Document:

exv10w7

 

EXHIBIT 10.7

FANNIE MAE

ELECTIVE DEFERRED COMPENSATION PLAN II

Effective January 1, 2005

ARTICLE I

Establishment and Purpose

     1.1 Establishment. Reference is made to the Federal National Mortgage Association
Elective Deferred Compensation Plan (the “EDC I”), which, on November 15, 2004, was divided into
two plans: the legacy EDC I and this Fannie Mae Elective Deferred Compensation Plan II (the
“Plan”). The EDC I was frozen as to new deferrals (other than, for the avoidance of doubt,
notional earnings on prior deferrals) as of December 31, 2004 and thereafter governs only amounts
deferred prior to December 31, 2004 and not materially modified after October 4, 2004, plus
notional earnings thereon (“grandfathered benefits”). A Participant’s grandfathered benefits under
the EDC I are intended to be grandfathered for purposes of Section 409A and therefore exempt from
Section 409A. The Plan is intended to comply with the requirements of Section 409A, 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 Plan and the rights and obligations
of the Company, such Participants and their beneficiaries shall be determined under the Plan.

     A Participant will receive a rate of return on his or her deferrals based on the Participant’s
choice among several hypothetical investment funds. The terms and conditions of the Plan are set
forth herein.

     1.2 Purpose. The purpose of the 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 “Administrator” shall mean the Committee or, solely under the conditions set forth in
Section 6.1, the Compensation Committee of the Board of Directors.

     2.2 “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.

 

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

     2.4 “Code” shall mean the Internal Revenue Code of 1986, as from time to time amended and in
effect.

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

     2.6 “Company” shall mean Federal National Mortgage Association or Fannie Mae.

     2.7 “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.

     2.8 “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.

     2.9 “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.

     2.10 “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 or her designee, may designate as available under the Plan.

     2.11 “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.

     2.12 “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 or her designee.

     2.13 “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.

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

 

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

     2.16 “Plan” shall mean the Fannie Mae Elective Deferred Compensation Plan II.

     2.17 “Retirement” shall mean (i) in the case of an Executive, a Separation from Service that
occurs on or after the date the Participant attains age 55 and has 5 years of service with the
Company (as defined under the Federal National Mortgage Association Retirement Savings Plan for
Employees) or attains age 65 without regard to the Participant’s
years of service or (ii) in the case a Director, any Separation from Service from the Board of Directors.

     2.18 “Section 409A” shall mean Section 409A of the Code.

     2.19 “Separation from Service” shall mean a “separation from service” (as that term is defined
at Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other
corporations and trades or businesses, if any, that would be treated as a single “service
recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations) from the
Company and any corporation, partnership or other entity that is part of a controlled group with
the Company for employee benefit plan purposes pursuant to the provisions of Code Sections 414(b)
or (c). The Administrator may, but need not, elect in writing, subject to the applicable
limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h)
of the Treasury Regulations for purposes of determining whether a “separation from service” has
occurred. Any such written election shall be deemed part of the Plan.

     2.20 “Termination of Service” shall mean, in the case of an Executive, a Separation from
Service other than by reason of Retirement or death.

     2.21 “Unforeseeable Emergency” shall mean an unforeseeable emergency as defined in subsection
(a)(2)(B)(ii) of Section 409A, including a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as
defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

     To the extent permitted by the Administrator, the terms “written,” “in writing,” and terms of
similar import shall include communications by electronic media.

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 or its designee) 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. Each such election shall become irrevocable not later than the applicable election
deadline. Subject to Section 3.2(b) below, the applicable deadline for a deferral election is such
deadline as the Administrator shall establish, which deadline shall in no event be later than the
last day of the calendar year preceding the calendar year in which the services to which the
deferred compensation relates are to be performed.

     (b) 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, 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 in respect of services to be performed
during the calendar year following such election or his or her Award in respect of services to be
performed during the calendar year following such election (as hereinafter determined) within
thirty (30) days of the date that he or she becomes eligible to participate after becoming an
Executive or Director, as applicable. The amount that a Participant may defer under this Section
3.2(b) with respect to an Award may not exceed an amount equal to the total amount of the Award for
the performance period multiplied by the ratio of the number of days remaining in the performance
period after the election over the total number of days in the performance period. An individual
who already participates or is eligible to participate in (including, except to the extent
otherwise provided in Section 1.409A-2(a)(7) of the Treasury Regulations, an individual who has any
entitlement, vested or unvested, to payments under) any other nonqualified deferred compensation
plan that would be required to be aggregated with the Plan for purposes of Section 1.409A-1(c)(2)
of the Treasury Regulations shall not be treated as eligible for the mid-year election rules of
this Section 3.2(b) with respect to the Plan, even if he or she had never previously been eligible
to participate in the Plan itself. Notwithstanding the foregoing, the Administrator may, in its
sole discretion, determine prior to the beginning of a calendar year that no mid-year election that
would otherwise be permitted under this Section 3.2(b) shall be permitted for such following
calendar year.

     (c) A Participant’s deferral elections for a Plan Year shall be cancelled as to future
deferrals if the Participant receives a withdrawal under Section 5.3(c) below or receives a
hardship distribution under the Retirement Savings Plan pursuant to Section 1.401(k)-1(d)(3) of the
Treasury Regulations. A Participant may also cancel his or her deferral elections as to future
deferrals upon the occurrence of any medically determinable physical or mental impairment resulting
in the Participant’s inability to perform the duties of his or her position or any substantially
similar position, where such impairment can be expected to result in death or can be expected to
last for a continuous period of not less than six (6) months, provided such cancellation is made by
the later of (i) the end of the calendar year in which such impairment occurs or (ii) the 15th day
of the third month following the date on which such impairment occurs. If a Participant’s deferral
elections are cancelled pursuant to this Section 3.2(c), any later deferral election by the
Participant will be subject to the timing requirements of Section 3.2(a).

 

 

     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 may be in any increment. The maximum amount that may be
deferred for any calendar year under this Plan by a Participant who is an Executive is fifty
percent (50%) (or such other percent as prescribed by the Administrator prior to the
applicable election deadline) of the Compensation (including any amount deferred under this
Plan) 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 all or part of
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 prior to the
applicable election deadline. A Participant who is an Executive may elect to defer for any
calendar year up to one hundred percent (100%) (or such other percent as prescribed by the
Administrator prior to the applicable election deadline) of the Award (including any amount
deferred under this Plan) of such Participant for such calendar year. For the avoidance of
doubt, no more than 100% of any Award may be deferred, in the aggregate, under this Plan and
all other deferral plans of the Company for any 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 may be in any increment. A Participant who
is a Director may elect to defer for any calendar year up to one hundred percent (100%) (or
such other percent as prescribed by the Administrator prior to the applicable election
deadline) 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) 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) 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(c)(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).

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 or his or her designee prior to the applicable election deadline. 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 or his or her designee prior to the applicable election deadline. 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(b) 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 such
Participant has elected to defer in the Deferral Year.

     (c) 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.

     (d) The Participant’s accounts shall be adjusted periodically for Deemed Earnings. A
Participant’s account (reduced in accordance with Section 4.1(e)) shall continue to be adjusted in
accordance with this Section 4.1(d) 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(c) 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.

     (e) The Participant’s account shall be reduced by any payments made to the Participant, his or
her beneficiary, estate or representative. 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).

     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. A Participant may subsequently elect to change his or her prior election of the date of
commencement of payment if and only if such change (i) shall not take effect for at least twelve
(12) months after the date on which the subsequent election is made; (ii) is made at least twelve
(12) months prior to the date on which the first payment was scheduled to be made (“prior election
payment date”); and (iii) results in a new payment date that is delayed by at least five (5) years,
as measured from the prior election payment date. Any such change of the time of commencement of
payment shall be made in the manner specified by the Committee consistent with Section 409A.
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 (i) shall not take effect for at least twelve (12) months after the date on which
the subsequent election is made; (ii) is made at least twelve (12) months

 

 

prior to the prior election payment date (as defined in Section 5.2); and (iii) results in a
new payment date that is delayed by at least five (5) years, as measured from the prior election
payment date. 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 5.3(b).

     (c) Notwithstanding any other provision of the Plan to the contrary, a Participant or
beneficiary may be permitted to withdraw, but only to the extent permitted by Section 409A, a part
or all of any deferred amounts provided, however, that such distribution shall be made only if the
Benefit Plans Committee (or, as provided in Section 6.1, the Compensation Committee of the Board of
Directors), in its sole discretion, determines (i) that the Participant, or the Participant’s
beneficiary, has experienced an Unforeseeable Emergency or (ii) that an acceleration of payments is
necessary in order for a federal officer or employee in the executive branch to comply with an
ethics agreement with the federal government. If an Unforeseeable Emergency is determined to exist
pursuant to clause (i) above, a distribution may not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship). 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 of the circumstances described in clause (i) or (ii)
above.

     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 Separation from Service.

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

     (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 the Participant has elected not to have the
foregoing lump sum payment provision apply in his or her deferral election(s), 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(c), or if changed, in the most recent change pursuant to Section 5.2 or 5.3(b). 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
under the circumstances set forth in Section 5.3(c).

     (d) Notwithstanding any provision of this Section 5 or any other provision of the Plan to the
contrary, in the case of a Participant who is an individual determined by the Administrator or its
delegate to be a “specified employee” as defined in subsection (a)(2)(B)(i) of Section 409A,
payment of such Participant’s benefit owing to a Separation from Service with the Company shall not
commence until the January coincident with or next following the date which is six (6) months and
one (1) day after the date of such Separation from Service or, if earlier than the end of such
period, the date of death of such Participant. The Administrator may, but need not, elect in
writing, subject to the applicable limitations under Section 409A, any of the special elective
rules prescribed in Section 1.409A-1(i) of the Treasury Regulations for purposes of determining
“specified employee” status. Any such written election shall be deemed part of the Plan.

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 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. Notwithstanding the foregoing, the Company
may provide for the immediate distribution of all accounts upon termination of the Plan as a whole
or with respect to any Participant or group of Participants, but only to the extent the Company
determines to be desirable to comply with Section 409A.

     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 materially or adversely affect the
rights of any Participant under any Award for which a deferral election has already been made as of
the date of such amendment, except as permitted under Section 409A.

     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 Section 409A Transition Relief. The Company may, by action of the Committee,
authorize changes to time and form of payment elections but only to the extent consistent with the
transition rules, and during the transition relief period, provided under Section 409A and guidance
issued thereunder by the Internal Revenue Service.exv10w10

 

Exhibit
10.10

FEDERAL NATIONAL MORTGAGE ASSOCIATION

SUPPLEMENTAL PENSION PLAN

As Amended Effective January 1, 2008

ARTICLE I.

PURPOSE

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

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

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

ARTICLE II.

DEFINITIONS

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

     2.1 “Administrator” means the Benefit Plans Committee.

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

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

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

     2.5 “Corporation” means the Federal National Mortgage Association.

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

 

 

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

     2.7A “Grandfathered Employee” means an employee of the Corporation who, as of January 1,
2008, satisfied the requirements for being treated as a “Grandfathered Participant” under the
Retirement Plan as in effect on such date. If a Grandfathered Employee separates from service with
the Employer after December 31, 2007 and is subsequently reemployed by the Corporation, such
Executive shall not be considered a Grandfathered Employee for any period following such
reemployment.

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

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

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

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

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

ARTICLE III.

ELIGIBILITY AND PARTICIPATION

     3.1. Each Executive of the Corporation who was a Participant in the Plan as of January 1,
2008 shall continue to be a Participant in the Plan after such date, provided that any such
Executive who is not a Grandfathered Employee shall not accrue any further benefits under the Plan
after June 30, 2008. In addition, on and after January 1, 2008, each Executive who was not a
Participant in the Plan as of such date, but who is a Grandfathered Employee and whose Unrestricted
Benefit exceeds his or her Qualified Plan Benefit, shall be eligible to participate in the Plan.
As a condition of initial and continued participation in the Plan, an eligible Executive must
complete and submit to the Administrator any and all forms as may be required by the Administrator,
including, but not limited to, authorization to withhold from other compensation payable by the
Corporation to the Executive any applicable taxes resulting from participation in the Plan.

     3.2 Benefits. A Participant (or surviving spouse of a deceased Participant) who is
eligible to commence receiving a benefit under the Retirement Plan shall receive a benefit under
this Plan equal to the Participant’s Unrestricted Benefit reduced by (i) the Participant’s
Qualified Plan Benefit (including for this purpose the annual amount of any payment which he or she
is then entitled to receive from the Corporation

 

 

pursuant to Section 4.1(g) of the Federal National Mortgage Association Career Deferred
Compensation Plan and/or the Federal National Mortgage Association Elective Deferred Compensation
Plan or any successor provision to said section of said plans), and (ii) the actuarial equivalent
value of the vested benefits accrued under the Executive Pension Plan of the Federal National
Mortgage Association.

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

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

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

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

ARTICLE IV.

ADMINISTRATION

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

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

     4.3 Claims Procedures. Claims for benefits under the Plan shall be submitted in writing to
and decided by the person designated by the Committee. A claimant or his duly authorized
representative may review pertinent documents and may submit issues and comments in writing prior
to the time when a decision is rendered on the claim. Under normal circumstances a final decision
on a claimant’s request for

 

 

benefits shall be made within ninety (90) days after receipt of the claim. However, if special
circumstances require an extension of time to process a claim, a final decision may be deferred up
to one hundred eighty (180) days after receipt of the claim if prior to the end of the initial
ninety (90) day period the claimant is furnished written notice of the special circumstances
requiring the extension and the anticipated date of a final decision. If the claim is denied,
within the applicable period of time set out above, the claimant shall receive written notification
of the denial, which notice shall set forth in a manner reasonably calculated to be understood by
such claimant (i) the specific reason or reasons for the denial, (ii) specific reference to the
pertinent provision of the Plan on which the denial is based, (iii) a description of any additional
material or information necessary for the claimant to perfect such claim and an explanation of why
such material or information is necessary, and (iv) an explanation of the Plan’s review procedure.
If such a notice is not furnished and such claim has not been allowed within the ninety (90) day
period after receipt of the claim, such claim shall be deemed to have been denied.

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

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

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

ARTICLE V.

MISCELLANEOUS

     5.1 General Creditor Status. To the extent that any person acquires a right to receive
payments from the Corporation under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Corporation and such person shall have only the unsecured promise
of the Corporation that such
payment shall be made. All payments to be made hereunder shall be paid from the general funds of
the

 

 

Corporation and no special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts. Participants and their surviving spouses shall
have no right, title or interest in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. All such assets shall be the property solely of the
Corporation and shall be subject to the claims of the Corporation’s unsecured general creditors.

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

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

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

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

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

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

 

 

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

     5.9 Other Plans. Benefits payable under the Plan shall not be deemed salary or other
compensation to the Participant for the purpose of computing benefits to which he may be entitled
under any other plan or arrangement of the Corporation. Notwithstanding any provision of the Plan
to the contrary, no benefit (or portion of a benefit) shall be payable as a result of participation
in the Plan to the extent a benefit is payable to or on behalf of such participant under a plan,
program or agreement with purposes similar to those of this Plan and the payment of the benefit (or
portion of such benefit) under this Plan would provide a benefit to or on behalf of the participant
which duplicates the benefit payable under such other plan, program or agreement.

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

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

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

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