FEDERAL HOME LOAN MORTGAGE CORPORATION DIRECTOR’S NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.19
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, 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.
(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. 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 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
July 14, 2015 (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 Date of Grant 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 July 15, 2005, and an additional
25 percent at the end of each of the three 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. 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. 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, the Grantee (or the
person or persons who acquired the right to exercise the Option
upon the 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 the
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 the
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 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. 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. 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 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: July 15, 2005
FEDERAL HOME LOAN
MORTGAGE CORPORATION
By:
/s/ Xxxxxxxx
X. Xxxxx
Xxxxxxxx X. Xxxxx
Senior Vice President &
Chief Administrative Officer
