Preview | Employment Agreement | Franklin D. Raines

TABLE OF CONTENTS


		Page

ARTICLE 1	DEFINITIONS		2
Section 1.1.	Agreement Term		2
Section 1.2.	Annual Incentive Plan		2
Section 1.3.	Award Period		2
Section 1.4.	Base Salary		2
Section 1.5.	Board		2
Section 1.6.	Cause		2
Section 1.7.	Compete		2
Section 1.8.	Corporation		3
Section 1.9.	Effective Date		3
Section 1.10.	Employee		3
Section 1.11.	Employment		3
Section 1.12.	Executive Pension Plan		3
Section 1.13.	Existing Agreement		3
Section 1.14.	Good Reason		3
Section 1.15.	OFHEO		3
Section 1.16.	Option		3
Section 1.17.	Performance Share Award		4
Section 1.18.	Qualifying Termination		4
Section 1.19.	Restricted Stock		4
Section 1.20.	Retirement		4
Section 1.21.	Serious Illness or Disability		4
Section 1.22.	Stock Compensation Plan		4
Section 1.23.	Surviving Spouse		4
Section 1.24.	Termination of Employment		4
ARTICLE 2	PERIOD OF EMPLOYMENT AND DUTIES		5
Section 2.1.	Period of Employment		5
Section 2.2.	Duties		5
ARTICLE 3	COMPENSATION AND BENEFITS		6
Section 3.1.	Base Salary		6
Section 3.2.	Benefits		6
ARTICLE 4	TERMINATION OF EMPLOYMENT		10
Section 4.1.	Termination of Employment By the Corporation		10
Section 4.2.	Termination of Employment By Employee		12
Section 4.3.	Other Termination of Employment		13
Section 4.4.	Resignation as Member of the Board of Directors		13
ARTICLE 5	COMPENSATION AND BENEFITS FOLLOWING TERMINATION OF EMPLOYMENT		14


Section 5.1.	Termination of Employment (Other Than By Reason of Death)	14
Section 5.2.	Voluntary Termination Pursuant to Section 4.2(c)	14
Section 5.3.	Termination for Cause	15
Section 5.4.	Qualifying Termination (Other Than by Reason Of Death)	16
Section 5.5.	Termination of Employment By Reason of Death	19
ARTICLE 6	MISCELLANEOUS	21
Section 6.1.	Noncompetition	21
Section 6.2.	Payment of Certain Expenses	22
Section 6.3.	Assignment by Employee	23
Section 6.4.	No Funding Required	23
Section 6.5.	Nondisclosure of Confidential Information	23
Section 6.6.	Waiver	24
Section 6.7.	Notice	24
Section 6.8.	Applicable Law	24
Section 6.9.	Taxes	24
Section 6.10.	Benefit	24
Section 6.11.	Entire Agreement	25
Section 6.12.	Arbitration	25
Section 6.13.	Severability	26
Section 6.14.	Regulatory Approval	26

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EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this Agreement) is between FANNIE MAE (the Corporation) and FRANKLIN D. RAINES (Employee).

WHEREAS, the Corporation and Employee are parties to an employment agreement dated as of May 21, 1998, which as extended provides for termination on June 30, 2004 (the Existing Agreement);

WHEREAS, under the termination provisions of the Existing Agreement, which were approved by OFHEO, Employee is contractually entitled to certain compensation and benefits if, among other circumstances, Employees employment is not extended;

WHEREAS, Employee has successfully discharged his responsibilities under the Existing Agreement and has earned certain vested amounts, as described in his Existing Agreement, over the course of his employment; and

WHEREAS the Corporation and Employee agree that the terms of the agreement set forth below if approved in their entirety to the extent required would provide compensation and benefits to Employee that are at least as favorable as the compensation and benefits provided under the Existing Agreement, it being understood and acknowledged, however, that absent approval by OFHEO of the provisions set forth below relating to benefits upon termination of employment, the compensation and benefits described below would not be comparable or substantially equivalent to those provided under the Existing Agreement and in the aggregate would be materially less favorable to Employee than those provided under the Existing Agreement;

NOW, THEREFORE, the Corporation and Employee agree as follows:

ARTICLE 1
DEFINITIONS

The following terms shall have the meanings set forth below:

Section 1.1. Agreement Term means the period of time beginning on the Effective Date and ending on June 30, 2007 or such later date as may be agreed to pursuant to Section 2.1.

Section 1.2. Annual Incentive Plan means the Federal National Mortgage Association Annual Incentive Plan as from time to time amended and in effect, or any successor plan.

Section 1.3. Award Period is defined in the Stock Compensation Plan.

Section 1.4. Base Salary means the dollar amount of Employees annual base compensation as determined by the Board. Employees Base Salary may be paid or provided, as the Board determines, either entirely in cash or partly in cash and partly in long-term, equity-based compensation valued as determined by the Board in its reasonable discretion.

Section 1.5. Board means the Board of Directors of the Corporation, acting without the participation of those of its members who are also officers of the Corporation.

Section 1.6. Cause is defined in Section 4.1(b).

Section 1.7. Compete means directly or indirectly to manage, operate, control, participate in the ownership, management, operation or control of, be connected as an officer, employee, partner, director, consultant or otherwise with, or have any financial interest in, (i) any business if a substantial part of such business involves originating, purchasing, selling, servicing or otherwise dealing in the residential mortgage market (provided, that Employee shall not be deemed, directly or indirectly, to Compete solely by virtue of Employees employment by a business that engages in transactions in the residential mortgage market so long as Employee himself does not participate directly in the residential mortgage business), (ii) Freddie Mac, or (iii) any part of the Federal Home Loan Bank System (including any one of the Federal Home

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