FEDERAL HOME LOAN MORTGAGE CORPORATION RESTRICTED STOCK UNITS AGREEMENT
Exhibit
10.5
This RESTRICTED STOCK UNITS AGREEMENT is dated
,
2005 (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,
as provided in Section 4 hereof, 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 which 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.
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2. Vesting and Forfeiture.
(a) Vesting Date. Subject to
Section 2(b), the vesting schedule for the grant shall be
as follows:
| • | 25% of such grant shall vest on the first anniversary of the Grant Date; | |
| • | an additional 25% of the grant shall vest on the second anniversary of the Grant Date; | |
| • | an additional 25% of the grant shall vest on the third anniversary of the Grant Date; and | |
| • | the remaining 25% of the grant shall vest on the fourth 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 (as defined in the Plan), all unvested RSUs
shall vest and become nonforfeitable immediately upon such
termination.
(c) Retirement Other Than Qualifying Normal
Retirement. If Grantee terminates employment with the
Corporation due to Retirement (as defined in the Plan) other
than a Qualifying Normal Retirement (as defined below), the
vesting of any unvested RSUs may be accelerated at the
discretion of the Committee; if the Committee does not
accelerate such expiration date and vesting, the unvested RSUs
will be forfeited.
(d) Qualifying Normal Retirement. If Grantee
terminates employment with the Corporation due to a Qualifying
Normal Retirement (as defined below), all unvested RSUs shall
continue to vest after Qualifying Normal Retirement in
accordance with the vesting schedule in Section 2(a) above.
For purposes of this Agreement, a “Qualifying Normal
Retirement” shall mean Grantee’s ceasing to be an
employee of the Corporation (whether or not such Termination is
a “Retirement” as defined in the Plan), other than a
Termination by the Corporation for Gross Misconduct (as defined
in Corporate Policy
No. 3-254.1
or 3-254, as
applicable (as may be amended or replaced from time to time) as
determined by the Chief Executive Officer or a Termination
subject to Section 2(b), at least one year after the date
of grant of the Unit, if, at the time of such Termination,
(A) Grantee has attained (or exceeded) age 62 and 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 to the
maximum extent practicable the confidential and proprietary
business information of the Corporation. The Corporation’s
remedies under any such agreement may include but shall not be
limited to the forfeiture of RSUs not theretofore settled. For
purposes of this Section 2(d), “years of service”
shall be defined (and calculated) in the same manner as
“year of qualifying service” under the Federal Home
Loan Mortgage Corporation Employees’ Pension Plan.
(e) Other Terminations. If Grantee terminates
employment with the
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Corporation for any reason other than death, Disability,
Retirement (to the extent subject to Section 2(c) above),
or Qualifying Normal Retirement, any unvested RSUs will be
forfeited.
3. Nontransferability. Until RSUs become
settleable 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, except that, if vesting occurs pursuant to
Section 2(c) and the Committee so specifies or if vesting
occurs pursuant to Section 2(d), settlement of each RSU
shall instead occur at the time the RSU would have become vested
under Section 2(a) if Grantee’s employment by the
Corporation had not terminated. Notwithstanding the previous
sentence, if Grantee completed an Election Form for Deferral of
Restricted Stock Units (the “Deferral Election”)
regarding this Agreement prior to the Grant Date, settlement of
each RSU granted hereunder shall occur in accordance with the
terms of the Deferral Election. 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 shall be automatically modified and limited to the
extent necessary such that Grantee will not be deemed to be in
constructive receipt of such income prior to the actual
settlement of the RSUs.
5. Dividend Equivalents and Adjustments.
(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 |
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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.
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 |
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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 Section 2(d), 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, 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 or the forfeitures specified in
Section 6(a).
(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
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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, 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 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
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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.
(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.
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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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