Freddie Mac 2010 Annual Report Download - page 67

Restrictions Under our Charter
Without regard to our capital classification, we must obtain prior written approval of FHFA to make any capital
distribution that would decrease total capital to an amount less than the risk-based capital level or that would decrease core
capital to an amount less than the minimum capital level. As noted above, our capital requirements have been suspended
during conservatorship.
Restrictions Relating to Subordinated Debt
During any period in which we defer payment of interest on qualifying subordinated debt, we may not declare or pay
dividends on, or redeem, purchase or acquire, our common stock or preferred stock. Our qualifying subordinated debt
provides for the deferral of the payment of interest for up to five years if either: (a) our core capital is below 125% of our
critical capital requirement; or (b) our core capital is below our statutory minimum capital requirement, and the Secretary of
the Treasury, acting on our request, exercises his or her discretionary authority pursuant to Section 306(c) of our charter to
purchase our debt obligations. FHFA has directed us to make interest and principal payments on our subordinated debt, even
if we fail to maintain required capital levels. As a result, the terms of any of our subordinated debt that provide for us to
defer payments of interest under certain circumstances, including our failure to maintain specified capital levels, are no
longer applicable. As noted above, our capital requirements have been suspended during conservatorship.
Restrictions Relating to Preferred Stock
Payment of dividends on our common stock is also subject to the prior payment of dividends on our 24 series of
preferred stock and one series of senior preferred stock, representing an aggregate of 464,170,000 shares and
1,000,000 shares, respectively, outstanding as of December 31, 2010. Payment of dividends on all outstanding preferred
stock, other than the senior preferred stock, is subject to the prior payment of dividends on the senior preferred stock. On
December 31, 2010, we paid dividends of $1.6 billion in cash on the senior preferred stock at the direction of the
Conservator. We did not declare or pay dividends on any other series of preferred stock outstanding in 2010.
Recent Sales of Unregistered Securities
The securities we issue are “exempted securities” under the Securities Act of 1933, as amended. As a result, we do not
file registration statements with the SEC with respect to offerings of our securities.
Following our entry into conservatorship, we suspended the operation of, and ceased making grants under, equity
compensation plans. Under the Purchase Agreement, we cannot issue any new options, rights to purchase, participations, or
other equity interests without Treasury’s prior approval. However, grants outstanding as of the date of the Purchase
Agreement remain in effect in accordance with their terms.
No stock options were exercised during the three months ended December 31, 2010. However, restrictions lapsed on
23,137 restricted stock units.
See “NOTE 13: FREDDIE MAC STOCKHOLDERS’ EQUITY (DEFICIT)” for more information.
Issuer Purchases of Equity Securities
We did not repurchase any of our common or preferred stock during the three months ended December 31, 2010.
Additionally, we do not currently have any outstanding authorizations to repurchase common or preferred stock. Under the
Purchase Agreement, we cannot repurchase our common or preferred stock without Treasury’s prior consent, and we may
only purchase or redeem the senior preferred stock in certain limited circumstances set forth in the Certificate of Creation,
Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions of
Variable Liquidation Preference Senior Preferred Stock.
Transfer Agent and Registrar
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
Telephone: [phone]
http://www.computershare.com/investors
64 Freddie Mac