FEDERAL NATIONAL MORTGAGE
ASSOCIATION
WARRANT TO PURCHASE COMMON STOCK
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NO.
2008-1
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September 7, 2008
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VOID AFTER SEPTEMBER 7,
2028
THIS CERTIFIES
THAT, for value received, the United States Department of the
Treasury, with its principal office at 1500 Pennsylvania Avenue,
NW, Washington, DC 20220 (the “ Holder ”), is
entitled to purchase at the Exercise Price (defined below) from
Federal National Mortgage Association, a government-sponsored
enterprise of the United States of America, with its principal
office at 3900 Wisconsin Avenue, NW, Washington, DC 20016 (the
“ Company ”), shares of common stock, no par
value, of the Company, as provided herein.
1.
Definitions . As used herein, the following terms shall have
the following respective meanings:
“
Affiliate ” shall mean, as to any specified Person,
any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person. For the purposes of this definition, “control,”
when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise and the terms “affiliated,”
“controlling” and “controlled” have
meanings correlative to the foregoing.
“
Business Day ” shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday that is not a day on which banking
institutions in New York, New York are authorized or obligated by
law or executive order to close.
“ Common
Stock ” shall mean the common stock, no par value, of the
Company, and all other stock of any class or classes (however
designated) of the Company from time to time outstanding, the
holders of which have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends or
liquidating distributions after the payment of dividends and
distributions on any shares entitled to preference.
“
Exercise Period ” shall mean the time period
commencing with the date hereof and ending at 5:00 p.m. New York
time on the 20 th anniversary of the date hereof.
“
Exercise Price ” shall mean one one-thousandth of a
cent ($0.00001) per share.
“
Exercise Shares ” shall mean the shares of the Common
Stock issuable upon exercise of this Warrant, subject to adjustment
pursuant to the terms herein, and shall also mean any other shares,
securities, assets or property otherwise issuable upon exercise of
this Warrant.
“ Fair
Market Value ” shall mean, with respect to a share of
Common Stock, or any other security of the Company or any other
issuer:
(a) the
volume weighted average daily Market Price during the period of the
most recent twenty (20) Trading Days, ending on the last
Trading Day before the date of determination of Fair Market Value,
if such class of Common Stock or other security is
(i) traded
on the New York
Stock Exchange or any other U.S. national or regional securities
exchange, or admitted to unlisted trading privileges on such an
exchange, or (ii) is quoted or reported on the
Over-the-Counter Bulletin Board (“OTCBB”) or by Pink
OTC Markets Inc. or a similar organization or agency succeeding to
its functions of reporting prices; or
(b) if such
class of Common Stock or other security is not then so listed,
admitted to trading or quoted, the Fair Market Value shall be the
Market Price on the last Business Day before the date of
determination of Fair Market Value.
“ Fully
Diluted ” shall mean, as of immediately prior to the
exercise of this Warrant (or a portion of this Warrant), the sum
of, without duplication, (i) the total number of shares of
Common Stock outstanding and (ii) all shares of Common Stock
issuable in respect of securities convertible into or exercisable
or exchangeable for Common Stock, stock appreciation rights or
options, warrants (including this Warrant) and other rights to
purchase or subscribe for Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock (in each case,
assuming that no restrictions apply with respect to conversion,
exercise, exchange, subscription or purchase).
“ Market
Price ” shall be, as of any specified date with respect
to any share of any class of Common Stock or any other security of
the Company or any other issuer:
(i) the
closing price on that date or, if no closing price is reported, the
last reported sale price, of shares of the Common Stock or such
other security on the New York Stock Exchange on that date;
or
(ii) if the
Common Stock or such other security is not traded on the New York
Stock Exchange, the closing price on that date as reported in
composite transactions for the principal U.S. national or regional
securities exchange on which the Common Stock or such other
security is so traded or, if no closing price is reported, the last
reported sale price of shares of the Common Stock or such other
security on the principal U.S. national or regional securities
exchange on which the Common Stock or such other security is so
traded on that date; or
(iii) if the
Common Stock or such other security is not traded on a U.S.
national or regional securities exchange, the last quoted bid price
on that date for the Common Stock or such other security in the
over-the-counter market as reported (x) by the OTCBB or
(y) if reports are unavailable under clause (x) above by
Pink OTC Markets Inc. or a similar organization or agency
succeeding to its functions of reporting prices;
(iv) if the
Common Stock or such other security is not so quoted by OTCBB or
Pink OTC Markets Inc. or a similar organization, the Market Price
shall be determined in accordance with the Valuation
Procedure.
“
Participating Securities ” shall mean, (i) any
equity security (other than Common Stock) that entitles the holders
thereof to participate in liquidations or other distributions with
the holders of Common Stock or otherwise participate in the capital
of the Company other than through a fixed or floating rate of
return on capital loaned or invested, and (ii) any stock
appreciation rights, phantom stock rights, or any other profit
participation rights with respect to
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any of the
Company’s capital stock or other equity ownership interest,
or any rights or options to acquire any such rights.
“
Person ” shall mean any individual, corporation,
limited liability company, partnership, joint venture, association,
joint-stock company, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof, or any
other entity whatsoever.
“ Trading
Day ” shall mean, with respect to any class of Common
Stock or any other security of the Company or any other issuer a
day (i) on which the securities exchange or other trading
platform applicable for purposes of determining the Market Price of
a share or unit of such class of Common Stock or other security
shall be open for business or (ii) for which quotations from
such securities exchange or other trading platform of the character
specified for purposes of determining such Market Price shall be
reported.
“
Valuation Procedure ” shall mean a determination made
in good faith by the Board of Directors of the Company (the “
Board ”) that is set forth in resolutions of the Board
that are certified by the Secretary of the Company, which certified
resolutions (i) set forth the basis of the Board’s
determination, which, in the case of a valuation in excess of
$100 million, shall include the Board’s reliance on the
valuation of a nationally recognized investment banking or
appraisal firm, and (ii) are delivered to the Holder within
ten (10) Business Days following such determination. A
Valuation Procedure with respect to the value of any capital stock
shall be based on the price that would be paid for all of the
capital stock of the issuer in an arm’s-length transaction
between a willing buyer and a willing seller (neither acting under
compulsion).
2.
Exercise of Warrant; Number of Shares .
2.1
Exercise . This Warrant may be exercised in whole or in part
at any time during the Exercise Period, by delivery of the
following to the Company at its address set forth above (or at such
other address as it may designate by notice in writing to the
Holder):
(a) an
executed Notice of Exercise in the form attached hereto;
(b) payment
of the Exercise Price (i) in cash or by check, (ii) by
cancellation of indebtedness or (iii) pursuant to
Section 2.2 hereof; and
This Warrant will
be exercisable for a number of shares of Common Stock that,
together with the shares of Common Stock previously issued pursuant
to this Warrant, is equal to 79.9% of the total number of shares of
Common Stock outstanding on a Fully Diluted basis on the date of
exercise. Whenever the Holder exercises this Warrant in whole or in
part, it may assign its right to receive the Exercise Shares
issuable upon such exercise to any other Person.
As soon as
practicable (and in any event within five Business Days) after this
Warrant shall have been exercised, a certificate or certificates
for the Exercise Shares so purchased, registered in the name of the
Holder or such other Person as may be designated by the Holder (to
the extent such transfer is not validly restricted and upon payment
of any transfer taxes that are
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required to be
paid by the Holder in connection with any such transfer), shall be
issued and delivered by the Company to the Holder or such other
Person .
The Person in
whose name any certificate or certificates for the Exercise Shares
are to be issued upon exercise of this Warrant shall be deemed to
have become the holder of record of such shares on the date on
which this Warrant was surrendered and payment of the Exercise
Price was made, irrespective of the date of delivery of such
certificate or certificates, except that, if the date of such
surrender and payment is a date when the stock transfer books of
the Company are close
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