. On November 15, 2004, the Plan was divided
into two plans: the legacy Plan (now referred to as the Fannie Mae Elective Deferred Compensation
Plan I or EDC I) and the Fannie Mae Elective Deferred Compensation Plan II (the “EDC II”). As a
result, the provisions of the Plan are effective as of December 31, 2004 only with respect to
Compensation and Awards under the Plan that were fully earned and vested on or prior to December
31, 2004 and not materially modified after October 4, 2004 (“Grandfathered Amounts”). Such
Grandfathered Amounts shall be administered and distributed pursuant to the terms of the Plan,
subject only to such amendments, if any, as do not constitute a “material modification” for
purposes of Treas. Regs. §1.409A-6(a)(4). Such Grandfathered Amounts are intended to be
grandfathered for purposes of Section 409A of the Internal Revenue Code (the “Code”) and therefore
exempt from Section 409A of the Code. In determining what amounts were earned and vested as of
December 31, 2004, the rules of Treas. Regs. § 1.409A-6(a)(3) will apply. For the avoidance of
doubt, no deferrals of any Compensation or Award shall be permitted under the Plan after December
31, 2004 except for the continued deferral of any Grandfathered Amounts consistent with the
requirements of Section 409A of the Code.

          The EDC II is intended to comply with the requirements of Section 409A of the Code, including
the transition relief provisions thereunder, and shall be construed consistent with that intent.
Deferrals made after December 31, 2004 shall be made under the EDC II and the rights and
obligations of the Company, such Participants and their beneficiaries with respect to such
deferrals shall be determined under the EDC II.

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