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EXHIBIT 10.10

EXECUTIVE PENSION PLAN

OF THE FEDERAL NATIONAL MORTGAGE ASSOCIATION

AS AMENDED AND RESTATED

EFFECTIVE AS OF SEPTEMBER 16, 1986

	1.	 	Purpose

		
	 	      In order to secure and retain the services of key employees of
outstanding ability and motivate such employees to exert their best
efforts, the Board has adopted a policy designed to assure such employees
a reasonable level of retirement income. The purpose of the Executive
Pension Plan of Federal National Mortgage Association is to enable the
Board to carry out such policy with respect to a designated group of
senior officers.

	2.	 	Definitions
	 	 	 
	 	 	When used herein, the following terms shall have the following
meanings:

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

	 
	 	“Code” means the Internal Revenue Code of 1954, 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.

	 
	 	“Committee” means the Compensation Committee of the Board.
	 
	 	“Corporation” means Federal National Mortgage Association.
	 
	 	“High-Three Total Compensation” means a Participant’s average annual
Total Compensation from the Corporation, as determined by the
Committee, for the 36 consecutive months of the last 120 months
of the Participant’s employment by the Corporation when such
Participant’s Total Compensation is the highest, or during his
total period of employment by the Corporation if less than 36
months.

	 
	 	“Participant” means any officer of the Corporation, who is employed by
the Corporation on a full-time basis, who is compensated for such
employment by a regular salary, who, in the opinion of the
Committee, based upon such criteria as it shall from time to time
establish, is in a position to contribute materially to its
continued growth and development and to its future financial
success and who is selected to participate in the Plan in the
manner described in Section 4.

	 
	 	“Pension Goal” means the annual pension goal established by the
Committee for each

 

 

		
	 	Participant
in accordance with Section 5.

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

	 
	 	“Surviving Spouse” means the person to whom the Participant is legally
married (i) at the time of his death, if the Participant dies
before his payments under the Plan commence, and (ii) if the
Participant dies after his payments under the Plan commence, both
at the time of his death and at the time benefits under the Plan
so commenced.

	 
	 	“Total Compensation” means annual base salary, including amounts
deferred by the Participant under the Federal National Mortgage
Association Optional Deferred Compensation Plan, and its
successor plans, and amounts which, pursuant to the election of
the Participant, the Corporation has contributed to any cash or
deferred arrangement qualified under Section 401(k) of the Code,
plus the Participant’s other taxable compensation paid by the
Corporation with respect to the calendar year for which the
determination is made; provided, however, that such other taxable
compensation (i) shall be allocated equally over the years in
which it is earned and (ii) shall be limited in each such year to
50 percent of the Participant’s annual base salary for such
year.

	3.	 	Administration

             The Plan shall be administered by the Committee. In no event shall
a member of the Committee be eligible for an Award under the Plan.

             A majority of the Committee shall constitute a quorum, and the acts
of a majority of the members physically present at a meeting or
participating in a telephonic meeting, or acts unanimously approved in
writing by the Committee without a meeting, shall be the acts of the
Committee.

             The Committee shall have the authority to:

	(i)	 	Select the Participants;
	 
	(ii)	 	Determine the Pension Goal for each Participant; provided,
however, that the Pension Goals determined for the Chief
Executive Officer, the President, and the Executive Vice
Presidents shall be approved by the Board;

	 
	(iii)	 	Establish from time to time regulations for the
administration of the Plan, interpret the Plan, and make all
determinations considered necessary

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	 	 	or advisable for the administration
of the Plan.

             All decisions, actions or interpretations of the Committee shall be
final, conclusive, and binding upon all parties.

	4.	 	Participation

             Participants in the Plan shall be limited to those employees of the
Corporation who have received written notification from the Committee, or
from a person designated by the Committee, that they have been selected
to participate in the Plan. No employee shall at any time have the right
to be selected as a Participant. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be
retained in the employ of the Corporation

	5.	 	Pension Goal

             At the time an employee is designated a Participant, the Committee
shall determine his Pension Goal based upon his position with and
achievements for the Corporation and other factors, such as age and the
presence of prior pension plan benefits. A Participant’s Pension Goal
shall be a percentage (not less than 30 percent nor more than 60 percent)
of his High-Three Total Compensation. In exceptional circumstances the
Committee may, in its sole discretion, increase a Participant’s initial
Pension Goal to a higher percentage, up to a maximum of 60 percent,
subject to the satisfaction of such additional vesting requirements as
the Committee shall establish. Without regard to whether such 60 percent
limitation shall have become operative, the Committee may, in its sole
discretion, after the date the Participant becomes fully vested in his
Pension Goal, on a year-by-year basis, add up to 2 percentage points to
the Pension Goal then established for him for each year of additional
service.

	6.	 	Normal Retirement Benefit

             The amount of a Participant’s annual normal retirement benefit shall
be payable within 30 days after the date he attains age 60 or, if later,
within 30 days after the date his employment with the Corporation
terminates, and shall be equal to the amount of his Pension Goal in which
he is vested less (i) the annual amount of any benefit which he is then
entitled to receive under the Qualified Plan (including for this purpose
the annual amount of any payment which he is then entitled to receive
from the Corporation pursuant to Section 4.1(g) of the Federal National
Mortgage Association Optional Deferred Compensation Plan or any successor
provision to said section of said plan), (ii) the annual amount of any
benefits not attributable to his own contributions which he is then
entitled to receive under the Civil Service Retirement Act, solely to the
extent such benefits are attributable to periods of employment with the
Corporation, and (iii) if the Committee in its sole discretion so
determines, the annual amount of any benefits not attributable to his own
contributions which he is then entitled to receive under any plan which
is designated by the Committee, qualified under Section 401(a) of the
Code and maintained by the Participant’s prior employer, if years of
service with such employer are counted for purposes of vesting under the
Plan.

             All benefit offsets described in (i), (ii), and (iii) of this
Section 6 shall be determined by the Committee in its sole discretion and
taking into account all applicable

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actuarial adjustments (i) in the case
of a Participant who is married on the date of determination, as if he
had elected to receive such benefits as a joint and 100 percent survivor
annuity and (ii) in the case of a Participant who is not married on the date of
determination, as if he had elected to receive such benefits as a single

life annuity. Such benefit offsets shall be based, if necessary, upon
actuarial assumptions similar to those used in the Qualified Plan. If,
notwithstanding any election which the Participant could make, any such
benefit offset could not be payable (i) at the time benefits under the
Plan commence, or (ii) in the form of a joint and 100% survivor annuity,
then such offset shall (i) be taken into account on the earliest date it
could be payable, or (ii) be determined as if the Participant had elected
that form of benefit which provides the largest possible survivor benefit
for which his Surviving Spouse would have qualified, or both, as
appropriate. Cost of living adjustments made to benefits payable under
the Civil Service Retirement Act shall be taken into account in the
calendar year following the calendar year in which such adjustments are
made.

	7.	 	Early Retirement Benefits

             Subject to Section 9, any Participant may elect to commence to
receive an early retirement benefit in the event his employment with the
Corporation terminates prior to the date he attains age 60. Such
election must be made on or prior to the date he becomes a Participant in
the Plan pursuant to Section 4 and shall be irrevocable after such date.
The amount of a Participant’s annual early retirement benefit shall be
computed in the same manner as his annual normal retirement benefit, but
shall be adjusted by reducing the Pension Goal in which he is vested by
1/12 of 2 percentage points for each full month by which the commencement
of payments precedes the Participant’s attainment of age 60. The payment
of such Participant’s early retirement benefit, if any, under the Plan
shall commence within 30 days after his employment with the Corporation
terminates or, if later, within 30 days after the date he attains age 55.

	8.	 	Deferred Retirement Benefit

             There shall be no actuarial increase or, except as provided in
Section 5, other adjustment of the Pension Goal of a Participant who
remains in the employ of the Corporation after attaining age 60. The
payment of such Participant’s normal retirement benefit, if any, under
the Plan shall commence within 30 days after the date his employment with
the Corporation terminates.

	9.	 	Commencement of Benefit Payments

             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.

	10.	 	Vesting

             Except as otherwise provided in this Section 10. a Participant shall
vest in his initial Pension Goal in accordance with the following
schedule:

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	Years of Service	 	 	 	 
	with the Corporation	 	Percent Vested
	as a Participant	 	in Pension Goal
	
	 	

	5	 	 	50	%
	6	 	 	60	%
	7	 	 	70	%
	8	 	 	80	%
	9	 	 	90	%
	10	 	 	100	%

             In computing a Participant’s years of service for purposes of the
Plan, the Committee shall follow rules similar to those in effect under
the Qualified Plan.

             In exceptional circumstances, the Committee may, in its sole
discretion, at any time, recognize up to five years of service with the
Participant’s immediate prior employer. Such recognition shall be
conditional upon the Participant’s completion of five years of service
with the Corporation as a Participant. In exceptional circumstances, if
an employee of the Corporation attains age 50 by January 1, 1984, the
Committee may, in its sole discretion, recognize years of service
completed with the Corporation prior to the effective date of the Plan.
In addition, the Committee may, in its sole discretion, at any time,
recognize one or more years of service with the Corporation after the
effective date of the Plan but prior to the date the employee becomes a
Participant. However, in no case shall a Participant completely or
partially vest in his Pension Goal prior to the date he completes two
years of service with the Corporation as a Participant.

	11.	 	Form of Benefit Payments

             Payments under this Plan shall be made monthly to a Participant for
as long as he shall live in an amount equal to one-twelfth of the annual
normal or early retirement benefit, as applicable, in which the
Participant is vested. In addition, if a Participant dies after his
payments under the Plan commence, his Surviving Spouse (regardless of her
age at the time of the Participant’s death) shall be entitled to monthly
payments, commencing on the first day of the month coincident with or
next following the date of the Participant’s death and continuing for the
duration of her life, of 100% of the monthly amount which was being paid
to the Participant at the time of his death.

	12.	 	Preretirement Surviving Spouse’s Benefit

             If a Participant (whether or not he has terminated employment with
the Corporation or attained age 55) dies before his payments under the
Plan commence, his Surviving Spouse shall be entitled to monthly payments
for life (a “Surviving Spouse’s Benefit”) equal to 1/12 of the Pension
goal in which the Participant was vested on his date of death, if any, as
adjusted and paid in accordance with the following rules:

	(i)	 	the Pension Goal in which the Participant is vested shall be
reduced by 1/12 of 2 percentage points for each full month by
which the date of the Participant’s death precedes the date on
which he would have attained age 60, and he survived, subject to
a maximum reduction of 10 percentage points;

	 
	(ii)	 	the Surviving Spouse’s Benefit shall take full account of
all benefit offsets

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	 	 	described in clauses (i), (ii), and (iii) of
the first paragraph of Section 6 above, as determined by the
Committee in its sole discretion, but in determining the amount
of such offsets:

	 	(A)	 	if the Participant’s benefits had already
commenced under one or more of the benefit offset plans
referred to in Section 6 above, the offset under such plan
or plans shall be determined by reference to the largest
possible survivor benefit which the Participant could have
elected to have his Surviving Spouse continue to receive
after his death; and

	 
	 	(B)	 	if the Participant’s benefits had not already
commenced under one or more of such benefit offset plans,
then the benefit offset under each such plan or plans shall
be determined by reference to the benefit which would have
been payable had the Participant elected the largest
possible survivor benefit which he could have elected to
have his Surviving Spouse receive (or, if no such election
is provided, the survivor benefit, if any, which is
automatically provided under such plan or plans), without
having his own benefits commence, and had such elective or
automatic survivor benefit commenced on the earliest
possible date under each respective offset plan;

	(iii)	 	if a Participant’s Surviving Spouse has not attained age 55
on the date of the Participant’s death, payment of the Surviving
Spouse’s Benefit shall be deferred and shall commence within 30
days after the date she attains age 55, without actuarial
increase; and

	 
	(iv)	 	if a Particpant’s Surviving Spouse has attained age 55 by
the date of the Participant’s death, the Surviving Spouse’s
Benefit shall commence within 30 days after the date of the
Participant’s death.

	 
	13.	 	Optional Forms of Benefit Payments

             In lieu of the form of payment described in Section 11 or 12 above,
the Committee may designate in writing another form of benefit for a
Participant (or, in the event of his death, his Surviving Spouse),
provided (i) such written designation is irrevocable and is made on or
prior to the date he becomes a Participant in the Plan pursuant to
Section 4 and (ii) such form is actuarially equivalent (determined on the
basis of conversion assumptions adopted by the Committee) to the
prescribed form of payment. Notwithstanding the foregoing, if a
Participant dies before his payments under the Plan commence and he is
not survived by a Surviving Spouse, no benefit shall be payable under the
Plan.

	14.	 	General Creditor Status

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             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
payments 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.

	15.	 	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
provisions for the preservation of Participants’ rights under the Plan in
any agreement or plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization, reincorporation, change of name or
transfer of assets.

	16.	 	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.

	17.	 	Taxes

             The Corporation shall deduct from all amounts paid under the Plan
all federal, state, local, and other taxes required by law to be withheld
with respect to such payments.

	18.	 	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 affairs because of
illness or accident, or is a minor, or has died, then any payment due to
such person or his estate (unless a prior claim therefor has been made by
a duly appointed legal representative), may, if the Committee so directs
the Corporation, 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 other-
wise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Committee and the Corporation therefor.

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	19.	 	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 behalf
in his 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.

	20.	 	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 deprive any Participant of any vested
rights without his written consent.

	21.	 	Unfunded Plan; Governing Law

             The Plan is intended to constitute an unfunded deferred compensation
arrangement for a select group of management or highly compensated
personnel and all rights thereunder shall be governed by and construed in
accordance with the laws of the District of Columbia.

	22.	 	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.

	23.	 	Gender

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

	24.	 	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.

	25.	 	Effective Date

             The Plan as amended and restated shall become effective as of
September 16, 1986.

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EXHIBIT 10.11

FANNIE MAE ANNUAL INCENTIVE PLAN

(As Amended Through January 16, 2001)

     1.     Purpose. The purpose of the Fannie Mae Annual Incentive Plan is to
encourage greater focus on performance among the Management Group of Fannie Mae
by relating a significant portion of their total compensation to the
achievement of annual financial, strategic or operational objectives.

     2.     Definitions. The following definitions are applicable to the Plan:

	 	 	“Award” means an amount of money expressed as a percentage of a
Participant’s annual base salary and earned in accordance with the
provisions of the Plan.
	 
	 	 	“Beneficiary” means the beneficiary or beneficiaries designated in
accordance with Section 8 to receive the amount, if any, payable under
the Plan in the event of the death of a Participant.
	 
	 	 	“Board” means the Board of Directors of Fannie Mae.
	 
	 	 	“Business Unit” means the annual performance objectives of a business
unit of the Company established for purposes of the Plan.
	 
	 	 	“Committee” means the Compensation Committee of the Board.
	 
	 	 	“Company” means Fannie Mae.
	 
	 	 	“Corporate Goals” means the annual performance objectives of the Company
established for purposes of the Plan.

 

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	 	 	“Individual Goals” means the annual performance objectives of individual
Participants established for purposes of the Plan.
	 
	 	 	“Maximum Potential Award” means the maximum Award that can be earned by a
Participant during a calendar year.
	 
	 	 	“Management Group” means the group of employees of the Company holding
positions at or above the grade level equivalent to that of a director,
or an equivalent title.
	 
	 	 	“Participant” means each member of the Management Group of the Company
who is employed by the Company and who is compensated for such employment
by a regular salary.
	 
	 	 	“Plan” means the Fannie Mae Annual Incentive Plan.

     3.     Administration. The Plan shall be administered by the Committee. In
no event shall a member of the Committee be eligible for an Award under the
Plan. In this regard, an employee of the Company who is present at a Committee
meeting by reason of his office shall not be deemed to be a member of the
Committee and in no event shall be entitled to vote on any matter on which the
Committee is required or permitted to vote under the Plan.

		
	 	     A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members physically present at a meeting or participating in a
telephonic meeting, or acts unanimously approved in writing by the Committee
without a meeting, shall be the acts of the Committee.

 

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     The Committee shall have the authority to establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make
all determinations considered necessary or advisable for the administration of
the Plan.

     Except with respect to matters requiring action by the Board, all
decisions, actions or interpretations of the Committee shall be final,
conclusive and binding upon all parties.

     The Chairman, the President, and the Vice Chairman are authorized to
delegate their authority under this Plan.

     4.     Participation. Participants in the Plan shall be limited to members
of the Management Group of the Company. No Participant shall at any time have
the right to be entitled automatically to an Award. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee the right to
be retained in the employ of the Company.

     5.     Awards. Awards will be earned on the basis of performance measured
against preestablished goals consisting of (i) either Corporate or Business
Unit Goals, (ii) Individual Goals or (iii) a combination of either Corporate or
Business Unit Goals and Individual Goals.

     Corporate Goals shall be established by the Board and shall be based upon
the Company’s annual return on shareholders’ equity or upon such other
corporate objectives as the Board shall determine annually. The Committee
shall determine the extent to which each year’s Corporate Goals are attained.
The Committee shall also have the authority, with the approval of the Board, to
adjust Corporate Goals, or performance measurement standards for such goals,
for any calendar year as it deems equitable in recognition of (i) extraordinary
or non-recurring events experienced by the Company during the calendar year, or
by any other company whose performance is relevant to the determination of the
amount of any Award hereunder, (ii) changes in applicable accounting

 

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rules or principles or changes in the Company’s or in any other such company’s
methods of accounting during the calendar year, or (iii) the occurrence of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
capital structure of the Company, or of any other such company. If the minimum
Corporate Goal set for any calendar year by the Board is met, the Chairman, the
President, or the Vice Chairman may increase or decrease the amount of the
Corporate Goal-related Award to be paid to each Participant at or below the
level of Executive Vice President based on an evaluation of the individual
performance of such Participant; provided however that such adjustment may not
cause the total amount of Corporate Goal-related Awards to be paid under the
Plan to exceed the maximum fund for Corporate Goal-related Awards set by the
Board for such calendar year, or, if a separate fund has not been set for
Corporate Goal-related Awards, such adjustment may not cause the total amount
of Corporate Goal-related Awards, when combined with Business Unit Goal-related
Awards, to be paid under the Plan to exceed the maximum fund for all Awards set
by the Board for such calendar year. In the event that the Company’s annual
return on shareholders’ equity or other measurement of corporate performance
for any calendar year is less than the minimum Corporate Goal set for such year
by the Board, no Award for corporate performance will be made for such year,
and, except as otherwise provided in the penultimate paragraph of this Section
5, no Award for individual performance will be made for such year even though
Individual Goals have been met.

     Business Unit Goals for a business unit with employees eligible for Awards
based, in whole or in part, on a Business Unit Goal, shall be established by
the Board and shall be based upon performance objectives for such business unit
established annually by the Board. The Committee shall determine the extent to
which each year’s Business Unit Goals are attained. The Committee shall also
have the authority, with the approval of the Board, to adjust Business Unit
Goals, or performance measurement standards for such goals, for any calendar
year as it deems equitable in recognition of (i) extraordinary or non-recurring
events experienced by the business unit or the Company during the calendar
year, or by any other company whose performance is

 

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relevant to the determination of the amount of any Award hereunder, (ii)
changes in applicable accounting rules or principles or changes in the
Company’s or in any other such company’s methods of accounting during the
calendar year, or (iii) changes in the business unit’s function or role within
the Company. If the minimum Business Unit Goal for a business unit set for any
calendar year by the Board is met, the Chairman, the President, or the Vice
Chairman may increase or decrease the amount of the Business Unit Goal-related
Award to be paid to each Participant in such business unit at or below the
level of Executive Vice President (or an equivalent title) based on evaluation
of the individual performance of such Participant; provided however that such
adjustment may not cause the total amount of Business Unit Goal-related Awards
to be paid under the Plan to exceed the maximum fund for Business Unit
Goal-related Awards set by the Board for such calendar year, or, if a separate
fund has not been set for Business Unit Goal-related Awards, such adjustment
may not cause the total amount of Business Unit Goal-related Awards, when
combined with Corporate Goal-related Awards, to be paid under the Plan to
exceed the maximum fund for all Awards set by the Board for such calendar year.
In the event that the business unit does not satisfy its minimum Business Unit
Goal set by the Board for such year, no Award for business unit performance
will be made for such year, and, except as otherwise provided in the next
following paragraph of this Section 5, no Award to a Participant in the
business unit for individual performance will be made for such year even though
Individual Goals have been met.

     The Chairman of the Board, the President, or the Vice Chairman shall set
the Individual Goals and measure the performance of Participants each year;
provided, however, that the Board shall set the Individual Goals, if any, of
the Chairman, the President, and the Vice Chairman of the Company and, if it
sets such goals, shall measure their performance. In any case where the
Individual Goals of a Participant, at or below the level of Executive Vice
President, have been substantially satisfied, the Chairman, the President, or
Vice Chairman may, but shall not be required to, determine that such
Participant’s Individual Goals have been partially attained and, in any such
case, the percentage of the Participant’s Award that is based on individual
performance

 

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shall be appropriately adjusted and, if the other requirements for the payment of an
Award are met, shall be paid. The Chairman, the President, or the Vice
Chairman may, but shall not be required to, adjust Individual Goals of
Participants, at or below the level of Executive Vice President, at any time
prior to the end of the year for which they were established, to reflect
changed responsibilities of such Participants or other material changes in
circumstances. With respect to the Individual Goals, if any, of the Chairman,
the President, and the Vice Chairman, the Board shall exercise the discretion
granted to the Chairman, the President, and the Vice Chairman in the preceding
two sentences of this Section 5. The Committee may provide in any year that as
to any or all Participants at or below the level of Executive Vice President
and under such conditions as may be imposed by the Committee some or all Awards
for individual performance for such year may be earned whether or not the
relevant minimum Business Unit Corporate Goal has been met; the Board may make
such provision for the Chairman, the President, and the Vice Chairman.

     The Committee shall determine for each year for each Participant the
Maximum Potential Award as a percentage of his or her aggregate regular basic
salary paid during such year while a Participant (including any such salary
deferred by the Participant under a Fannie Mae plan or program) and may make
such determination either on an individual basis or by categories of
Participants. The Committee shall also determine the percentage of each
Participant’s Maximum Potential Award that is to be earned on the basis of
business unit, corporate or individual performance, and may make such
determination either on an individual basis or by categories of Participants.
Notwithstanding other provisions of this Plan, the Chairman, the President, or
the Vice Chairman may determine that the amount of any Award payable to a
Participant at or below the level of Executive Vice President, may exceed the
Maximum Potential Award for any year; provided, however that such adjustment
may not cause the total amount of business unit, corporate or all combined
Awards, to be paid under the Plan to exceed the maximum fund for business unit,
corporate or all combined Awards, whichever is applicable, set by the Board for
such calendar year.

 

7

     6.     Payment of Awards. The amount payable with respect to an Award earned
under the Plan shall be paid by the Company in cash as soon as practicable
after the end of the calendar year with respect to which it is earned, unless
the Participant has effectively elected to defer all or any part of such amount
pursuant to the terms and conditions of any Fannie Mae plan or program. All
amounts that are so deferred shall be paid in accordance with the terms and
conditions of such Fannie Mae plan or program. Except as otherwise provided in
Section 7 of the Plan, no Award shall be payable to any Participant who is not
a member of the Management Group of the Company on December 31 of the calendar
year with respect to which such Award is earned. The Chairman, the President,
or the Vice Chairman shall report the total amount of each Participant’s actual
Award to the Committee each year.

     7.     Partial Awards. A Participant who, except on account of death,
permanent disability or retirement, is not a member of the Management Group of
the Company on the last day of a Plan year and, therefore, is a Participant for
less than a full year may, upon the approval of the Chairman, receive a pro
rata portion of an Award, if any, for such partial year of participation. An
employee who is a Participant for less than a full year by reason of promotion,
commencement of employment, or termination of employment on account of death,
permanent disability or retirement shall receive a pro rata portion of an
Award, if any, for that year. A Participant who is eligible for more than one
Award during any calendar year by reason of a promotion within the Management
Group or a transfer to a different business unit shall receive a pro rata
portion of each Award, if any, for that year.

     8.     Designation and Change of Beneficiary. Each Participant shall file
with the Committee or its designee, on a form prescribed for such purpose by
the Committee or its designee, a written designation of one or more persons as
the Beneficiary who shall be entitled to receive the amount, if any, payable
under the Plan in the event of the Participant’s death. A Participant may,
from time to time, revoke or change the Participant’s Beneficiary designation
without the consent of any prior

 

8

Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event
shall it be effective as of a date prior to such receipt.

     9.       Unsecured Creditor Status. To the extent that any person acquires a

right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts.

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

     11.     Non-Alienation of Benefits. A Participant shall not assign, sell,
encumber, transfer, or otherwise dispose of any rights or interests under the
Plan and any attempted disposition shall be null and void.

     12.     Taxes. The Company shall deduct from all amounts paid under the Plan
all federal, state, local, and other taxes required by law to be withheld with
respect to such payments.

 

9

     13.     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 affairs because of illness or accident, or is a minor, or has
died, then any payment due to such person or his estate (unless a prior claim
therefor has been made a duly appointed legal representative), may, if the
Committee so directs the Company, 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 Committee and the Company therefor.

     14.     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 behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each employee, officer, or director of the Company 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.

     15.     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 to the Committee’s administration, management, and interpretation of the
Plan, provided any such amendment does not significantly affect the cost to the
Company of maintaining the Plan. However, no amendment, suspension, or
termination of the Plan shall be permitted if it would

 

10

materially and adversely affect the right of any Participant, without his written consent, to
earn or receive an Award for a particular year once such year has commenced.

     16.     Unfunded Plan; Governing Law. The Plan is intended to constitute an
unfunded deferred compensation arrangement for a select group of management or
highly compensated personnel and all rights thereunder shall be governed by and
construed in accordance with the laws of the District of Columbia.

     17.     Other Plans. No Award shall 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 Company except as
specifically provided in any such plan or arrangement or as otherwise
determined by the Board.

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

     19.     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.

     20.     Effective Date. The Plan shall become effective as of January 1,
1985.

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