Document:

exv10w9

 

    Exhibit 10.9

 

    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    GLOBAL AMENDMENT TO AFFECTED STOCK OPTIONS UNDER

    NONQUALIFIED STOCK OPTION AGREEMENTS

    AND SEPARATE GRANT OF DIVIDEND EQUIVALENT RIGHTS

 

    WHEREAS, the Compensation and Human Resources Committee
    (including its predecessor committees) (the
    “Committee”) of the Federal Home Loan Mortgage
    Corporation (the “Corporation”) approved grants of
    nonqualified stock options with related dividend equivalent
    rights to certain employees under the Federal Home Loan Mortgage
    Corporation 1995 Stock Compensation Plan (the “1995
    Plan”) and the Federal Home Loan Mortgage Corporation 2004
    Stock Compensation Plan (the “2004 Plan”);

 

    WHEREAS, section 409A of the Internal Revenue Code and related
    regulatory guidance would result in certain unforeseeable
    negative tax consequences to the grantees of such nonqualified
    stock options (or portions thereof) that were not fully vested
    as of December 31, 2004 (including stock options issued in
    2005) (“Affected Stock Options”), absent amendment to
    such options;

 

    WHEREAS, Affected Stock Options generally include portions of
    options granted in 2000, 2001, 2002 and 2003 and all options
    granted in 2004 and 2005; and

 

    WHEREAS, the Committee authorized the Chief Executive Officer
    and the Executive Vice President — Human Resources to
    modify the terms of the Affected Stock Options to remove the
    existing provisions regarding dividend equivalents, and to
    replace them with a right that is “explicitly set forth as
    a separate arrangement” within the meaning of Proposed
    Treasury Regulation
    § 1.409A-1(b)(5)(iii)(E),
    such right to provide for the distribution, as soon as
    practical, of a dollar amount equal to the dividend equivalents
    accrued through the date of such distribution, and, as regards
    future dividend equivalents, for distribution of those amounts
    as soon as practical to the extent that they would otherwise
    have accrued.

 

    NOW, THEREFORE, BE IT RESOLVED that pursuant to Section 8.4
    of the 1995 Plan and Section 9.4 of the 2004 Plan and
    applicable provisions of outstanding option agreements, the
    nonqualified stock option agreements that include an Affected
    Stock Option are hereby amended as set forth in
    paragraphs 1, 2 and 3 below (as applicable), effective
    December 31, 2005:

 

			
	 	    1.  
	
    As to the Affected Stock Options granted in 2003 or earlier,
    Section 1(b) is amended to add the following at the end
    thereof:

 

			
	 	
	
    The foregoing provision and other provisions of this Agreement
    notwithstanding (including Sections 3(a) and 4), no
    Dividend Equivalents are granted or will be credited under this
    Agreement as to that portion of the Option that was not vested
    and exercisable at December 31, 2004 (“Affected Stock
    Options”). The bookkeeping account described in
    Section 3(a)(i) will be adjusted to cancel any amounts
    credited as Dividend Equivalents on such Affected Stock Options
    prior to December 31, 2005. With respect to such Affected
    Stock Options, references to Dividend Equivalents in any other
    provision of this Agreement shall be understood to refer to a
    dollar amount equal to zero. Affected Stock Options will remain
    subject to adjustment in accordance with Section 5(c)
    (ordinary cash dividends do not trigger such adjustments,
    however). The terms of this Section 1(b) are intended to
    meet the requirements of Proposed Treasury Regulation
    § 1.409A-1(b)(5)(iii)(E)
    with respect to Affected Stock Options.

 

			
	 	    2.  
	
    As to Affected Stock Options granted in 2004 or 2005,
    Section 1(b) is amended to read as follows:

 

			
	 	    (b) 
	
    Dividend Equivalents. No right of the Grantee to receive from
    the Corporation amounts equivalent to dividends on Common Stock
    (“Dividend Equivalents”) is granted under this
    Agreement. References to Dividend Equivalents in any other
    provision of this Agreement shall be disregarded or understood
    to refer to a dollar amount equal to zero, as the context may
    require. The bookkeeping account maintained under this Agreement
    for Dividend Equivalents on and before December 31, 2005
    will be cancelled. The Option will remain subject to adjustment
    in accordance with Section 5(c) (ordinary cash dividends do
    not trigger such adjustments, however). The terms of this
    Section 1(b) are intended to meet the requirements of
    Proposed Treasury Regulation
    § 1.409A-1(b)(5)(iii)(E).

 

			
	 	    3.  
	
    As to Affected Stock Options granted in 2004 or 2005,
    Section 3 is amended by deleting it and inserting in its
    stead the term “[Reserved.]”

 

    BE IT FURTHER RESOLVED that the Corporation hereby grants to the
    Grantee whose Options have been amended hereby the following
    rights to payments relating to dividends. These rights are an
    arrangement separate from those Options:

 

			
	 	    A.  
	
    Dividends Accrued at December 31, 2005. The
    Corporation shall pay in cash to the Grantee, no later than
    March 15, 2006, an amount equal to the bookkeeping account
    balance that is cancelled as a result of the amendments to
    Grantee’s Option(s) under the preceding resolution
    (paragraphs 1 and 2).

 

			
	 	    B.  
	
    Relating to Cash Dividends after December 31, 2005.
    If the Corporation declares and pays a cash dividend or
    distribution on Common Stock, other than an extraordinary
    dividend, and the record date of which occurs while all or a
    portion of Grantee’s Affected Stock Option remains
    outstanding, then an amount of cash shall be paid to

    

    2

 

    Grantee, as promptly as practicable after the payment date for
    such dividend or distribution (and in no event more than
    60 days thereafter), equal to the number of shares subject
    to the outstanding Affected Stock Option on such record date
    multiplied by the amount of cash actually paid as a dividend or
    distribution on each outstanding share of Common Stock at such
    payment date. This right will not apply in the case of any
    extraordinary dividend or distribution or non-cash dividend or
    distribution. This right is separate from the Affected Stock
    Option, and no amount is payable hereunder solely due to the
    exercise or expiration of the Affected Stock Option or in
    respect of the period following the latest record date preceding
    the exercise or expiration of the Affected Stock Option.

 

			
	 	    C.  
	
    Dividend equivalents payable and paid to Grantee under A and B
    above are non-forfeitable.

 

			
	 	    D.  
	
    Withholding. Amounts payable under A and B above shall be
    reduced by the amount of all Federal, state, local and other
    taxes that may be required to be withheld by the Corporation
    with respect to such payment.

 

    BE IT FURTHER RESOLVED that the nonqualified stock options (or
    portions thereof) that were fully vested as of December 31,
    2004 (i.e., options other than Affected Stock Options) are not
    modified or otherwise affected by the amendments set forth
    above, and the separate rights to dividend equivalents and
    related rights granted under the immediately preceding
    resolution do not apply to such options (or portions thereof).

 

    IN WITNESS WHEREOF, the Corporation has caused this Global
    Amendment to be executed by its duly authorized officer,
    effective as of the 31st day of December 2005.

 

    FEDERAL HOME LOAN

    MORTGAGE CORPORATION

 

			
	 	    By: 
	
    /s/  Paul
    G. George

    Paul G. George

    Executive Vice President

    Human Resources

    ATTEST:

 

              

    /s/  Stacy
    Papadopoulos

    Assistant Secretary

    

    3exv10w10

 

    Exhibit 10.10

 

 

    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

 

    1995
    STOCK COMPENSATION PLAN

 

 

    Effective
    May 2, 1995

 

 

    FEDERAL
    HOME LOAN MORTGAGE CORPORATION

    1995 STOCK COMPENSATION PLAN

 

    ARTICLE I
    

    Establishment of the Plan

 

    1.1  Purposes. The purposes of this 1995 Stock
    Compensation Plan of the Federal Home Loan Mortgage Corporation
    (the “Corporation”) are to promote the success of the
    Corporation and its stockholders by providing an additional
    means to attract, retain, motivate, and reward officers and
    employees of the Corporation and its Affiliates, to link
    compensation of such persons to measures of the
    Corporation’s performance in order to provide incentives
    for high levels of performance, and to enable such persons to
    acquire or increase a proprietary interest in the Corporation in
    order to promote a closer identity of interests between such
    persons and the Corporation’s stockholders.

 

    1.2  Effective Date. This Plan shall be
    effective upon the approval of the Corporation’s
    stockholders as set forth in Section 8.10.

 

    1.3  Plan Name. The name of the Plan is the
    Federal Home Loan Mortgage Corporation 1995 Stock Compensation
    Plan.

 

    ARTICLE II
    

    Definitions

 

    2.1  Affiliate. An organization whose employees
    are designated by the Committee as eligible to participate in
    this Plan.

 

    2.2  Award. Any Option, Stock Appreciation
    Right, Restricted Stock, Deferred Stock, Stock Bonus, Dividend
    Equivalent, Other Stock-Based Award, or any combination thereof,
    granted under the Plan.

 

    2.3  Award Document. Any written agreement,
    contract, notice, or other instrument or document evidencing an
    Award.

 

    2.4  Beneficiary. The person, persons, trust,
    or trusts which have been designated by a Participant in his or
    her most recent written beneficiary designation filed with the
    Committee to receive the benefits in connection with an Award
    upon such Participant’s death, or to which an Award or
    rights relating thereto are transferred if and to the extent
    permitted under Section 6.8. If, upon a Participant’s
    death, there is no designated Beneficiary or surviving designated

    

    2

 

    Beneficiary, then the term Beneficiary means the person,
    persons, trust, or trusts entitled by will or the laws of
    descent and distribution to receive such benefits.

 

    2.5  Board. The Board of Directors of the
    Corporation.

 

    2.6  Code. The Internal Revenue Code of 1986,
    as amended from time to time.

 

    2.7  Committee. The Human Resources Committee
    of the Board, or such other Board committee as may be designated
    by the Board to administer the Plan; provided, however, that the
    Committee shall at all times consist of two or more directors
    each of whom is not an employee of the Corporation.

 

    2.8  Common Stock. The Common Stock, $0.84 par
    value, of the Corporation and such other common stock as may be
    substituted or resubstituted for Common Stock pursuant to an
    adjustment under Section 4.3.

 

    2.9  Corporation. The Federal Home Loan
    Mortgage Corporation.

 

    2.10  Deferred Stock. An Award under
    Section 7.4 representing a right to receive delivery of a
    specified number of shares of Common Stock, or shares of Common
    Stock having a specified Fair Market Value at a specified date,
    at the expiration of a period or periods of deferral, and
    subject to such risk of forfeiture (which need not extend for
    the entire period of deferral) and other conditions as the
    Committee may specify.

 

    2.11  Disability. A condition resulting in a
    Participant’s being considered disabled under the terms of
    the Corporation’s group long-term disability insurance
    contract applicable to such Participant and in force at the time
    of the Disability.

 

    2.12  Dividend Equivalent. An Award under
    Section 7.6 giving the Participant a right (which may be
    conditional) to receive cash, Common Stock, other Awards, or
    other property equal in value to dividends paid with respect to
    a specified number of shares of Common Stock, and subject to
    such other conditions as the Committee may specify.

 

    2.13  Employee. Any officer or employee of the
    Corporation who is not a Senior Executive.

 

    2.14  Fair Market Value. With respect to Common
    Stock, Awards, or other property, the fair market value of such
    Common Stock, Awards, or other property determined by such
    methods or procedures as shall be established from time to time
    by the Committee. Unless otherwise determined by the Committee,
    the Fair Market Value of Common Stock as of any given date means
    the mean of the high and the low sale prices of a share of
    Common Stock reported in the table entitled “New York Stock
    Exchange Composite Transactions” contained in The Wall
    Street Journal (or an equivalent successor table) for such
    date or, if no such prices are

    

    3

 

    reported for such date, on the most recent trading day prior to
    such date for which such prices were reported.

 

    2.15  Incentive Stock Option. Any Option that
    is designated as an incentive stock option and qualifies as such
    within the meaning of Section 422 of the Code.

 

    2.16  1990 Plan. The Corporation’s Stock
    Compensation Plan that became effective June 8, 1990.

 

    2.17  Nonqualified Stock Option. Any Option
    which is not an Incentive Stock Option.

 

    2.18  Option. An Award under Section 7.1
    representing a right to purchase, upon the exercise of the right
    by the Participant or his or her Beneficiary, a specified number
    of shares of Common Stock at a fixed price during a specified
    period or periods, and subject to such other conditions as the
    Committee may specify.

 

    2.19  Other Stock-Based Award. An Award under
    Section 7.7 denominated or payable in, valued in whole or
    in part by reference to, or otherwise based on, or related to,
    Common Stock or factors that may influence the value of Common
    Stock, as determined by the Committee, and subject to such other
    conditions as may be specified by the Committee.

 

    2.20  Participant. A person who, as a Senior
    Executive or Employee of the Corporation or any Affiliate, has
    been granted an Award under the Plan.

 

    2.21  Performance Award. An Award that is
    subject to any performance condition or conditions imposed by
    the Committee under Section 6.7.

 

    2.22  Performance Shares. An Award of Deferred
    Stock denominated in shares which is subject to a performance
    condition or conditions imposed by the Committee under
    Section 6.7 which could result in forfeiture of the Award.

 

    2.23  Performance Units. An Award of Deferred
    Stock denominated in cash which is subject to a performance
    condition or conditions imposed by the Committee under
    Section 6.7 which could result in forfeiture of the Award.

 

    2.24  Plan. This 1995 Stock Compensation Plan.

 

    2.25  Restricted Stock. An Award under
    Section 7.3 pursuant to which a specified number of shares
    of Common Stock are granted to the Participant, subject to a
    risk of forfeiture and restrictions on transferability until the
    expiration of a specified restricted period or periods, and
    subject to such other conditions as the Committee may specify.

    

    4

 

    2.26  Retirement. Retirement in accordance with
    the eligibility provisions and retirement benefit provisions of
    Articles V and VI, respectively, of the Federal Home Loan
    Mortgage Corporation Employees’ Pension Plan.

 

    2.27  Senior Executive. An officer who is a
    Senior Vice President of the Corporation or who is senior to
    such an officer.

 

    2.28  Stock Appreciation Right or SAR. An Award
    under Section 7.2 representing a right to receive cash,
    Common Stock, other Awards, or other property equal in value to
    the excess of (a) the Fair Market Value of one share of
    Common Stock on the date of exercise, over (b) the grant
    price of the SAR as determined by the Committee as of the date
    of grant of the SAR, which grant price shall be not less than
    the Fair Market Value of one share of Common Stock on the date
    of grant. SARs shall be subject to such other conditions as the
    Committee may specify.

 

    2.29  Stock Bonus. An Award of Common Stock
    granted as a bonus under Section 7.5, subject to such
    conditions as the Committee may specify.

 

    2.30  Termination. A termination of employment
    of the Participant immediately after which the Participant is
    not an employee of the Corporation or any Affiliate. Conversion
    from full-time to part-time employment shall not be deemed to be
    a Termination.

 

    ARTICLE III
    

    Administration

 

    3.1  Authority of the Committee Generally. The
    Plan shall be administered by the Committee. The Committee shall
    have full and final authority to take the following actions, in
    each case subject to and consistent with the provisions of the
    Plan:

 

    (a)  to select officers and other employees to whom
    Awards may be granted;

 

    (b)  to determine the type or types of Awards to be
    granted to each person selected to become a Participant, and the
    time or times at which Awards may be granted;

 

    (c)  to determine the number of Awards to be granted,
    the number of shares of Common Stock subject to an Award, the
    terms and conditions of any Award granted under the Plan
    including, but not limited to, any option price, grant price, or
    purchase price, any restriction or condition, any schedule or
    performance conditions for the lapse of restrictions or
    conditions relating to transferability, forfeiture,
    exercisability, or settlement of an Award, and waivers,
    accelerations, or modifications of any such schedule or
    performance conditions, based in each case on such
    considerations as the Committee shall determine, and all other
    matters to be determined in connection with an Award;

    

    5

 

    (d)  to determine whether, to what extent, and under
    what circumstances an Award may be settled or an Award may be
    canceled, forfeited, or surrendered, and the method of payment
    of the option price or purchase price of an Award, including but
    not limited to cash, Common Stock, other Awards, or other
    property;

 

    (e)  to determine whether, to what extent, and under
    what circumstances cash, Common Stock, other Awards, or other
    property payable with respect to an Award will be deferred
    either automatically, at the election of the Committee, or at
    the election of the Participant;

 

    (f)  to prescribe the form of each Award Document,
    which need not be identical for each Participant;

 

    (g)  to adopt, amend, suspend, waive, and rescind such
    rules and regulations as the Committee may deem necessary or
    advisable to administer the Plan;

 

    (h)  to correct any defect or supply any omission or
    reconcile any inconsistency in the Plan and to construe and
    interpret the Plan and any Award, rules and regulations, Award
    Document, or other instrument hereunder; and

 

    (i)  to make all other decisions and determinations as
    may be required under the terms of the Plan or as the Committee
    may deem necessary or advisable for the administration of the
    Plan.

 

    3.2  Scope of Committee Authority. Unless
    authority is specifically reserved to the Board under the terms
    of the Plan, the Corporation’s Charter or Bylaws, or
    applicable law, the Committee shall have sole discretion in
    exercising authority under the Plan. Any action of the Committee
    with respect to the Plan shall be final, conclusive, and binding
    on all persons, including the Corporation, Participants, any
    Beneficiary or other person claiming any rights under the Plan
    from or through any Participant, and stockholders. The express
    grant of any specific power to the Committee, and the taking of
    any action by the Committee, shall not be construed as limiting
    any power or authority of the Committee.

 

    3.3  Delegation of Committee Authority. The
    Committee may delegate any or all of its authority under this
    Article 3 relating to the selection of Employees for
    participation, the grant of Awards to Employees, and other
    actions under the Plan relating to Employees, to the extent
    permitted by applicable law. Such delegation shall be made only
    to the Chief Executive Officer, another Senior Executive or a
    committee of two or more Senior Executives (which may include
    the Chief Executive Officer). In the case of any such
    delegation, references in the Plan to the Committee shall be
    deemed to include the Chief Executive Officer or committee to
    which authority has been delegated with respect to Employees;
    provided, however, that the Committee may impose any term or
    limitation upon the exercise of such delegated authority
    hereunder not inconsistent with the Plan. The Committee may not
    make such delegation with respect to any

    

    6

 

    Senior Executive, except as to ministerial functions. In this
    regard, the Committee may delegate to officers or other
    employees of the Corporation, subject to such terms as the
    Committee shall determine, the duty to perform ministerial
    functions under the Plan.

 

    3.4  Good Faith Reliance. Each member of the
    Committee shall be entitled to, in good faith, rely or act upon
    any report or other information furnished to him by any officer
    or other employee of the Corporation, the Corporation’s
    independent public accountants, or any compensation consultant,
    legal counsel, or other professional retained by the Corporation
    to assist in the administration of the Plan. No member of the
    Committee, nor any officer or employee of the Corporation acting
    on behalf of the Committee, shall be personally liable for any
    action, determination, or interpretation taken or made in good
    faith with respect to the Plan, and members of the Committee and
    any officer or employee of the Corporation acting on behalf of
    the Committee or members thereof shall, to the extent permitted
    by law, be fully indemnified and protected by the Corporation
    with respect to any such action, determination, or
    interpretation.

 

    ARTICLE IV
    

    Common Stock Available Under the Plan; Adjustments

 

    4.1  Common Stock Available for Delivery.
    Subject to adjustment as hereinafter provided, the total number
    of shares of Common Stock reserved and available for delivery in
    connection with Awards under the Plan shall be 1,500,000, plus
    that number of shares of Common Stock that, at the date on which
    all further authority for the grant of awards under the 1990
    Plan terminates, remain reserved and available for awards under
    the 1990 Plan but for such termination and less any shares
    allocated for use under the 1995 Non-Employee Directors’
    Stock Compensation Plan. No Award may be granted if the number
    of shares to which such Award relates, when added to the number
    of shares to which other then-outstanding Awards relate, exceeds
    the Committee’s good faith estimate of the number of shares
    then remaining available for delivery under this Article 4.
    If all or any portion of an Award is forfeited, is settled in
    cash, other Awards, or other property not resulting in the
    delivery of non-forfeitable shares of Common Stock, or otherwise
    is terminated without delivery of shares of Common Stock to the
    Participant, the shares to which such Award or portion thereof
    related shall again be available for Awards under the Plan. The
    Committee may adopt procedures for the counting of shares
    relating to any Award to ensure appropriate counting and avoid
    double counting (in the case of tandem or substitute awards).

 

    4.2  Source of Common Stock. Any shares of
    Common Stock delivered pursuant to an Award may consist, in
    whole or in part, of authorized but previously unissued shares,
    treasury shares, or shares acquired in market transactions on
    behalf of the Participant.

    

    7

 

    4.3  Adjustments.

 

    (a)  In the event that the Committee shall determine
    that any dividend or other distribution (whether in the form of
    cash, Common Stock, or other property), recapitalization,
    forward or reverse split, reorganization, merger, consolidation,
    spin-off, combination, share exchange, rights offering, or other
    similar corporate transaction or event affects the Common Stock
    such that an adjustment is appropriate in order to prevent
    dilution or enlargement of the rights of Participants under the
    Plan, then the Committee shall, in such manner as it may deem
    equitable, adjust any or all of (i) the number and kind of
    shares of Common Stock then reserved and available for Awards
    under Section 4.1, (ii) the number and kind of shares
    of outstanding Restricted Stock or other outstanding Award in
    connection with which shares have been issued or delivered,
    (iii) the number and kind of shares that may be issued or
    delivered in respect of other outstanding Awards, and
    (iv) the option price, grant price, or purchase price
    relating to any Award (or, if deemed appropriate, the Committee
    may make provision for a cash payment with respect to any
    outstanding Award) and any other term relating to an Award.

 

    (b)  The Committee is further authorized to make
    adjustments in the terms and conditions of, and the criteria
    included in, Awards in recognition of unusual or nonrecurring
    events (including, without limitation, events described in the
    preceding sentence) affecting the Corporation or any Affiliate
    or the financial statements of the Corporation or any Affiliate,
    or in response to changes in applicable laws, regulations, or
    accounting principles.

 

    (c)  The foregoing notwithstanding, no adjustments
    shall be authorized under this Section 4.3 with respect to
    Incentive Stock Options or SARs in tandem therewith to the
    extent that such authority would cause Incentive Stock Option to
    fail to comply with Section 422(b) of the Code, and
    adjustments to such Incentive Stock Options shall be made in a
    manner that preserves their compliance with Section 422 of
    the Code unless otherwise requested by the Participant.

 

    ARTICLE V
    

    Eligibility

 

    5.1  Persons Eligible. Senior Executives and
    Employees of the Corporation and its Affiliates, including
    directors of the Corporation who are also employees, are
    eligible to be granted Awards under the Plan. The foregoing
    notwithstanding, no member of the Committee shall be eligible to
    be granted Awards under the Plan.

 

    5.2  No Rights to Awards. No Participant,
    Senior Executive, or Employee shall have any claim to be granted
    any Award under the Plan, and there is no obligation for
    uniformity of treatment of Participants, Senior Executives, and
    Employees.

    

    8

 

    ARTICLE VI
    

    Terms of Awards

 

    6.1  General. Awards may be granted generally
    on the terms and conditions set forth in Articles 6 and 7.
    In addition, the Committee may impose on any Award or the
    exercise thereof, at the date of grant or thereafter, subject to
    Section 8.4, such additional terms and conditions, not
    inconsistent with the provisions of the Plan, as the Committee
    shall determine and specify in an Award Document.

 

    6.2  Minimum Vesting Requirements. The
    foregoing notwithstanding, Options, SARs, Restricted Stock,
    Deferred Stock, and Other Stock-Based Awards shall be
    forfeitable for at least one year after the date of grant in the
    event of the Participant’s Termination for reasons other
    than due to death, Disability, or Retirement. Options, SARs, and
    any other Award carrying a right to exercise shall not be
    exercisable prior to the time such risk of forfeiture shall
    lapse.

 

    6.3  Stand-Alone, Additional, Tandem, and
    Substitute Awards. Awards granted under the Plan may, in the
    discretion of the Committee, be granted either alone or in
    addition to, in tandem with, or in substitution for, any other
    Award granted under the Plan or any award granted under any
    other plan of the Corporation, an Affiliate, or any business
    entity to be acquired by the Corporation or an Affiliate, or any
    other right of a Participant to receive payment from the
    Corporation or an Affiliate. Awards granted in addition to or in
    tandem with other Awards or awards may be granted either as of
    the same time as or a different time from the grant of such
    other Awards or awards. In the case of Awards granted in
    substitution for other Awards or awards, the per share option
    price of any Option, grant price of any SAR, or purchase price
    of any other Award conferring a right to purchase Common Stock
    shall be deemed to equal or exceed the Fair Market Value of the
    underlying Common Stock if the Fair Market Value of the
    surrendered Award or award together with the nominal option
    price, grant price, or purchase price equal or exceed the Fair
    Market Value of the underlying Common Stock.

 

    6.4  Term of Awards. The term of each Award
    shall be for such period as may be determined by the Committee,
    except that such term shall not exceed ten years from the date
    of grant of the Award.

 

    6.5  Form of Payment Under Awards. Subject to
    the terms of the Plan and any applicable Award Document,
    payments to be made by the Corporation or an Affiliate upon the
    grant, exercise, or settlement of an Award may be made in such
    forms as the Committee shall determine, including, without
    limitation, cash, Common Stock, other Awards, or other property,
    and may be made in a single payment or transfer, in
    installments, or on a deferred basis as determined by the
    Committee. Such payments may include, without limitation,
    provisions for the payment or crediting of reasonable interest
    on installment or deferred payments or the grant or crediting of
    Dividend Equivalents in respect of installment or deferred
    payments denominated in Common Stock.

    

    9

 

    6.6  Acceptance of Notes to Finance Exercise or
    Other Participant Obligations. With the written consent of
    the Committee, and subject at all times to, and only to the
    extent, if any, permitted under and in accordance with, laws and
    regulations and other binding obligations or provisions
    applicable to the Corporation, the Corporation may accept one or
    more promissory notes from any Participant in connection with
    the exercise of Options or payment of any other amount in
    connection with any Award, including withholding taxes. Any such
    note shall provide for full recourse against the maker thereof,
    and shall have such other terms, including as to principal
    amount, interest rate, and maturity, as may be specified by the
    Committee.

 

    6.7  Performance Awards. The Committee may, in
    its discretion, impose conditions on any Award in order to make
    such an Award a Performance Award, including conditions imposed
    on Deferred Stock resulting in such Awards being deemed
    Performance Shares or Performance Units. In connection with a
    Performance Award, the Committee shall establish the business or
    other criteria for the measure of performance, the performance
    levels required, the period over which performance is to be
    measured, the right or benefit to accrue to the Participant upon
    achievement of the performance objective, the manner in which
    achievement of the performance objective shall be determined,
    and all other terms and conditions (including adjustments
    thereto) of the Performance Award.

 

    6.8  Limitations on Transferability. Awards and
    any other rights under the Plan will not be transferable by a
    Participant except by will or the laws of descent and
    distribution (or to a designated Beneficiary in the event of the
    Participant’s death), and, if exercisable, shall be
    exercisable during the lifetime of a Participant only by such
    Participant or his guardian or legal representative. The
    foregoing notwithstanding, if and to the extent expressly
    permitted by the Committee, such Awards and other rights (other
    than Incentive Stock Options and SARs in tandem therewith) may
    be transferred by a Participant after his or her Retirement to
    one or more Beneficiaries, and may be exercised by such
    transferees in accordance with the terms of such Award. Awards
    and other rights under the Plan may not be pledged, mortgaged,
    hypothecated, or otherwise encumbered, and shall not be subject
    to the claims of creditors. No transfer by will or the laws of
    descent and distribution shall be effective to bind the
    Corporation unless the Corporation shall have been furnished
    with a copy of such will or other evidence as the Corporation
    may deem necessary to establish the validity of the transfer.

 

    6.9  No Stockholder Rights. No Award shall
    confer on any Participant any of the rights of a stockholder of
    the Corporation unless and until Common Stock is duly issued or
    transferred to the Participant in accordance with the terms of
    the Award or, in the case of an Option, the Option is duly
    exercised.

    

    10

 

    ARTICLE VII
    

    Forms of Awards

 

    7.1  Options. The Committee is authorized to
    grant Options, which may be either Incentive Stock Options or
    Nonqualified Stock Options, to Participants on the following
    terms and conditions:

 

    (a)  Option Price. The option price per share
    of Common Stock purchasable under an Option shall be determined
    by the Committee; provided, however, that such option price
    shall be not less than the Fair Market Value of a share on the
    date of grant of such Option.

 

    (b)  Time and Method of Exercise. The Committee
    shall determine the time or times at which an Option may be
    exercised in whole or in part (subject to Section 6.2); the
    methods by which such option price may be paid or deemed to be
    paid; the form of such payment, including, without limitation,
    cash, Common Stock, other Awards or awards granted under other
    plans of the Corporation, or other property, promissory notes as
    authorized under Section 6.7, or “cashless
    exercise” arrangements to the extent permitted by
    applicable law; and the methods by which Common Stock will be
    delivered or deemed to be delivered to Participants.

 

    (c)  Incentive Stock Options. The terms of any
    Incentive Stock Option granted under the Plan shall comply in
    all respects with the provisions of Section 422 of the
    Code. Anything in the Plan to the contrary notwithstanding, no
    term of the Plan relating to Incentive Stock Options shall be
    interpreted, amended, or altered, nor shall any discretion or
    authority granted under the Plan be exercised, so as to
    disqualify either the Plan or any Incentive Stock Option under
    Section 422 of the Code, unless the Participant has first
    requested such disqualification of the Incentive Stock Option.

 

    7.2  Stock Appreciation Rights. The Committee
    is authorized to grant SARs to Participants on the following
    terms and conditions:

 

    (a)  Grant Price. The grant price of an SAR
    shall be determined by the Committee as of the date of grant of
    the SAR, provided, however, that the grant price of an SAR shall
    be not less than the Fair Market Value of one share of Common
    Stock on the date of grant.

 

    (b)  Exercise of SAR and Other Terms. The
    Committee shall determine the time or times at which an SAR may
    be exercised in whole or in part (subject to Section 6.2),
    the method of exercise, method of settlement, form of
    consideration payable in settlement, method by which Common
    Stock will be delivered or deemed to be delivered to
    Participants, whether an SAR shall be in tandem with any other
    Award or shall be free-standing, and any other terms and
    conditions of any SAR. An SAR may be exercised by the
    Participant, his or her Beneficiary, or automatically during a
    specified period or periods.

    

    11

 

    7.3  Restricted Stock. The Committee is
    authorized to grant Restricted Stock to Participants on the
    following terms and conditions:

 

    (a)  Restrictions Generally. Restricted Stock
    shall be subject to such restrictions on transferability and
    other restrictions, if any, as the Committee may impose, which
    restrictions may lapse separately or in combination at such
    times, under such circumstances, in such installments, or
    otherwise as the Committee may determine. Except to the extent
    restricted under the terms of the Plan and any Award Document
    relating to the Restricted Stock, a Participant granted
    Restricted Stock shall have all of the rights of a stockholder
    including, without limitation, the right to vote Restricted
    Stock or the right to receive dividends thereon.

 

    (b)  Forfeiture. In addition to the risk of
    forfeiture imposed under Section 6.2, upon Termination
    during the applicable restriction period Restricted Stock that
    is at that time subject to restrictions shall be forfeited and
    reacquired by the Corporation; provided, however, that the
    Committee may provide, by rule or regulation or in any Award
    Document, or may determine in any individual case, that
    restrictions or forfeiture conditions relating to Restricted
    Stock will be waived in whole or in part in the event of death,
    Disability, Retirement or Terminations resulting from specified
    causes, except as otherwise provided in Section 6.2.

 

    (c)  Certificates for Common Stock. Restricted
    Stock granted under the Plan may be evidenced in such manner as
    the Committee shall determine. If certificates representing
    Restricted Stock are registered in the name of the Participant,
    such certificates shall bear an appropriate legend referring to
    the terms, conditions, and restrictions applicable to such
    Restricted Stock, or shall be required to be transferred into
    the name of a custodian designated by the Corporation. In either
    case, the Corporation or such custodian shall retain physical
    possession of the certificate, and the Participant shall, upon
    the request of the Corporation at any time, deliver a stock
    power to the Corporation, endorsed in blank if so requested by
    the Corporation, relating to the Restricted Stock.

 

    (d)  Dividends and Distributions. Dividends
    paid on Restricted Stock shall be either paid at the dividend
    payment date in cash or in shares of unrestricted Common Stock
    having a Fair Market Value equal to the amount of such
    dividends, or the payment of such dividends shall be deferred
    and/or the amount or value thereof automatically reinvested in
    additional Restricted Stock, other Awards, or other investment
    vehicles, as the Committee shall determine or permit the
    Participant to elect. Common Stock distributed in connection
    with a Common Stock split or Common Stock dividend, and other
    property distributed as a dividend, shall be subject to
    restrictions and a risk of forfeiture to the same extent as the
    Restricted Stock with respect to which such Common Stock or
    other property is distributed.

 

    7.4  Deferred Stock. The Committee is
    authorized to grant Deferred Stock to Participants, subject to
    the following terms and conditions:

 

    (a)  Deferral of Delivery and Restrictions.
    Delivery of Common Stock will occur upon expiration of the
    deferral period specified for an Award of Deferred Stock by the

    

    12

 

    Committee (or, if permitted by the Committee, as elected by the
    Participant). In addition, Deferred Stock shall be subject to
    such restrictions as the Committee may impose, if any, which
    restrictions may lapse at the expiration of the deferral period
    or at earlier specified times, separately or in combination,
    under such circumstances, in such installments, or otherwise as
    the Committee may determine.

 

    (b)  Forfeiture. In addition to the risk of
    forfeiture imposed under Section 6(b), upon Termination
    during the applicable deferral period or portion thereof to
    which forfeiture conditions apply (as specified by the Committee
    in the Award Document evidencing the Deferred Stock), all
    Deferred Stock that is at that time subject to such risk of
    forfeiture shall be forfeited; provided, however, that the
    Committee may provide, by rule or regulation or in any Award
    Document, or may determine in any individual case, that
    restrictions or forfeiture conditions relating to Deferred Stock
    will be waived in whole or in part in the event of death,
    Disability, Retirement or Terminations resulting from specified
    causes, except as otherwise provided in Section 6.2.

 

    7.5  Stock Bonus; Awards in Lieu of Other
    Obligations. The Committee is authorized to grant Stock
    Bonuses to Participants, which may be outright grants of Common
    Stock subject to no conditions. A Stock Bonus and other Awards
    under the Plan may be granted in lieu of other obligations of
    the Corporation to pay cash under other plans or compensatory
    arrangements. Bonus Stock granted hereunder, and any Award in
    lieu of another obligation of the Corporation, shall be subject
    to such other terms as shall be determined by the Committee.

 

    7.6  Dividend Equivalents. The Committee is
    authorized to grant Dividend Equivalents to a Participant.
    Dividend Equivalents may be awarded on a free-standing basis or
    in connection with another Award. The Committee may provide that
    Dividend Equivalents shall be paid or distributed when accrued
    or shall be reinvested or deemed reinvested in additional Common
    Stock, Awards, or other investment vehicles, and subject to such
    restrictions on transferability and risks of forfeiture, as the
    Committee may specify.

 

    7.7  Other Stock-Based Awards. The Committee is
    authorized, subject to limitations under applicable law, to
    grant to Participants such other Awards that may be denominated
    or payable in, valued in whole or in part by reference to, or
    otherwise based on, or related to, Common Stock and factors that
    may influence the value of Common Stock, as deemed by the
    Committee to be consistent with the purposes of the Plan. The
    Committee shall determine the terms and conditions of such
    Awards. Common Stock delivered pursuant to an Award in the
    nature of a purchase right granted under this Section 7.7
    shall be purchased for such consideration, paid for at such
    times, by such methods, and in such forms, including, without
    limitation, cash, Common Stock, other Awards, or other property,
    as the Committee shall determine.

    

    13

 

    ARTICLE VIII
    

    General Provisions

 

    8.1  Compliance With Laws and Obligations. The
    Corporation shall not be obligated to issue or deliver Common
    Stock in connection with any Award or take any other action
    under the Plan in a transaction subject to any federal or state
    law, any requirement under any listing agreement between the
    Corporation and any national securities exchange or automated
    quotation system, or any other law, regulation, or contractual
    obligation of the Corporation, until the Corporation is
    satisfied that such laws, regulations, and other obligations of
    the Corporation have been complied with in full. Certificates
    representing shares of Common Stock delivered under the Plan
    will be subject to such stop transfer orders and other
    restrictions as may be applicable under such laws, regulations,
    and other obligations of the Corporation, including any
    requirement that a legend or legends be placed thereon.

 

    8.2  No Right to Continued Employment. Neither
    the Plan nor any action taken hereunder shall be construed as
    giving any employee the right to be retained in the employ of
    the Corporation or any Affiliate, nor shall it interfere in any
    way with the right of the Corporation or any Affiliate to
    terminate any employee’s employment at any time.

 

    8.3  Taxes. The Corporation or any Affiliate is
    authorized to withhold from any Award granted or to be settled,
    any delivery of Common Stock in connection with an Award, any
    other payment relating to an Award, or any payroll or other
    payment to a Participant amounts of federal, state, and local
    withholding taxes and other taxes due or potentially payable in
    connection with any transaction involving an Award, and to take
    such other action as the Committee may deem advisable to enable
    the Corporation and Participants to satisfy obligations for the
    payment of withholding taxes and other tax obligations relating
    to any Award. This authority shall include authority to withhold
    or receive Common Stock or other property and to make cash
    payments in respect thereof in satisfaction of a
    Participant’s tax obligations. In such case, Common Stock
    shall be valued at its Fair Market Value at the date the shares
    are withheld or received by the Corporation, and any such shares
    withheld shall be deemed to have been delivered to the
    Participant for purposes of Section 4.1.

 

    8.4  Changes to the Plan and Awards. The Board
    may, with prospective or retroactive effect, amend, alter,
    suspend, discontinue, or terminate the Plan or the
    Committee’s authority to grant further Awards under the
    Plan without the consent of stockholders or Participants, except
    that any amendment shall be subject to the approval of the
    Corporation’s stockholders at or before the first annual
    meeting of stockholders for which the record date falls on or
    after the date of such Board action if such amendment is subject
    to a requirement of stockholder approval under any applicable
    federal or state law or regulation, the rules of any stock
    exchange or automated quotation system on which the Common Stock
    may then be listed or quoted, or the Corporation’s Bylaws,
    and the Board may otherwise, in its discretion, determine to
    submit other such changes to the Plan to stockholders for
    approval; provided, however, that, without the consent of an
    affected Participant, except to the extent required by
    Section 8.1 hereof no such

    

    14

 

    action may materially impair the rights of such Participant
    under any Award therefore granted. The Committee may waive any
    conditions or rights under, or amend, alter, suspend,
    discontinue, or terminate, any Award therefore granted and any
    Award Document relating thereto; provided, however, that, except
    to the extent required by Section 8.1 hereof no such action
    may materially impair the rights of such Participant under such
    Award without the consent of an affected Participant.

 

    8.5  Unfunded Status of Awards. The Plan is
    intended to constitute a generally “unfunded” plan for
    incentive and deferred compensation. With respect to any
    payments not yet made to a Participant pursuant to an Award,
    nothing contained in the Plan or any Award shall give any such
    Participant any rights that are greater than those of a general
    creditor of the Corporation.

 

    8.6  Nonexclusivity of the Plan. Neither the
    adoption of the Plan by the Board nor its submission to the
    stockholders of the Corporation for approval shall be construed
    as creating any limitations on the power of the Board to adopt
    such other compensatory arrangements as it may deem desirable,
    including, without limitation, the granting of stock options
    otherwise than under the Plan, and such arrangements may be
    either applicable generally or only in specific cases.

 

    8.7  No Fractional Shares. No fractional shares
    of Common Stock shall be issued or delivered pursuant to the
    Plan or any Award. The Committee shall determine whether cash,
    other Awards, or other property shall be issued or paid in lieu
    of such fractional shares or whether such fractional shares or
    any rights thereto shall be forfeited or otherwise eliminated.

 

    8.8  Awards Not Compensation Under Plans. No
    Award shall be considered as compensation under any employee
    benefit plan of the Corporation except as specifically provided
    in any such plan or otherwise determined by the Committee.

 

    8.9  Governing Law. The validity, construction,
    and effect of the Plan, any rules and regulations under the
    Plan, and any Award Document will be determined in accordance
    with the Federal Home Loan Mortgage Corporation Act of 1970,
    other federal laws regulating the Corporation, and other laws of
    the United States. This Plan and the respective rights and
    obligations of the Corporation and the Participants, except to
    the extent otherwise provided by Federal law, shall be construed
    under the laws of the Commonwealth of Virginia (without giving
    effect to principles of conflicts of laws).

 

    8.10  Stockholder Approval, Termination of
    Authority to Grant Awards and Termination of the Plan. The
    Plan shall become effective not later than the first annual
    meeting of stockholders of the Corporation at which the Plan
    shall have been approved by the affirmative votes of the holders
    of a majority of the voting securities of the Corporation
    present, or represented, and entitled to vote on the subject
    matter. No Award may be granted after December 31, 2004.
    The Plan will remain in effect thereafter until such time as the
    Corporation has no further rights or obligations under the Plan
    with respect to outstanding Awards under the Plan, unless the
    Plan is earlier terminated by the Board of Directors.

    

    15

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