Exhibit 10.2

 

MFA FINANCIAL, INC.
THIRD AMENDED AND RESTATED

 

2003 NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

(as amended and restated through November 1, 2012)

 

1.                                       Purpose

 

The purpose of the Plan is to provide Nonemployee Directors of the Corporation
with an opportunity to defer 100% or 50% of their Compensation while at the same
time aligning their interests more closely with the interests of the
stockholders of the Corporation.  This Plan is an amendment and complete
restatement of the Amended and Restated 2003 Nonemployee Directors’ Deferred
Compensation Plan.

 

2.                                       Effective Date

 

This Plan shall become effective on the Effective Date.

 

3.                                       Definitions

 

In this Plan, the following definitions shall apply:

 

“Account” - the account maintained by the Corporation for Deferred Stock Units
credited in accordance with Section 6 of the Plan.

 

“Administrator” - the person, persons or entity appointed by the Board from time
to time to manage and administer the Plan.

 

“Annual Meeting” - annual meetings of stockholders of the Corporation at which
directors of the Board are elected.

 

“Board” - the Board of Directors of the Corporation.

 

“Code” - the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

 

“Common Stock” - the Corporation’s common stock, $0.01 par value per share.

 

“Compensation” - the aggregate value of all annual cash compensation payable to
a Nonemployee Director for service on the Board (exclusive of any reimbursable
expenses relating to such Nonemployee Director’s service on the Board).

 

“Corporation” - MFA Financial, Inc., a Maryland corporation, and its successors.

 

“Deferral Period” - the five-year period, if so elected, during which
Compensation for a particular year is to be deferred.  At the conclusion of the
Deferral Period, such deferred Compensation will be paid out in a lump sum or,
if so elected, in a specified number of annual installments not to exceed five
years.  If the deferred Compensation is paid out in annual installments, such
installment payments shall be treated as a series of separate payments for
purposes of Section 409A of the Code.  Except as otherwise provided in Section
8(a) of the Plan, payment(s) will commence, or be made in a lump sum, no earlier
than January 15 of the year first following the five-year anniversary of the
applicable election date.  For example, if during 2012 a Participant elects the
Deferral Period (i.e., 5 years) for Compensation deferred in 2013, the
payment(s) shall be made/commence on or after January 15, 2018.

 

“Deferred Stock Unit” - a credit to a Participant’s Account under Section 6(b)
that represents the right to receive a cash payment equal to the Fair Market
Value of one Share on settlement of the Account.

 

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“Effective Date” — November 1, 2012, the date the Plan was amended and restated.

 

“Equity Award” - either fully vested Shares or fully vested Restricted Stock
Units.

 

“Fair Market Value” - for any date, the average of the high and low sales prices
for Shares of the Corporation’s Common Stock, as reported by the New York Stock
Exchange or such other relevant exchange on which the Corporation’s Common Stock
is traded.

 

“Incumbent Directors” - persons who, as of the Effective Date, that constitute
the Board.

 

“Nonemployee Director” - a member of the Board who is not also an employee of
the Corporation and/or an employee of any affiliate of the Corporation.

 

“Participant” - each Nonemployee Director who elects to defer 50% or 100% of his
or her Compensation or receives an Equity Award under this Plan.

 

“Plan” - MFA Financial, Inc. Third Amended and Restated 2003 Nonemployee
Directors’ Deferred Compensation Plan, as it may be amended from time to time.

 

“Restricted Stock Unit” - a phantom interest that represents the right to
receive one Share on settlement, in accordance with the Restricted Stock Unit
Agreement.

 

“Restricted Stock Unit Agreement” - a written agreement to be entered into
between the Corporation and the Participant in connection with the grant of
Restricted Stock Units.

 

“Second Election” - an election pursuant to Section 5(c)(4) of the Plan which
changes the Nonemployee Director’s prior deferral election.

 

“Share” - a share of Common Stock of the Corporation.

 

“Termination of Service” - termination of service with the Corporation, which
shall be interpreted in a manner that is consistent with the definition of a
“separation from service” under Section 409A of the Code and Treasury Regulation
1.409A-1(h).

 

4.                                       Administration

 

(a)                                                                                 
Subject to the oversight of the Board, the Administrator shall have authority to
administer the Plan, including conclusive authority to construe and interpret
the Plan, to establish rules, policies, procedures, forms and notices for use in
carrying out the Plan, and to make all other determinations necessary or
desirable for administration of the Plan.  The Administrator may delegate some
or all of its functions to another person(s) as it may deem appropriate.

 

(b)                                                                                
Notwithstanding any other provision herein to the contrary, the Administrator
shall administer the Plan and exercise authority and discretion under the Plan,
to satisfy the requirements of Section 409A of the Code or any exemption
thereto.

 

5.                                       Election to Defer Compensation

 

(a)                                                                                 
Amount of Deferral.  A Nonemployee Director may elect to defer receipt of 50% or
100% of such Nonemployee Director’s Compensation otherwise thereafter payable to
such Nonemployee Director.

 

(b)                                                                                
Manner of Electing Deferral.  An election to defer Compensation shall be made by
each Participant by giving written notice to the Administrator in the form
approved by the Administrator.  Such notice shall address, without limitation:

 

(1)                                                                                 
the percentage of Compensation for the next calendar year to be deferred;

 

(2)                                                                                 
the type of Equity Award to be received;

 

(3)                                                                                 
if applicable, an election for the Account to be settled following a five-year
Deferral Period; and

 

(4)                                                                                 
an election for the Account to be settled in either a lump-sum payment or in a
specified number of annual installments (not to exceed five).

 

(c)                                                                                 
Time of Election; Effectiveness; Change of Election.

 

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(1)                                                                                 
An election to defer Compensation shall be made by a Nonemployee Director no
later than the end of the taxable year preceding the year for which the
Compensation was earned.  Notwithstanding the foregoing, a Nonemployee Director
who first becomes eligible to participate in the Plan may make an election to
defer any future Compensation within 30 days after the date of such eligibility;
provided, however, that such deferral election shall only apply to the pro rata
portion of the Compensation that is earned from the date of such election
through the remainder of the year.

 

(2)                                                                                 
An election shall be irrevocable as of the last day of the calendar year in
which the election is made and shall continue in effect until the end of the
calendar year for which Compensation is earned.

 

(3)                                                                                 
A Nonemployee Director may change a deferral election annually by making
different elections in the Annual Participant Election Form provided by the
Administrator; all such changes shall only be effective prospectively for
subsequent calendar years commencing at or after the time of such notice.

 

(4)                                                                                 
Notwithstanding the foregoing, with respect to any previously deferred amounts,
a Nonemployee Director may make a Second Election, which must, except as may
otherwise be permitted under the rules applicable under Section 409A of the
Code, (A) be effective at least one year after it is made, or, in the case of
payments to commence at a specific time, be made at least one year before the
first scheduled payment, and (B) defer the commencement of distributions (and
each affected distribution) for at least five years.

 

6.                                       Deferred Compensation Account

 

(a)                                                                                 
Establishment of Account.  The Corporation will maintain Account(s) for each
Participant for each year in which they elect to participate in the Plan, which
will reflect the Compensation deferred by such Participant for a given calendar
year.  Accounts under this Plan shall be unfunded and shall represent only an
unsecured claim against the general assets of the Corporation.

 

(b)                                                                                
Deferred Stock Units.  In any given calendar year, a Participant’s election to
defer either 50% or 100% of the Compensation earned by such Participant shall be
in the form of Deferred Stock Units.  Such deferral election shall be made in
accordance with the provisions of Sections 5(b) and 5(c) of the Plan.  The
number of Deferred Stock Units credited to the Participant’s Account, at the
time such Compensation would otherwise have been payable absent the election to
defer, will be equal to (i) the otherwise payable amount divided by (ii) the
Fair Market Value of a Share on the last trading day preceding the credit date. 
In addition, on each date on which a cash dividend is payable on the Shares, the
Participant’s Account shall be credited with a number of Deferred Stock Units
equal to (i) the per Share cash dividend times the number of Deferred Stock
Units then credited to the Account, divided by (ii) the Fair Market Value of a
Share on the last trading day preceding the dividend payment date.  Accounts
shall be credited with fractional Deferred Stock Units, rounded to the third
decimal place.  Such additional Deferred Stock Units shall be paid to the
Participant at the same time as Deferred Stock Units are received by the
Participant with respect to the deferral of Compensation.

 

(c)                                  Adjustments.  In case of a stock split,
stock dividend, or other relevant change in capitalization of the Corporation,
the number of Deferred Stock Units credited to a Participant’s Account shall be
adjusted in such manner as the Administrator deems appropriate.

 

7.                                       Valuation

 

The value of an Account as of any date on which a settlement payment is to be
made under Section 9 shall be the amount equal to the number of Deferred Stock
Units then credited to the Participant’s Account times the Fair Market Value of
a Share on the last trading day preceding the payment date.

 

8.                                       Settlement

 

(a)                                                                                 
General.  An Account shall be distributed or commence distribution to a
Participant on the earlier of (i) the year first following the year in which a
Termination of Service occurs, or (ii) with respect to any particular Account,
the year first following the year in which the five-year Deferral Period elected
by such Participant for such Account expires.  Notwithstanding the foregoing,
all distribution elections shall provide that no payments may commence with
respect to any Account any later than the year first following the Participant’s
72nd birthday, or such other date as may, subject to Section 409A of the Code,
be approved by the Administrator.  To the

 

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extent that an Account is to be distributed to a Participant in accordance with
this Section 8, such distribution shall occur on or about, but no earlier than,
January 15 of the applicable distribution year.

 

(b)                                                                                
Lump Sum.  If a Participant elects lump sum settlement, an amount of cash equal
to the value of the Account determined in accordance with Section 7 shall be
paid to the Participant in accordance with Section 8(a).

 

(c)                                                                                 
Installment Payments.  If a Participant elects settlement in installments, an
amount of cash determined as hereafter provided shall be paid to the Participant
in accordance with Section 8(a) in each year of the installment payment period
elected.  The amount of each installment shall be equal to (i) the value of the
Account as of the payment date for such installment, determined in accordance
with Section 7, divided by (ii) the number of unpaid installments.  Each
installment payment shall be debited to the Deferred Stock Units in a
Participant’s Account.

 

(d)                                                                                
Payment on Death.  Notwithstanding a Participant’s settlement election, in the
event of a Participant’s death an amount of cash equal to the remaining value of
the Account determined as provided in Section 7 shall be paid in a single
payment to the Participant’s estate as soon as possible, without undue delay,
but in no event later than 90 days after the date of the Participant’s death.

 

(e)                                                                                 
No Early Withdrawal.  No withdrawal may be made from a Participant’s Account
except as provided in this Section 8.

 

(f)                                                                                   
Cash Settlement Only.  Settlement of an Account under this Plan shall be made
only in cash, via wire transfer or check in U.S. dollars.

 

9.                                       Equity Awards.

 

(a)                                                                                 
Type of Equity Awards.  Nonemployee Directors shall also be eligible to receive
for service on the Board annual Equity Awards in an amount and on such terms and
conditions as prescribed by the Board or Compensation Committee of the Board.
Such Equity Awards shall be, as elected by the Participant in accordance with
this Plan, granted in the form of fully vested Shares or fully vested Restricted
Stock Units.

 

(b)                                                                                
Election of Form of Equity Awards.

 

(1)                                                                                 
The Participant may elect to receive each applicable Equity Award in the form of
fully vested Shares or fully vested Restricted Stock Units.  Such election shall
be made no later than the end of the taxable year preceding the applicable
Annual Meeting.  Notwithstanding the foregoing, a Participant who first becomes
eligible to participate in the Plan may make an election as to the form of the
applicable Equity Award within 30 days after the date of such eligibility;
provided, however, that, with respect to the then-current annual period, the
Participant may elect to receive Shares only with respect to the pro rata
portion of the number of Shares included in the Equity Award that are earned
from the date of such election through the remainder of the year.

 

(2)                                                                                 
The election described in Section 5(b)(2) shall be made by giving written notice
to the Administrator in the form approved by the Administrator.  The
Participant’s election as to the form of the Equity Award shall be irrevocable
immediately prior to the first day of the applicable annual period.  Except as
set forth above in Section 5(b)(2), elections described in Section 5(b)(2) shall
continue in effect from period to period and from meeting to meeting, as
applicable.  The Equity Award for any Participant who fails to make an election
shall be granted in the form of fully vested Shares.

 

(3)                                                                                 
A Participant’s fully vested Restricted Stock Units will be settled in
accordance with the Restricted Stock Unit Agreement.

 

10.                                 Non-Assignability

 

The right of a Participant to receive any unpaid portion of the Participant’s
Account may not be assigned or transferred except by will or the laws of descent
and distribution, and may not be pledged or encumbered or be subject to
attachment, execution, or levy of any kind.

 

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11.                                 Amendment and Termination

 

This Plan may be amended, modified or terminated by the Board at any time
(taking into account, without limitation, Section 409A of the Code as the Board
may deem appropriate), provided that no such amendment, modification or
termination shall, without the consent of a Participant, adversely affect such
Participant’s rights with respect to amounts accrued in the Participant’s
Account.

 

12.                                 Governing Law

 

This Plan and all actions taken under it shall be governed by the laws of the
State of New York, without reference to conflict of law principles.

 

13.                                 Severability

 

If any provision of this Plan shall be deemed illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining provisions of the
Plan but shall be fully severable.

 

14.                                 Compliance

 

The Administrator is authorized to take such steps as may be necessary
including, without limitation, delaying effectiveness of a Participant’s
election or delaying settlement of an Account, in order to ensure that this Plan
and all actions taken under it comply with any law, regulation, or listing
requirement which the Administrator deems applicable or desirable, including the
exemption provided by Rule 16b-3 under the Securities Exchange Act of 1934, as
amended.

 

15.                                 Withholding

 

If the Corporation concludes that any tax is owing with respect to any deferral
of income or payment hereunder, the Corporation shall withhold such amounts from
any payments due the Participant, or otherwise make appropriate arrangements
with the Participant for satisfaction of such obligation.

 

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MFA FINANCIAL, INC.

THIRD AMENDED AND RESTATED

 

2003 NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

 

ANNUAL PARTICIPANT ELECTION FORM FOR 20[·] DEFERRALS

 

Annual Director Compensation 20[·]

 

In accordance with the provisions of the MFA Financial, Inc. Third Amended and
Restated 2003 Nonemployee Directors’ Deferred Compensation Plan (the “Plan”), I
hereby make the following elections pursuant to the Plan:

 

1.                                       AMOUNT OF COMPENSATION DEFERRAL - I
hereby elect to defer the annual Compensation otherwise earned and payable in to
me in 20[·] by the Corporation as follows: (Check one if participating in Plan)

 

I elect to defer            50% or            100% of the aggregate value of the
annual retainer payable to a Nonemployee Director for service on the Board of
the Corporation. I understand that the deferral of Compensation will be in the
form of Deferred Stock Units.

 

2.                                       DEFERRAL PERIOD — I hereby elect the
five-year Deferral Period for Compensation earned during 20    , such that
payment will be deferred until on or about January 15, 20    .  o Yes o No

 

3.                                       SETTLEMENT (Check one):

 

o                                    I elect to the following installment
payment period:            (indicate between two and five years) OR

 

o                                    I elect a lump sum distribution in
accordance with the terms of the Plan.

 

4.                                       TYPE OF EQUITY AWARD - I hereby elect
to receive my annual Equity Award otherwise granted to me by the Corporation as
follows:

 

o                                    I elect to receive my Equity Awards in the
form of fully vested Shares of Common Stock.

 

o                                    I elect to receive my Equity Award in the
form of fully vested Restricted Stock Units.  I elect to have my Restricted
Stock Units settled on the date of my separation from service from the
Corporation or              [will be void if left blank], whichever occurs
first.

 

I understand that I will receive Equity Awards in the form of fully vested
Shares if I fail to elect to receive my Equity Awards in the form of fully
vested Restricted Stock Units.

 

This election is subject to all of the terms of the Plan attached hereto and on
file with the records of the Corporation.  Unless otherwise defined, all defined
terms used herein shall have the meanings ascribed to them in the Plan.

 

Dated:

 

 

 

 

 

 

 

 

Signature of Director

 

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Please check below if you do not wish to participate in the Plan and sign below.

 

o                                    I do not wish to participate in the Plan.

 

Dated:

 

 

 

 

 

 

 

 

 

 

Signature of Director

 

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Accepted on the        day of                     , 20

 

on behalf of MFA Financial, Inc.

 

By:

 

 

 

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