Document:

Exhibit 10.1

Exhibit 10.1

IRIS INTERNATIONAL, INC

KEY EMPLOYEE AGREEMENT

FOR

AMIN KHALIFA

IRIS INTERNATIONAL, INC., a Delaware corporation (the “Company”), agrees with you as follows:

1. Position and Responsibilities.

1.1 The Company will employ you and you shall serve in an executive capacity as Corporate Vice
President of Finance and Chief Financial Officer, and perform the duties customarily associated
with such capacity from time to time as the Company shall reasonably designate or as shall be
reasonably appropriate and necessary in connection with such employment. You will commence service
in this capacity on the date set forth in Section 2.1 below.

1.2 Subject to Section 4 below, you will, to the best of your ability, devote your
full time and best efforts to the performance of your duties hereunder and the business and affairs
of the Company. You will report to the Company’s Chief Executive Officer.

1.3 You will duly, punctually and faithfully perform and observe any and all rules and
regulations which the Company may now or shall hereafter establish governing the conduct of its
business, except to the extent that such rules and regulations may be inconsistent with your
executive position.

2. Term of Employment; Termination.

2.1 The commencement date of your employment shall be October 11, 2010 (your “Start Date”), on
which date you shall commence employment as Corporate Vice President of Finance, and the
Corporation’s Acting Chief Financial Officer shall continue to serve in that capacity until the
Company files its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (the “Form
10-Q”). On the day immediately following the date the Company files the Form 10-Q, you shall
become Chief Financial Officer of the Company.

2.2 Unless otherwise mutually agreed in writing, this Agreement and your employment by the
Company pursuant to this Agreement shall be terminated on the earliest of:

(a) your death, or any illness, disability or other incapacity that renders you physically
unable regularly to perform your duties hereunder for a period in excess of one hundred twenty
(120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12)
month period;

(b) thirty (30) days after you, for any reason, give written notice to the Company of your
resignation; or

(c) immediately if the Company, with or without cause, gives written notice to you of your
termination.

 

 

 

2.3 The determination regarding whether you are physically unable regularly to perform your
duties (as described in Section 2.2(a)) shall be made by the Board of Directors.

2.4 Any notice required pursuant to this Section 2 shall be given in accordance with
the provisions of Section 9 hereof. The exercise of either party’s right to terminate this
Agreement pursuant to Sections 2.2(b) or (c) is not exclusive and shall not effect
either party’s right to seek remedies for the other party’s breach, if any, giving rise to such
termination.

2.5 You may be terminated with or without cause. If you are terminated without cause, you
will be entitled to certain severance benefits as described in this Agreement. You shall be deemed
terminated “for cause” if, in the reasonable determination of the Company, you (a) commit an act
that is fraudulent, dishonest or a material breach of the Company’s policies, including wrongful
disclosure of any trade secrets or other confidential information of the Company, or material
breach of Section 4 of this Agreement or any material provision of the Employee
Confidentiality Agreement (as defined in Section 5), (b) are convicted of a felony under
federal, state, or local law applicable to the Company or (c) intentionally refuse, without proper
cause, to substantially perform duties after a demand for such performance has been delivered in
writing by the Company’s Chief Executive Officer or the Board of Directors, which notice shall
specify the alleged instance of breach, and shall provide you with reasonable time in which to
remedy such breach.

3. Compensation; Benefits; and Investment Rights.

3.1 The Company shall pay to you for the services to be rendered hereunder a base salary at an
annual rate of $315,000 subject to increases in accordance with the policies of the Company, as
determined by its Board of Directors, in force from time to time, payable in installments in
accordance with Company policy. You shall also be entitled to all rights and benefits for which
you shall be eligible under bonus, pension, group insurance, long-term disability, life insurance,
profit-sharing and other Company benefits which may be in force from time to time and provided
specifically to you or for the Company’s executive officers generally.

3.2 You will be awarded a 7 year stock option to purchase shares of the Company’s Common
Stock, which option shall have a Black-Scholes value on the date of grant equal to $450,000.00.
The option shall be issued pursuant to the Company’s 2007 Stock Incentive Plan, have an exercise
price equal to the per share fair market value of the Company’s Common Stock on the date of grant,
vest over 4 years, 25% on the first anniversary of your Start Date and thereafter 6.25% will vest
in equal quarterly installments, and otherwise be issued on terms consistent with the Company’s
standard form of stock option agreement. Additionally, you will be awarded a restricted stock unit
for a number of shares of the Company’s Common Stock determined by dividing $150,000.00 by the per
share fair market value of the Company’s Common Stock on the date of grant, which restricted stock
unit shall vest over 4 years, 25% of which will vest on a date which is 13 months following your
Start Date and thereafter 6.25%, and otherwise be issued on terms consistent with the Company’s
standard form of restricted stock unit agreement. In addition to the foregoing, you will be
eligible for further option and/or
equity awards, commensurate with other similar situated employees, based on your performance
as determined by the CEO and the Compensation Committee of the Board of Directors.

 

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3.3 You shall also be eligible for an annual bonus to be determined by the CEO and
Compensation Committee of the Board of Directors in accordance with the Company’s bonus program for
executive officers. The bonus program provides for cash and stock-based compensation, with the
stock-based compensation comprised of stock options and restricted stock unit awards.

3.4 You shall be entitled to four (4) weeks of paid vacation per year to be taken at such time
as will not interfere with the performance of your duties. You will also be entitled to illness
days during the term of this Agreement consistent with the Company’s standard practice for its
employees generally as in effect from time to time.

3.5 (a) Except as provided in subsection (b) below, in the event that (i) your employment is
terminated by the Company without cause at any time pursuant to Section 2.2(c) hereof or by
you for Good Reason (as defined herein), and (ii) you deliver to the Company a signed settlement
agreement and general release in the form attached hereto as Exhibit A (the “Release”) and
satisfy all conditions to make the Release effective, then the Company shall pay you, at the time
and in the manner specified in subsection (c) below, an amount equal to one (1) times your annual
base salary in effect immediately prior to such termination.

(b) If a Change in Control (as defined herein) occurs and at any time within the three (3)
months before or eighteen (18) months after the effective date of the Change in Control your
employment is terminated by the Company without cause pursuant to Section 2.2(c) hereof or
by you for Good Reason, then, in lieu of the payments provided for in subsection (a) above and
provided that you deliver to the Company a signed Release and satisfy all conditions to make the
Release effective:

(i) the Company shall pay you, at the time and in the manner specified in subsection
(c) below, an amount equal to one and one-half (1.5) times your annual base salary in effect
immediately prior to such termination;

(ii) the Company shall pay you, at the time and in the manner specified in subsection
(c) below, an amount equal to one and one-half (1.5) times your Average Cash Bonus, where
“Average Cash Bonus” is equal to (A) the sum of the annual cash bonus actually paid to you
for performance during the two fiscal years immediately preceding the date of your
termination for which the Company has paid bonuses to executives, divided by (B) two (2).
For purposes of clarity, if you did not receive a bonus during either or both of the
immediately preceding two fiscal years for which the Company has paid annual cash bonuses to
executives, either because you were not then employed by the Company or for any other
reason, then a value of zero shall be assigned as your bonus for such fiscal year for
purposes of calculating the Average Cash Bonus;

 

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(iii) you shall be entitled to full vesting and exercisability of all unvested stock
options, restricted stock, restricted stock units and all other equity compensation awards;
and

(iv) you shall be entitled to continue to receive for a period of eighteen (18) months
following termination of your employment, the health and welfare benefits you were receiving
as of the date of termination of your employment, at the same cost to you and your
dependents (as applicable) as such health and welfare benefits cost immediately prior to
such termination of employment (subject to premium increases affecting participants in such
plan(s) generally); provided, that if the Company determines, in its sole discretion, that
it is necessary or advisable for you to elect continuation healthcare coverage under Section
4980B of the Code and the regulations thereunder in order for the Company to provide such
coverage under its healthcare plans, and the Company so notifies you, you hereby agree to
make such an election; and provided further, that if the Company determines, in its sole
discretion, that it is unable to continue to provide you with any other health and welfare
benefits under its health and welfare plans, and the Company so notifies you, in lieu of
providing you continued coverage under such plans the Company will either obtain for you
comparable coverage under another plan for which you qualify or reimburse you for your cost
to obtain comparable coverage directly.

(c) The Company shall make payment of the amounts specified in subsection (a) or, if
applicable, clauses (i) and (ii) of subsection (b) as follows:

(i) an amount that does not exceed two times the maximum amount that may be taken into
account under a qualified plan pursuant to section 401(a)(17) of the Internal Revenue Code
(the “Code”) for the year in which such termination occurs, shall be made, at the Company’s
option, (A) in the form of a lump sum payment within ten (10) days of the date you become
entitled to receive such amounts or (B) through regular payroll payments in equal amounts
for a period that begins in the month of termination and ends no later than, in the case of
payments made pursuant to subsection (a), twelve (12) months after the month of termination
and, in the case of payments made pursuant to subsection (b), eighteen (18) months after the
month of termination; and

(ii) the positive amount, if any, that is the difference between the amounts to which
you are entitled pursuant to subsection (a) or, if applicable, clauses (i) and (ii) of
subjection (b) and the amount determined under clause (i) of this subsection (c), shall be
made, at the Company’s option, (A) in the form of a lump sum payment within ten (10) days of
the date you become entitled to receive such amounts or (B) through regular payroll payments
in equal amounts for a period that begins in the month of termination and ends no later than
the fifteenth (15th) day of the third (3rd) month of the calendar year
following the year in which you are terminated.

 

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The parties intend that the compensation payable pursuant to clause (ii) of this subsection (c)
shall be treated as a short-term deferral as that term is used in section 409A of the Code and the
regulations promulgated thereunder (collectively, “Section 409A”). The parties intend that each
of the payments payable pursuant to clause (i) of this subsection (c) shall be treated as a
separate payment for purposes of Section 409A and excluded from the definition of “deferred
compensation” pursuant to the regulations promulgated thereunder regarding separation pay payable
upon an involuntary separation from service.

(d) For purposes of this Section 3.5:

(i) “Change in Control” shall mean (A) the dissolution or liquidation of the Company,
(B) approval by the stockholders of the Company of any sale, lease, exchange or other
transfer (in one or a series of transactions) of all or substantially all of the assets of
the Company, (C) approval by the stockholders of the Company of any merger or consolidation
of the Company in which the holders of voting stock of the Company immediately before the
merger or consolidation will not own thirty five percent (35%) or more of the voting stock
of the continuing or surviving corporation immediately after such merger or consolidation;
or (D) a change of fifty percent (50%) (rounded to the next whole person) in the membership
of the Board within a twelve (12)-month period, unless the election or nomination for
election by stockholders of each new director within such period was approved by the vote of
a majority of the directors then still in office who were in office at the beginning of the
twelve (12)-month period; and

(ii) “Good Reason” shall mean any of the following (without your express written
consent and provided you provide written notice within ninety (90) days of the initial
occurrence stating in reasonable detail the basis for termination, a thirty (30)-day
opportunity to cure to the Company, and your actual separation from service occurs within
two (2) years from said initial occurrence): (A) a material reduction in your
responsibilities or duties as such responsibilities or duties exist on the date hereof,
except in the event of a termination for cause, death or disability or your resignation
other than for Good Reason; (B) a material reduction of your base salary as it exists on the
date hereof (i.e., a reduction of your base salary unless such reduction (x) is in
connection with concurrent and proportional reductions in the salaries of other members of
management of the Company, which reductions have been approved by the Board, and (y) reduces
your base salary to no less than 80% of your base salary immediately before such reduction);
or (C) any material relocation by the Company of your place of employment that would
increase your one-way commute to the place of employment by more than fifty (50) miles when
compared to your commute immediately prior to the relocation.

 

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(e) Notwithstanding any provision of this Agreement to the contrary, if the Company
determines, based upon the advice of the tax advisors for the Company, that part or all of the
consideration, compensation or benefits to be paid to you pursuant to this Agreement constitute
“parachute payments” under Section 280G(b)(2) of the Code, then, if the aggregate present value of
such parachute payments, singularly or together with the aggregate present value of any
consideration, compensation or benefits to be paid to you under any other plan, arrangement or
agreement which constitute “parachute payments” (collectively, the “Parachute Amount”) exceeds 2.99
times your “base amount,” as defined in Section 280G(b)(3) of the Code (the “Base Amount”), the
amounts constituting “parachute payments” which would otherwise be payable to you or for your
benefit shall be reduced to the extent necessary so that the Parachute Amount is
equal to 2.99 times the Base Amount (the “Reduced Amount”); provided, however, that the
Company shall pay to you the Parachute Amount without reduction if the Company determines that
payment of the Parachute Amount would generate more after-tax income to you than the Reduced
Amount. In the event of a reduction of the payments that would otherwise be paid to you, then the
Company may elect which and how much of any particular entitlement shall be eliminated or reduced
and shall notify you promptly of such election; provided, however, that the aggregate reduction
shall be no more than as set forth in the preceding sentence of this clause (e). Within ten (10)
days following such election, the Company shall pay you such amounts as are then due pursuant to
this Agreement and shall pay you in the future such amounts as become due pursuant to this
Agreement. As a result of the uncertainty in the application of Section 280G of the Code at the
time of a determination hereunder, it is possible that payments will be made by the Company which
should not have been made (“Overpayment”) or that additional payments which are not made by the
Company pursuant to this clause (e) should have been made (“Underpayment”). In the event of a
final determination by the Internal Revenue Service, a final determination by a court of competent
jurisdiction or a change in the provisions of the Code or regulations or tax law, that an
Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to you
that you shall repay to the Company together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code. In the event of a final determination by the Internal
Revenue Service, a final determination by a court of competent jurisdiction or a change in the
provisions of the Code or regulations or tax law pursuant to which an Underpayment arises under
this Agreement, any such Underpayment shall be promptly paid by the Company to you or for your
benefit, together with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code.

3.6 The Company will pay and/or reimburse you for the following costs associated with your
relocation from Laguna Niguel, California to Los Angeles County or Ventura County, California: (i)
reasonable and customary moving expenses (including packing and shipping) for you and your family
and your customary household possessions (excluding automobiles); (ii) use of a furnished corporate
apartment in Los Angeles or Ventura County, California for up to twelve (12) months following your
Start Date, such expense not to exceed $25,000; (iii) third party costs (including real estate
sales commissions) incurred in connection with the sale at any time within the twenty four (24)
months following your Start Date of your primary residence in Laguna Niguel and the purchase of
your primary residence in Los Angeles or Ventura County, California, not to exceed $75,000. All
such costs incurred by you shall be documented and submitted to the Company for reimbursement in
accordance with the Company’s standard expense reimbursement policies. You shall not be entitled
to payment or reimbursement of any such costs incurred following termination of your employment.

4. Other Activities During Employment.

4.1 Except with the prior written consent of the Company’s Board of Directors, you will not
during the term of this Agreement undertake or engage in any other employment, occupation or
business enterprise, other than ones in which you are a passive investor in non-competitive
businesses. You may engage in civic and not-for-profit activities, and you may continue to serve
on the board of directors of PetSmart, Inc. and Chemaphor, Inc., so long as such activities do not
materially interfere with the performance of your duties hereunder.

 

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4.2 Except as permitted by Section 4.3, you will not acquire, assume or participate
in, directly or indirectly, any position, investment or interest, known by you to be adverse or
antagonistic to, or competitive with, the Company, its businesses or prospects, financial or
otherwise.

4.3 During the term of your employment by the Company (except on behalf of the Company), you
will not directly or indirectly, whether as an officer, director, stockholder, partner, proprietor,
associate, representative, consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other person, corporation,
firm, partnership or other entity whatsoever which were known by you to directly or indirectly
compete with the Company, throughout the world, in any line of business engaged in (or planned to
be engaged in) by the Company; provided, however, that anything above to the contrary
notwithstanding, you may own, as a passive investor, securities of any competitor corporation, so
long as your direct holdings in any one such corporation shall not in the aggregate constitute more
than 1% of the publicly-traded voting stock of such corporation.

5. Proprietary Information and Inventions. You agree to sign and be bound by the provisions of
the Company’s standard Employee Confidentiality and Inventions Agreement (the “Employee
Confidentiality Agreement”).

6. Remedies. Your duties under the Employee Confidentiality Agreement shall survive
termination of your employment with the Company. You acknowledge that a remedy at law for any
breach or threatened breach by you of the provisions of the Employee Confidentiality Agreement
would be inadequate and you therefore agree that the Company shall be entitled to injunctive relief
in case of any such breach or threatened breach.

7. Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned
by you.

8. Severability. In case any one or more of the provisions contained in this Agreement shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been
contained herein. If moreover, any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.

9. Notices. Any notice which the Company is required or may desire to give you shall be given
by personal delivery or registered or certified mail, return receipt requested, addressed to you at
the address of record with the Company, or at such other place as you may from time to time
designate in writing. Any notice which you are required or may desire to give to the Company
hereunder shall be given by personal delivery or by registered or certified mail, return receipt
requested, addressed to the Company’s Chief Executive Officer, at the Company’s principal office or
at such other office as the Company may from time to time designate in writing. The date of
personal delivery or the date of mailing any such notice shall be deemed to be the date of delivery
thereof.

 

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10. Waiver. If either party should waive any breach of any provisions of this Agreement, he or
it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any
other provision of this Agreement.

11. Complete Agreement; Amendments. The foregoing, together with the Employee Confidentiality
Agreement, is the entire agreement of the parties with respect to the subject matter hereof and
thereof and may not be amended, supplemented, canceled or discharged except by written instrument
executed by both parties hereto.

12. Headings. The headings of the sections hereof are inserted for convenience only and shall
not be deemed to constitute a part hereof nor to affect the meaning thereof.

13. Choice of Law. All questions concerning the construction, validity and interpretation of
this Agreement will be governed by the laws of the State of California, without giving effect to
any choice of law principles.

14. Section 409A of the Internal Revenue Code — General Provisions.

14.1 It is the intention of the Company and you that this Agreement shall comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). All
payments under this Agreement are intended to be excluded from the requirements of Section 409A or
be payable on a fixed date or schedule under Section 409A. All payments made under this Agreement
shall be strictly paid in accordance with the terms of this Agreement. To the extent that this
Agreement is subject to Section 409A, notwithstanding the other provisions hereof, all provisions
herein, or incorporated by reference, shall be construed and interpreted to comply with Section
409A. Each payment of compensation under this Agreement shall be treated as a separate payment of
compensation for purposes of Section 409A.

14.2 Any discretionary bonuses that you may be awarded by the Company shall be paid no later
than the fifteenth (15th) day of the third (3rd) month following the year in
which the services were rendered with respect to which the discretionary bonus has been determined.

14.3 Any reimbursements or in-kind benefits provided under this Agreement that are subject to
Section 409A shall be made or provided in accordance with the requirements of Section 409A,
including, where applicable, the requirement that (i) any reimbursement is for expenses incurred
during the period of time specified in this Agreement, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii)
the reimbursement of an eligible expense will be made no later than the last day of the calendar
year following the year in which the expense is incurred, and (iv) the right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another benefit.

 

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14.4 Notwithstanding anything to the contrary herein, (i) if at the time of your “separation
from service” with the Company you are a “specified employee” (as such terms are defined in Section
409A and any regulations or other pronouncements thereunder) and the deferral of the commencement
of any payments or benefits otherwise payable hereunder as a
result of such termination of employment is necessary in order to prevent any accelerated or
additional tax under Section 409A, then the Company will defer the commencement of the payment of
any such payments or benefits hereunder (without any reduction in such payments or benefits
ultimately paid or provided to you) until the date that is six months and one day following your
separation from service with the Company (or the earliest date that is permitted under Section
409A).

14.5 Notwithstanding anything to the contrary in this Agreement, the Company shall not make
any deductions for money or property that you owe to the Company, or offset or otherwise reduce any
sums that may be due or become payable to or for your account, from amounts that constitute
“deferred compensation” for purposes of Section 409A.

14.6 Your right to any “deferred compensation,” as defined under Section 409A, shall not be
subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment,
garnishment by creditors, or borrowing, to the extent necessary to avoid tax, penalties and/or
interest under Section 409A.

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, the parties have executed this Key Employee Agreement on the day and year
written below.

	 	 	 	 	 
	 	IRIS INTERNATIONAL, INC.

 	 
	 	By:  	/s/ César M. García
 	 
	 	 	Name:  	César M. García 	 
	 	 	Its:                   Chief Executive Officer 	 
	 	 	Dated: October 11, 2010	 

	 	 	 	 	 
	 	ACCEPTED AND AGREED TO

THIS 11th DAY OF OCTOBER, 2010

 	 
	 	/s/ Amin Khalifa
 	 
	 	Amin Khalifa 	 
	 	 	 
	 

 

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EXHIBIT A

[IRIS LETTERHEAD]

RELEASE

[DATE]

Amin Khalifa

ADDRESS

Re:     Separation Terms and General Release Agreement

Dear Mr. Khalifa:

This letter confirms the terms of your separation from the employment of IRIS International, Inc.
and consideration in exchange for your waiver and general release of claims in favor of IRIS
International, Inc. and its officers, directors, employees, agents, representatives, subsidiaries,
divisions, affiliated companies, successors, and assigns
(collectively, the “Company” or “IRIS”).

1. Termination Date. Your
 employment with the Company will end effective
 _____ 
(the
“Termination Date”). Between now and the Termination Date, you should assist with any
transition-related activities as directed by the employee to whom you directly report.

2. Acknowledgment of Payment of Wages. On or before execution of this release, we delivered to
you a final paycheck that includes payment for all accrued wages, salary, accrued and unused
vacation time, reimbursable expenses, and any similar payments due and owing to you from the
Company as of the Termination Date (collectively referred to as
“Wages”). You are entitled to
these Wages regardless of whether you sign this Separation Terms and General Release Agreement (the
“Agreement”).

3. Consideration For Release. In consideration of the waiver and release of claims set forth
in Paragraphs 7 and 8 below, and in exchange for your signing this Agreement, the Company agrees to
provide you with the post-termination payments (the “Severance Payments”) described in Section 3.5
of that certain IRIS International, Inc. Key Employee Agreement for Amin Khalifa, dated October 11,
2010. The Severance Payments are in addition to any amounts owed to you by the Company. You
acknowledge and agree that you are not otherwise entitled to receive the Severance Payments. You
understand that if you do not sign the Agreement, or if you revoke the signed Agreement as
described in Paragraph 19 below (if applicable), the Company has no obligation to provide you with
the Severance Payments.

4. COBRA Continuation Coverage. Your Company provided health coverage will end on your
Termination Date. If you are eligible for, and timely elect COBRA continuation, you may continue
health coverage pursuant to the terms and conditions of COBRA at your own expense. Our Human
Resources Department will contact you shortly after your Termination Date. All other insured
benefit coverage (e.g., life insurance, disability insurance) will also end on your Termination
Date.

 

 

 

5. Return of Company Property. By signing below, you represent that you have returned all the
Company property and data of any type whatsoever that was in your possession or control.

6. Confidential Information. You hereby acknowledge that as a result of your employment with
the Company you have had access to the Company’s confidential information. You acknowledge your
continuing obligations under the Employee Confidentiality Agreement you have previously executed,
and you agree you will hold all such confidential information in strictest confidence and that you
may not make any use of such confidential information. You further confirm that you have delivered
to the Company all documents and data of any nature containing or pertaining to such Confidential
Information and that you have not taken with you any such documents or data or any copies thereof.

7. General Release and Waiver of Claims.

7.1. The payments and agreements set forth in this Agreement fully satisfy any and all accrued
salary, vacation pay, bonus and commission pay, stock-based compensation, profit sharing,
termination benefits or other compensation to which you may be entitled by virtue of your
employment with the Company or your termination of employment. You acknowledge that you have no
claims and have not filed any claims against the Company based on your employment with or the
separation of your employment with the Company.

7.2. To the fullest extent permitted by law, you hereby release and forever discharge the
Company, its successors, subsidiaries and affiliates, directors, shareholders, current and former
officers, agents and employees (all of whom are collectively referred to as “Releasees”) from any
and all existing claims, demands, causes of action, damages and liabilities, known or unknown, that
you ever had, now have or may claim to have had arising out of or relating in any way to your
employment or separation from employment with the Company including, without limitation, claims
based on any oral, written or implied employment agreement, claims for wages, bonuses, commissions,
stock-based compensation, expense reimbursement, and any claims that the terms of your employment
with the Company, or the circumstances of your separation, were wrongful, in breach of any
obligation of the Company or in violation of any of your rights, contractual, statutory or
otherwise. Each of the Releasees is intended to be a third party beneficiary of the General Release
and Waiver of Claims set forth in this Paragraph 7.

(a) Release of Statutory and Common Law Claims. Such rights include, but are not limited to,
your rights under the following federal and state statutes: the Employee Retirement Income Security
Act (ERISA) (regarding employee benefits); the Occupational Safety and Health Act (safety matters);
the Family and Medical Leave Act of 1993; the Worker Adjustment and Retraining Act (“WARN”)
(notification requirements for employers who are curtailing or closing an operation) and common
law; tort; wrongful discharge; public policy; workers’ compensation retaliation; tortious
interference with contractual relations, misrepresentation, fraud, loss of consortium; slander,
libel, defamation, intentional or negligent infliction of emotional distress; claims for wages,
bonuses, commissions, stock-based compensation or fringe benefits; vacation pay; sick pay;
insurance reimbursement, medical expenses, and the like.

 

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(b) Release of Discrimination Claims. You understand that various federal, state and local
laws prohibit age, sex, race, disability, benefits, pension, health and other forms of
discrimination, harassment and retaliation, and that these laws can be enforced through the U.S.
Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of
Labor, and similar state and local agencies and federal and state courts. You understand that if
you believe your treatment by the Company violated any laws, you have the right to consult with
these agencies and to file a charge with them. Instead, you have decided voluntarily to enter into
this Agreement, release the claims and waive the right to recover any amounts to which you may have
been entitled under such laws, including but not limited to, any claims you may have based on age
or under the Age Discrimination in Employment Act of 1967 (ADEA; 29 U.S.C. Section 621 et. seq.)
(age); the Older Workers Benefit Protection Act (“OWBPA”) (age); Title VII of the Civil Rights Act
of 1964 (race, color, religion, national origin or sex); the 1991 Civil Rights Act; the Vocational
Rehabilitation Act of 1973 (disability); The Americans with Disabilities Act of 1990 (disability);
42 U.S.C. Section 1981, 1986 and 1988 (race); the Equal Pay Act of 1963 (prohibits pay
differentials based on sex); the Immigration Reform and Control Act of 1986; Executive Order 11246
(race, color, religion, sex or national origin); Executive Order 11141 (age); Vietnam Era Veterans
Readjustment Assistance Act of 1974 (Vietnam era veterans and disabled veterans); and California
state statutes and local laws of similar effect.

7.3. Releasees and you do not intend to release claims (i) which you may not release as a
matter of law (including, but not limited to, indemnification claims under applicable law); (ii)
for unemployment, state disability and/or paid family leave insurance benefits pursuant to the
terms of applicable state law; (iii) for any benefit entitlements that are vested as of the
Termination Date pursuant to the terms of a Company-sponsored benefit plan governed by the federal
law known as “ERISA”; and (iv) for vested stock and/or vested option shares pursuant to the written
terms and conditions of your existing stock and stock option grants and agreements existing as of
the Termination Date. To the fullest extent permitted by law, any dispute regarding the scope of
this general release shall be determined by an arbitrator under the procedures set forth in
paragraph 12.

8. Waiver of Unknown Claims. You expressly waive any benefits of Section 1542 of the Civil
Code of the State of California (and any other laws of similar effect), which provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.”

9. Covenant Not to Sue.

9.1. To the fullest extent permitted by law, you agree that you will not now or at any time in
the future pursue any charge, claim, or action of any kind, nature and character whatsoever against
any of the Releasees, or cause or knowingly permit any such charge, claim or
action to be pursued, in any federal, state or municipal court, administrative agency,
arbitral forum, or other tribunal, arising out of any of the matters covered by paragraphs 7 and 8
above.

 

3

 

9.2. You further agree that you will not pursue, join, participate, encourage, or directly or
indirectly assist in the pursuit of any legal claims against the Releasees, whether the claims are
brought on your own behalf or on behalf of any other person or entity.

9.3. Nothing in this paragraph shall prohibit you from: (1) providing truthful testimony in
response to a subpoena or other compulsory legal process, and/or (2) filing a charge or complaint
with a government agency such as the Equal Employment Opportunity Commission, the National Labor
Relations Board or applicable state anti-discrimination agency.

10. Non-disparagement. You agree that you will not make any statement, written or oral, or
engage in any conduct that is or could reasonably be construed to be disparaging of the Company or
its products, services, agents, representatives, directors, officers, shareholders, attorneys,
employees, vendors, affiliates, successors or assigns, or any person acting by, through, under or
in concert with any of them. Nothing in this paragraph shall prohibit you from providing truthful
testimony in response to a subpoena or other compulsory legal process.

11. Legal and Equitable Remedies. You and the Company agree that either party shall have the
right to enforce this Agreement and any of its provisions by injunction, specific performance or
other equitable relief without prejudice to any other rights or remedies that either party may have
at law or in equity for breach of this Agreement.

12. Arbitration of Disputes. Except for claims for injunctive relief arising out of a breach
of the Employee Confidentiality Agreement, you and the Company agree to submit to mandatory binding
arbitration any future disputes between you and the Company, including any claim arising out of or
relating to this Agreement. By signing below, you and the Company waive any rights you and the
Company may have to trial by jury of any such claims. You agree that the American Arbitration
Association will administer any such arbitration(s) under its National Rules for the Resolution of
Employment Disputes, with administrative and arbitrator’s fees to be borne by the Company. The
arbitrator shall issue a written arbitration decision stating his or her essential findings and
conclusions upon which the award is based. A party’s right to review of the decision is limited to
the grounds provided under applicable law. The parties agree that the arbitration award shall be
enforceable in any court having jurisdiction to enforce this Agreement. This Agreement does not
extend or waive any statutes of limitations or other provisions of law that specify the time within
which a claim must be brought. Notwithstanding the foregoing, each party retains the right to seek
preliminary injunctive relief in a court of competent jurisdiction to preserve the status quo or
prevent irreparable injury before a matter can be heard in arbitration.

13. Attorneys’ Fees. If any legal action arises or is brought to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover its reasonable attorneys’ fees, costs
and expenses from the other party, in addition to any other relief to which such prevailing party
may be entitled, except where the law provides otherwise. The costs and expenses that may be
recovered exclude arbitration fees pursuant to paragraph 12 above.

 

4

 

14. Confidentiality Provision. You agree to keep the contents, terms and conditions of this
Agreement confidential and not disclose them except to your spouse or domestic partner, attorneys,
accountant or as required by subpoena or court order.

15. Materiality of Breach. Any breach of the provisions contained in paragraphs 6 through 10
and/or 14 will be deemed a material breach of this Agreement.

16. No Admission of Liability. You agree that this Agreement is not an admission or evidence
of any wrongdoing or liability on the part of the Company, its representatives, attorneys, agents,
partners, officers, shareholders, directors, employees, subsidiaries, affiliates, divisions,
successors or assigns. This Agreement will be afforded the maximum protection allowable under
California Evidence Code Section 1152 and/or any other state or Federal provisions of similar
effect.

17. Indemnification. This Release shall not apply with respect to any claims arising under
your existing rights to indemnification and defense pursuant to (a) the articles and bylaws of the
Company for acts as a director and/or officer, (b) any indemnification agreement with IRIS, or (c)
your rights of insurance under any director and officer liability policy in effect covering the
Company’s directors and officers.

18. Review of Agreement. You may not sign this Agreement prior to your Termination Date. You
may take up to twenty-one (21) days from the date you receive this Agreement, or until your
Termination Date, whichever date is later, to consider this Agreement and release and, by signing
below, affirm that you were advised by this letter to consult with an attorney before signing this
Agreement and were given ample opportunity to do so. You understand that this Agreement will not
become effective until you return the original properly signed Agreement to IRIS Human Resources,
attention: Director of Human Resources, at the Company’s principal executive offices in Chatsworth,
California, and after expiration of the revocation period without revocation by you.

[IF EMPLOYEE IS OVER 40 AT THE TIME OF TERMINATION, THE FOLLOWING SECTION 19 APPLIES:

19. Revocation of Agreement. You acknowledge and understand that you may revoke this
Agreement by faxing a written notice of revocation to our Human Resources Department, Attention
Director of Human Resources at (818)
 _____ 
any time up to seven (7) days after you sign
it. After the revocation period has passed, however, you may no longer revoke your Agreement.

IF EMPLOYEE IS UNDER 40 AT THE TIME OF TERMINATION, THE FOLLOWING SECTION 19 APPLIES:

19. Intentionally Omitted.]

 

5

 

20. Entire Agreement. This Agreement together with the Employee Confidentiality Agreement
that you previously executed is the entire Agreement between you and the Company with respect to
the subject matter of this Agreement and supersedes all prior negotiations and agreements, whether
written or oral, relating to this subject matter. You acknowledge that
neither the Company, nor its agents or attorneys, made any promise or representation, express
or implied, written or oral, not contained in this Agreement to induce you to execute this
Agreement. You acknowledge that you have signed this Agreement knowingly, voluntarily and without
coercion, relying only on such promises, representations and warranties as are contained in this
document. You understand that you do not waive any right or claim that may arise after the date
this Agreement is executed.

21. Modification. By signing below, you acknowledge your understanding that this Agreement
may not be altered, amended, modified, or otherwise changed in any respect except by another
written agreement that specifically refers to this Agreement, executed by the Company’s authorized
representatives and you.

22. Governing Law. This Agreement is governed by, and is to be interpreted according to, the
laws of the State of California.

23. Savings and Severability Clause. Should any court, arbitrator or government agency of
competent jurisdiction declare or determine any of the provisions of this Agreement to be illegal,
invalid or unenforceable, the remaining parts, terms or provisions shall not be affected thereby
and shall remain legal, valid and enforceable. Further, it is the intention of the parties to this
Agreement that, if a court, arbitrator or agency concludes that any claim under paragraph 7 above
may not be released as a matter of law, the General Release in paragraph 7 and the Waiver Of
Unknown Claims in paragraph 8 shall otherwise remain effective as to any and all other claims.

If this Agreement accurately sets forth the terms of your separation from the Company and if you
voluntarily agree to accept the terms of the severance package offered please sign below no earlier
than your Termination Date and return it to the Director of Human Resources.

PLEASE REVIEW CAREFULLY. THIS AGREEMENT CONTAINS

A GENERAL RELEASE OF KNOWN AND UNKNOWN CLAIMS.

Sincerely,

[NAME]

	 	 	 	 	 
	 	REVIEWED, UNDERSTOOD AND AGREED:

 	 
	 	By:  	 	 
	 	 	Amin Khalifa 	 
	 	Date:  	 	 
	 

DO NOT SIGN PRIOR TO YOUR TERMINATION DATE

 

6exv10w1

 

    Exhibit 10.1

 

    EXECUTIVE
    MANAGEMENT COMPENSATION PROGRAM

 

    Program
    Description

    Amended and Restated as of October 11, 2010

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
    Objective
	
 
	
 
	
    To provide a compensation structure that addresses the
    Company’s and the Federal Housing Finance Agency’s
    (“FHFA”) shared interests of motivating, retaining,
    and, in some instances, recruiting members of Executive
    Management while Freddie Mac is in conservatorship.

	
 
	
 
	
 
	
 

	
    Effective Period
	
 
	
 
	
    The Executive Management Compensation Program is intended to be
    effective for calendar years 2009, 2010, and thereafter as long
    as Freddie Mac remains in Conservatorship. The specific
    parameters of the Executive Management Compensation Program may
    be amended from time to time by the Compensation Committee of
    Freddie Mac’s Board of Directors (the
    “Committee”), if approved by FHFA after consulting
    with the U.S. Department of the Treasury (“Treasury”),
    as appropriate.

	
 
	
 
	
 
	
 

	
    Covered Positions
	
 
	
 
	
    Freddie Mac’s Chief Executive Officer (“CEO”),
    Chief Operating Officer (“COO”), Chief Financial
    Officer (“CFO”), Executive Vice Presidents
    (“EVPs”), and Senior Vice Presidents
    (“SVPs”), collectively referred to as “Executive
    Management,” and, individually referred to as a
    “Covered Officer.”

	
 
	
 
	
 
	
 

	
    Covered Position

    Participation

    Requirement
	
 
	
 
	
    Participation of a Covered Officer in the Executive Management
    Compensation Program is contingent upon the Covered Officer
    agreeing to be bound by the terms of a the Executive Management
    Compensation Recapture Policy (the “Recapture Policy”)
    that has been approved by both the Committee and FHFA.

	
 
	
 
	
 
	
 

	
    Composition of Total

    Direct Compensation
	
 
	
 
	
    The total direct compensation (“TDC”) shall be
    comprised of two components, a “Base Salary” and a
    “Target Incentive Opportunity”. Two-thirds (2/3) of
    the TDC amount shall be delivered in Base Salary and one-third
    (1/3) of the TDC shall be delivered in a Target Incentive
    Opportunity. The TDC for all participants will be approved by
    the Committee, FHFA, or the CEO, as appropriate, as of the
    effective date of this program.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For an employee hired or promoted into a Covered Officer
    position subsequent to approval of the Executive Management
    Compensation Program, the Committee or the CEO will recommend a
    TDC for such employee, which will be subject to approval by FHFA
    after consulting with Treasury, as appropriate.

	
 
	
 
	
 
	
 

	
    Adjustments to TDC
	
 
	
 
	
    The Committee or the CEO may recommend adjustments to TDC for
    Covered Officers. Any such recommendations are subject to
    approval by FHFA after consulting with Treasury, as appropriate.
    An approved adjustment to a Covered Officer’s TDC shall
    become effective as of the date specified in the approval
    document.

	
 
	
 
	
 
	
 

	
    Base Salary
	
 
	
 
	
    The Base Salary will consist of two components. One component
    will be paid in cash on a semi-monthly basis during each
    calendar year (the “Semi-Monthly Base Salary”) and the
    other component will be earned on a semi-monthly basis during
    each calendar year, but subject to a deferral and payment
    schedule (the “Deferred Base Salary”) as discussed
    below.

	
 
	
 
	
 
	
 

 

 

    Executive
    Management Compensation Program

    Page 2 of 9

    October 11, 2010
    

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    Effective Date for Base Salary

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For each employee who was a Covered Officer as of
    January 1, 2009, the Semi-Monthly Base Salary and Deferred
    Base Salary will be effective retroactive to January 1,
    2009, subject to the exception provided in the section
    “Semi-Monthly Base Salary” below. For an employee who
    is hired into a Covered Officer position after January 1,
    2009, the Semi-Monthly Base Salary and Deferred Base Salary
    shall be pro-rated effective as of the date of hire. For an
    employee who is promoted after January 1, 2009 into either
    a Covered Position or a Covered Position with increased scope
    and responsibility, the Semi-Monthly Base Salary and Deferred
    Base Salary shall be pro-rated effective as of the date of
    promotion.

	
 
	
 
	
 
	
 

	
    Semi-Monthly Base

    Salary
	
 
	
 
	
    Semi-Monthly Base Salary for any Covered Officer cannot exceed
    $500,000, except for the CEO, COO, and CFO, or other exceptions
    as approved from time to time by FHFA. In those instances, the
    Semi-Monthly Base Salary will be the amount approved by FHFA
    after consultation with Treasury, as appropriate, as of the
    Covered Officer’s date of hire or promotion.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For any Covered Officer other than the CEO, COO, and CFO, with a
    Semi-Monthly Base Salary greater than $500,000 immediately prior
    to the adoption of the Executive Management Compensation
    Program, that Covered Officer’s Semi-Monthly Base Salary
    will be reduced to $500,000 effective January 1, 2010.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Form of Payout

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Cash less applicable withholdings

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Treatment of Base Salary Under Freddie Mac’s Benefit
    Plans

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Semi-Monthly Base Salary will be considered compensation for
    purposes of the following Freddie Mac retirement or executive
    benefit plans that take base salary into consideration: the tax
    qualified
    Thrift/401(k)
    Savings Plan, the tax qualified Employees’ Pension Plan,
    the non-qualified Supplemental Executive Retirement Plan the
    Executive Deferred Compensation Plan, and the following welfare
    benefit plans: (1) the Flexible Benefits Plan (for purposes
    of calculating FlexDollars); (2) the Group Term Life
    Insurance Plan; (3) the Group Universal Life Insurance
    Program; (4) the Long-Term Disability Plan; (5) the
    Accidental Death and Personal Loss Plan; and (6) the
    purchase and payout of vacation.

	
 
	
 
	
 
	
 

	
    Deferred Base Salary
	
 
	
 
	
    The portion of Base Salary that is not paid in Semi-Monthly Base
    Salary shall be delivered in the form of Deferred Base Salary.
    The Deferred Base Salary, which is earned on a semi-monthly
    basis during each calendar year, shall be deferred and paid
    according to the applicable Approved Payment Schedule below.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Approved Payment Schedule: Calendar Year 2009

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Deferred Base Salary earned during each quarter of 2009 will be
    paid on the last business day of the corresponding quarter of
    2010, provided the Covered Officer is actively employed by the
    Company on such payment date, or in the event that the Covered
    Officer dies, has a Long-Term Disability or Retires in 2010. For
    clarity, the 2009 Deferred Base Salary will not become
    non-forfeitable upon the Covered Officer’s death, Long-Term
    Disability or Retirement, as provided below under
    “Treatment Upon Termination” if such event occurs in
    2009. The 2009 Deferred

	
 
	
 
	
 
	
 

 

    Executive
    Management Compensation Program

    Page 3 of 9

    October 11, 2010
    

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    Base Salary will, however, become non-forfeitable, subject to
    the Recapture Policy, if such event occurs in 2010.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Approved Payment Schedule: Calendar Year 2010 and
    Subsequent Years

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Fifty percent (50%) of Deferred Base Salary earned during each
    quarter of a calendar year will be paid in a fixed amount on the
    last business day of the corresponding quarter of the
    immediately following calendar year.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The amount that will be paid for the remaining fifty percent
    (50%) of Deferred Base Salary earned during each quarter of a
    calendar year will be determined by the Committee’s
    approved Deferred Base Salary funding level. The approved
    performance-based portion Deferred Base Salary funding level
    will be determined by the Committee’s assessment of the
    following:

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              1. The
    Company’s performance against the objectives on the
    short-term
         incentive (“STI”) scorecard (i.e., for
the
    STI plan applicable to employees at 
         the level of Vice President
    and below for the performance year in which the
    
         performance-based portion of Deferred Base Salary is earned);

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              2. All
    other relevant internal and external factors and non-STI
    scorecard 
         developments that affect our corporate condition and
    mission fulfillment; and,

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              3. Achievement
    of significant accomplishments beyond the STI scorecard
    
         objectives or adverse developments.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The approved funding level, expressed as a percentage that can
    range from 0% up to a maximum of 125%, will be equal to the
    aggregate amount of funds approved by the Committee for
    distribution to Covered Officers divided by the
    performance-based portion of Deferred Base Salary earned.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The amount of the performance-based portion of Deferred Base
    Salary that will be paid to a Covered Officer will be equal to
    the performance-based portion of Deferred Base Salary earned
    multiplied by Deferred Base Salary funding level.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For any Covered Officer for whom a separate division scorecard
    is approved by a Board committee, the performance-based portion
    of the Deferred Base Salary funding level will be based on the
    appropriate Board committee’s assessment of performance
    against such separate division scorecard.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The performance-based portion of the Deferred Base Salary earned
    during each quarter of a calendar year will be adjusted in a
    manner consistent with the approved Deferred Base Salary funding
    level, and will be paid on the last business day of the
    corresponding quarter in the immediately following calendar year.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Form of Payout

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Cash less applicable withholdings.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Treatment Under Freddie Mac’s Benefit Plans

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Deferred Base Salary will be considered compensation for
    purposes of the Federal Home Loan Mortgage Corporation
    Supplemental Executive Retirement Plan (Thrift

	
 
	
 
	
 
	
 

 

    Executive
    Management Compensation Program

    Page 4 of 9

    October 11, 2010
    

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
    401(k) and
    Pension SERP) when paid to an active Covered Officer, subject to
    the maximum described in “Impact on Freddie Mac’s
    Supplemental Executive Retirement Plan.”

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Deferred Base Salary will not be considered compensation for
    purposes of any of Freddie Mac’s tax qualified retirement
    or executive benefit or welfare plans.

	
 
	
 
	
 
	
 

	
    Target Incentive

    Opportunity
	
 
	
 
	
    For each performance year, every Covered Officer will be
    provided an annual Target Incentive Opportunity, which will be
    equal to 1/3 of TDC.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Effective Date for 2009 Target Incentive
    Opportunity

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For each employee who was in a Covered Officer position on
    January 1, 2009, the 2009 Target Incentive Opportunity will
    be effective retroactive to January 1, 2009 and will be
    equal to 1/3 of their TDC (i.e., the 2009 Target Incentive
    Opportunity will not be pro-rated).

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For an employee who was hired into a Covered Officer position
    after January 1, 2009, the 2009 Target Incentive
    Opportunity shall be pro-rated based on their date of hire. For
    an employee who is promoted after January 1, 2009 into
    either a Covered Position or a Covered Position with increased
    scope and responsibility, the 2009 Target Incentive Opportunity
    shall be pro-rated effective as of the date of promotion.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Effective Date for Target Incentive Opportunity in 2010
    and Subsequent Years

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For each employee who is in a Covered Officer position as of
    January 1 of any calendar year, the Target Incentive
    Opportunity will be effective on January 1 of that calendar
    year and will be equal to 1/3 of their TDC.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For an employee who is hired into a Covered Officer position
    after January 1 of any calendar year, the Target Incentive
    Opportunity for that calendar year shall be pro-rated based on
    the date of promotion or hire. For an employee who is promoted
    after January 1 of any calendar year into either a Covered
    Position or a Covered Position with increased scope and
    responsibility, the Target Incentive Opportunity shall be
    pro-rated effective as of the date of promotion.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Target Incentive Opportunity Payouts

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    A Covered Officer will be eligible to be paid 50% of their
    annual Target Incentive Opportunity no later than March 15 of
    the calendar year immediately following the performance year
    (the “First Incentive Opportunity Payment”), and the
    remaining 50% no later than March 15 of the second calendar year
    immediately following the performance year (the “Second
    Incentive Opportunity Payment”).

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    2009 Target Incentive Opportunity (Payouts in 2010 and
    2011)

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The amount of the annual Target Incentive Opportunity that is
    actually paid will be determined by the aggregate amount of
    funds approved by the Committee for distribution to Covered
    Officers for each payment. In determining the aggregate amount
    of funds approved for distribution, which can be greater than,
    less than, or equal to the aggregate Target Incentive
    Opportunity for the Covered Officers, the Committee will take
    into account the following:

	
 
	
 
	
 
	
 

 

    Executive
    Management Compensation Program

    Page 5 of 9

    October 11, 2010
    

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	

              1. The
    Company’s performance against the objectives on the
    long-term 
         incentive (“LTI”) scorecard (i.e., for the
    LTI plan applicable to employees at 
         the level of Vice President
    and below) for the LTI grant made in the same 
         calendar year of
    the Covered Officers’ annual Target Incentive Opportunity;

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              2. All
    other relevant internal and external factors and non-LTI
    scorecard 
         developments that affect our corporate condition and
    mission fulfillment; and,

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              3. Achievement
    of significant accomplishments beyond the LTI scorecard
    
         objectives or adverse developments.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The approved funding level, expressed as a percentage that can
    range from 0% up to a maximum of 120%, will be equal to the
    aggregate amount of funds approved by the Committee for
    distribution to Covered Officers divided by the aggregate Target
    Incentive Opportunity for those same Covered Officers.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
                First
    Incentive Opportunity Payment — The amount
    actually paid will be equal 
            50% of the Covered Officer’s
    annual Target Incentive Opportunity multiplied 
            by the approved
    funding level for the first vesting.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
                Second
    Incentive Opportunity Payment — The amount
    actually paid will be 
            equal to 50% of the Covered Officer’s
    annual Target Incentive Opportunity 
            multiplied by the approved
    funding level for the second vesting.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    For Covered Officers who are members of the Freddie Mac
    Management Committee on the date the Committee approves the
    funding level, the amount of the Target Incentive Opportunity
    that is paid is also subject to an assessment of division and/or
    individual performance as determined by the CEO, for Covered
    Officers other than the CEO. For the CEO, Freddie Mac’s
    Board of Directors conducts the assessment. This assessment can
    result in an increase or decrease to the amount payable of up to
    25%. However, in no event can the aggregate amount paid to the
    Covered Officers who are members of the Management Committee for
    any First or Second Incentive Opportunity Payment exceed the
    aggregate Target Incentive Opportunities for those Covered
    Officers multiplied by the funding level.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    2010 and Subsequent Year Target Incentive
    Opportunities

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The Committee or the CEO will determine the actual amount that
    is paid to a Covered Officer (other than the CEO) for either the
    First or the Second Incentive Opportunity Payments based on:
    (i) the aggregate amount of funds approved by the Committee
    for distribution to Covered Officers for each payment,
    (ii) an assessment of individual, group or enterprise
    performance; and (iii) any other relevant factors. For the
    CEO, the Committee determines the actual amount to be paid based
    on the same factors, after obtaining and considering the views
    of the other non-management members of the Board.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    In determining the aggregate amount of funds approved for
    distribution, which can be greater than, less than, or equal to
    the aggregate Target Incentive Opportunity for the Covered
    Officers, the Committee will take into account the following:

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              1. The
    Company’s performance against the objectives on the
    long-term 
         incentive (“LTI”) scorecard (i.e., for the
    LTI plan applicable to employees at 
         the level of Vice President
    and below) for the LTI grant made in the same

	
 
	
 
	
 
	
 

 

    Executive
    Management Compensation Program

    Page 6 of 9

    October 11, 2010
    

 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	

                  calendar
    year of the Covered Officers’ annual Target Incentive
    Opportunity;

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              2. All
    other relevant internal and external factors and non-LTI
    scorecard 
         developments that affect our corporate condition and
    mission fulfillment; and,

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	

              3. Achievement
    of significant accomplishments beyond the LTI scorecard
    
         objectives or adverse developments.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The actual amount paid to a Covered Officer for each of the
    First and Second Incentive Opportunity Payments can range from
    0% to 150% of his/her Target Incentive Opportunity. However, in
    no event can the aggregate amount paid to the Covered Officers
    for any First or Second Incentive Opportunity Payment exceed the
    aggregate amount of funds approved for distribution.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Form of Payout

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Cash less applicable withholdings

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Treatment Under Freddie Mac’s Benefit Plans

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The Target Incentive Opportunity will not be considered
    compensation for purposes of any Freddie Mac retirement benefit
    or welfare plans.

	
 
	
 
	
 
	
 

	
    Impact on Freddie Mac’s

    Supplemental Executive

    Retirement Plan
	
 
	
 
	
    The Supplemental Executive Retirement Plan (“SERP”)
    shall be modified effective January 1, 2010 to provide that
    the maximum covered compensation, for purposes of the plan,
    relative to Covered Officers only, may not exceed two times the
    Covered Officer’s Semi-Monthly Base Salary. It is the
    intent of Freddie Mac and FHFA that, upon the conclusion of
    Conservatorship, the definition of “compensation” for
    purposes of accruals under the SERP will revert to the
    definition of “compensation” in place prior to the
    amendment to the SERP made to conform its terms to this
    Executive Management Compensation Program.

	
 
	
 
	
 
	
 

	
    Treatment Upon

    Termination:

     

    Semi-Monthly Base

    Salary
	
 
	
 
	
    Under all termination events except death, Semi-Monthly Base
    Salary will terminate as of the date employment terminates. In
    the event of death, Semi-Monthly Base Salary will terminate at
    the end of the month in which the death occurs.

	
 
	
 
	
 
	
 

	
    Treatment Upon

    Termination:

     

    Deferred Base Salary
	
 
	
 
	
    Death: If a Covered Officer’s employment is
    terminated due to death, any unpaid Deferred Base Salary will be
    paid as soon as administratively possible. If, at the time of
    the Covered Officer’s death, the Deferred Base Salary
    funding level has not been determined, the performance-based
    portion of Deferred Base Salary will remain outstanding until
    such determination is made. The actual amount paid for the
    performance-based portion will be determined by the approved
    Deferred Base Salary funding level.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The date on which the Committee approves the Deferred Base
    Salary funding level is referred to as the “Deferred Base
    Salary Determination Date.” Payment of any
    performance-based Deferred Base Salary will occur as soon as
    administratively possible after the Deferred Base Salary
    Determination Date.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Long-Term Disability: If a Covered Officer’s
    employment is terminated due to Long-Term Disability, the
    Covered Officer’s right to receive any unpaid Deferred Base
    Salary will become non-forfeitable, subject to the Recapture
    Policy, but will be paid no earlier than as called for in the
    Approved Payment Schedule above. The actual

	
 
	
 
	
 
	
 

 

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    amount paid for the performance-based portion of Deferred Base
    Salary earned will be determined by the approved Deferred Base
    Salary funding level.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Retirement: If a Covered Officer terminates
    employment due to retirement (as defined in Definitions),
    the Covered Officer’s right to receive any unpaid Deferred
    Base Salary will become non-forfeitable, subject to the
    Recapture Policy, and the Deferred Base Salary will be paid no
    earlier than as called for in the Approved Payment Schedule
    above. The actual amount paid for the performance-based portion
    of Deferred Base Salary will be determined by the approved
    Deferred Base Salary funding level.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Involuntary Termination: If a Covered Officer is
    involuntarily terminated, any unpaid Deferred Base Salary will
    be forfeited unless the Committee recommends that the Covered
    Officer receive either all or a portion of the unpaid Deferred
    Base Salary and the Committee’s recommendation is approved
    by FHFA after consulting with Treasury, as appropriate.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Voluntary Termination: If a Covered Officer
    voluntarily terminates employment, any unpaid Deferred Base
    Salary will be forfeited.

	
 
	
 
	
 
	
 

	
    Treatment Upon

    Termination:

     

    Target Incentive

    Opportunity
	
 
	
 
	
    Minimum Service Required: In order to be eligible
    to receive any portion of an annual Target Incentive Opportunity
    upon termination, a Covered Officer must have been employed for
    a minimum of four (4) whole calendar months during the
    performance year for which the incentive is being earned.

	
 
	
 
	
 
	
    Death and Long-Term Disability: If a Covered
    Officer’s employment is terminated due to either death or
    Long-Term Disability, any earned but unpaid portion of the
    Target Incentive Opportunity will be paid as soon as
    administratively possible following the date of death or the
    first day of Long-Term Disability. The actual amount that is
    paid will be determined consistent with the process under Target
    Incentive Opportunity Payouts.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    If, at the time of the Covered Officer’s death or Long-Term
    Disability, the Target Incentive Opportunity funding level has
    not been determined, the award will remain outstanding until
    such determination is made. As soon as administratively possible
    after the Target Incentive Opportunity Payment Determination
    Date (which is the date on which the Committee approves the LTI
    funding level), but no later than March 15 of the calendar
    year following each calendar year performance period, the
    Covered Officer, or the Covered Officer’s
    beneficiary(ies),
    will receive all unpaid portions of their Target Incentive
    Opportunity determined consistent with the process under Target
    Incentive Opportunity Payouts.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Retirement: If a Covered Officer terminates
    employment due to Retirement (as defined in Definitions),
    any earned but unpaid portion of the Target Incentive
    Opportunity will be paid as soon as administratively possible.
    The actual amount paid will be determined consistent with the
    process under Target Incentive Opportunity Payouts.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    If, at the time of the Covered Officer’s termination,
    performance against the performance
    measure(s)
    has not been determined, the Target Incentive Opportunity will
    remain outstanding until the Target Incentive Opportunity
    Payment Determination Date. As soon as administratively possible
    after the Target Incentive Opportunity Determination Date, but
    no later than March 15 of the calendar year following each

	
 
	
 
	
 
	
 

 

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    calendar year performance period, the Covered Officer’s
    right to receive a pro-rata payment shall become
    non-forfeitable, subject to the Recapture Policy. The Covered
    Officer is eligible to receive a pro-rata payment for the
    performance year in which the Covered Officer was employed. If
    the Covered Officer is employed for less than four
    (4) whole calendar months during a performance year, the
    Covered Officer will forfeit the Target Incentive Opportunity
    payment for that performance year. The pro-rata payment shall be
    calculated using the following methodology:

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
            Step
    1. The number of whole months employed during the applicable
    performance 
        year (minimum of four months required)

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
            Step
    2. Divided by twelve (12), the number of whole months in the
    performance 
        year

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
            Step
    3. Multiplied by 50% of the Covered Officer’s annual Target
    Incentive 
        Opportunity and adjusted consistent with the process
    under Target Incentive 
        Opportunity Payouts.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The above formula will be applied separately to each of the of
    the performance years for which a Covered Officer is eligible
    for a pro-rata payment of the Target Incentive Opportunity.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Involuntary Termination: If a Covered Officer is
    involuntarily terminated, any unpaid portion of the Target
    Incentive Opportunity will be forfeited unless the Committee
    recommends that the Covered Officer receive either all or a
    portion of the unpaid Target Incentive Opportunity and the
    Committee’s recommendation is approved by FHFA after
    consulting with Treasury, as appropriate.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Voluntary Termination: If a Covered Officer
    voluntarily terminates employment, any unpaid portion of the
    Target Incentive Opportunity will be forfeited.

	
 
	
 
	
 
	
 

	
    Additional Forfeiture

    Provision
	
 
	
 
	
    Upon a “Forfeiture Event” (as defined in
    Definitions), any unearned or any unpaid Total
    Incentive Opportunity will be cancelled and the Covered Officer
    or former Covered Officer will be required to immediately repay
    Freddie Mac the gross value of the Target Incentive Opportunity
    that was paid during the 12 month period immediately prior
    to the Forfeiture Event.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    In the event that a repayment is triggered under a current or
    former Covered Officer’s Recapture Policy, any earned but
    unpaid amounts that are subject to recapture under the terms of
    the Recapture Policy will be forfeited.

	
 
	
 
	
 
	
 

	
    Regulatory Approval and

    Reservation of Rights
	
 
	
 
	
    Actual payment of any Deferred Base Salary or any Target
    Incentive Opportunity at the time of termination is conditioned
    on the prior approval of FHFA at the time of any proposed
    payment.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Freddie Mac reserves the right, subject to FHFA approval, to
    modify the terms and conditions set forth herein so long as such
    modifications reasonably and in good faith are not detrimental
    to the rights of the employee.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    The terms of this program are subject to and shall be construed
    in accordance with applicable law and any applicable regulation,
    guidance or interpretation issued by FHFA or Treasury.

	
 
	
 
	
 
	
 

	
    Definitions
	
 
	
 
	
    Forfeiture Event: A Forfeiture Event shall mean
    the Covered Officer or former Covered Officer directly or
    indirectly seeks or accepts employment with, or provides
    professional services to, a “Competitor” in violation
    of any non-competition covenant

	
 
	
 
	
 
	
 

 

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    agreement between the Covered Officer and Freddie Mac in effect
    as of the date the Covered Officer receives a Target Incentive
    Opportunity.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Long-Term Disability: A Long-Term Disability shall
    be as defined in Freddie Mac’s Long-Term Disability Plan.

	
     
    
	
 
	
 
	
 

	
 
	
 
	
 
	
    Retirement: A Covered Officer is eligible to
    retire when s/he has attained or exceeded the Normal Retirement
    Age in the Freddie Mac Employees’ Pension Plan, which is
    currently 65 years of age.

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