FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE
EX-10.18
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<TYPE>EX-10.18
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<DESCRIPTION>EX-10.18
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.18
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FANNIE MAE<BR>
STOCK COMPENSATION PLAN OF 2003<BR>
as amended December 14, 2007</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. The Plan</B>
</DIV>


<DIV style="margin-top: 6pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Purpose. </I>The purpose of the Fannie Mae Stock Compensation Plan of 2003 is to promote
the success of Fannie Mae by providing stock compensation to employees and directors that is
comparable to that provided by similar companies; to attract, motivate, retain and reward
employees of Fannie Mae; to provide incentives for high levels of individual performance and
improved financial performance of Fannie Mae; to attract, motivate and retain experienced
and knowledgeable independent directors; and to promote a close identity of interests
between directors, officers, employees and shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Definitions. </I>The following terms shall have the meanings set forth below:</TD>
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    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Award&#148; </I>shall mean an award of any Option, Stock Appreciation Right,
Restricted Stock, Performance Share Award, Stock Bonus or any other award authorized
under Section&nbsp;1.6, or any combination thereof, whether alternative or cumulative, or
an award of any Options or Restricted Stock authorized under Articles VI and VII.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Award Date&#148; </I>shall mean the date upon which the Committee takes the action
granting an Award or a later date designated by the Committee as the Award Date at
the time it grants the Award, or, in the case of Awards under Sections&nbsp;6.2 or 7.2,
the applicable dates set forth therein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Award Document&#148; </I>shall mean any writing (including in electronic or other
form approved by the Committee), which may be an agreement, setting forth the terms
of an Award that has been granted by the Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Award Period&#148; </I>shall mean the period beginning on an Award Date and ending
on the expiration date of such Award.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Beneficiary&#148; </I>shall mean the person or persons designated by a Participant
or Permitted Transferee in writing to the senior-ranking officer in the Human
Resources department of Fannie Mae to receive the benefits specified in an Award
Document and under the Plan in the event of the death of the Participant or Permitted
Transferee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Benefit Plans Committee&#148; </I>shall mean the Benefit Plans Committee
established by the Board, consisting of employees of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Board&#148; </I>shall mean the Board of Directors of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(8)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Cause&#148; </I>shall mean significant harm to Fannie Mae in connection with a
Participant&#146;s employment by Fannie Mae, by the Participant&#146;s engaging in dishonest or
fraudulent actions or willful misconduct or performing the Participant&#146;s duties in a
negligent manner, as determined by the Committee for a member of the Board who is an
officer or employee of Fannie Mae and for the General Counsel of Fannie Mae, and by
the General Counsel of Fannie Mae for all other employees; provided that no act or
failure to act will be considered &#147;willful&#148; unless it is done, or omitted to be done,
by the Participant in bad faith or without reasonable belief that the act or failure
to act was in the interest of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(9)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Change in Control Event&#148; </I>shall mean a change in the composition of a
majority of the Board elected by shareholders within 12&nbsp;months after any &#147;person&#148; (as
such term is used in Sections&nbsp;3(a)(9), 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934) is or becomes the beneficial owner, directly or indirectly, of
securities of Fannie Mae representing more than 25&nbsp;percent of the combined voting
power of the then-outstanding securities of Fannie Mae entitled to then vote
generally in the election of directors of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(10)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Code&#148; </I>shall mean the Internal Revenue Code of 1986, as amended from time
to time.</TD>
</TR>

</TABLE>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(11)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Committee&#148; </I>shall mean the Compensation Committee of the Board.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(12)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Common Stock&#148; </I>shall mean the common stock of Fannie Mae and, in the event
such common stock is converted to another security or property pursuant to Section
8.2, such other security or property.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(13)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Director Term&#148; </I>shall mean the period starting immediately following the
annual meeting of the shareholders at which directors are elected to serve on the
Board and ending at the close of the next annual meeting at which directors are
elected.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(14)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Early Retirement&#148; </I>means separation from service with Fannie Mae at or
after the attainment of age 60 (but before attainment of age 65) with five years of
service with Fannie Mae, or at an earlier age only if permitted by the Committee in
its sole discretion. For purposes of this Section&nbsp;1.2(14), a year of service shall be
determined in accordance with the Federal National Mortgage Association Retirement
Plan for Employees Not Covered Under Civil Service Retirement Law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(15)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Eligible Employee&#148; </I>shall mean any employee of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(16)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;ERISA&#148; </I>shall mean the Employee Retirement Income Security Act of 1974, as
amended.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(17)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Fair Market Value&#148; </I>shall mean the per share value of Common Stock as
determined by using the mean between the high and low selling prices of such Common
Stock, on the date of determination, as reported on the NYSE. If such prices are not
available the Fair Market Value shall be the mean of (1)&nbsp;the mean between the high
and low selling prices of the common stock, as reported on the NYSE, for the first
trading day immediately preceding the date of determination and (2)&nbsp;the mean between
the high and low selling prices of the common stock, as reported on the NYSE, for the
first trading day immediately following the date of determination. If the Common
Stock is no longer traded on the NYSE, or if for any other reason using the foregoing
methods to determine Fair Market Value is not possible or logical under the
circumstances, the Committee may determine the Fair Market Value, in good faith,
using any reasonable method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(18)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Fannie Mae&#148; </I>shall mean Fannie Mae and its successors and, where the
context requires, its Subsidiaries.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(19)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Immediate Family Member&#148; </I>shall mean, with respect to a Participant, (i)
the Participant&#146;s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, half-sibling, stepsibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law
(including adoptive relations where the adopted individual shall not have attained
the age of 18&nbsp;years prior to such adoption); (ii)&nbsp;the Participant&#146;s Domestic Partner
(as defined in Section&nbsp;2.18 of the Federal National Mortgage Association Retirement
Plan for Employees Not Covered Under Civil Service Retirement Law and determined
pursuant to the guidelines and procedures established thereunder); (iii)&nbsp;any lineal
ascendant or descendant of any individual described in (i)&nbsp;or (ii)&nbsp;above; (iv)&nbsp;any
partnership, limited liability company, association, corporation or other entity all
of whose beneficial interests (including without limitation all pecuniary interests,
voting rights and investment power) are held by and for the benefit of the
Participant and/or one or more individuals described in (i), (ii)&nbsp;or (iii)&nbsp;above; or
(v)&nbsp;any trust for the sole benefit of the Participant and/or one or more individuals
described in (i), (ii)&nbsp;or (iii)&nbsp;above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(20)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Incentive Stock Option&#148; </I>shall mean an Option that is designated as an
incentive stock option within the meaning of Section&nbsp;422 of the Code, or any
successor provision, and that otherwise satisfies the requirements of that section.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(21)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;NMD Participant&#148; </I>shall mean a Nonmanagement Director who has been granted
an Award under Article&nbsp;VI or Article&nbsp;VII.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(22)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Nonmanagement Director&#148; </I>shall mean a member of the Board who is not an
officer or employee of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(23)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Nonqualified Stock Option&#148; </I>shall mean an Option that is not an Incentive
Stock Option</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(24)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;NYSE&#148; shall mean the New York Stock Exchange.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(25)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Option&#148; </I>shall mean an option to purchase shares of Common Stock pursuant
to an Award.</TD>
</TR>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(26)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Participant&#148; </I>shall mean a Nonmanagement Director who has been granted an
Award under the Plan or an Eligible Employee who has been granted an Award under the
Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(27)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Performance Share Award&#148; </I>shall mean an Award granted under Section&nbsp;5.1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(28)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Permitted Transferee&#148; </I>shall mean (i)&nbsp;any Immediate Family Member with
respect to the Participant, and (ii)&nbsp;in the case of an Eligible Employee, any
organization described in Section 170(c) of the Code that is eligible to receive
tax-deductible, charitable contributions or any intermediary designated to exercise
an Option for the benefit of such organization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(29)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Personal Representative&#148; </I>shall mean the person or persons who, upon the
incompetence of a Participant or Permitted Transferee, shall have acquired, by legal
proceeding or power of attorney, the power to exercise the rights under the Plan, and
who shall have become the legal representative of the Participant or Permitted
Transferee, or, in the event of the death of the Participant or the Permitted
Transferee, the executor or administrator of the estate of the Participant or
Permitted Transferee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(30)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Plan&#148; </I>shall mean this Fannie Mae Stock Compensation Plan of 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(31)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Plan Termination Date&#148; </I>shall mean the tenth anniversary of the date of the
meeting at which shareholders of Fannie Mae approve the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(32)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;QDRO&#148; </I>shall mean a qualified domestic relations order as defined in
Section 414(p) of the Code or Section&nbsp;206(d)(3) of ERISA (to the same extent as if
this Plan were subject thereto) and the applicable rules thereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(33)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Restricted Stock&#148; </I>shall mean shares or bookkeeping units of Common Stock
awarded to a Participant subject to payment of the consideration, if any, and the
conditions on vesting and transfer and other restrictions as are established under
the Plan, for so long as such shares or units remain nonvested under the terms of the
applicable Award Document.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(34)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Retirement&#148; </I>shall mean, in the case of an Eligible Employee, separation
from service with Fannie Mae under conditions entitling such Eligible Employee to an
immediate annuity under the Federal National Mortgage Association Retirement Plan for
Employees Not Covered Under Civil Service Retirement Law or under the Civil Service
retirement law, whichever is applicable to such Eligible Employee, at or after the
attainment of age 65.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(35)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Stand-Alone SAR&#148; </I>shall mean a Stock Appreciation Right granted
independently of any other Award.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(36)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Stock Appreciation Right&#148; </I>shall mean a right pursuant to an Award to
receive a number of shares of Common Stock or an amount of cash, or a combination of
shares of Common Stock and cash, the aggregate amount or value of which is determined
by reference to a change in the Fair Market Value of the Common Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(37)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Stock Bonus&#148; </I>shall mean an Award of shares of Common Stock under Section
5.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(38)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;STSP&#148; </I>shall mean the Fannie Mae Securities Transactions Supervision
Program and the guidelines thereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(39)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Subsidiary&#148; </I>shall mean an organization whose employees are identified by
the Board as eligible to participate in benefit plans of Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(40)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Total Disability&#148; </I>shall mean complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which the Participant
was employed when the illness commenced or accident occurred, as determined by Fannie
Mae&#146;s independent medical consultant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(41)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;Without Consideration&#148; </I>shall mean, with respect to a transfer of an
Option, that the transfer is being made purely as a gift or donation, with no promise
or receipt of payment, goods, services or other thing of value in exchange for the
Option; provided, however, if the terms of a transfer of Options to an otherwise
Permitted Transferee require
</TD>
</TR>
</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that, upon proper notice of exercise of such Options,
(i)&nbsp;Fannie Mae may reduce the number of shares of Common
Stock or sell such number of shares of Common Stock otherwise deliverable thereunder
to the extent required to fund any additional withholding tax on behalf of the
Eligible Employee necessitated by the exercise, delivering only the balance of the
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock due upon exercise of the Option to the Permitted Transferee,
and/or (ii)&nbsp;the Permitted Transferee sell the shares of Common Stock so received upon
exercise of the Option, apply a portion of the net proceeds of the exercise to the
payment of any additional taxes, fees or other costs or expenses incurred by the donor
Eligible Employee in connection with or as a result of such transfer and then deliver
(if an intermediary) or retain (if an organization described in Section 170(c) of the
Code) the remaining net proceeds from such sales of shares of Common Stock, the
transfer shall nevertheless continue to be Without Consideration for the purposes
hereof. A distribution of an Option by an entity or trust described in Section
1.2(19)(iv) or (v)&nbsp;to an owner or beneficiary thereof shall be treated as a transfer
Without Consideration.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Administration and Authorization; Power and Procedure</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The Committee. </I>The Plan shall be administered by, and all Awards to
Eligible Employees shall be authorized by, the Committee, unless otherwise required
by law or regulation. Action of the Committee with respect to the administration of
the Plan shall be taken by majority vote or unanimous written consent of the
respective members.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Plan Awards; Interpretation; Powers. </I>Subject to the express provisions of
the Plan, the Committee shall have the authority:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to determine the Eligible Employees who will receive an Award;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to grant an Award to such Eligible Employees, to determine the
amount of and the price at which shares of Common Stock will be offered or
awarded, to determine the other specific terms and conditions of such Award
consistent with the express limits of the Plan, to establish the installments (if
any) in which such Award shall become exercisable or shall vest, and to establish
the expiration date and the events of termination of such Award;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to construe and interpret the Plan and any Award Documents, to
further define the terms used in the Plan, and to prescribe, amend and rescind
rules and regulations relating to the administration of the Plan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to cancel, modify or waive Fannie Mae&#146;s rights with respect to, or
modify, discontinue, suspend or terminate, an Award being granted or an
outstanding Award granted to or held by an Eligible Employee, subject to any
required consents under Section&nbsp;8.5;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as part of any Eligible Employee&#146;s employment agreement approved by
the Committee, to modify or change an Award;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vi)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to accelerate the vesting of, extend the ability to exercise, or
extend the term of an Award being granted or an outstanding Award; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to make all other determinations and take such other actions as
contemplated by the Plan or as may be necessary or advisable for the
administration of the Plan and the effectuation of its purposes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing, the provisions of Articles VI and VII (except
Sections&nbsp;6.7 and 7.5) relating to Nonmanagement Director Awards shall be automatic
and, to the maximum extent possible, self-effectuating. Ministerial,
non-discretionary actions with respect to implementation of the Plan shall be
performed by individuals who are officers or employees of Fannie Mae at the
direction of the senior ranking officer in the Human Resources department of
Fannie Mae. The senior ranking officer in the Human Resources department of Fannie
Mae may also direct that certain administrative functions shall be performed by
service providers outside of Fannie Mae.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Binding Determinations. </I>Any action taken by, and any inaction of, Fannie
Mae, any Subsidiary, the Board, the Committee or the Benefit Plans Committee relating
or pursuant to the Plan shall be within the absolute discretion of that entity or
body and shall be conclusive and binding upon all persons. Subject only to compliance
with the express provisions of the Plan, the Board, the Committee and the Benefit
Plans Committee may act in their absolute discretion in matters within their
authority related to this Plan.</TD>
</TR>

</TABLE>
</DIV>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Reliance on Experts. </I>In making any determination or in taking or not
taking any action under the Plan, the Board, the Committee and the Benefit Plans
Committee may obtain and may rely upon the advice of experts, including professional
advisors to Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Delegation. </I>The Committee may delegate, subject to such terms and
conditions as it may impose, some or all of its authority under the Plan to one or
more members of the Board or, for Awards to Eligible Employees below the rank of
Senior Vice President, to the senior-ranking officer in the Human Resources
department. In addition, the Committee may delegate ministerial, non-discretionary
functions to individuals who are officers, employees, contractors or vendors of
Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>No Liability. </I>No member of the Board, the Committee or the Benefit Plans
Committee, or director, officer or employee of Fannie Mae or any Subsidiary shall be
liable, responsible or accountable in damages or otherwise for any determination made
or other action taken or any failure to act by such person in connection with the
administration of the Plan, so long as such person is not determined by a final
adjudication to be guilty of willful misconduct with respect to such determination,
action or failure to act.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Indemnification. </I>To the extent permitted by law, each of the members of
the Board, the Committee and the Benefit Plans Committee and each of the directors,
officers and employees of Fannie Mae and any Subsidiary shall be held harmless and be
indemnified by Fannie Mae for any liability, loss (including amounts paid in
settlement), damages or expenses (including reasonable attorneys&#146; fees) suffered by
virtue of any determinations, acts or failures to act, or alleged acts or failures to
act, in connection with the administration of the Plan so long as such person is not
determined by a final adjudication to be guilty of willful misconduct with respect to
such determination, action or failure to act.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Participation. </I>Awards may be granted by the Committee to Eligible Employees. An
Eligible Employee who has been granted an Award may be granted, if otherwise eligible,
additional Awards if the Committee shall so determine. Nonmanagement Directors shall be
eligible to receive Awards granted automatically under Sections&nbsp;6.2 and 7.2 and Awards
granted under Sections&nbsp;6.7 and 7.5.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Shares Available for Awards.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Common Stock. </I>Subject to the provisions of Section&nbsp;8.2, the shares of
Common Stock that may be delivered under this Plan shall be shares of Fannie Mae&#146;s
authorized but unissued Common Stock, shares of Common Stock held by Fannie Mae as
treasury shares or shares of Common Stock purchased by Fannie Mae on the open market.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Number of Shares. </I>The maximum number of shares of Common Stock that may be
delivered under Awards granted to Eligible Employees and Nonmanagement Directors
under the Plan shall not exceed 40,000,000 shares, and, subject to such overall
maximum as applied to all Awards, the maximum number of shares of Common Stock that
may be delivered under Specified Stock Awards (as hereinafter defined) shall not
exceed, in the aggregate, 2,000,000 shares. For purposes of this Section&nbsp;1.5(b),</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a Specified Stock Award is (A)&nbsp;an Award granted pursuant to Article
IV (&#147;Restricted Stock Awards&#148;) that is scheduled to vest in full before the third
anniversary of the date of grant, or (B)&nbsp;an Award granted pursuant to Section&nbsp;5.1
(&#147;Grants of Performance Share Awards&#148;) with a performance cycle that ends less
than one year from the date of grant, or (C)&nbsp;an Award granted pursuant to Section
5.2 (&#147;Grants of Stock Bonuses&#148;) that is fully and immediately vested or that has
vesting or performance features described in (A)&nbsp;or (B)&nbsp;above;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an Award that is described in both Article&nbsp;IV and Section&nbsp;5.1 shall
be considered a Specified Stock Award only if it is described in both of clauses
(A)&nbsp;and (B)&nbsp;of Section&nbsp;1.5(b)(i) above;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in applying Sections&nbsp;1.5(b)(i), there shall be disregarded any
Award or Plan provision that could result in accelerated vesting of or delivery
of Common Stock under an Award; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the 40,000,000 and 2,000,000 limitations shall be subject to
adjustment in accordance with Section&nbsp;8.2.&#148;</TD>
</TR>

</TABLE>
</DIV>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Calculation of Available Shares and Replenishment. </I>A good faith estimate
of the number of shares of Common Stock subject to outstanding Awards that will be
satisfied by delivery of shares of Common Stock, plus the number of shares of Common
Stock referenced in calculating an Award paid in cash, shall be reserved from the
number of shares of Common Stock available for Awards under the Plan. The aggregate
number of shares of Common Stock delivered under the Plan plus the number of shares
of Common Stock referenced with respect to Awards paid in cash shall reduce the
number of shares of Common Stock remaining available for Awards under the Plan. If
any Award shall expire or be canceled or terminated without having been exercised in
full, or any Common Stock subject to a Restricted Stock Award or other Award shall
not vest or be delivered, the unpurchased, nonvested or undelivered shares of Common
Stock subject thereto or the shares of Common Stock referenced with respect thereto
shall again be available under the Plan. In the case of Awards granted in combination
such that the exercise of one results in a proportionate cancellation of the other,
the number of shares of Common Stock reserved for issuance shall be the greater of
the number that would be reserved if one or the other alone were outstanding. If
Fannie Mae withholds shares of Common Stock pursuant to Section&nbsp;8.4, the number of
shares of Common Stock that would have been deliverable with respect to an Award but
that are withheld pursuant to the provisions of Section&nbsp;8.4 shall be treated as
delivered, and the aggregate number of shares of Common Stock deliverable with
respect to the applicable Award and under the Plan shall be reduced by the number of
shares of Common Stock so withheld, and such withheld shares shall not be available
for additional Awards.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grant of Awards. </I>Subject to the express provisions of the Plan, the Committee shall
determine the number of shares of Common Stock subject to each Award, the price (if any) to
be paid for such shares or Award and other terms and conditions of the Award. Each Award to
an Eligible Employee shall be evidenced by an Award Document, which, if required by the
Committee, shall be signed by the Eligible Employee. Awards are not restricted to any
specified form or structure and may include, without limitation, the types of Awards set
forth in Articles II, III, IV and V or, without limitation, any other transfers of Common
Stock or any options or warrants to acquire shares of Common Stock, or any similar right
with value related to or derived from the value of Common Stock, as may be determined by the
Committee. An Award may consist of one such benefit, or two or more of them in any
combination or alternative.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Award Period. </I>Each Award and all executory rights or obligations under the related Award
Document shall expire on such date (if any) as shall be determined by the Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Limitations on Exercise and Vesting of Awards.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Provisions for Exercise. </I>An Award shall be exercisable or shall vest as
determined by the Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Procedure. </I>Any exercisable Award shall be exercised when the person
appointed by the Committee or the Committee&#146;s designee receives written notice of
exercise from the Participant or by any other method, including in electronic form,
approved by the Committee, together with satisfactory arrangements for any required
payment to be made in accordance with Sections&nbsp;2.2 or 8.4 or the terms of the Award
Document, as the case may be.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Fractional Shares. </I>Fractional share interests shall be disregarded, but
may be accumulated, or the Committee may determine that cash will be paid or
transferred in lieu of any fractional share interests.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Transferability.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>General Restrictions. </I>Awards may be exercised only by the Participant; the
Participant&#146;s Personal Representative, if any; the Participant&#146;s Beneficiary, if the
Participant has died; the recipient of an Award by will or the laws of descent and
distribution or, in the case of a Nonqualified Stock Option, pursuant to a QDRO; in
the case of a Nonqualified Stock Option, a person who was a Permitted Transferee at
the time the Option was transferred to such person; a Permitted Transferee&#146;s Personal
Representative, if any; or a Permitted Transferee&#146;s Beneficiary, if the Permitted
Transferee has died. Amounts payable or shares of Common Stock issuable under an
Award shall be paid to (or registered in the name of) the person or persons specified
by the person exercising the Award. Other than (i)&nbsp;by will or the laws of descent and
distribution or, in the case of a Nonqualified Stock Option, pursuant to a QDRO or
(ii)&nbsp;to a Permitted Transferee in the case of any Nonqualified Stock Option and
(subject to (b), (c), (d), and (e)&nbsp;below), no right or benefit under this Plan or any
Award, whether vested or not vested, shall be transferable by a Participant or
Permitted Transferee or shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge (other than to Fannie Mae),
and any such attempted action shall be void.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fannie Mae shall disregard any attempt at transfer, assignment or other alienation
prohibited by the preceding sentences and shall pay or deliver such cash or shares of
Common Stock only in accordance with the provisions of this Plan. The designation of a
Beneficiary hereunder shall not constitute a transfer for these purposes.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Tax Withholding. </I>An Eligible Employee may not transfer Options
(&#147;Transferred Options&#148;) to a Permitted Transferee, other than a charitable
organization described in Section&nbsp;1.2(28)(ii), unless the Eligible Employee agrees to
retain, and not to exercise until the exercise of the Transferred Options, at least
50&nbsp;percent of the exercisable Options held by the Eligible Employee with the same
exercise price and expiration date as the Transferred Options. The condition set
forth in the first sentence of this Section&nbsp;1.9(b), however, may be waived at any
time by (A)&nbsp;the Chairman of the Committee in the case of an Eligible Employee who is
either a member of the Board or the senior-ranking officer in the Human Resources
department of Fannie Mae, or (B)&nbsp;the senior-ranking officer in the Human Resources
department of Fannie Mae in the case of any other Eligible Employee, and, as a
condition of such waiver, the Chairman of the Committee or the senior-ranking officer
in the Human Resources department of Fannie Mae, as the case may be, may specify
other steps that the Eligible Employee must take to provide for the collection by
Fannie Mae of all federal, state, local and other taxes required by law to be
withheld upon the exercise of such Transferred Options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Notice of Transfer. </I>A transfer of an Option to a Permitted Transferee
shall not be effective unless, prior to making the transfer, the transferor (i)
provides written notice of the transfer to (A)&nbsp;the Chairman of the Committee in the
case of a transfer by a Participant who is either a member of the Board, the
senior-ranking officer in the Human Resources department of Fannie Mae or the General
Counsel of Fannie Mae (or a transfer by a Permitted Transferee of an Option
originally granted to a member of the Board or to the senior-ranking officer in the
Human Resources department of Fannie Mae), or (B)&nbsp;the senior-ranking officer in the
Human Resources department of Fannie Mae in the case of any other transfer, and (ii)
certifies in writing to the Chairman of the Committee or the senior-ranking officer
in the Human Resources department of Fannie Mae, as the case may be, that the
transfer will be Without Consideration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Approval of Transfer. </I>A transfer of an Option to a charitable organization
described in section 1.2(28)(ii) shall not be effective unless, after receiving the
notice described in (c)&nbsp;above, the Chairman of the Committee or, after consultation
with the General Counsel of Fannie Mae, the senior-ranking officer in the Human
Resources department of Fannie Mae, as the case may be, either approves the proposed
transfer in writing or does not disapprove the proposed transfer in writing within
ten business days after receipt of such notice. The Chairman of the Committee or,
after consultation with the General Counsel of Fannie Mae, the senior-ranking officer
in the Human Resources department of Fannie Mae, as the case may be, may disapprove a
proposed transfer if he or she determines, in his or her good faith judgment, that
(i)&nbsp;the proposed Permitted Transferee has philosophies, purposes, policies,
objectives, goals or practices inconsistent with those of Fannie Mae or (ii)&nbsp;the
Participant has not taken such steps as may be necessary or appropriate to provide
for the collection by Fannie Mae of all federal, state, local and other taxes
required by law to be withheld upon exercise of the Option.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Transfer of Nonvested Options. </I>A nonvested Option may be transferred only
to an Immediate Family Member described in section 1.2(28)(i) and only with the prior
consent of (A)&nbsp;the Chairman of the Committee in the case of a Participant who is
either a member of the Board, the senior-ranking officer in the Human Resources
department of Fannie Mae or the General Counsel of Fannie Mae, or (B)&nbsp;after
consultation with the General Counsel, the senior-ranking officer in the Human
Resources department of Fannie Mae, after consultation with the General Counsel of
Fannie Mae, in the case of any other Participant.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Section&nbsp;</I><I>83(b)</I><I> Elections. </I>If a Participant shall file an election with the Internal
Revenue Service under Section 83(b) of the Code to include the value of any Award in the
Participant&#146;s gross income while the Award remains subject to restrictions, the Participant
shall promptly furnish Fannie Mae with a copy of such election.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>II. Options</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grants. </I>One or more Options may be granted under this Article&nbsp;II to any Eligible
Employee. Each Option granted may be either an Incentive Stock Option or a Nonqualified
Stock Option.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Option Price.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Pricing Limits. </I>The exercise price for shares of Common Stock covered by an Option
shall be determined by the Committee at the time of the Award, but shall not be less than
100&nbsp;percent of the Fair Market Value of the Common Stock on the Award Date.
Notwithstanding any provision of the Plan, an Option may not be modified so as to reduce
the exercise price of the Option.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Payment Provisions. </I>The exercise price for any shares of Common Stock purchased on
exercise of an Option granted under this Article&nbsp;II shall be paid in full at the time of
each exercise in one or a combination of the following methods: (i)&nbsp;by electronic funds
transfer; (ii)&nbsp;by check payable to the order of Fannie Mae; (iii)&nbsp;by notice and third
party payment; (iv)&nbsp;by the delivery of shares of Common Stock already owned by the
Participant; or (v)&nbsp;by cashless exercise, or any other method, if permitted by law and
authorized by the Committee, in its discretion, or specified in the applicable Award
Document; provided, however, that the Committee, in its discretion, may limit the
Participant&#146;s ability to exercise an Option by delivering shares of Common Stock,
including by imposing a requirement that the Participant satisfy a minimum holding period
with respect to the shares so delivered. Shares of Common Stock used to satisfy the
exercise price of an Option shall be valued at their Fair Market Value on the date of
exercise.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Limitations on Incentive Stock Options. </I>There shall be imposed in any Award Document
relating to Incentive Stock Options such terms and conditions as from time to time are
required in order that the Option be an &#147;incentive stock option&#148; as that term is defined in
Section&nbsp;422 of the Code, or any successor provision.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Option Period.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Award Period. </I>Each Option shall specify the Award Period for which the Option is
granted and shall provide that the Option shall expire at the end of such Award Period.
The Committee may extend the Award Period by amendment of an Option or in an Eligible
Employee&#146;s employment agreement approved by the Committee. Notwithstanding the foregoing,
the Award Period with respect to an Incentive Stock Option, including all extensions,
shall not exceed ten years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Effect of Termination of Employment. </I>Notwithstanding the provisions of Section
2.4(a), unless otherwise provided by the Committee or in an Eligible Employee&#146;s
employment agreement approved by the Committee, (i)&nbsp;for a Participant whose employment is
terminated for any reason other than for Cause, Retirement, Early Retirement, Total
Disability, death or having attained at least age 55 with at least five years of service
and is not covered by Section&nbsp;2.5(d), an Option shall expire on the earlier to occur of
(A)&nbsp;the end of the Award Period or (B)&nbsp;the date three months following the Participant&#146;s
termination of employment, (ii)&nbsp;for a Participant whose employment is terminated and is
covered by Section&nbsp;2.5(d), an Option shall expire on the earlier to occur of (A)&nbsp;the end
of the Award Period or (B)&nbsp;the date 12&nbsp;months following the Participant&#146;s termination of
employment, (iii)&nbsp;for a Participant whose employment is terminated by reason of
Retirement, Early Retirement, Total Disability, death or having attained at least age 55
with at least five years of service, an Option shall expire on the end of the Award
Period and (iv)&nbsp;for a Participant whose employment is terminated by Fannie Mae for Cause,
an Option shall expire upon the Participant&#146;s termination.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Death of Permitted Transferee. </I>Unless otherwise provided by the Committee, an
Option held by a Permitted Transferee shall expire on the earlier of the date on which it
would expire pursuant to Section&nbsp;2.4(a) or (b)&nbsp;or the date 12&nbsp;months following the
Permitted Transferee&#146;s death.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Vesting; Forfeiture.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Vesting Generally. </I>An Option shall be exercisable and vested upon such terms and
conditions or pursuant to such schedule as the Committee shall determine. Except as
otherwise provided in this Section&nbsp;2.5 or unless otherwise specified by the Committee or
in an Eligible Employee&#146;s employment agreement approved by the Committee, an Option that
is not vested upon a Participant&#146;s termination of employment shall be forfeited. If a
Participant&#146;s employment is terminated by Fannie Mae for Cause, an Option that is not
vested upon the Participant&#146;s termination shall be forfeited.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Change in Control. </I>The Committee, in its discretion, may grant Options that by
their terms shall become immediately exercisable and fully vested upon a Change in
Control Event.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Retirement, Early Retirement, Total Disability or Death. </I>Unless otherwise
specified by the Committee, an Option shall become immediately exercisable and fully
vested upon the Participant&#146;s Total Disability or the Participant&#146;s termination of
employment by reason of Retirement, Early Retirement or death.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Vesting Upon Termination with Separation Agreements. </I>Notwithstanding the
foregoing, (i)&nbsp;for a Participant who, prior to the termination of employment, executes a
separation agreement with Fannie Mae pursuant to Fannie Mae&#146;s Voluntary Separation
Agreement program (&#147;VSA&#148;) or Voluntary Separation Option program (&#147;VSO&#148;), one-half of the
<I>portion </I>of each Award that would have vested within 12&nbsp;months of the date of such
Participant&#146;s termination of employment shall become immediately exercisable and fully
vested upon the Participant&#146;s termination; (ii)&nbsp;for a Participant who accepts Fannie
Mae&#146;s offer to terminate employment voluntarily and, prior to such termination, executes
a separation agreement with Fannie Mae pursuant to an Elective Severance Window under the
Federal National Mortgage Association Discretionary Severance Benefit Plan, the portion
of each Award that would have vested within 12&nbsp;months of the date of such Participant&#146;s
termination of employment by Fannie Mae, and one-half of the portion of each Award that
would have vested within 13-24&nbsp;months of the date of termination, shall become
immediately exercisable and fully vested upon termination; and (iii)&nbsp;for a Participant
who, prior to the termination of his or her employment, executes a separation agreement
with Fannie Mae pursuant to a Displacement Program under the Federal National Mortgage
Association Discretionary Severance Benefit Plan or pursuant to the Fannie Mae Individual
Severance Plan, the portion of each Award that would have vested within 12&nbsp;months of the
date of termination of employment shall become immediately exercisable and fully vested
upon the Participant&#146;s termination. If the Committee approves an employment agreement
with an Eligible Employee that provides for vesting of certain Awards upon the employee&#146;s
termination, such Awards shall vest in accordance with the terms of such Eligible
Employee&#146;s employment agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>&#147;EPS Challenge Grants.&#148; </I>Section&nbsp;2.5(d) shall not apply to Options granted under
the &#147;EPS Challenge Grant&#148; <I>program </I>established by the Board on January&nbsp;18, 2000 or, if so
provided by the Committee, to Options granted under other special incentive Option
programs.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Option Amendments or Waiver of Restrictions. </I>Subject to Sections&nbsp;1.5 and 8.5 and the
specific limitations on Awards contained in the Plan, the Committee from time to time may
authorize, generally or in specific cases only, for the benefit of any Participant who is an
Eligible Employee, any adjustment in the vesting schedule, the restrictions upon or the term
of an Award granted under this Article&nbsp;II by amendment, waiver or other legally valid means.
The amendment or other action may provide, among other changes, for a longer or shorter
vesting or exercise period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Gain Deferral. </I>Any Participant who is eligible to participate in the Fannie Mae Stock
Option Gain Deferral Plan may elect to exercise a Nonqualified Stock Option under the
provisions of such plan.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>III. Stock Appreciation Rights</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grants. </I>In its discretion, the Committee may grant to any Eligible Employee Stock
Appreciation Rights either concurrently with the grant of another Award or in respect of an
outstanding Award, in whole or in part, or may grant to any Eligible Employee Stand-Alone
SARs. Any Stock Appreciation Right granted in connection with an Incentive Stock Option
shall contain such terms as may be required to comply with the provisions of Section&nbsp;422 of
the Code (or any successor provision). Each Stand-Alone SAR shall specify the Award Period
for which the Stand-Alone SAR is granted and shall provide that the Stand-Alone SAR shall
expire at the end of such Award Period. The Committee may extend the Award Period by
amendment of a Stand-Alone SAR.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Exercise of Stock Appreciation Rights.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Related Awards. </I>Unless the Award Document or the Committee otherwise provides, a
Stock Appreciation Right related to another Award shall be exercisable at such time or
times, and to the extent, that the related Award shall be exercisable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Stand-Alone SARs. </I>Stand-Alone SARs shall be exercisable and vest upon such terms
and conditions or pursuant to such schedule as the Committee shall determine at the time
of the Award. Unless otherwise provided by the Committee or in</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an Eligible Employee&#146;s employment agreement approved by the Committee, (i)&nbsp;in the case of
a Participant&#146;s termination of employment for Cause, Stand-Alone SARs shall expire and no
longer be exercisable upon the Participant&#146;s termination; (ii)&nbsp;in the case of a
Participant&#146;s Total Disability or a Participant&#146;s termination of employment by reason of
Retirement, Early Retirement or death or having attained at least age 55 with at least
five years of service, Stand-Alone SARs shall become immediately exercisable and fully
vested upon the Participant&#146;s Total Disability or termination of employment, and
Stand-Alone SARs shall expire and no longer be exercisable at the end of the Award Period;
and (iii)&nbsp;in the case of a Participant&#146;s termination of employment for any reason other
than for Cause, Retirement, Early Retirement, Total Disability or death or having attained
at least age 55 with at least five years of service, Stand-Alone SARs shall expire and no
longer be exercisable on the earlier to occur of (A)&nbsp;the end of the Award Period or (B)
the date three months following the Participant&#146;s termination. The Committee, in its
discretion, may grant Stand-Alone SARs that by their terms shall become immediately
exercisable and fully vested upon a Change in Control Event.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Payment.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Amount. </I>Unless the Committee otherwise provides, upon exercise of a Stock
Appreciation Right and surrender of the appropriate exercisable portion of any related
Award, the Participant shall be entitled to receive payment of an amount determined by
multiplying</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the difference obtained by subtracting the exercise price per share of
Common Stock under the related Award (if applicable) or the initial share value
specified in the Award from the Fair Market Value on the date of exercise, by</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of shares of Common Stock with respect to which the
Participant is exercising the Stock Appreciation Right.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Form of Payment. </I>The Committee, in its discretion, shall determine the form in
which payment shall be made of the amount determined under paragraph (a)&nbsp;above, which may
be solely in cash, solely in shares of Common Stock (valued at their Fair Market Value on
the date of exercise of the Stock Appreciation Right), or partly in shares and partly in
cash. If the Committee permits the Participant to elect to receive cash or shares of
Common Stock (or a combination thereof) on such exercise, any such election shall be
subject to such conditions as the Committee may impose.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>IV. Restricted Stock Awards</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grants. </I>The Committee, in its discretion, may grant one or more Restricted Stock Awards
to any Eligible Employee. Each Restricted Stock Award Document shall specify the number of
shares or units of Common Stock to be issued to the Participant, the date of such issuance,
the consideration for the Restricted Stock, if any, to be paid by the Participant, the
restrictions imposed on the Restricted Stock, and the conditions of release or lapse of such
restrictions. Promptly after the lapse of restrictions on Restricted Stock, shares of Common
Stock equal to the number of shares or units as to which the restrictions have lapsed (or
such lesser number as may be permitted pursuant to Section&nbsp;8.4) shall be delivered or
credited to the Participant or other person entitled under the Plan to receive the shares.
The Participant or such other person shall deliver to Fannie Mae such further assurance and
documents as the Committee may require.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Restrictions.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Pre-Vesting Restraints. </I>Except as provided in Section&nbsp;1.9, shares or units of
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise disposed of
or encumbered, either voluntarily or involuntarily, until the restrictions have lapsed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Dividend and Voting Rights. </I>Unless otherwise provided in the applicable Award
Document, a Participant receiving shares (but not units) of Restricted Stock shall be
entitled to cash dividend and voting rights for all shares of Common Stock issued even
though they are not vested, provided that such rights shall terminate immediately as to
any shares of Restricted Stock that cease to be eligible for vesting. If provided in the
applicable Award Document, a Participant receiving units of Restricted Stock shall be
entitled to cash dividend and voting rights for such units even though they are not
vested, provided that such rights shall terminate immediately as to any units of
Restricted Stock that cease to be eligible for vesting.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Accelerated Vesting. </I>Unless otherwise provided by the Committee or in an Eligible
Employee&#146;s employment agreement approved by the Committee, the restrictions on Restricted
Stock shall lapse upon the Participant&#146;s Total Disability or termination of employment by
reason of Retirement, Early Retirement, or death, and, if provided in the applicable
Award Document, restrictions on Restricted Stock held for more than one year from the
Award Date by Participants shall lapse upon a Change in Control Event.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Vesting Upon Termination with Separation Agreements. </I>Notwithstanding the
foregoing, (i)&nbsp;for a Participant who, prior to the termination of employment, executes a
separation agreement with Fannie Mae pursuant to Fannie Mae&#146;s Voluntary Separation
Agreement program (&#147;VSA&#148;) or Voluntary Separation Option program (&#147;VSO&#148;), one-half of the
portion of each Award of Restricted Stock that would have vested within 12&nbsp;months of the
date of such Participant&#146;s termination of employment shall become fully vested upon the
Participant&#146;s termination; (ii)&nbsp;for a Participant who accepts Fannie Mae&#146;s offer to
terminate employment voluntarily and, prior to such termination, executes a separation
agreement with Fannie Mae pursuant to an Elective Severance Window under the Federal
National Mortgage Association Discretionary Severance Benefit Plan, the portion of each
Award of Restricted Stock that would have vested within 12&nbsp;months of the date of such
Participant&#146;s termination of employment by Fannie Mae, and one-half of the portion of
each Award of Restricted Stock that would have vested within 13-24&nbsp;months of the date of
termination, shall become fully vested upon termination; and (iii)&nbsp;for a Participant who,
prior to the termination of his or her employment, executes a separation agreement with
Fannie Mae pursuant to a Displacement Program under the Federal National Mortgage
Association Discretionary Severance Benefit Plan or pursuant to the Fannie Mae Individual
Severance Plan, the portion of each Award of Restricted Stock that would have vested
within 12&nbsp;months of the date of termination of employment shall become fully vested upon
the Participant&#146;s termination. If the Committee approves an employment agreement with an
Eligible Employee that provides for vesting of certain Awards upon the employee&#146;s
termination, such Awards shall vest in accordance with the terms of such Eligible
Employee&#146;s employment agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Forfeiture. </I>Unless otherwise provided by the Committee or in an Eligible
Employee&#146;s employment agreement approved by the Committee, Restricted Stock as to which
the restrictions have not lapsed in accordance with the provisions of the Award or
pursuant to Section&nbsp;4.2(c) shall be forfeited upon a Participant&#146;s termination of
employment. Upon the occurrence of any forfeiture of Restricted Stock, the forfeited
Restricted Stock shall be automatically transferred to Fannie Mae without payment of any
consideration by Fannie Mae and without any action by the Participant.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>V. Performance Share Awards and Stock Bonuses</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grants of Performance Share Awards.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Committee, in its discretion, may grant Performance Share Awards to Eligible
Employees. An Award shall specify the maximum number of shares of Common Stock (if any)
subject to the Performance Share Award and its terms and conditions. The Committee shall
establish the specified period (a &#147;performance cycle&#148;) for the Performance Share Award
and the measure(s) of the performance of Fannie Mae (or any part thereof) or the Eligible
Employee. The Committee, during the performance cycle, may make such adjustments to the
measure(s) of performance as it may deem appropriate to compensate for, or reflect, any
significant changes that may occur in accounting practices, tax laws and other laws or
regulations that alter or affect the computation of the measure(s). The Award Document
shall specify how the degree of attainment of the measure(s) over the performance cycle
is to be determined.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In its discretion, the Committee may grant Performance Share Awards which, by their
terms, provide that, upon a Change in Control Event, payments shall be made with respect
to a Performance Share Award held for more than one year from the Award Date by an
Eligible Employee, based on the assumption that the performance achievement specified in
the Award would have been attained by the end of the performance cycle. If the Committee
approves an employment agreement with an Eligible Employee that provides for payments
with respect to a Performance Share Award upon the employee&#146;s termination, payments shall
be made with respect to such Performance Share Awards in accordance with the terms of
such Eligible Employee&#146;s employment agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise provided by the Committee or in an Eligible Employee&#146;s employment
agreement approved by the Committee, if an Eligible Employee&#146;s employment is terminated
because of Retirement, Total Disability or Early Retirement prior to the end of the
performance cycle, but at least 18&nbsp;months after the first day of the performance cycle,
such Eligible Employee shall receive a pro rata Performance Share Award, calculated as if
the Eligible Employee were employed by Fannie Mae at the end of the performance cycle but
adjusted to reflect the portion of the performance cycle</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in which the Participant actually was employed by Fannie Mae, payable in full as soon as
practicable after the end of the performance cycle.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise provided by the Committee or in an Eligible Employee&#146;s employment
agreement approved by the Committee, if an Eligible Employee&#146;s employment is terminated
because of the Eligible Employee&#146;s death prior to the end of the performance cycle, but
at least 18&nbsp;months after the first day of the performance cycle, the Eligible Employee
shall receive a pro rata Performance Share Award, payable in full as soon as practicable
after the Eligible Employee&#146;s death, in an amount that is based upon the Committee&#146;s
assessment of the likelihood of Fannie Mae&#146;s success in attaining the performance
measures by the end of the performance cycle and the portion of the performance cycle
during which the Eligible Employee was employed by Fannie Mae, and calculated using the
date of the Eligible Employee&#146;s death as the date for establishing the Fair Market Value
of such Award.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise provided by the Committee or in an Eligible Employee&#146;s employment
agreement approved by the Committee, if, after the end of the performance cycle, an
Eligible Employee&#146;s employment is terminated because of the Eligible Employee&#146;s
Retirement, Total Disability, death or Early Retirement, all portions of the Eligible
Employee&#146;s Performance Share Award not yet paid shall be paid in full as soon as
practicable thereafter, except to the extent subject to a deferral election under Section
5.3.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise provided by the Committee or in an Eligible Employee&#146;s employment
agreement approved by the Committee, any Eligible Employee who is not employed by Fannie
Mae on the last day of a performance cycle or on the date of a scheduled payment of any
portion of a Performance Share Award (determined without regard to any deferral election
under Section&nbsp;5.3), other than by reason of the Eligible Employee&#146;s Retirement, Total
Disability, death or Early Retirement, shall forfeit such payment and all future payments
with respect to such performance cycle.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Grants of Stock Bonuses. </I>The Committee may grant a Stock Bonus to any Eligible Employee
in such amounts of shares of Common Stock and on such terms and conditions as determined
from time to time by the Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Deferred Payments. </I>The Committee, in its discretion, may permit any Eligible Employee to
defer receipt of a Performance Share Award. Such deferral shall be subject to such further
conditions, restrictions or requirements as the Committee may impose, subject to any vested
rights of the Eligible Employee.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>VI. Nonmanagement Director Options</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Participation. </I>Awards under this Article&nbsp;VI shall be made only to Nonmanagement Directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Annual Option Grants.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Annual Awards. </I>On the first day of the Director Term in 2004 and in each
subsequent year prior to the Plan Termination Date (each of which shall be the Award
Date), there shall be granted automatically (without any action by the Board or the
Committee) to each Nonmanagement Director then in office a Nonqualified Stock Option to
purchase 4,000 shares of Common Stock. Any Nonmanagement Director appointed or elected to
office during a Director Term shall be granted automatically (without any action by the
Board or the Committee) a Nonqualified Stock Option (the Award Date of which shall be the
date such person takes office) to purchase the nearest whole number of shares of Common
Stock equal to 4,000 multiplied by the number of partial or full calendar months
remaining in the Director Term in which the Award is granted divided by 12.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Maximum Number of Shares. </I>Annual grants that would otherwise cause the total
Awards under this Plan to exceed the maximum number of shares of Common Stock under
Section&nbsp;1.5(b) shall be prorated to come within such limitation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Discontinuance of Annual Option Grants. </I>Notwithstanding Section&nbsp;6.2(a), no
additional annual grants of Nonqualified Stock Options pursuant to Section&nbsp;6.2(a) shall
be made to Nonmanagement Directors after the grants made with respect to the annual
meeting of the shareholders held in 2004.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Option Price. </I>The exercise price per share of Common Stock covered by each Option
granted under Sections&nbsp;6.2 or 6.7 shall be 100&nbsp;percent of the Fair Market Value on the Award
Date. Notwithstanding any provision of the Plan, an Option may not be modified so as to
reduce the exercise price of the Option. The exercise price of any Option granted under this
Article shall be paid in full at the time of each purchase, in cash or by check or in shares
of Common Stock valued at their Fair Market Value on the date of exercise of the Option, or
partly in shares and partly in cash.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">6.4 <I>Option Period and Ability to Exercise. </I>Each Option granted under Sections&nbsp;6.2 or 6.7
shall provide that the Option shall expire ten years from the Award Date and shall be
subject to earlier termination as provided below. Each Option granted under Sections&nbsp;6.2
or 6.7 shall vest and become exercisable over a four-year period at a rate of 25&nbsp;percent
each year on the anniversary of the date of grant.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Termination of Directorship</I>. If an NMD Participant&#146;s services as a member of the Board
terminate for any reason, any Option granted under Sections&nbsp;6.2 or 6.7 held by the NMD
Participant shall immediately vest and may be exercised until the earlier of one year after
the date of such termination or the expiration of the stated term of the Option.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Adjustments</I>. Options granted under Sections&nbsp;6.2 or 6.7 shall be subject to adjustment as
provided in Section&nbsp;8.2, but only to the extent that such adjustment is based on objective
criteria and is consistent with adjustments to Options or other Awards held by persons other
than Nonmanagement Directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Additional Option Awards</I>. Under this Article&nbsp;VI, the Committee may grant additional
Option Awards to Nonmanagement Directors as appropriate, based on market compensation data
or other information or circumstances.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>VII. Nonmanagement Director Restricted Stock</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Participation</I>. Awards under this Article&nbsp;VII shall be made only to Nonmanagement
Directors. Neither the Plan nor any action taken under the Plan shall give any NMD
Participant the right to be reappointed or renominated to serve as a member of the Board.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Annual Grant of Restricted Stock.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Commencing with the annual meeting of the Company&#146;s shareholders held in 2008, each
Nonmanagement Director who is a member of the Board immediately following each annual
meeting of the shareholders of the Company, shall be granted, immediately following such
annual meeting, a Restricted Stock Award in the form of units (rounded down to the
nearest full unit) representing shares of Common Stock. In 2008, this grant shall have an
aggregate Fair Market Value on the date of grant equal to $135,000. In future years, the
amount of the grant shall be equal to $135,000 or such other amount to be determined by
the Board prior to the annual meeting. The Committee may determine, prior to the
scheduled grant date, to substitute Restricted Stock in the form of restricted shares of
Common Stock for the Restricted Stock units granted under Section&nbsp;7.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Nonmanagement Director who is newly appointed or elected after the annual meeting
of the Company&#146;s shareholders held in 2008 and between annual meetings of the Company&#146;s
shareholders shall be granted upon such appointment or election a pro rata portion of the
Award of Restricted Stock that would have been granted to such newly appointed or elected
Nonmanagement Director under Section&nbsp;7.2(a) had he or she been a member of the Board on
the date of the annual meeting of the shareholders of the Company occurring immediately
prior to his or her election or appointment. The pro rata portion shall be determined by
multiplying the number of units or shares of Restricted Stock that would have been
awarded had the newly appointed or elected Nonmanagement Director been a member of the
Board immediately following the annual meeting of shareholders occurring immediately
prior to his or her election or appointment by a fraction, the numerator of which is
twelve minus the number of full calendar months between such annual meeting and the
Nonmanagement Director&#146;s appointment or election, and the denominator of which is twelve,
with the resulting total rounded down to the nearest full unit or share.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Restricted Stock granted under Sections&nbsp;7.2(a) and (b)&nbsp;shall become 100&nbsp;percent
vested on the day before the annual meeting of the Company&#146;s shareholders that first
occurs following the date of grant, but in no event later than the one year anniversary
of the date of grant. The Restricted Stock granted under Sections&nbsp;7.2(a) and 7.2(b) shall
also become 100&nbsp;percent vested, to the extent not previously vested, upon termination of
the NMD Participant&#146;s membership on the Board because of (i)&nbsp;Total Disability or (ii)
death. Any Restricted Stock that is not vested (or that does not become</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>vested in accordance with the previous sentence) shall be forfeited upon the termination
of the NMD Participant&#146;s membership on the Board.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless delivery of the shares has been deferred by the NMD Participant in
accordance with Section&nbsp;7.3, promptly after, and in all events within 30&nbsp;days after the
vesting of the Restricted Stock, shares of Common Stock equal to the number of units or
shares which have become vested shall be delivered to the NMD Participant or other person
entitled under the Plan to receive the shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An NMD Participant receiving Restricted Stock units shall be entitled to receive
dividend equivalents with respect to the Restricted Stock units. Dividend equivalents
shall be paid in the same amount and at the same time as dividends are paid on the Common
Stock. An NMD Participant receiving shares of Restricted Stock shall be entitled to cash
dividend and voting rights for all shares of Common Stock issued even though they are not
vested.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The awards of Restricted Stock with a value of $75,000 in 2006 and $90,000 in 2010
provided for in Section&nbsp;7.2 as originally adopted and approved by the shareholders on May
20, 2003 shall not be granted.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Deferrals. </I>An NMD Participant may elect to defer the shares that the NMD Participant
would otherwise receive pursuant to Section&nbsp;7.2(d) by submitting an irrevocable deferral
election (in a form provided by the Company) no later than December&nbsp;31 of the year prior to
the year in which the grant of Restricted Stock is made. Dividend equivalents shall be
credited with respect to the deferred shares at the same time dividends are paid with
respect to the Common Stock, and shall be deemed to be reinvested in additional deferred
shares of Common Stock based on the Fair Market Value of the Common Stock on the date
credited. Distributions of shares deferred pursuant to this Section&nbsp;7.3 shall be paid in a
single lump-sum distribution (with cash paid for fractional shares) on the first business
day of the month that is six months following the month in which the NMD Participant
separates from service within the meaning of Section&nbsp;409A of the Code. Deferrals made
pursuant to this Section&nbsp;7.3 shall be subject to such other terms and conditions established
by the Company and set forth in a deferral election form and related documents. All
deferrals hereunder shall be accomplished in a manner consistent with the requirements of
Section&nbsp;409A of the Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Adjustments</I>. Restricted Stock granted under this Article&nbsp;VII shall be subject to
adjustment as provided in Section&nbsp;8.2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Additional Restricted Stock and Other Stock</I><U> </U><I>Awards.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>(a)</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under this Article&nbsp;VII, the Committee may grant additional Restricted Stock Awards
to Nonmanagement Directors as appropriate, based on market compensation data or other
information or circumstances. The Committee may also grant Awards consisting of deferred
Common Stock to Nonmanagement Directors who elect to convert their Nonmanagement Director
retainer payments into deferred Common Stock, in each case consistent with the
requirements of Section&nbsp;409A of the Code.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>(b)</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An NMD Participant who elects to convert his or her Nonmanagement Director retainer
payments into deferred Common Stock pursuant to Section&nbsp;7.5(a) shall submit an
irrevocable deferral election (in a form provided by the Company) no later than December
31 of the year prior to the year in which the retainer payments are earned and paid.
Notwithstanding the forgoing, a newly appointed or elected NMD Participant may make an
election to convert the NMD Participant&#146;s retainer payments for the current calendar year
into deferred Common Stock; provided, that, such election is made no later than thirty
days following the Participant&#146;s appointment or election to the Board and applies only to
payments that are earned and paid after the date of the election. Dividend equivalents
shall be credited with respect to the deferred shares at the same time dividends are paid
with respect to the Common Stock, and shall be deemed to be reinvested in additional
deferred shares of Common Stock based on the Fair Market Value of the Common Stock on the
date credited. Distributions of shares deferred pursuant to this Section&nbsp;7.5(b) shall be
paid in a single lump-sum distribution (with cash paid for fractional shares) on the
first business day of the month that is six months following the month in which the NMD
Participant separates from service within the meaning of Section&nbsp;409A of the Code.
Deferrals made pursuant to this Section&nbsp;7.5(b) shall be subject to such other terms and
conditions, consistent with Section&nbsp;409A of the Code, as may be established by the
Company and set forth in a deferral election form and related documents.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>VIII. Other Provisions</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Rights of Eligible Employees, Participants and Beneficiaries</I>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Employment Status. </I>Status as an Eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Employee or to
Eligible Employees generally.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>No Employment Contract. </I>Nothing contained in the Plan (or in any other documents
related to the Plan or to any Award) shall confer upon any Participant any right to
continue in the employ or other service of Fannie Mae or constitute any contract or
agreement of employment or other service, nor shall the Plan interfere in any way with
the right of Fannie Mae to change such person&#146;s compensation or other benefits or to
terminate the employment of such person, with or without cause; provided, however, that
nothing contained in the Plan or any related document shall adversely affect any
independent contractual right of any Participant without the Participant&#146;s consent.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Plan Not Funded. </I>Awards payable under the Plan shall be payable in shares of
Common Stock or from the general assets of Fannie Mae, and (except as provided in
Section&nbsp;1.5(c)) no special or separate reserve, fund or deposit shall be made to assure
payment of Awards. No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of Common
Stock, except as expressly otherwise provided) of Fannie Mae by reason of any Award
hereunder. Neither the provisions of the Plan (or of any related documents), nor the
creation or adoption of the Plan, nor any action taken pursuant to the provisions of the
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between Fannie Mae and any Participant, Beneficiary or other person. To the
extent that a Participant, Beneficiary or other person acquires a right to receive
payment pursuant to any Award hereunder, such right shall be no greater than the right
of any unsecured general creditor of Fannie Mae.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Adjustments</I>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Events Requiring Adjustments. </I>If any of the following events occur, the Committee
shall make the adjustments described in Section&nbsp;8.2(b): (i)&nbsp;any recapitalization, stock
split (including a stock split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of Fannie Mae, (ii)&nbsp;any
issuance of warrants or other rights to purchase shares of Common Stock or other
securities of Fannie Mae (other than to employees) at less than 80&nbsp;percent of Fair Market
Value on the date of such issuance, (iii)&nbsp;a sale of substantially all the assets of
Fannie Mae, or (iv)&nbsp;any other similar corporate transaction or event with respect to the
Common Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Adjustments to Awards. </I>If any of the events described in Section&nbsp;8.2(a) occurs,
then the Committee shall, in the manner and to the extent (if any) as it deems
appropriate and equitable, (i)&nbsp;proportionately adjust any or all of (1)&nbsp;the number and
type of shares of Common Stock that thereafter may be made the subject of Awards
(including the specific maximum set forth in Section&nbsp;1.5), (2)&nbsp;the number, amount and
type of shares of Common Stock subject to any or all outstanding Awards, (3)&nbsp;the grant,
purchase or exercise price of any or all outstanding Awards, (4)&nbsp;the shares of Common
Stock or cash deliverable upon exercise of any outstanding Awards, or (5)&nbsp;the performance
standards appropriate to any outstanding Awards; or (ii)&nbsp;make provision for a cash
payment or for the substitution or exchange of any or all outstanding Awards based upon
the distribution or consideration payable to holders of Common Stock upon or in respect
of the event; provided, however, in each case, that with respect to Awards of Incentive
Stock Options, no adjustment shall be made that would cause the Plan to violate Section
422 or 424(a) of the Code or any successor provisions thereto.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Compliance with Laws. </I>The Plan, the granting and vesting of Awards under the Plan and
the issuance and delivery of shares of Common Stock and the payment of money under the Plan
or under Awards granted hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and federal securities
law and federal margin requirements) and to approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for Fannie Mae, be necessary or
advisable in connection therewith. Any securities delivered under the Plan shall be subject
to such restrictions, and the person acquiring the securities shall, if requested by Fannie
Mae, provide such assurances and representations to Fannie Mae, as Fannie Mae may deem
necessary or desirable to assure compliance with all applicable legal requirements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Tax Withholding. </I>Upon any exercise, vesting or payment of any Award or upon the
disposition of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of Section&nbsp;422 of the
Code (or any successor provision), the Committee may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding by Fannie Mae of all
federal, state, local and other taxes required by law to be withheld, including without
limitation, the right, at its option, to the extent permitted by law (i)&nbsp;to require the
Participant (or Personal Representative or Beneficiary, as the case may be) to pay or
provide for payment of the amount of any taxes that Fannie Mae may be required to withhold
with respect to the transaction as a condition to the release of the shares of Common Stock
or the making of any payment or distribution, or (ii)(a) to deduct from any amount payable
in cash, or (b)&nbsp;to reduce the number of shares of Common Stock otherwise deliverable (or
otherwise reacquire such shares), based upon their Fair Market Value on the date of
delivery, or (c)&nbsp;to grant the Participant the right to elect reduction in the number of
shares upon such terms and conditions as it may establish for the amount of any taxes that
Fannie Mae may be required to withhold.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Plan Amendment, Termination and Suspension.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Board Authorization. </I>Subject to this Section&nbsp;8.5, the Board may, at any time,
terminate or amend, modify or suspend the Plan, in whole or in part. No Awards may be
granted during any suspension of the Plan or after termination of the Plan, but the
Committee shall retain jurisdiction as to Awards then outstanding in accordance with the
terms of the Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Shareholder Approval. </I>If any amendment would (i)&nbsp;materially increase the benefits
accruing under the Plan, or (ii)&nbsp;materially increase the aggregate number of shares of
Common Stock that may be issued under the Plan (except as provided in Section&nbsp;8.2), then
to the extent deemed necessary or advisable by the Board or as required by law or the
rules of the NYSE, such amendment shall be subject to shareholder approval.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Amendments to Awards. </I>Without limiting any other express authority granted under
the Plan, but subject to its express limits, the Committee may waive conditions of or
limitations on Awards, without the consent of the Participant, and may make other changes
to the terms and conditions of Awards that do not affect the Participant&#146;s rights and
benefits under an Award in any materially adverse manner.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Limitations on Amendments to Plan and Awards. </I>No amendment, suspension or
termination of the Plan or any change affecting any outstanding Award shall, without the
written consent of the Participant, Beneficiary or Personal Representative, as
applicable, affect in any manner materially adverse to such person any rights or benefits
of any such person or any obligations of Fannie Mae under any Award granted under the
Plan prior to the effective date of such change; however, any changes made pursuant to
Section&nbsp;8.2 shall not be deemed to constitute changes or amendments for purposes of this
Section&nbsp;8.5.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Privileges of Stock Ownership. </I>Except as otherwise expressly authorized by the Committee
or the Plan and expressly stated in an Award Document, a Participant shall not be entitled
to any privilege of stock ownership as to any shares of Common Stock not actually delivered
to and held of record by the Participant. No adjustment shall be made for dividends or other
shareholder rights for which a record date is prior to the date of delivery of such shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Effective Date of the Plan. </I>The Plan shall be effective as of the date of the meeting at
which the shareholders of Fannie Mae approve it.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Term of the Plan. </I>No Award shall be granted after the Plan Termination Date. Unless
otherwise expressly provided in the Plan or in an applicable Award Document, any Award may
extend beyond the Plan Termination Date, and all authority of the Committee with respect to
Awards hereunder shall continue during any suspension of the Plan and in respect of Awards
outstanding on the Plan Termination Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Governing Law/Construction/Severability.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Choice of Law. </I>The Plan, the Awards, all documents evidencing Awards, and all
other related documents shall be governed by, and construed in accordance with the laws
of the District of Columbia, without reference to its principles of conflicts of law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Severability. </I>If any provision shall be held by a court of competent jurisdiction
to be invalid and unenforceable, the remaining provisions of the Plan shall continue in
effect.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Captions. </I>Captions and headings are given to the sections and subsections of the Plan
solely as a convenience to facilitate reference. The headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or of its provisions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Effect of Change of Subsidiary Status. </I>For purposes of the Plan and any Award, if an
entity ceases to be a Subsidiary, the employment of all Participants who are employed by
such entity shall be deemed to have terminated, except any Participant who continues as an
employee of another entity within Fannie Mae.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Nonexclusivity of Plan. </I>Nothing in the Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or authorize any other compensation,
with or without reference to the Common Stock, under any other plan or authority.</TD>
</TR>

</TABLE>
</DIV>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.13</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Plan Binding on Successors. </I>The obligations of Fannie Mae under the Plan shall be
binding upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of Fannie Mae, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of Fannie Mae.
Fannie Mae agrees that it will make appropriate provisions for the preservation of all
Participants&#146; rights under the Plan in any agreement or plan that it may enter into or adopt
to effect any such merger, consolidation, reorganization or transfer of assets.</TD>
</TR>

</TABLE>
</DIV>


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