FEDERAL HOME LOAN MORTGAGE CORPORATION DIRECTORS NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.20
This NONQUALIFIED STOCK OPTION AGREEMENT is dated
September 8, 2006 (the “Grant Date”) 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, and
as may be 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. The
Option is not intended to constitute an incentive stock option
within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.
(b) Dividend Equivalents. The Corporation has not granted
the Option with related dividend equivalent rights.
(c) 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. The 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 (the
“Committee”) of the Board of Directors (the
“Board”) thereunder.
2. Rights of Exercise.
(a) Exercisability and Expiration Date. The Option may be
exercised by the Grantee, to the extent it has vested as
provided in clause (a)(ii) of this paragraph, in whole or
in part, at any time or from time to time on or before the tenth
anniversary of the Grant Date (the “Expiration Date”);
provided, however, that the 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 Grant Date to the
date of such exercise; and (ii) shall become exercisable at
the rate of 25 percent of the shares subject to the Option
at the end of the Grantee’s term of office that commenced
on the Grant Date, and an additional 25 percent at the end
of each of the three succeeding terms of office thereafter;
provided, however, that only whole shares shall vest, and
fractional shares (if any) produced by application of the
relevant percentage will be added to the number of shares
produced by application of the relevant percentage in the next
vesting period, and will vest when a whole number is attained.
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(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 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. 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
the Grantee while serving on 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 the 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 the 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 the 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 the
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 the 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 the
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 the 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 the 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 the
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. Miscellaneous.
(a) Limitations on Transfer. Except as otherwise provided
herein, neither the Option nor any of the Grantee’s rights
or interests therein shall be assignable or transferable by the
Grantee other than by will or the laws of descent and
distribution or to a designated Beneficiary in the event of the
Grantee’s death. Except as otherwise provided herein,
during the lifetime of the Grantee the Option shall be
exercisable only by the 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 Committee and then in effect (“Rules”)
permit such transfers, and subject to the terms and conditions
set forth in such Rules.
(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. The 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
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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 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.
FEDERAL HOME LOAN
MORTGAGE CORPORATION
By:
/s/ Xxxx
X. Xxxxxx
Xxxx X. Xxxxxx
Executive Vice President — Human Resources
