FEDERAL HOME LOAN MORTGAGE CORPORATION DIRECTOR’S NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.18
NONQUALIFIED STOCK OPTION AGREEMENT between the Federal Home
Loan Mortgage Corporation (the “Corporation”) and
(the “Grantee”), pursuant to the Federal Home Loan
Mortgage Corporation 1995 Directors’ Stock Compensation
Plan as amended and restated effective May 14, 1998, as
subsequently amended (the “Plan”):
1. Grant.
(a) Nonqualified Stock Option. The
Corporation has granted to the Grantee a Nonqualified Stock
Option (the “Option”) to purchase
( ) shares of the Common
Stock of the Corporation ($0.21 par value) at a purchase price
of
$
per share. The Option is subject to all applicable provisions of
the Plan and to the terms and conditions set forth herein.
(b) Coordination with Plan. All of the
terms, conditions, and other provisions of the Plan are hereby
incorporated by reference into this Directors’ Nonqualified
Stock Option Agreement (the “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. Grantee
acknowledges receipt of a copy of the Plan and 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 (the “Committee”) thereunder.
2. Rights of Exercise.
(a) Exercisability and Expiration
Date. The Option may be exercised by Grantee, to
the extent it has become exercisable as provided in clause
(a)(ii) of this paragraph, in whole or in part, at any time
within a period beginning on the Date of Grant (as defined on
the last page of this Agreement) and ending on November 3,
2014 (the “Expiration Date”); provided, however, that
such Option: (i) except as provided in Paragraph 2(c),
below, may not be exercised unless the Grantee is at the time of
exercise a Director of the Corporation and shall have been such
continuously from the Date of Grant to the date of such
exercise; and (ii) shall become exercisable at the rate of
20 percent of the shares subject to the Option at the end
of the Grantee’s term of office that commenced on
November 4, 2004, and an additional 20 percent at the
end of each of the four succeeding terms of office thereafter.
(b) Form of Exercise. The Option shall be
exercised by the Grantee giving notice of such exercise to the
Corporation (or its designee) in such form as the Corporation
may require in its sole discretion. Such notice shall specify
the number of shares to be purchased and shall be accompanied by
full payment of the purchase price of such shares (the
“Exercise Price”). Payment of the Exercise Price shall
be made (i) in cash, (ii) in shares of Common Stock of
the Corporation
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having a “Fair Market Value” (as defined in the Plan)
on the date of exercise at least equal to such purchase price,
or (iii) in a combination of cash and shares of the
Corporation’s Common Stock; provided, however, that shares
acquired upon exercise of an option during the six months prior
to the exercise date of the Option may not be used to pay the
Exercise Price except upon approval of the Committee. In
addition, such Exercise Price may be paid irrevocably by
instructing such broker-dealer as may be designated by the
Corporation to sell part or all of the shares to be purchased,
simultaneously with such exercise or as soon as practicable
thereafter, at the market in a broker’s transaction (within
the meaning of section 4(4) of the Securities Act of 1933,
as amended), the proceeds of which sale shall be at least equal
to the Exercise Price for the shares to be purchased, plus
applicable transaction costs, and to remit to the Corporation an
amount equal to such Exercise Price.
(c) Termination.
(i) Death While on Board. In the event of
the death of Grantee while serving on the Board of Directors of
the Corporation (the “Board”) but prior to the
Expiration Date, any restrictions on exercise otherwise
applicable to the Option under Paragraph 2(a) shall lapse
immediately and Grantee’s Beneficiary shall have the right
to exercise the unexercised portion of the Option during the one
year period that begins as of the date of death; provided,
however that at the end of such one year period, the Option
shall cease to be exercisable.
(ii) Disability. In the event that
Grantee ceases to be a member of the Board prior to the
Expiration Date by reason of Disability (as defined in the
Plan), any restrictions on the exercise otherwise applicable to
the Option, under Paragraph 2(a), shall lapse immediately
and Grantee shall have the right to exercise the unexercised
portion of the Option at any time prior to the Expiration Date.
(iii) Retirement and Early Retirement. In
the event Grantee ceases to be a member of the Board prior to
the Expiration Date by reason of “Retirement” or
“Early Retirement” (as defined in the Plan), any
restrictions on exercise otherwise applicable to the Option
under Paragraph 2(a)(i) shall lapse immediately but
restrictions on exercise under paragraph 2(a)(ii) (if any)
shall continue, and Grantee may exercise such Option in
accordance with Paragraph 2(a)(ii) at any time prior to the
Expiration Date.
(iv) Other Terminations. In the event
that Grantee’s membership on the Board terminates prior to
the Expiration Date for any reason other than death, Disability,
Early Retirement or Retirement, the portion of the Option which,
as of the date of termination, remains subject to the exercise
restrictions shall be forfeited, and Grantee shall have three
months after the date of termination in which to exercise any
portion of the Option which, as of the date of termination, was
exercisable, during which three month period the restrictions on
exercise under Paragraph 2(a)(i) shall not apply.
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(v) Death After Leaving Board. In the
event of the death of the Grantee after Grantee’s
membership on the Board has ceased at a time that any portion of
the Option remains exercisable under clauses (ii), (iii) or
(iv) of this Paragraph 2(c), any restrictions on
exercise otherwise applicable to such portion of the Option
under Paragraph 2(a) shall lapse immediately and
Grantee’s Beneficiary shall have the right to exercise the
unexercised portion of the Option during the one year period
that begins as of the date of death; provided, however, that at
the end of such one year period, the Option shall cease to be
exercisable (the provisions of clauses (ii) and
(iii) notwithstanding).
The foregoing notwithstanding, nothing contained in this
Paragraph 2(c) shall be deemed to permit the exercise of
any portion of the Option after the Expiration Date.
3. Dividend Equivalents.
(a) Generally. Upon exercise of the
Option (in whole or in part), or, to the extent that the Option
is not exercised, upon the Expiration Date, Grantee (or the
person or persons who acquired the right to exercise the Option
upon Grantee’s death) shall be entitled to receive Dividend
Equivalents from the Corporation with respect to which the
Option is exercised or has expired, the record dates for which
dividends have occurred during the period the Option was
outstanding. Such Dividend Equivalents shall be subject to all
terms and conditions (including forfeitures) otherwise
applicable to the Option. Payment of such amounts shall be made
in cash.
(i) Relating to Cash Dividends. If the
Corporation declares and pays any cash dividend or distribution
on Common Stock, the record date of which occurs while all or a
portion of the Option remains outstanding, the Corporation shall
credit to a bookkeeping account maintained on behalf of Grantee,
as promptly as practicable after the payment date of such
dividend or distribution, a cash amount equal to the amount of
cash actually paid as a dividend or distribution per share of
Common Stock multiplied by the number of shares subject to the
Option on such record date.
(ii) Relating to Extraordinary Stock Dividends, Stock
Splits, and Other Extraordinary Dividends Resulting in
Adjustments to Options. If the Corporation
declares and pays a dividend or distribution in the form of
Common Stock payable on Common Stock, or if there occurs a
forward stock split of the Common Stock, or if there occurs
another extraordinary dividend resulting in an adjustment under
Paragraph 4(b) hereof, the record date of which occurs
while all or a portion of the Option remains outstanding, the
Corporation shall not credit any dividend equivalents to
Grantee’s bookkeeping account in connection therewith,
except as otherwise determined by the Committee in accordance
with Paragraph 4(b).
(b) Forfeiture. In the event any portion
of the Option is forfeited, the Dividend Equivalents theretofore
credited to the Grantee’s bookkeeping account in respect to
that portion of the Option shall likewise be forfeited.
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4. Miscellaneous.
(a) Limitations on Transfer. Except as
otherwise provided herein, neither the Option nor any of
Grantee’s rights or interests therein shall be assignable
or transferable by Grantee other than by will or the laws of
descent and distribution or to a designated Beneficiary in the
event of a Grantee’s death. Except as otherwise provided
herein, during the lifetime of Grantee the Option shall be
exercisable only by Grantee (or his guardian or legal
representative). The Option shall not be pledged or encumbered
in any way and shall not be subject to execution, attachment or
similar legal process. Other provisions of this Agreement
notwithstanding, the portion of the Option which is not at that
time subject to risk of forfeiture upon termination of service
of the Grantee to the Corporation shall be transferable, solely
for estate-planning purposes, if and to the extent that rules
adopted by the Compensation and Human Resources Committee of the
Board and then in effect (“Rules”) permit such
transfers, and subject to the terms and conditions set forth in
such Rules. In addition, each agreement evidencing an option
granted to the Grantee under the Plan (as amended and restated)
and outstanding at the Date of Grant of the Option is hereby
amended by inserting the preceding sentence as additional text
at the end of any provision setting forth limitations on
transferability.
(b) Adjustments. In the event of any
change in the Common Stock of the Corporation by reason of any
recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase or exchange of shares, stock
dividend, or other similar corporate transaction or event that
affects the Common Stock such that the Board determines that an
adjustment to the Option is appropriate, then the Board will
adjust the terms of the Option in a manner that is equitable to
prevent substantial dilution or enlargement of the rights of the
Grantee. Any such adjustment shall be effective and binding for
all purposes under the Option when the Board gives notice of
such adjustment to the Grantee.
(c) 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 Option prior to the
valid exercise of the Option.
(d) Legal Effect. This Agreement shall be
legally binding when executed by the Corporation and delivered
to the Grantee.
(e) General. 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 Option, and supersedes
any prior agreements or documents with respect to the Option. No
amendment, alteration, suspension, discontinuation or
termination of this Agreement which may impose any additional
obligation upon the Corporation or impair the rights of the
Grantee with respect to the Option shall be valid unless in each
instance such
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amendment, alteration, suspension, discontinuation or
termination is expressed in a written instrument duly executed
in the name and on behalf of the Corporation and by the Grantee.
Date of Grant: November 4, 2004
FEDERAL HOME LOAN
MORTGAGE CORPORATION
/s/ Xxxxxxx
X. Xxxxx
| By: | Xxxxxxx X. Xxxxx |
Senior Vice President
Human Resources
