FEDERAL HOME LOAN MORTGAGE CORPORATION RESTRICTED STOCK UNITS AGREEMENT
Exhibit 10.6
This RESTRICTED STOCK UNITS AGREEMENT is dated
(the “Grant Date”) by and between the Federal Home
Loan Mortgage Corporation (the “Corporation”) and
(the “Grantee”), pursuant to the Federal Home Loan
Mortgage Corporation 2004 Stock Compensation Plan (the
“Plan”).
1. Grant of Restricted Stock Units and Receipt by
Grantee.
(a) Grant. The Corporation hereby confirms the
grant, under and pursuant to the Plan, to Grantee on the date
hereof of
Restricted
Stock Units (the “RSUs”). The RSUs are subject to all
of the terms and conditions set forth in the Plan, the relevant
resolution of the Compensation and Human Resources Committee of
the Board of Directors and this Restricted Stock Units Agreement
(the “Agreement”). The Corporation shall maintain a
bookkeeping account for Grantee (the “Account”)
reflecting the number of RSUs then credited to Grantee hereunder
as a result of such grant of RSUs and any additional RSUs
attributable to Dividend Equivalents (not paid out in cash) as
described in Section 5 hereof.
(b) Restrictions. Grantee acknowledges and
agrees that: (i) until an RSU has become vested in
accordance with Section 2(a), such RSU shall be subject to
a risk of forfeiture as provided in the Plan and Section 2
hereof; (ii) until such time as each RSU becomes vested and
is settled, such RSU shall be generally nontransferable, as
provided in the Plan and Section 3 hereof;
(iii) Grantee is subject to the Corporation’s Code of
Conduct and related policies on xxxxxxx xxxxxxx that restrict
Grantee’s ability to sell shares of the Corporation’s
Common Stock received in settlement of RSUs, which may include
“blackout” periods during which Grantee may not engage
in such sales; and (iv) the RSUs, and certain gains
realized by Grantee upon settlement of the RSUs, are subject to
forfeiture in the event Grantee fails to meet applicable
requirements relating to non-competition, non-solicitation of
employees and others, and other provisions protecting the
Corporation’s business, as set forth in Section 6
hereof.
(c) Coordination with Plan. All of the terms,
conditions and other provisions of the Plan are hereby
incorporated by reference into this Agreement. Capitalized terms
used in this Agreement but not defined herein shall have the
same meanings as in the Plan. If there is any conflict between
the provisions of this Agreement and the provisions of the Plan,
the provisions of the Plan shall govern. A copy of the Plan is
available on the Human Resources homepage of the
Corporation’s intranet site. Grantee hereby agrees to be
bound by the Plan (as presently in effect or hereafter amended)
and this Agreement, and by all decisions and determinations of
the Compensation and Human Resources Committee of the Board of
Directors (including any delegatee) (the “Committee”)
thereunder.
2. Vesting and Forfeiture.
(a) Vesting Date. Subject to
Sections 2(b), 2(c) and 2(d), the vesting schedule for the
grant shall be as follows:
• | 33% of such grant shall vest on the first anniversary of the Grant Date; | |
• | an additional 33% of the grant shall vest on the second anniversary of the Grant Date; and | |
• | the remaining 34% of the grant shall vest on the third anniversary of the Grant Date. |
Each RSU credited as a result of Dividend Equivalents under
Section 5(a)(ii) and (iii) (“Dividend Equivalent
RSU”) shall vest at the time of vesting of the forfeitable
RSU which gives rise, directly or indirectly, to the crediting
of such Dividend Equivalent RSU, or shall be immediately vested
if credited on a previously vested RSU.
(b) Death or Disability. If Grantee terminates
employment with the Corporation as a result of Grantee’s
death or Disability (defined for purposes of this Agreement as
an event or condition arising before Termination which the
Social Security Administration determines to render Grantee
totally disabled), all unvested RSUs shall vest and become
nonforfeitable immediately upon such death or Disability.
(c) Retirement. If Grantee terminates
employment with the Corporation due to a Retirement (as defined
below), all unvested RSUs shall vest and continue to settle
under Section 4 below after the date of the Retirement in
accordance with the dates in the vesting schedule in
Section 2(a) above. For purposes of this Agreement, a
“Retirement” shall mean Grantee’s Termination if
at the time of such Termination (A) either Grantee has both
attained age 55 and the sum of Grantee’s age and years
of service is equal to (or greater than) 70, or Grantee has both
attained (or exceeded) age 62 and has at least five years
of service, and (B) Grantee has executed and is subject to
a written agreement containing such non-competition,
non-solicitation, and other covenants, and a release of the
Corporation, in form and substance satisfactory to the Chief
Executive Officer in order to protect the business relationships
and confidential and proprietary business information of the
Corporation. A “Retirement” shall not include a
Termination by the Corporation for Gross Misconduct (as defined
in Corporate Policy
No. 3-254.1
or 3-254, as applicable (as it may be amended or replaced from
time to time) as determined by the Chief Executive Officer or a
Termination subject to Section 2(b). The Corporation’s
remedies under any such covenant may include but shall not be
limited to the forfeiture of RSUs not theretofore settled. For
purposes of this Section 2(c), “years of service”
shall be defined (and calculated) in the same manner as
“years of qualifying service” under the Federal Home
Loan Mortgage Corporation Employees’ Pension Plan.
(d) Special Circumstances Termination. If the
Corporation terminates Grantee’s employment due to Special
Circumstances (as defined below), all unvested RSUs shall vest
and continue to settle under Section 4 below after
Termination in accordance with dates in the vesting schedule in
Section 2(a) above. For purposes of this Agreement,
“Special Circumstances” shall mean Grantee’s
ceasing to be an employee of the Corporation by action of the
Corporation, other than the following Termination events: a
Termination by the Corporation for Gross Misconduct (as defined
in Corporate Policy
No. 3-254.1
or 3-254, as
applicable, as it may be amended or replaced from time to time)
as determined by the Chief Executive Officer, a Termination for
violating any standard of performance, conduct or attendance
embodied in
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Exhibit A to Corporate Policy
No. 3-214
(as it may be amended or replaced from time to time) as
determined by the Chief Executive Officer, or a Termination upon
death or following a Disability; provided, however,
“Special Circumstances” shall exist only if, at the
time of such Termination, (A) Grantee’s position with
the Corporation was eliminated due to a reorganization or job
relocation or Grantee’s employment was terminated due to a
restructuring or other no-fault displacement as determined in
the absolute and sole discretion of the Chief Executive Officer,
and (B) Grantee has executed and is subject to a written
agreement containing such non-competition, non-solicitation, and
other covenants, and a release of the Corporation, in form and
substance satisfactory to the Chief Executive Officer in order
to protect the business relationships and confidential and
proprietary business information of the Corporation.
(e) Other Terminations. If Grantee terminates
employment with the Corporation for any reason other than death,
following a Disability, or Retirement, or if the Corporation
terminates Grantee’s employment for any reason other than
Special Circumstances, any unvested RSUs will be forfeited.
3. Nontransferability. Until RSUs have settled
under Section 4 hereof, the RSUs and Grantee’s rights
and interests therein shall be subject to the restrictions on
transferability and related terms set forth in Section 6.6
of the Plan.
4. Settlement. RSUs granted hereunder,
together with RSUs credited as a result of Dividend Equivalents
under Section 5(a)(ii) and (iii), shall be settled by
delivery of one share of the Corporation’s Common Stock
($0.21 par value) for each RSU being settled. Settlement of
each RSU granted hereunder shall occur upon the vesting of such
RSU under Section 2, provided, however, that, in the case
of Retirement pursuant to Section 2(c) or Termination by
the Corporation due to Special Circumstances pursuant to
Section 2(d), settlement of each RSU shall instead occur
pursuant to the schedule under Section 2(a) (i.e., the time
RSUs would have become vested under Section 2(a) if
Grantee’s employment by the Corporation had not
terminated). The terms set forth or incorporated in this
Agreement notwithstanding, if, under U.S. federal income
tax laws as presently in effect or hereafter amended, and
regulations thereunder, any rights or elections of Grantee with
respect to the RSUs would result in Grantee’s constructive
receipt of income relating to the RSUs prior to their actual
settlement by the Corporation, such rights or elections, and any
reserved power of the Corporation, shall be automatically
modified and limited to the extent necessary such that Grantee
will not recognize taxable income prior to the settlement of the
RSUs. In particular, distribution to a “key employee”
as specified in
Section 409A(a)(2)(B)(i)
of the Internal Revenue Code upon a Disability may in some cases
have to be delayed for six months after Termination, and the
Corporation shall have no power to accelerate the distribution
of shares of Common Stock except in conformity with
Section 409A and regulations thereunder.
5. Dividend Equivalents and Adjustments.
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(a) Dividend Equivalents. Dividend Equivalents
shall be paid or credited on RSUs (other than RSUs that, at the
relevant record date, previously have been settled or forfeited)
in accordance with Section 7.6 of the Plan, as follows:
(i) | Cash Dividends. If the Corporation declares and pays a dividend or distribution on Common Stock in the form of cash, then an amount of cash shall be paid to Grantee, as promptly as possible after the payment date for such dividend or distribution, equal to the number of RSUs credited to Grantee’s Account hereunder as of the record date for such dividend or distribution multiplied by the amount of cash actually paid as a dividend or distribution on each outstanding share of Common Stock at such payment date. | |
(ii) | Non-Common Stock Dividends. If the Corporation declares and pays a dividend or distribution on Common Stock in the form of property other than shares of Common Stock, then a number of additional RSUs shall be credited to Grantee’s Account as of the payment date for such dividend or distribution equal to the number of RSUs credited to the Account as of the record date for such dividend or distribution multiplied by the Fair Market Value of such property actually paid as a dividend or distribution on each outstanding share of Common Stock at such payment date, divided by the Fair Market Value of a share of Common Stock at such payment date. | |
(iii) | Common Stock Dividends and Splits. If the Corporation declares and pays a dividend or distribution on Common Stock in the form of additional shares of Common Stock, or there occurs a forward split of Common Stock, then a number of additional RSUs shall be credited to Grantee’s Account as of the payment date for such dividend or distribution or forward split equal to the number of RSUs credited to the Account as of the record date for such dividend or distribution or split multiplied by the number of additional shares of Common Stock actually paid as a dividend or distribution or issued in such split in respect of each outstanding share of Common Stock. |
The foregoing notwithstanding, any payment of Dividend
Equivalents shall be reduced by the amount of all Federal,
state, local and other taxes that may be required to be withheld
by the Corporation with respect to such payment. In addition,
the Committee may vary the manner and terms of crediting
Dividend Equivalents from that specified in clause (i),
(ii) or (iii) above, for administrative convenience or
any other reason, provided that the Committee determines that
any alternative manner and terms result in equitable treatment
of Grantee.
(b) Adjustments to RSUs. The number of RSUs
credited to Grantee’s Account shall be appropriately
adjusted, in order to prevent substantial dilution or
enlargement of Grantee’s rights with respect to RSUs, to
reflect any changes in the number and kind of outstanding shares
of Common Stock resulting from any event referred to in
Section 4.4 of the Plan, taking into account any RSUs
credited to Grantee in connection with such event under
Section 5(a) hereof.
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6. Additional Forfeiture Provisions.
(a) Forfeiture of RSUs and Gains Realized Upon
Prior Settlement of RSUs. The RSUs are subject to the
following additional forfeiture conditions, to which Grantee, by
accepting the RSUs, agrees. If any of the events specified in
Section 6(b) occurs (a “Forfeiture Event”), all
of the following forfeitures will result, such forfeitures to be
effective at the time of the occurrence of the Forfeiture Event:
(i) | The RSUs then outstanding, whether or not vested, will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and | |
(ii) | Grantee will be obligated to repay to the Corporation, within five business days after demand is made therefor by the Corporation, the total amount of After-Tax Gain (as defined herein) realized by Grantee upon any settlement of the RSUs that occurred on or after the date that is 12 months prior to the occurrence of the Forfeiture Event. For purposes of this Section, the term “After-Tax Gain” shall mean, in respect of a given settlement of RSUs, the product of (X) the Fair Market Value per share delivered at the date of such settlement (without regard to any subsequent change in the market price of shares) times (Y) the number of shares delivered in such settlement, provided that, if the settlement occurred in a calendar year prior to the Corporation making demand for repayment, such product shall be reduced by a percentage equal to Grantee’s marginal tax rate at the time of settlement as reasonably determined by the Committee. Such repayment may be in cash or in shares having a Fair Market Value at the repayment date equal to the After-Tax Gain. |
(b) Events Triggering Forfeiture. The
forfeitures specified in Section 6(a) will be triggered
upon the occurrence of the following Forfeiture Event at any
time during Grantee’s employment by the Corporation or
during the noncompetition period following Termination of
Employment specified in any agreement between the Corporation
and Grantee in existence at the Date of Grant (the
“Restrictive Covenant Agreement”):
Grantee, directly or indirectly, seeks or accepts employment
with or provides professional services, directly or indirectly,
to a “Competitor” in violation of the Restrictive
Covenant Agreement. For purposes of this Section 6(b) and
the second sentence of Sections 2(d) and 2(e), references
to the “Corporation” include any subsidiary, affiliate
or joint venture of the Corporation.
The non-occurrence of the Forfeiture Event set forth herein is a
condition to Grantee’s right to realize and retain value
from the RSUs, and shall remain a condition regardless of any
subsequent change or challenge to or termination of such other
agreement referenced herein and the consequences hereunder if
Grantee engages in an activity giving rise to any such
Forfeiture Event are the forfeitures specified in
Section 6(a).
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(c) Monitoring Compliance. In order to allow
the Corporation to monitor Grantee’s compliance with the
conditions imposed under this Section 6, beginning with
Grantee’s Termination of Employment Grantee shall provide
written notice to the Executive Vice-President, Human Resources,
of the identity of each new employer with whom Grantee accepts
employment or of any other entity to which Grantee provides
professional services, together with Grantee’s new job
title and a brief description of job duties, during the
noncompetition period specified in the Restrictive Covenant
Agreement.
7. Other Terms Relating to RSUs.
(a) Fractional RSUs and Shares. The number of
RSUs credited to a Grantee’s Account shall include
fractional RSUs calculated to at least three decimal places,
unless otherwise determined by the administrator (which shall be
the Human Resources Division, unless otherwise specified by the
Committee). Upon settlement of RSUs, Grantee shall be paid, in
cash, an amount equal to the value of any fractional share that
would have otherwise been deliverable in settlement of such RSUs.
(b) Statements. An individual statement of
each Grantee’s Account will be made available to each
Grantee in such form and in such manner as the administrator may
determine. Such statements may include information such as the
amount of RSUs credited to Grantee’s Account, transactions
therein during the period covered by the statement, and other
information deemed relevant by the administrator. Such statement
may include information regarding other plans and compensatory
arrangements for Grantee. A Grantee’s statements shall be
deemed a part of this Agreement, and shall evidence the
Corporation’s obligations under the Plan, including the
number of RSUs credited as a result of Dividend Equivalents (if
any). Any statement containing an error shall not, however,
represent a binding obligation to the extent of such error,
notwithstanding the inclusion of such statement as part of this
Agreement.
(c) Tax Withholding. The Corporation may make
such provisions and take such steps as it may deem necessary or
appropriate for the withholding of all Federal, state, local and
other taxes required by law to be withheld upon the vesting or
settlement of RSUs (including at the time employees are eligible
for retirement, or terminations related to Retirement or Special
Circumstances) including, but not limited to, (i) reducing
the number of shares of Common Stock otherwise to be delivered
to Grantee at that time, based on their value determined in
accordance with Section 9.3(a) of the Plan, to permit
deduction of the amount of any such withholding taxes from the
amount otherwise payable under the Plan, (ii) deducting the
amount required to be withheld from any other amount then or
thereafter payable to Grantee, a beneficiary or legal
representative, and (iii) requiring Grantee, a beneficiary
or legal representative to pay to the Corporation the amount
required to be withheld as a condition of delivering Common
Stock in settlement of the RSUs or any other distributions
related thereto.
8. Miscellaneous.
(a) Modifications. The Corporation acting
through the Committee shall have the authority to modify or
remove any or all restrictions or conditions on the vesting or
settlement
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of the RSUs whenever it may determine that, by reason of a
change in applicable laws or other change in circumstances
arising after the date hereof, or for any other reason, such
action is appropriate.
(b) Binding Agreement. This Agreement shall be
binding upon the heirs, executors, administrators and successors
of the parties. This Agreement constitutes the entire agreement
between the parties with respect to the RSUs, and supersedes any
prior agreements or documents with respect to the RSUs. No
amendment, alteration, suspension, discontinuation or
termination of this Agreement which may impose any additional
obligation upon the Corporation or materially impair the rights
of Grantee with respect to the RSUs shall be valid unless in
each instance such amendment, alteration, suspension,
discontinuation or termination is expressed in a written
instrument duly executed in the name and on behalf of the party
to be bound thereby. The foregoing notwithstanding, equitable
adjustments to the RSUs under Section 5(b), including those
resulting from a transaction in which the Corporation’s
Common Stock is no longer publicly traded, and changes that
affect only the timing of federal income or other taxation to
Grantee for compensation received hereunder, shall not be deemed
material impairments and therefore shall not require approval of
Grantee.
(c) Beneficiary Designations. All designations
of Beneficiary shall be on such forms as are specified by and
filed with the administrator. Any Beneficiary designation made
by Grantee in accordance with this provision may be changed from
time to time, without the consent of any previously designated
Beneficiary (but subject to any spousal consent as may be
required), by filing with the administrator a notice of such
change on the form provided by the administrator and such change
of Beneficiary designation shall become effective upon receipt
by the administrator. In the event Grantee’s Beneficiary
would otherwise become entitled to a distribution hereunder, and
all Beneficiaries designated by Grantee are not then living, or
if no valid Beneficiary designation is in effect, Grantee’s
estate or duly authorized personal representative shall be
deemed to have been designated by Grantee.
(d) No Security Interest or Trust Created. Any
provision for distribution in settlement of Grantee’s
Account hereunder shall be by means of bookkeeping entries on
the books of the Corporation and shall not create in Grantee or
any Beneficiary any right to, or claim against any, specific
assets of the Corporation, nor result in the creation of any
trust or escrow account for Grantee or any Beneficiary. Grantee
or any Beneficiary entitled to any distribution hereunder shall
be a general creditor of the Corporation.
(e) No Right to Continued Employment. Nothing
contained herein or in the Plan shall be construed as giving
Grantee any right to be retained in the employ of the
Corporation, or interfere in any way with the right of the
Corporation to terminate the employment of Grantee at any time,
with or without cause, without incurring any liability to
Grantee due to the forfeiture of the RSUs.
(f) No Stockholder Rights. Grantee shall have
no rights as a stockholder of the Corporation with respect to
any shares of Common Stock subject to the RSUs prior to the
settlement of the RSUs.
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(g) Notices. Any notice hereunder to the
Corporation shall be in writing and addressed to it at its
office, 0000 Xxxxx Xxxxxx Xxxxx, XxXxxx, XX 00000, Attn:
Human Resources Division, and any notice to Grantee shall be in
writing and addressed to him or her at the latest address
appearing in the records of the Corporation, subject to the
right of either party to designate in writing another address at
any time hereafter.
(h) Legal Effect. This Agreement shall be
legally binding when (i) executed by the Corporation
attaching the typed name and title of its authorized officer as
a legally binding electronic signature and (ii) delivered
to Grantee who has consented and agrees to its terms
electronically (or in such other manner as the Corporation may
provide). This Agreement is governed by applicable federal law
and, to the extent not governed by federal law, the laws of the
Commonwealth of Virginia (without regard to conflicts of law
provisions), and is deemed executed in the Commonwealth of
Virginia.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed by attaching the typed name and title of its
authorized officer as a legally binding electronic signature as
of the day and year first above written, and Grantee has
consented to and has acknowledged receipt of the Agreement
electronically (or in such other manner as the Corporation may
provide).
FEDERAL HOME LOAN
MORTGAGE CORPORATION
/s/ Xxxx
X. Xxxxxx
By: | Xxxx X. Xxxxxx |
Executive Vice President
Human Resources
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