Exhibit 10.3

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 26th day
of November, 2019, and effective as of the first day of January, 2020 (the
“Effective Date”) by and between MFA Financial, Inc. (“MFA”), and Bryan Wulfsohn
(the “Executive”).

 

WITNESSETH:

 

WHEREAS, MFA and the Executive entered into an employment agreement, effective
as of January 1, 2018, the term of which expires on December 31, 2019 (the
“Former Employment Agreement”);

 

WHEREAS, MFA and the Executive desire to enter into a new employment agreement
that supersedes and replaces the Former Employment Agreement in all respects as
of the Effective Date and sets forth the terms of the Executive’s employment
with MFA; and

 

WHEREAS, the Executive wishes to continue serving MFA, and MFA wishes to secure
the continued exclusive services of the Executive, under the terms and
conditions described in this Agreement, which will be legally binding on the
date the Agreement is executed by the parties hereto.

 

NOW THEREFORE, in consideration of the foregoing premises and the mutual
agreements herein contained, the parties hereto agree as follows:

 

1.            Term of Employment.

 

(a)          MFA hereby employs the Executive, and the Executive hereby accepts
employment with MFA, in the positions and with the duties and responsibilities
as set forth in Section 2 below for the Term of Employment, subject to the terms
and conditions of this Agreement. Except as otherwise provided in Section
3(b)(iii) below, as of the Effective Date of this Agreement, the Former
Employment Agreement is terminated.

 

(b)          The term of employment (the “Term of Employment”) under this
Agreement shall commence on the Effective Date and continue until December 31,
2021; provided that if December 31, 2021 occurs during a Garden Leave period,
the Term of Employment shall continue through the end of such Garden Leave. The
Term of Employment may also be terminated in accordance with Section 5 hereof.

 

2.            Position; Duties and Responsibilities.

 

(a)          During the Term of Employment, the Executive shall be employed as
Co-Chief Investment Officer and Senior Vice President of MFA, reporting directly
and solely to the Chief Executive Officer of MFA (the “CEO”), with such
authority, duties and day-to-day management responsibilities as are customarily
maintained and performed by persons holding such offices at similarly situated
mortgage REITs and such other duties as may be mutually agreed upon between the
Executive and the CEO.

 

 

 

 

(b)          During the Term of Employment, the Executive shall, without
additional compensation, also serve on the board of directors of, serve as an
officer of, and/or perform such executive and consulting services for, or on
behalf of, such subsidiaries or affiliates of MFA as the Board of Directors of
MFA (the “Board of Directors”) or the CEO may, from time to time, request. MFA
and such subsidiaries and affiliates are hereinafter referred to, collectively,
as the “Company.” For purposes of this Agreement, the term “affiliate” shall
have the meaning ascribed thereto in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the “Act”).

 

(c)          During the Term of Employment, the Executive shall serve MFA
faithfully, diligently and to the best of his ability and shall devote
substantially all of his business time and efforts to his employment and the
performance of his duties under this Agreement. Nothing herein shall preclude
the Executive from engaging in charitable and community affairs and managing his
personal, financial and legal affairs, so long as such activities do not
materially interfere with his carrying out his duties and responsibilities under
this Agreement.

 

3.            Compensation.

 

(a)          Base Salary. During the Term of Employment, the Executive shall be
entitled to receive an annualized base salary (the “Base Salary”) of not less
than $400,000. The Compensation Committee of the Board of Directors (the
“Compensation Committee”) shall review the Executive’s Base Salary annually to
determine whether increases are appropriate.

 

(b)          Performance Bonus.

 

(i)              During the Term of Employment, the Executive shall be eligible
to receive an annual bonus for the 12-month performance periods beginning
December 1, 2019 and December 1, 2020, respectively according to the terms set
forth on the attached Exhibit A. The Compensation Committee shall make all
determinations with respect to the annual bonus in good faith and consistent
with the attached Exhibit A.

 

(ii)             The annual bonus shall be paid in a combination of cash and
restricted stock as set forth on Exhibit A. The annual bonus that is payable for
any performance period will be paid on or about January 15 following the end of
the performance period, and in no event later than March 15 following the end of
the performance period.

 

(iii)            Any annual bonus for the 12-month period beginning on December
1, 2018 shall be determined and paid in accordance with the terms of the Former
Employment Agreement, but in no event may such bonus be paid to the Executive
later than March 15, 2020.

 

(c)          Equity Compensation. To the extent that the Executive is still
employed by MFA on each applicable grant date, within 25 business days following
the Effective Date and in February 2021, the Company shall grant to the
Executive a time-based RSU award and a performance-based RSU award, each of
which shall be granted according to the terms set forth on the attached Exhibit
B and the terms of the MFA Financial, Inc. Equity Compensation Plan or any
successor thereto (the “Equity Compensation Plan”) (which, for the avoidance of
doubt, shall not be inconsistent with the terms set forth on Exhibit B).

 

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(d)          Stock Ownership Requirements. All shares of MFA stock distributed
to the Executive by the Company under this Agreement or otherwise shall be
subject to the stock ownership guidelines in effect for executives from time to
time, as determined by the Board of Directors. Unless the stock ownership
guidelines provide otherwise, vested shares of equity grants cannot be
transferred or sold during the Executive’s employment by the Company unless and
until the value of the Executive’s stock holdings in MFA (including shares of
restricted stock and RSUs (with any RSUs that vest based on performance valued
at target)) exceeds four times the Executive’s Base Salary; and following the
termination of Executive’s employment with the Company, vested shares of equity
grants may not be sold or transferred to the extent the value of the Executive’s
stock holdings does not exceed four times the Executive’s Base Salary as of the
date of the Executive’s termination of employment (provided, however, that this
sentence shall no longer apply following the six-month anniversary of the
Executive’s termination of employment). Notwithstanding the foregoing, the
restrictions of this subsection (d) shall not prevent Executive from selling
shares of MFA stock to satisfy income tax and employment tax obligations
relating to the vesting and settlement of the equity grants to which the shares
relate.

 

4.            Employee Benefit Programs and Fringe Benefits. During the Term of
Employment, the Executive shall be entitled to at least 25 days in the aggregate
of vacation and paid time off for each of calendar years 2020 and 2021 and shall
be entitled to participate in all executive incentive and employee benefit
programs of MFA now or hereafter made available to MFA’s senior executives or
salaried employees generally, as such programs may be in effect from time to
time. MFA shall reimburse the Executive for any and all necessary, customary and
usual business expenses incurred by Executive in connection with his employment
in accordance with applicable MFA policies.

 

5.            Termination of Employment.

 

(a)          Termination Due to Disability. If the Executive’s employment is
terminated during the Term of Employment by reason of the Executive’s
Disability, the Executive’s Term of Employment shall terminate automatically
without further obligations to the Executive under this Agreement except as
provided in this Section 5(a) and Section 5(h) below. In addition and if the
requirements of Section 5(k) are met:

 

(i)           The Executive shall receive cash payments in an aggregate amount
equal to the sum of (A) Executive’s then current Base Salary and (B) the average
of the annual bonuses paid to the Executive for the three calendar years
preceding such termination (the “Average Bonus”), with such amount to be paid in
cash in equal ratable installments in accordance with applicable MFA payroll
practices over the 12 month period following such termination. Such installment
payments shall commence as soon as possible (without undue delay), but in any
event within 60 days following the date of termination on account Disability,
and the first payment shall include any unpaid installments for the period prior
to commencement. Notwithstanding the foregoing, in the event that the
Executive’s employment is terminated on account of Disability and such
termination occurs within 12 months following a Change of Control, in lieu of
payment in the form of installments, the sum of the amounts set forth in the
preceding clauses (A) and (B) shall be paid in a lump sum cash payment as soon
as possible (without undue delay), but in any event within 60 days following the
date of termination on account of Disability.

 

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(ii)          The Executive shall receive any unpaid Annual Bonus (as defined in
Exhibit A) for the Performance Period (as defined in Exhibit A) immediately
preceding the Executive’s date of termination.

 

(iii)         The Company shall reimburse the Executive for 100% of the COBRA
premiums incurred by the Executive for the Executive and his eligible dependents
under the Company’s health care plan during the 18 month period following the
Executive’s termination of employment. Such reimbursement shall be provided on
the payroll date immediately following the date on which the Executive remits
the applicable premium payment and shall commence within 60 days after the
termination date; provided that the first payment shall include any
reimbursements that would have otherwise been payable during the period
beginning on the Executive’s termination date and ending on the date of the
first reimbursement payment. Reimbursement payments shall be treated as taxable
compensation to the Executive to the extent required by law.

 

(iv)         All of the Executive’s outstanding equity-based awards (e.g.,
restricted stock, phantom shares, RSUs and stock options) shall be treated in
accordance with the following:

 

(A)         Except as otherwise provided in (C) below, all unvested awards shall
immediately vest.

 

(B)         All vested options shall remain exercisable until the earlier of (x)
90 days following the date of such termination or (y) the date on which each
such option would have expired had the Executive’s employment not terminated.

 

(C)         Any equity award that is subject to vesting based on the achievement
of performance goals shall vest in accordance with the terms and conditions
applicable to such award, determined as though the Executive remained actively
employed through the end of the applicable performance period, provided that if
the Executive’s date of termination occurs within 12 months following a Change
of Control, such award shall become immediately vested with respect to the
target number of shares subject to such award.

 

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(b)         Termination Due to Death. If the Executive’s employment is
terminated during the Term of Employment by reason of the Executive’s death, the
Executive’s Term of Employment shall terminate automatically without further
obligations to the Executive, his legal representative or his estate, as the
case may be, under this Agreement except as provided in this Section 5(b) and
Section 5(h) below. In addition:

 

(i)           The Executive’s legal representative or his estate, as the case
may be, shall receive a lump sum cash payment equal to the sum of (A)
Executive’s then current Base Salary and (B) the Average Bonus. Such payment
shall be made as soon as possible (without undue delay), but in any event within
60 days following the date of the Executive’s death.

 

(ii)          The Executive shall receive any unpaid Annual Bonus (as defined in
Exhibit A) for the Performance Period (as defined in Exhibit A) immediately
preceding the Executive’s date of termination.

 

(iii)         All of the Executive’s outstanding equity-based awards (e.g.,
restricted stock, phantom shares, RSUs and stock options) shall be treated in
accordance with the following:

 

(A)         Except as otherwise provided in (C) below, all unvested awards shall
immediately vest.

 

(B)         All vested options shall remain exercisable until the earlier of (x)
90 days following the date of such termination or (y) the date on which each
such option would have expired had the Executive’s employment not terminated.

 

(C)         Any equity award that is subject to vesting based on the achievement
of performance goals shall vest in accordance with the terms and conditions
applicable to such award, determined as though the Executive remained actively
employed through the end of the applicable performance period, provided that if
the Executive’s date of termination occurs within 12 months following a Change
of Control, such award shall become immediately vested with respect to the
target number of shares subject to such award.

 

(c)         Termination By MFA Without Cause or By the Executive for Good
Reason. In the event the Executive’s employment is terminated during the Term of
Employment by the Company without Cause or by the Executive for Good Reason
(other than for Disability, as described in Section 5(a)), the Executive’s Term
of Employment shall terminate without further obligations to the Executive under
this Agreement, except as provided in this Section 5(c) and Section 5(h) below.
In addition and if the requirements of Section 5(k) are met:

 

(i)           The Executive shall be entitled to an amount (the “Severance
Amount”) equal to one and one-half (1.5) times the sum of (A) his then current
Base Salary, and (B) the Average Bonus, with such amount to be paid in cash in
equal ratable installments in accordance with applicable MFA payroll practices
over the 18 month period following such termination (the “Severance Period”).
The severance payments shall commence within 60 days following the date of
termination, and the first payment shall include any unpaid installments for the
period prior to commencement.

 

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(ii)          The Executive shall receive any unpaid Annual Bonus for the
Performance Period immediately preceding the Executive’s date of termination.

 

(iii)         All of the Executive’s outstanding equity-based awards (e.g.,
restricted stock, phantom shares, RSUs and stock options) shall be treated in
accordance with the following:

 

(A)         Except as otherwise provided in (C) below, any such awards that
would otherwise have vested within 12 months following such termination had the
Executive continued in employment shall immediately vest.

 

(B)         All vested options shall remain exercisable until the earlier of (x)
90 days following the date of such termination or (y) the date on which each
such option would have expired had the Executive’s employment not terminated.

 

(C)         Any equity award that is subject to vesting based on the achievement
of performance goals shall vest in accordance with the terms and conditions
applicable to such award; provided that the equity award shall vest no less
favorably than the following: the Executive shall vest in a pro-rata portion of
the amount determined based on achievement of the performance goals as of the
end of the applicable performance period. The pro-rata portion shall be equal to
the product of (I) the number of shares subject to such award that would have
vested if the Executive had remained employed through the end of the applicable
performance period (if any) based on the achievement of the performance goals,
and (II) a fraction, the numerator of which is the number of days during the
performance period that would have elapsed as of the anniversary of the date of
grant of such award next following the Executive’s date of termination (but not
beyond the end of the applicable performance period), and the denominator of
which is the number of days in the performance period. For the avoidance of
doubt, nothing in this Section 5(c)(iii)(C) requires vesting of any equity award
if and to the extent that the applicable performance goals are not achieved as
of the end of the applicable performance period.

 

The parties agree that a termination of the Executive’s employment pursuant to
this Section 5(c), Section 5(d), Section 5(e) or Section 5(g) below shall not be
a breach of this Agreement and does not relieve either party of its/his other
obligations hereunder.

 

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(d)         Termination By MFA on the Expiration Date. In the event that, prior
to the expiration of the Term of Employment, MFA fails to renew this Agreement
or provide the Executive with a new employment agreement, in either case, on
substantially similar terms to this Agreement (including but not limited to, the
term of employment) such that the Term of Employment under this Agreement
expires on December 31, 2021 under circumstances which do not constitute Cause
(such termination, an “Expiration Termination”), then the Executive’s Term of
Employment shall terminate on such date without further obligations to the
Executive, his legal representative or his estate, as the case may be, under
this Agreement except as provided in Section 5(h) below. In addition and if the
requirements of Section 5(k) are met:

 

(i)           During the nine month period following the date of termination,
the Executive shall continue to be paid his Base Salary in equal installments in
accordance with applicable MFA payroll practices. The continued Base Salary
payments shall commence within 60 days following the date of termination, and
the first payment shall include any unpaid installments for the period prior to
commencement.

 

(ii)          The Executive’s outstanding unvested equity-based awards (e.g.,
restricted stock, phantom shares, RSUs and stock options) shall be treated in
accordance with the following:

 

(A)         Except as otherwise provided in (B) below, all unvested awards shall
immediately vest.

 

(B)         With respect to any equity award that is subject to vesting based on
the achievement of performance goals, such equity award shall vest based on
achievement of the performance goals as of the end of the applicable performance
period, in accordance with the terms and conditions applicable to such award,
determined as though the Executive remained actively employed for the entire
performance period. For the avoidance of doubt, no portion of an equity award
shall vest in accordance with this Section 5(d)(ii)(B) if and to the extent that
the applicable performance goals are not achieved as of the end of the
applicable performance period.

 

(iii)         During the nine month period following the date of termination,
the Company shall reimburse the Executive for 100% of the COBRA premiums
incurred by the Executive for the Executive and his eligible dependents under
the Company’s health care, vision and dental plans (if applicable). Such
reimbursement shall be provided on the payroll date immediately following the
date on which the Executive remits the applicable premium payment and shall
commence within 60 days after the termination date; provided that the first
payment shall include any reimbursements that would have otherwise been payable
during the period beginning on the Executive’s termination date and ending on
the date of the first reimbursement payment. Reimbursement payments shall be
treated as taxable compensation to the Executive to the extent required by law.

 

(iv)         The Executive shall receive any unpaid Annual Bonus for the
Performance Period ending on November 30, 2021; provided that, for purposes of
calculating such Annual Bonus, the IRM Bonus (as defined in Exhibit A) shall be
no less than the target amount of the IRM Bonus for the Performance Period.

 

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Notwithstanding the foregoing, in the event that an Expiration Termination
occurs within 12 months following a Change of Control or within three months
prior to a Change of Control if such termination is initiated by, at the request
or suggestion of, or with the agreement of, the counterparty to the Change of
Control, then the Executive shall not be eligible to receive the payments and
benefits set forth in the preceding clauses (i) through (iv), and instead, the
Executive shall be eligible to receive the payments and benefits set forth in
Section 5(g) below, determined as though such termination under Section 5(g) was
a termination by the Company without Cause. For the avoidance of doubt, in the
event that MFA offers to renew this Agreement or to provide the Executive with a
new employment agreement, in either case on substantially similar terms to this
Agreement (including the term of employment) and the Executive rejects such
offer, then the Executive’s employment shall terminate on December 31, 2021, and
such termination shall not be considered a termination of the Executive’s
employment by MFA without Cause or give rise to a right of termination of
employment by the Executive for Good Reason, or except as provided in Section
5(h), give rise to any payments under this Section 5.

 

(e)         Termination by the Company for Cause or Voluntary Termination by the
Executive. In the event the Executive’s employment is terminated during the Term
of Employment by the Company for Cause, by the Executive on his own initiative
for other than a Good Reason or due to the Executive’s Disability, the
Executive’s Term of Employment shall terminate and the Executive shall be
entitled only to the amounts set forth in Section 5(h) below.

 

(f)         Garden Leave. The Executive shall provide a Notice of Termination to
the Company no less than 90 days prior to any termination of the Executive’s
employment (whether for Good Reason or without Good Reason) during the Term of
Employment, other than a termination during the period described in Section
5(g), and the Company shall provide a Notice of Termination to the Executive no
less than 90 days prior to any termination of the Executive’s employment for
Cause during the Term of Employment; provided that the Company may elect to
terminate the Garden Leave (as defined below) and the Executive’s employment at
any time during the Garden Leave if the Executive is terminated for Cause.
During this 90-day notice period (the “Garden Leave”), the Executive shall (i)
continue to be an employee of MFA and shall make himself available to provide
such services directed by the Company that are reasonably consistent with the
Executive’s status as a senior executive of the Company and (ii) continue to be
paid his Base Salary and to be eligible to participate in the Company’s benefits
programs, but shall not be eligible to earn any annual bonus with respect to a
performance period that ends after the commencement of the Garden Leave. During
the Garden Leave, the Company may require the Executive to resign from any
position with the Company and/or remove any or all of the Executive’s duties or
responsibilities, which shall not constitute Good Reason or otherwise be a
violation of this Agreement. The Executive agrees that he will not commence
employment with any entity during or in connection with the commencement of the
Garden Leave. During the Garden Leave, the Executive shall take all steps
reasonably requested by the Company to effect a successful transition of client
and customer relationships to the person or persons designated by the Company.

 

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(g)         Termination Related to Change of Control. In the event of the
termination of the Executive’s employment during the Term of Employment by the
Company other than for Cause or by the Executive for Good Reason (other than for
Disability, as described in Section 5(a)) within 12 months following a Change of
Control, or within three months prior to a Change of Control if such termination
is initiated by, at the request or suggestion of, or with the agreement of, the
counterparty to the Change of Control, the Executive’s Term of Employment shall
terminate without further obligations to the Executive under this Agreement,
except as provided in Section 5(h) below. In addition and if the requirements of
Section 5(k) are met:

 

(i)           MFA shall immediately pay to Executive in a lump sum, but in all
events within 60 days following the date of termination, an amount in cash equal
to one and a half times the sum of (A) the Executive’s then current Base Salary
and (B) the Executive’s Average Bonus;

 

(ii)          (A) All of the Executive’s outstanding equity-based awards (e.g.,
restricted stock, phantom shares, RSUs and stock options) shall immediately vest
in full (in the case of any such award which is subject to vesting based on the
achievement of performance goals, such award shall become vested with respect to
the target number of shares subject to such award); and (B) any such options
shall remain exercisable until the earlier of (I) 90 days following the date of
such termination or (II) the date on which each such option would have expired
had the Executive’s employment not terminated;

 

(iii)         The Company shall reimburse the Executive for 100% of the COBRA
premiums incurred by the Executive for the Executive and his eligible dependents
under the Company’s health care plan during the 18 month period following the
Executive’s termination of employment. Such reimbursement shall be provided on
the payroll date immediately following the date on which the Executive remits
the applicable premium payment and shall commence within 60 days after the
termination date; provided that, the first payment shall include any
reimbursements that would have otherwise been payable during the period
beginning on the Executive’s termination date and ending on the date of the
first reimbursement payment. Reimbursement payments shall be treated as taxable
compensation to the Executive to the extent required by law; and

 

(iv)         The Executive shall receive any unpaid Annual Bonus for the
Performance Period immediately preceding the Executive’s date of termination.

 

For the avoidance of doubt, if the Executive is eligible to receive payments and
benefits pursuant to this Section 5(g), he shall not be eligible to receive any
payments and benefits pursuant to Section 5(c) or Section 5(d).

 

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(h)          Other Payments. Upon the termination of the Executive’s employment
during the Term of Employment, in addition to the amounts payable under any
Section above and any accrued but unpaid base salary, the Executive shall be
entitled to receive the following:

 

(i)           any vested deferred compensation (including any interest accrued
on or appreciation in value of such deferred amounts) in accordance with the
applicable plan documents;

 

(ii)          reimbursement for reasonable business expenses incurred but not
yet reimbursed by the Company; and

 

(iii)         any other benefits to which the Executive or his legal
representative may be entitled under all applicable plans and programs of the
Company, as provided in Section 4 above.

 

(i)           Payments Subject to Section 409A and Other Applicable Law.

 

(i)           Notwithstanding anything herein to the contrary, the Executive
shall not be entitled to any payment pursuant to this Section 5 prior to the
earliest date permitted under Section 409A of the Code, and applicable Treasury
regulations thereunder. To the extent any payment pursuant to this Section 5 is
required to be delayed six months pursuant to the special rules of Section 409A
of the Code related to “specified employees,” each affected payment shall be
delayed until six months after the Executive’s termination of employment, and,
unless provided otherwise, with the first such payment being a lump sum equal to
the aggregate payments the Executive would have received during such six-month
period if no payment delay had been imposed. Any payments or distributions
delayed in accordance with the prior sentence shall be paid to the Executive on
the first day of the seventh month following the Executive’s termination of
employment. If the Executive dies during the postponement period prior to
payment, the amounts delayed shall be paid within 60 days after the date of the
Executive’s death.

 

(ii)          Notwithstanding any other provision contained herein, to the
extent any payments or distributions due to the Executive upon termination of
his employment under this Agreement are subject to Section 409A of the Code a
termination of the Executive’s employment shall be interpreted in a manner that
is consistent with the definition of a “separation from service” under Section
409A of the Code and the applicable Treasury regulations
thereunder.  Notwithstanding anything elsewhere to the contrary, the Executive
shall have no duties following any termination of his employment with MFA that
are inconsistent with his having a “separation from service” for purposes of
Section 409A of the Code and any regulations thereunder.

 

(iii)         With respect to the lump sum amounts payable in connection with a
Change of Control set forth in Section 5(a)(i) and Section 5(g)(i), such amounts
shall be paid in installments as described in Section 5(a)(i) and Section
5(c)(i) as though a Change of Control had not occurred, if such Change of
Control does not constitute a “change in control event” for purposes of Section
409A of the Code or if otherwise required by Section 409A of the Code.

 

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(iv)         In the case of any amounts that are payable to the Executive under
this Agreement in the form of installment payments, the Executive’s right to
receive such payments shall be treated as a right to receive a series of
separate payments under Treas. Reg. §1.409A-2(b)(2)(iii).

 

(v)          Notwithstanding anything herein to the contrary, in the event that
the reimbursements provided pursuant to Section 5(a)(iii), Section 5(d)(iii), or
Section 5(g)(iii) would subject the Executive or the Company to adverse tax
consequences under Section 105(h) of the Code or any tax penalties, then the
parties shall enter into an economically consistent arrangement that does not
cause either party to incur such adverse tax consequences or penalties.

 

(j)           No Mitigation; No Offset. In the event of any termination of the
Executive’s employment under this Agreement, he shall be under no obligation to
seek other employment or otherwise in any way to mitigate the amount of any
payment provided for in this Section 5, and there shall be no offset against
amounts due him under this Agreement on account of any remuneration attributable
to any subsequent employment that he may obtain.

 

(k)          Release. The Company’s obligation to make any payment or provide
any benefit pursuant to this Section 5 (other than pursuant to Sections 5(b) and
5(h) above) shall be contingent upon, and is the consideration for, (i) the
Executive executing and delivering to the Company, within 60 days after
termination of his employment, a general release (the “Release”), substantially
in the form annexed hereto as Exhibit C (with any revisions necessary to comply
with applicable law as reasonably determined by counsel to MFA and provided in
writing to the Executive within five business days after the date of the
termination of his employment), and (ii) such release becoming irrevocable in
accordance with its terms.  In the event that any payment or benefit is subject
to Section 409A of the Code and the 60-day period referred to in the immediately
preceding sentence spans two calendar years, any such payments or benefits
required to be made hereunder during such 60-day period shall be made in the
second calendar year, the first payment of which shall include all payments that
would otherwise have been made prior thereto.

 

(l)           Parachute Payments.

 

(i)           Notwithstanding any other provisions of this Agreement to the
contrary, in the event that it shall be determined that any payment or
distribution in the nature of compensation (within the meaning of Section
280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the “Payments”), would constitute an “excess parachute payment”
within the meaning of Section 280G of the Code (after taking into consideration
any mitigating factors such as the value of any non-competition restrictions or
similar factors), the Company shall reduce (but not below zero) the aggregate
present value of the Payments under the Agreement to the Reduced Amount (as
defined below), if reducing the Payments under this Agreement will provide the
Executive with a greater net after-tax amount than would be the case if no such
reduction was made. The Payments shall be reduced as described in the preceding
sentence only if (A) the net amount of the Payments, as so reduced (and after
subtracting the net amount of federal, state and local income and payroll taxes
on the reduced Payments), is greater than or equal to (B) the net amount of the
Payments without such reduction (but after subtracting the net amount of
federal, state and local income and payroll taxes on the Payments and the amount
of Excise Tax (as defined below) to which the Executive would be subject with
respect to the unreduced Payments). Only amounts payable under this Agreement
shall be reduced pursuant to this Section 5(l), and any reduction shall be made
in accordance with Section 409A of the Code.

 

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(ii)          The “Reduced Amount” shall be an amount expressed in present value
that maximizes the aggregate present value of Payments under this Agreement
without causing any Payment under this Agreement to be subject to the Excise
Tax, determined in accordance with Section 280G(d)(4) of the Code. The term
“Excise Tax” means the excise tax imposed under Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.

 

(iii)         All determinations to be made under this Section 5(l) shall be
made by an independent registered public accounting firm or consulting firm
selected by the Company immediately prior to a change of control, which shall
provide its determinations and any supporting calculations both to the Company
and the Executive within ten days of the change of control. Any such
determination by such firm shall be binding upon the Company and the Executive.
All fees and expenses of the accounting or consulting firm in performing the
determinations referred to in this Section 5(l) shall be borne solely by the
Company.

 

(m)         Resignation from Positions.  Upon termination of the Executive’s
employment with the Company for any reason, the Executive shall, as may be
requested by the Company, resign from any position he then holds as an officer,
director or fiduciary of the Company or any Company-related entity.  In
furtherance of the foregoing, the Executive shall execute and deliver to the
Company any letters, documents and other instruments necessary or appropriate to
effect such resignation.

 

6.            Definitions. For purposes of this Agreement, the following terms
shall be defined as set forth below:

 

(a)          Cause. “Cause” shall mean the Executive’s (i) commission of a
felony, a crime of moral turpitude or any crime committed against MFA, other
than traffic violations; (ii) engagement in willful misconduct, willful or gross
negligence, or fraud, embezzlement or misappropriation relating to significant
amounts, in each case in connection with the performance of his duties under
this Agreement; (iii) failure to adhere to the lawful directions of the Board of
Directors or the CEO that are reasonably consistent with his duties and position
provided for herein; (iv) breach in any material respect of any of the
provisions of Section 7 of this Agreement; (v) material violation of the
Company’s Code of Conduct or any other material written policy of the Company,
including without limitation, the Company’s nondiscrimination and harassment
policy; or (vi) breach in any material respect of the terms and provisions of
this Agreement resulting in material and demonstrable economic injury to MFA.
Notwithstanding the foregoing, (i) the Executive shall be given written notice
of any action or failure to act that is alleged to constitute Cause (a
“Default”), and if curable, an opportunity for 20 business days from the date of
such notice in which to cure such Default, such period to be subject to
extension in the discretion of the CEO and (ii) regardless of whether the
Executive is able to cure any Default, the Executive shall not be deemed to have
been terminated for Cause without (A) reasonable prior written notice to the
Executive setting forth the reasons for the decision to terminate the Executive
for Cause, (B) an opportunity for the Executive, together with his counsel, to
be heard by the CEO and (C) delivery to the Executive of a Notice of Termination
approved by the CEO, stating his good faith opinion that the Executive has
engaged in actions or conduct described in the preceding sentence, which notice
specifies the particulars of such action or conduct in reasonable detail;
provided, however, MFA may suspend the Executive with pay until such time as his
right to appear before the CEO, as the case may be, has been exercised, so long
as such appearance is within two weeks of the date of suspension.

 

 12 

 

 

(b)          Change of Control. A “Change of Control” shall mean the occurrence
of any one of the following events:

 

(i)           any “person,” as such term is used in Sections 13(d) and 14(d) of
the Act (other than MFA, any of its affiliates or any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan or
trust of MFA or any of its affiliates, and other than the Executive) together
with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2
under the Act) of such person, shall become the “beneficial owner” (as such term
is defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of MFA representing 30% or more of either (A) the combined voting power of MFA’s
then outstanding securities having the right to vote in an election of the Board
of Directors (“voting securities”), or (B) the then outstanding shares of common
stock of MFA (“Shares”) (in either such case other than as a result of an
acquisition of securities directly from MFA); or

 

(ii)          persons who, as of the Effective Date of this Agreement,
constitute MFA’s Board of Directors (the “Incumbent Directors”) cease for any
reason, including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of the
Board of Directors, provided that any person becoming a Director of MFA
subsequent to the Effective Date whose election or nomination for election was
approved and/or ratified by a vote of at least a majority of the Incumbent
Directors shall, for purposes of this Agreement, be considered an Incumbent
Director; or

 

(iii)         consummation of (A) any consolidation or merger of MFA or any
subsidiary where the stockholders of MFA, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, shares representing in the aggregate 50% or more of the voting
securities of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or substantially
all of the assets of MFA or (C) any plan for the liquidation or dissolution of
MFA.

 

 13 

 

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by MFA which, by reducing the number of Shares or
other voting securities outstanding, increases (x) the proportionate number of
Shares beneficially owned by any person to 30% or more of the Shares then
outstanding or (y) the proportionate voting power represented by the voting
securities beneficially owned by any person to 30% or more of the combined
voting power of all then outstanding voting securities; provided, however, that,
if any person referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional Shares or other voting securities
(other than pursuant to a stock split, stock dividend, or similar transaction),
then a “Change of Control” shall be deemed to have occurred for purposes of this
Section 6(b).

 

(c)          Competitor. “Competitor” shall mean any entity or person that is
engaged in a business that is conducted by the Company during the Executive’s
employment, or that is under consideration by the Board during the 12 months
prior to the Executive’s termination of employment, including, without
limitation, (i) any mortgage REIT, (ii) any entity or person engaged in any
element of acquiring mortgage backed securities (“MBS”), single family
residential mortgage loans (“Whole Loans”), credit risk transfer securities
(“CRTs”) or other products or instruments in which the Company invests,
including any private or public investment firm or broker dealer whose business
strategy is based on or who engages in the trading, sales, investment or
management of such securities, products or instruments, (iii) any entity that
manages or advises (including any external advisor) either (A) a mortgage REIT
or (B) an entity or person engaged in any element of acquiring MBS, Whole Loans,
CRTs or other products or instruments in which the Company invests, including
any private or public investment firm or broker dealer whose business strategy
is based on or who engages in the trading, sales, investment or management of
such securities, products or instruments and (iv) any entity or person engaged
in the management or sale of single family residential real estate that is
acquired as a result of foreclosure, short sale, deed-in-lieu or other actions
undertaken by such entity or person in respect of investments made by such
entity or person in Whole Loans.

 

(d)          Code. “Code” shall mean the Internal Revenue Code of 1986, as
amended.

 

(e)          Disability. “Disability” shall mean the Executive’s inability for a
period of six consecutive months, to render substantially the services provided
for in this Agreement with or without a reasonable accommodation by reason of
mental or physical disability, whether resulting from illness, accident or
otherwise, other than by reason of chronic or persistent abuse of any substance
(such as narcotics or alcohol), provided that a Disability for purposes of
Section 5(a) shall qualify as a Disability under Section 409A of the Code to the
extent required by Section 409A of the Code. Notwithstanding the foregoing, no
circumstances or condition shall constitute a Disability to the extent that, if
it were, a 20% tax would be imposed under Section 409A of the Code; provided
that, in such a case, the event or condition shall continue to constitute a
Disability to the maximum extent possible (e.g., if applicable, in respect of
vesting without an acceleration of distribution) without causing the imposition
of such 20% tax. In addition, nothing herein shall limit or restrict the payment
of any amount subject to Section 409A of the Code upon an otherwise permitted
payment event under Section 409A of the Code, including upon a separation from
service.

 

 14 

 

 

(f)          Good Reason. “Good Reason” shall mean:

 

(i)           a material diminution in the Executive’s title, duties or
responsibilities (other than in connection with the Executive’s disability);

 

(ii)          relocation of the Executive’s place of employment without his
consent outside the New York City metropolitan area;

 

(iii)         the failure of MFA to pay within 60 business days any material
payment or benefits due from MFA;

 

(iv)        the material failure by MFA to honor any of its material obligations
to the Executive.

 

For Good Reason to exist, the Executive must provide written notice of an event
purportedly constituting Good Reason within 90 days of its occurrence, MFA must
have failed to cure such event within 15 days of such notice and the Executive
must provide written notice of his decision to terminate employment, such notice
to be provided within 15 days of the expiration of such cure period.  The
effective date of such termination shall be the end of the period of Garden
Leave.

 

(g)          Notice of Termination. “Notice of Termination” means the written
notice of termination of the Executive’s employment delivered by, as applicable,
the Executive or MFA.

 

(h)          Restricted Period. “Restricted Period” shall mean the period
commencing on the Effective Date and ending on the date that is nine months
following the Executive’s termination of employment for any reason.

 

7.            Covenants.

 

(a)          Confidentiality. During the Term of Employment, and at all times
thereafter, the Executive shall maintain the confidentiality of all confidential
or proprietary information of the Company, or of any other person or entity with
which the Executive has been involved as a direct or indirect result of his
employment by, or performance of consulting or other services (including,
without limitation, as a director, officer, advisor, agent, consultant or other
independent contractor) for, the Company (“Confidential Information”), and,
except in furtherance of his employment by the Company or as specifically
required by law or by court order or as permitted by Section 7(g) or in the
course of carrying out his duties for the Company, he shall not directly or
indirectly disclose any such information to any person or entity; nor shall he
use Confidential Information for any purpose except for the benefit of the
Company. For purposes of this Agreement, “Confidential Information” includes,
without limitation: client or customer lists, identities, contacts, business and
financial information; investment strategies; pricing information or policies,
fees or commission arrangements of the Company; marketing plans, projections,
presentations or strategies of the Company; financial and budget information of
the Company; personnel information, personnel lists, resumes, personnel data,
organizational structure, compensation and performance evaluations; information
regarding the existence or terms of any agreement or relationship between the
Company and any other party; and any other information of whatever nature, which
gives to the Company an opportunity to obtain an advantage over its competitors
who or which do not have access to such information. This restriction shall
apply regardless of whether such Confidential Information is in written,
graphic, recorded, photographic, data or any machine readable form or is orally
conveyed to, or memorized by, the Executive; provided, however, that this
Section 7(a) shall not apply to Confidential Information that is or becomes
publicly known through no act or omission on the Executive’s part.  Anything to
the contrary notwithstanding, nothing in this Agreement shall prevent the
Executive from retaining papers and other materials of a personal nature,
including personal diaries, calendars and Rolodexes, information relating to his
compensation or relating to reimbursement of expenses, and copies of plans,
programs and agreements relating to his employment.

 

 15 

 

 

(b)          Non-Competition and Non-Solicitation. The Executive acknowledges
that during the Executive’s employment with the Company prior to and after the
Effective Date, (i) the Executive has had and will continue to have access to
trade secrets and other Confidential Information of the Company, which, if
disclosed, would unfairly and inappropriately assist in competition against the
Company; (ii) in the course of the Executive’s employment by a Competitor during
the Restricted Period, the Executive would inevitably use or disclose such trade
secrets and Confidential Information; (iii) the Company has substantial
relationships with its customers and the Executive has had and will continue to
have access to these customers; (iv) the Executive has generated and will
continue to generate goodwill for the Company in the course of the Executive’s
employment and (v) the Executive’s services are unique and
irreplaceable.  Therefore, in consideration of the Executive’s continued
employment with the Company, of the compensation and benefits provided to the
Executive under this Agreement, of MFA’s agreement to make severance benefits
available pursuant to Section 5, and of the Executive’s being granted access to
the customers, trade secrets and other Confidential Information of the Company,
the Executive agrees that the following restrictions on the Executive’s
activities during and after the Executive’s employment are necessary,
appropriate and reasonable to protect the goodwill, Confidential Information and
other legitimate interests of the Company from unfair and inappropriate
competition:

 

(i)           During the Restricted Period, the Executive will not, without the
prior written consent of MFA, within the United States, manage, operate, control
or be connected as a stockholder (other than as a holder of shares publicly
traded on a stock exchange or the NASDAQ National Market System, provided that
the Executive shall not own more than five percent of the outstanding shares of
any publicly traded company) or partner with, or serve as an officer, director,
employee or consultant of, any Competitor.

 

(ii)         During the Restricted Period, the Executive will not, without the
prior written consent of MFA, directly or indirectly (individually, or through
or on behalf of another entity as owner, partner, agent, employee, consultant,
or in any other capacity), engage in any activity intentionally to interfere
with, disrupt, diminish or damage the business of the Company, or its
relationship with any client, supplier or other business relationship of the
Company.

 

 16 

 

 

(iii)        During the Executive’s employment with the Company and during the
period commencing on the Executive’s date of termination of employment for any
reason and ending on the second anniversary of the Executive’s termination of
employment, the Executive will not, without the prior written consent of MFA,
directly or indirectly (individually, or through or on behalf of another entity
as owner, partner, agent, employee, consultant, or in any other capacity), (A)
solicit, encourage, or engage in any activity to induce any employee of MFA or
its affiliates to terminate employment with MFA or its affiliates, or to become
employed by, or to enter into a business relationship with, any other person or
entity; or (B) hire or retain any person who was an employee of MFA or its
affiliates within the six month period preceding such action; provided that, (x)
this Section 7(b)(iii) shall not apply to any administrative employee of MFA or
its affiliates or any person who was an administrative employee of MFA or its
affiliates and (y) any hiring or solicitation pursuant to a general solicitation
conducted by an entity that has hired or agreed to hire the Executive and that
does not directly or indirectly target current or former employees of MFA or its
affiliates, or by a headhunter employed by such entity, which in either case
does not involve the Executive, shall not be a violation of this Section
7(b)(iii).

 

(c)          MFA Materials. The Executive acknowledges that all originals and
copies of materials, records and documents generated by him or coming into his
possession during his employment by MFA are the sole property of MFA (“MFA
Materials”). During his employment, and at all times thereafter, the Executive
shall not remove, or cause to be removed, from the premises of MFA, copies of
any record, file, memorandum, document, computer related information or
equipment, or any other item relating to the business of MFA, except in
furtherance of his duties under this Agreement. When the Executive terminates
his employment with MFA, or upon request of MFA at any time, the Executive shall
promptly deliver to MFA all originals and copies of MFA Materials in his
possession or control and shall not retain any originals or copies in any form.
The Executive further agrees to delete or destroy any and all documents, files
and/or backup files containing MFA Materials on any computer or storage device
owned by and/or within the care, custody or control of the Executive.

 

(d)        No Disparagement. Each of the Executive and MFA agrees that, except
as required by applicable law or compelled by process of law or as otherwise
permitted pursuant to Section 7(g), during and after the Term of Employment they
shall not make any derogatory, disparaging or critical statement about the other
party hereto or, further in the case of statements by the Executive about (i)
MFA, its parent, affiliates, or subsidiaries, if any; (ii) any product or
service provided by MFA and its parent, affiliates or subsidiaries, if any; or
(iii) MFA’s and its parent’s, affiliates’ or subsidiaries’, if any, prospects
for the future. Nothing in this Section 7(d) shall (A) prohibit either MFA or
the Executive from testifying truthfully in any legal or administrative
proceeding or from truthfully responding to any untrue statement by the other
party or (B) prohibit the Executive from making truthful statements in the
course of carrying out his duties for MFA.

 

 17 

 

 

(e)        Cooperation with Respect to Litigation. During the Term of Employment
and at all times thereafter, the Executive agrees to give prompt written notice
to MFA of any claim against the Company after becoming aware of such claim and
(to the extent reasonably requested by MFA) to reasonably cooperate, in good
faith and to the best of his ability, with MFA in connection with any and all
pending, potential or future claims, investigations or actions which directly or
indirectly relate to any action, event or activity about which the Executive may
have knowledge in connection with or as a result of his employment by the
Company. Such cooperation will include all assistance that MFA, its counsel or
representatives may reasonably request, including reviewing documents, meeting
with counsel, providing factual information and material, and appearing or
testifying as a witness; provided, however, that MFA will promptly reimburse the
Executive for all reasonable expenses, including travel, lodging and meals,
incurred by him in fulfilling his obligations under this Section 7(e) and,
except as may be required by law or by court order, should the Executive then be
employed by an entity other than MFA, such cooperation will not materially
interfere with the Executive’s then current employment.

 

(f)          Remedies.

 

(i)           The Executive agrees that these restraints are necessary for the
reasonable and proper protection of the Company and its trade secrets and
Confidential Information and that each and every one of the restraints is
reasonable in respect to subject matter, length of time and geographic area, and
that these restraints, individually or in the aggregate, will not prevent the
Executive from obtaining other suitable employment during the period in which
the Executive is bound by the restraints.  The Executive agrees that, before
providing services, whether as an employee or consultant, to any entity during
the Restricted Period, the Executive will provide a copy of this Agreement to
such entity, and such entity shall acknowledge to MFA in writing that it has
read this Agreement.

 

(ii)          The Executive acknowledges that each of these covenants has a
unique, very substantial and immeasurable value to the Company, that the
Executive has sufficient assets and skills to provide a livelihood while such
covenants remain in force and that, as a result of the foregoing, in the event
that the Executive breaches such covenants, monetary damages would be an
insufficient remedy for the Company and equitable enforcement of the covenant
would be proper.  The Executive therefore agrees that the Company, in addition
to any other remedies available to it, will be entitled to preliminary and
permanent injunctive relief against any breach by the Executive of any of those
covenants, without the necessity of showing actual monetary damages or the
posting of a bond or other security.  The Executive also agrees that, in
addition to any other remedies available to the Company and notwithstanding any
provision of this Agreement to the contrary, in the event Executive breaches in
any material respect any of his obligations under this Section 7, the Company
may immediately cease all payments under Sections 5(a), 5(b), 5(c), 5(d), or
5(g) as applicable, all equity-based awards granted under this Agreement may be
immediately forfeited, and the Company may require that the Executive repay any
after-tax amounts previously paid to the Executive under Sections 5(a), 5(b),
5(c) or 5(d), as applicable, and any stock delivered or other amounts paid (each
on an after-tax basis) with respect to any equity-based awards granted under
this Agreement.

 

 18 

 

 

(iii)          The Executive and MFA further agree that, in the event that any
provision of this Section 7 is determined by any court of competent jurisdiction
to be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, that provision will
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.  The Executive further covenants that the Executive will not
challenge the reasonableness or enforceability of any of the covenants set forth
in this Section 7 and that the Executive will reimburse MFA and its affiliates
for all costs (including reasonable attorneys’ fees) incurred in connection with
any action to enforce any of the provisions of this Section 7 if either MFA
and/or its affiliates prevails on any material issue involved in such dispute or
if the Executive challenges the reasonability or enforceability of any of the
provisions of this Section 7, it being understood that the Executive shall not
be considered to have challenged the enforceability of this Section 7 by arguing
that his conduct did not, in fact, violate the terms of this Section 7. It is
also agreed that each of MFA’s affiliates will have the right to enforce all of
the Executive’s obligations to that affiliate under this Agreement, including
without limitation pursuant to this Section 7.

 

(g)          Permitted Conduct.

 

(i)           Nothing in this Agreement, including the obligations set forth in
this Section 7, restricts or prohibits the Executive from initiating
communications directly with, responding to any inquiries from, providing
testimony before, providing confidential information to, reporting possible
violations of law or regulation to, or from filing a claim or assisting with an
investigation directly with a self-regulatory authority or a government agency
or entity, including the U.S. Equal Employment Opportunity Commission, the
Department of Labor, the National Labor Relations Board, the Department of
Justice, the Securities and Exchange Commission, the Congress, and any agency
Inspector General (collectively, the “Regulators”), or from making other
disclosures that are protected under the whistleblower provisions of state or
federal law or regulation. The Executive does not need the prior authorization
of the Company to engage in such communications with the Regulators, respond to
such inquiries from the Regulators, provide confidential information or
documents to the Regulators, or make any such reports or disclosures to the
Regulators. The Executive is not required to notify the Company that he has
engaged in such communications with the Regulators.

 

 19 

 

 

 

(ii)           The Company hereby notifies the Executive that federal law
provides criminal and civil immunity to federal and state claims for trade
secret misappropriation to individuals who disclose a trade secret to their
attorney, a court, or a government official in certain, confidential
circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2),
related to the reporting or investigation of a suspected violation of the law,
or in connection with a lawsuit for retaliation for reporting a suspected
violation of the law. Nothing in this Agreement is intended to limit any rights
under such federal law.

 

8.            Indemnification. MFA shall indemnify the Executive to the fullest
extent permitted by Maryland law as amended from time to time in connection with
the Executive’s duties with MFA, against all costs, expenses, liabilities and
losses (including, without limitation, attorneys’ fees, judgments, fines,
penalties, ERISA excise taxes and amounts paid in settlement) actually and
reasonably incurred by the Executive in connection with an action, suit or
proceeding. While the Executive is an officer of MFA, and for six years
thereafter, MFA (or any successor thereto) shall provide comprehensive coverage
under its officers and directors insurance policy (or policies) on substantially
the same terms and levels that it provides to its senior executive officers, at
MFA’s sole cost.

 

9.           Clawback Policy. The Executive agrees that all bonuses, equity
compensation and other incentive compensation provided by the Company shall be
subject to any applicable clawback policy implemented by the Board of Directors
from time to time.

 

10.         Assignability; Binding Nature. This Agreement shall inure to the
benefit of MFA and the Executive and their respective successors, heirs (in the
case of the Executive) and assigns. No rights or obligations of MFA under this
Agreement may be assigned or transferred by MFA except that any such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which MFA is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of MFA, provided that the assignee or transferee
is the successor to all or substantially all of the assets of MFA and such
assignee or transferee assumes the liabilities, obligations and duties of MFA,
as contained in this Agreement, either contractually or as a matter of law. This
Agreement shall not be assignable by the Executive; provided however that, in
the event of the Executive’s death or a judicial determination of his
incapacity, references to the Executive in this Agreement shall be deemed, as
appropriate, to be references to his heirs, executor(s) or other legal
representative(s).

 

11.         Representation. MFA and the Executive each represent and warrant
that it or he is fully authorized and empowered to enter into this Agreement and
that its or his entering into this Agreement and the performance of its or his
obligations under this Agreement will not violate any agreement to which it or
he is a party.

 

12.         Entire Agreement. This Agreement contains the entire agreement
between MFA and the Executive concerning the subject matter hereof and upon the
Effective Date supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between them with
respect thereto, including without limitation, the Former Employment Agreement,
except as otherwise provided in Section 3(b)(iii).

 

13.         Amendment or Waiver. This Agreement can only be changed, modified or
amended in a writing that is signed by both the Executive and MFA and that
specifically identifies the provision(s) of this Agreement that are being
changed, modified or amended. No waiver by either MFA or the Executive at any
time of any breach by the other party of any condition or provision of this
Agreement shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or at any prior or subsequent time. Any waiver must be in
writing and signed by the Executive or the Board of Directors, as the case may
be.

 

 20 

 

 

14.         Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.

 

15.         Reasonableness. To the extent that any provision or portion of this
Agreement is determined to be unenforceable by a court of law or equity, that
provision or portion of this Agreement shall nevertheless be enforceable to the
extent that such court determines is reasonable.

 

16.         Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. For the
avoidance of doubt, the covenants in Section 7 of this Agreement shall survive
any termination or expiration of this Agreement and termination of the
Executive’s employment for any reason.

 

17.         Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Maryland (without
regard to its choice of law provisions).  Each of the parties agrees that any
dispute between the parties shall be resolved only in the courts of the State of
Maryland or the United States District Court for the District of Maryland and
the appellate courts having jurisdiction of appeals in such courts.  In that
context, and without limiting the generality of the foregoing, each of the
parties hereto irrevocably and unconditionally (a) submits for himself or itself
in any proceeding relating to this Agreement or the Executive’s employment by
MFA or any affiliate, or for the recognition and enforcement of any judgment in
respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of
the State of Maryland, the court of the United States of America for the
District of Maryland, and appellate courts having jurisdiction of appeals from
any of the foregoing, and agrees that all claims in respect of any such
Proceeding shall be heard and determined in such Maryland State court or, to the
extent permitted by law, in such federal court; (b) consents that any such
Proceeding may and shall be brought in such courts and waives any objection that
he or it may now or thereafter have to the venue or jurisdiction of any such
Proceeding in any such court or that such Proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; (c) waives all
right to trial by jury in any Proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Executive’s
employment by MFA or any affiliate, or his or its performance under or the
enforcement of this Agreement; (d) agrees that service of process in any such
Proceeding may be effected by mailing a copy of such process by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such party at his or its address as provided in Section 19; and (e) agrees that
nothing in this Agreement shall affect the right to effect service of process in
any other manner permitted by the laws of the State of Maryland.

 

 21 

 

 

18.           Legal Fees. MFA shall pay directly all reasonable legal fees
incurred by the Executive in connection with the negotiation, preparation and
execution of this Agreement up to $10,000. Subject to Section 7(f), MFA shall
reimburse the Executive (and his beneficiaries) any reasonable costs and
expenses (including, without limitation, reasonable attorneys’ fees and other
reasonable costs of counsel) incurred by the Executive (or any of his
beneficiaries) in resolving any controversy, dispute or claim arising out of or
relating to this Agreement (including, for the avoidance of doubt, with respect
to any equity grant described in this Agreement), if the Executive (or his
beneficiaries) is the prevailing party with respect to at least one material
issue asserting a material breach of such Agreement by the Company.

 

19.           Notices. Any notice given to either party shall be in writing and
shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the party concerned, if to MFA, at its principal executive office,
and if to the Executive, at the address of the Executive shown on MFA’s records
or at such other address as such party may give notice of.

 

20.           Headings. The headings of the Sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.

 

21.           Counterparts. This Agreement may be executed in two or more
counterparts.  Signatures delivered by facsimile (including by “pdf”) shall be
deemed effective for all purposes.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

 

 

  MFA FINANCIAL, INC.           By: /s/ Craig L. Knutson     Name: Craig L.
Knutson     Title: Chief Executive Officer and President                  
EXECUTIVE:           By: /s/ Bryan Wulfsohn     Bryan Wulfsohn

 

 22 

 

 

Exhibit A

 

Annual Performance Bonus

 

The following summarizes the material terms of the annual bonus (“Annual Bonus”)
set forth in Section 3(b) of the Agreement to which this Exhibit A is attached.
Unless otherwise specified in this Exhibit A, all defined terms have the
meanings set forth in the Agreement.

 

1.                  Performance Period. The Annual Bonus shall be payable for
each of the following performance periods (each, a “Performance Period”).

 

·December 1, 2019 through November 30, 2020

 

·December 1, 2020 through November 30, 2021

 

The Executive shall be eligible to receive the Annual Bonus only if the
Executive remains employed by the Company through the date on which the Annual
Bonus is paid, except as provided in the two next following sentences. The
Executive shall receive any unpaid Annual Bonus for the Performance Period
immediately preceding the Executive’s date of termination if the Executive’s
employment is terminated by the Company without Cause or by the Executive for
Good Reason, or if the Executive’s employment is terminated by death or
Disability, subject to compliance with Section 5(k) of the Agreement (except in
the event of death). In addition, in the event the Executive’s employment is
terminated by the Company on December 31, 2021 under circumstances which do not
constitute Cause, the Executive shall receive any unpaid Annual Bonus for the
Performance Period ending on November 30, 2021 calculated in accordance with
Section 5(d)(iv) of the Agreement, subject to compliance with Section 5(k) of
the Agreement.

 

Any Annual Bonus shall be subject to achievement of the performance goals
described herein. In no event shall the Executive receive any unpaid Annual
Bonus in the event the Executive’s employment is terminated by the Company for
Cause or by the Executive (other than for Good Reason as described above).

 

2.                  Target Bonus. For each Performance Period, the Executive’s
target annual bonus (the “Target Bonus”) shall be equal to $950,000. The
Executive is eligible to receive an Annual Bonus from zero to two times the
Target Bonus for each Performance Period, based on performance as described
below.

 

3.                  Performance Components. The Annual Bonus shall consist of
two components:

 

·75% of the Annual Bonus shall be payable based on MFA’s return on average
equity (“ROAE” and such portion of the Annual Bonus, the “ROAE Bonus”).

 

·25% of the Annual Bonus shall be payable based on the Executive’s individual
performance and on MFA performance and risk management (such portion of the
Annual Bonus, the “IRM Bonus”).

 

 

 

 

4.                  Definition of ROAE.

 

For purposes of the ROAE Bonus: “ROAE” means (i) MFA Return, divided by (ii) MFA
Average Equity, for the 12 month Performance Period.

 

“MFA Return” means net income as determined in accordance with GAAP, but
excluding non-cash expense items such as depreciation expense, amortization of
goodwill, life-of-loan loss reserves recorded under the Current Expected Credit
Losses accounting standard (ASU 2016-13) and other non-cash expense items as
determined by the Compensation Committee in its sole discretion for the
applicable Performance Period. If, for any portion of any Performance Period,
(i) MFA does not use hedge accounting or (ii) its derivative hedging instruments
or any portion thereof are otherwise deemed ineffective, which in either case,
results in changes in the value of such hedging instruments being recorded in
MFA’s GAAP income statement, then any gains or losses from such hedging
instruments will also be excluded from the calculation of MFA Return.

 

“MFA Average Equity” means the stockholders’ equity of MFA as determined in
accordance with GAAP, but excluding accumulated other comprehensive income or
loss (which, among other things, reflects unrealized gains or losses in MFA’s
residential mortgage-backed securities portfolio), stockholders’ equity
attributable to preferred stock and other items as determined by the
Compensation Committee in its sole discretion for the applicable Performance
Period. For purposes of calculating ROAE, MFA Average Equity shall be determined
based on the average of MFA’s stockholders’ equity calculated as described in
the preceding sentence as of the last day of each month during the applicable
Performance Period.

 

5.                  ROAE Bonus

 

For each Performance Period, the target amount of the ROAE Bonus will be equal
to 75% of the Target Bonus, and the Executive shall be eligible to receive from
zero to two times such target amount of ROAE Bonus.

 

For purposes of the ROAE Bonus:

 

·The “ROAE Target” shall be the greater of (x) the 2 Year Treasury Rate + 400
basis points or (y) 8%; provided that the ROAE Target shall not exceed 10%.

 

·The “2 Year Treasury Rate” shall be calculated as the average of the weekly 2
year Treasury note rates published in the U.S. Federal Reserve H.15 Report for
the 52 weeks in the Performance Period.

 

·The target bonus multiple (“TBM”) shall be the percentage determined as
described below based on ROAE for the Performance Period.

 

The ROAE Bonus will be calculated by multiplying (i) the TBM based on ROAE for
the Performance Period by (ii) the target amount of the ROAE Bonus for the
Performance Period.

 

 24 

 

 

To calculate the TBM, ROAE is compared against the 2 Year Treasury Rate and the
ROAE Target as follows:

 

·If ROAE is less than the ROAE Target and ROAE is less than or equal to the 2
Year Treasury Rate, the TBM shall be equal to 0.

 

·If ROAE is less than the ROAE Target but ROAE is greater than the 2 Year
Treasury Rate, the TBM is equal to the greater of (x) a fraction where (i) the
numerator equals the ROAE minus the 2 Year Treasury Rate and (ii) the
denominator equals the ROAE Target minus the 2 Year Treasury Rate and (y) zero
(0).

 

·If ROAE is greater than or equal to the ROAE Target, the TBM is equal to the
lesser of (x) one (1) plus a fraction where (i) the numerator equals the ROAE
minus the ROAE Target and (ii) the denominator equals 16% minus the ROAE Target,
and (y) two (2).

 

·Notwithstanding the foregoing, regardless of the applicable ROAE Target, in the
event that ROAE equals or exceeds 16%, then TBM shall be equal to 2.

 

Set forth below are two examples, which are intended to be used purely for
illustrative purposes:

 

Example 1:

 

If the 2-Year Treasury Rate was equal to 3%, ROAE was equal to 7%, and the
target for the ROAE Bonus was equal to $712,500, then:

 

·The ROAE Target would be 8%;

 

·ROAE would be less than the ROAE Target, so TBM would be equal to a fraction
where (x) the numerator equals the ROAE minus the 2 Year Treasury Rate and (y)
the denominator equals the ROAE Target minus the 2 Year Treasury Rate.

 

·(7-3)/(8-3) = 80%;

 

·TBM =80%;

 

·80% of $712,500 = $570,000; and

 

·ROAE Bonus = $570,000.

 

Example 2:

 

If the 2-Year Treasury Rate was equal to 7%, ROAE was equal to 11% and the
target for the ROAE Bonus was equal to $712,500, then:

 

·The ROAE Target would be 10%;

 

·ROAE would be greater than the ROAE Target, so TBM would be equal to the sum of
1 and a fraction where (x) the numerator equals the ROAE minus the ROAE Target
and (y) the denominator equals 16% minus the ROAE Target, up to a maximum TBM of
2;

 

 25 

 

 

·(1) + ((11-10)/(16-10)) = 116.67%

 

·116.67% of $712,500 = $831,273.75 and

 

·ROAE Bonus = $831,273.75.

 

6.                  IRM Bonus

 

For each Performance Period, the target amount of the IRM Bonus will be equal to
25% of the Target Bonus, and the Executive shall be eligible to receive from
zero to two times the target amount of such IRM Bonus. The amount of the IRM
Bonus shall be determined by the Compensation Committee in its sole discretion,
based upon any factors deemed relevant and appropriate by the Compensation
Committee in its sole discretion, including without limitation:

 

·MFA’s leverage strategy relative to business plan and peers;

 

·MFA’s total stockholder return relative to the S&P financial index or other
relevant indices;

 

·MFA’s total stockholder return relative to its peer group;

 

·MFA’s absolute total stockholder return;

 

·MFA’s other asset management activities; and

 

·The Executive’s individual performance.

 

7.                  Form of Payment

 

For each Performance Period, the sum of the ROAE Bonus and the IRM Bonus shall
equal the Annual Bonus. The amount of the Annual Bonus, up to $500,000 shall be
paid in cash. To the extent that the Annual Bonus exceeds $500,000, then (i) 50%
of the excess amount will be paid in the form of restricted stock with a fair
market value equal to 50% of the excess on the date of grant, and (ii) 50% of
the excess amount will be paid in cash. The restricted stock will be fully
vested as of the date of grant, but the shares may not be sold or otherwise
transferred during the three-year period following the date of grant (or, if
earlier, upon the Executive’s death or Disability or the occurrence of a Change
of Control). The restricted stock shall be subject to the terms of the
applicable award agreement and the Equity Compensation Plan.

 

The Annual Bonus shall be paid, and restricted stock issued, as applicable,
between January 1 and March 15 following the end of the Performance Period.

 

 26 

 

 

8.                  Withholding Obligations

 

The parties hereto acknowledge and understand that MFA or the Executive may
require or elect (as the case may be) that the Executive satisfy any federal,
state or local tax withholding obligation with respect to the portion of the
Annual Bonus paid in the form of restricted stock by withholding shares from the
shares otherwise issuable to the Executive; provided that such shares shall not
exceed the minimum applicable tax withholding required by law, or such higher
amount that does not result in adverse accounting treatment for the Company, as
approved in advance by the Compensation Committee.

 

9.                  Committee Determinations

 

All determinations with respect to the Annual Bonus, including the amount, if
any, which is payable to the Executive for each Performance Period, shall be
made by the Compensation Committee, in good faith and in compliance with this
Exhibit A. Any such determinations shall be final and binding on the Executive
and MFA.

 

 27 

 

 

Exhibit B

 

Summary of the Company’s Long Term Incentive Program

 

The following summarizes certain material components of the Company’s Long Term
Incentive Program as applicable to grants under Section 3(c) of the Agreement to
which this Exhibit B is attached. Notwithstanding any provision of the Agreement
or this Exhibit B, all grants under Section 3(c) of the Agreement shall be
subject to, and consistent with, the terms and conditions of the Equity
Compensation Plan. Unless otherwise specified in this Exhibit B, all defined
terms have the meanings set forth in the Agreement.

 

10.                  Annual Grants.

 

To the extent that the Executive is still employed by MFA on the applicable
grant date, within 25 business days following the Effective Date and in February
2021, the Executive shall receive grants of restricted stock units subject to
time vesting (“TRSUs”) and restricted stock units which vest based on the
achievement of performance goals (“PRSUs”). The TRSU and PRSU grants shall be
subject to the terms of the applicable award agreements and the Equity
Compensation Plan.

 

11.                 TRSUs

 

Each annual grant of TRSUs will provide for a grant of TRSUs with respect to a
number shares of MFA common stock equal to $380,000 divided by the average of
the daily closing price of MFA common stock during the first 20 trading days in
the year in which the TRSUs are granted, rounded to the nearest whole share. The
TRSUs will become fully vested on the third December 31 following the date of
grant; provided that the Executive remains employed for the entire vesting
period and subject to vesting as described in Sections 5(a), 5(b), 5(c) and 5(g)
of the Agreement. Any unvested TRSUs shall be forfeited as of the date of
Executive’s termination of employment, except as provided in Sections 5(a),
5(b), 5(c), 5(d), and 5(g) of the Agreement.

 

Within 30 days following the date on which the TRSUs vest, the Executive will
receive one share of common stock of MFA for each TRSU that vests.

 

In the event that dividends are declared with respect to the common stock of MFA
during the period in which the TRSUs are outstanding, the Executive shall
receive a cash payment equal to the amount of dividends that the Executive would
have received if the Executive had owned a number of shares of common stock of
MFA equal to the number of outstanding TRSUs as of the date on which the
dividend is declared. Such payment shall be made within 30 days after the date
on which the dividend is paid on MFA stock.

 

12.                 PRSUs

 

As further described below, 50% of each annual grant of PRSUs (the “Absolute TSR
PRSUs”) will vest based on MFA’s average total shareholder return (“Average
TSR”) for the three year performance period beginning on January 1 of the year
of grant (the “TSR Performance Period”), and 50% of each annual grant of PRSUs
(the “Relative TSR PRSUs”) will vest based on MFA’s TSR compared to the TSR of
designated peer group companies, as set forth in the applicable award agreement,
during the TSR Performance Period.

 

 

 

 

Each annual grant of PRSUs will provide for a target grant of Absolute TSR PRSUs
(the “Absolute TSR Target Award”) and a target grant of Relative TSR PRSUs (the
“Relative TSR Target Award”). The Absolute TSR Target Award and the Relative TSR
Target Award shall each be a number of PRSUs equal to the quotient of (a)
$285,000 and (b) 85% of the average of the daily closing price of MFA common
stock during the first 20 trading days in the year in which the PRSUs are
granted, rounded to the nearest whole share.

 

The TSR Performance Periods are as follows:

 

·January 1, 2020 through December 31, 2022

 

·January 1, 2021 through December 31, 2023

 

The PRSUs will vest on December 31 of the applicable TSR Performance Period, to
the extent that the total shareholder return performance goals described below
are achieved; provided that the Executive remains employed for the entire
vesting period and subject to vesting as described in Sections 5(a), 5(b), 5(c),
5(d), and 5(g) of the Agreement. Any unvested PRSUs shall be forfeited as of the
date of Executive’s termination of employment, except as provided in Sections
5(a), 5(b), 5(c) and 5(g) of the Agreement.

 

Within 30 days following the date on which the PRSUs vest, the Executive will
receive one share of common stock of MFA for each PRSU that vests.

 

For purposes of the PRSUs, TSR of MFA and each applicable peer group company for
the vesting period shall be calculated as follows:

 

·“TSR” is equal to (x) the excess of the Average Final Price over the Average
Initial Price, plus Dividends Paid on common stock in respect of the TSR
Performance Period, divided by (y) the Average Initial Price.

 

·The “Average Initial Price” is equal to the average of the daily closing price
of common stock during the first 20 trading days in January of the first year of
the TSR Performance Period.

 

·The “Average Final Price” is equal to the average of the daily closing price of
common stock during the last 20 trading days in December of the last year of the
TSR Performance Period.

 

·The “Dividends Paid” shall equal the cumulative dividends (including any stock
dividends) paid per share of common stock in respect of the TSR Performance
Period. For this purpose, dividends declared, but not yet paid, on a share
within the 45 day period preceding the applicable vesting date will be counted
as Dividends Paid.

 

 29 

 

 

Absolute TSR PRSUs

 

For purposes of the TSR PRSUs, the “Average TSR” for the Performance Period is
the TSR, divided by 3, and the “Target TSR” is an 8% per annum simple cumulative
return over the TSR Performance Period. MFA’s Average TSR will be compared to
the Target TSR to determine whether and to what extent the Absolute TSR PRSUs
will vest.

 

The number of Absolute TSR PRSUs that will vest at the end of the Performance
Period shall be determined by comparing the MFA’s Average TSR to the Target TSR
(8% per year), up to a maximum vesting of 200% of the Absolute TSR Target Award.
Any Absolute TSR PRSUs that do not vest at the end of the TSR Performance Period
shall be forfeited.

 

Example Calculations

 

Set forth below are examples addressing vesting of Absolute TSR PRSUs. The
examples below are intended to be used purely for illustrative purposes and
assume that the Absolute TSR Target Award for the applicable grant of Absolute
TSR PRSUs is equal to 46,000.

 

Example 1:

 

If MFA’s Average TSR over the TSR Performance Period were 2%, then the portion
of the Absolute TSR PRSUs that would become vested would be equal to: (2/8) of
the Absolute TSR Target Award, or 11,500 PRSUs.

 

Example 2:

 

If MFA’s Average TSR over the TSR Performance Period were 12%, then the portion
of the Absolute TSR PRSUs that would become vested would be equal to: (12/8) of
the Absolute TSR Target Award, or 69,000 PRSUs.

 

Example 3:

 

If MFA’s Average TSR over the TSR Performance Period were 16%, then the portion
of the Absolute TSR PRSUs that would become vested would be equal to (16/8) of
the Absolute TSR Target Award, or 92,000 PRSUs (maximum vesting).

 

Relative TSR PRSUs

 

At the end of each TSR Performance Period, MFA’s TSR and the TSR of each of the
designated peer group companies will be ranked from highest to lowest, and the
“Relative TSR Vesting Percentage” shall be determined based on MFA’s TSR as
compared to the TSR of the designated peer group companies for the TSR
Performance Period as follows:

 

 30 

 

  

MFA’s TSR Rank Relative TSR Vesting Percentage 80th percentile or above 200%
50th percentile 100% 25th percentile or below 0%

  

If MFA’s TSR Rank is between the 25th percentile and the 50th percentile, or
between the 50th percentile and the 80th percentile, the Relative TSR Vesting
Percentage will be interpolated.

 

The number of Relative TSR PRSUs that will vest for the TSR Performance Period
shall be determined by multiplying the Relative TSR Target Award by the Relative
TSR Vesting Percentage.

 

For the avoidance of doubt, in no event shall any Relative TSR PRSUs vest if
MFA’s TSR Rank is at or below the 25th percentile.

 

The Executive shall not be eligible to receive more than 200% of the Relative
TSR Target Award based on MFA’s TSR Rank.

 

Example Calculations

 

Set forth below are examples addressing vesting of Relative TSR PRSUs. The
examples below are intended to be used purely for illustrative purposes and
assume that the Relative TSR Target Award for the applicable grant of Relative
TSR PRSUs is equal to 46,000.

 

Example 1:

 

If MFA’s TSR Rank at the end of the TSR Performance Period was 15 out of 18, MFA
would be in the 17th percentile. Because MFA’s TSR Rank would be below the 25th
percentile, the Relative TSR Vesting Percentage would be equal to 0, so that
none of the Relative TSR Target Award would become vested. 100% of the Relative
TSR Target Award for that TSR Performance Period would be forfeited.

 

Example 2:

 

If MFA’s TSR Rank at the end of the TSR Performance Period was nine out of 18,
MFA would be in the 50th percentile. The Relative TSR Vesting Percentage would
be equal to 100, so that 100% of the Relative TSR Target Award (46,000 PRSUs)
would become vested.

 

 31 

 

 

Example 3:

 

If MFA’s TSR Rank at the end of the TSR Performance Period was two out of 18,
MFA would be in the 89th percentile. The Relative TSR Vesting Percentage would
be equal to 200, so that 200% of the Relative TSR Target Award (92,000 PRSUs)
would become vested.

 

Dividend Equivalent Rights on PRSUs

 

In the event that dividends are declared with respect to the common stock of MFA
during the TSR Performance Period, then an amount equal to the dividends that
the Executive would have received if the Executive had owned a number of shares
of MFA common stock equal to the number of outstanding PRSUs as of the date the
dividend is declared shall be accrued in a bookkeeping account. Accrued dividend
amounts shall only be payable, as described below, to the extent that the
underlying PRSUs vest and are distributed.

 

When vested PRSUs (whether Absolute TSR PRSUs or Relative TSR PRSUs) are
distributed to the Executive, the Executive shall receive additional shares of
MFA stock equal in value to the accumulated dividends applicable to the shares
distributed with respect to the vested PRSUs. The number of shares to be
distributed with respect to such accrued dividend amounts shall be calculated as
follows: (i) the accumulated dividends declared per share of MFA common stock
during the TSR Performance Period, multiplied by (ii) the number of shares of
MFA stock distributed with respect to vested PRSUs, divided by (iii) the per
share stock price of MFA common stock on the PRSU vesting date, rounded down to
the nearest whole share. Such additional shares shall be delivered on the same
day as the vested PRSUs are distributed.

 

13.                  Withholding Obligations

 

The parties hereto acknowledge and understand that MFA or the Executive may
require or elect (as the case may be) that the Executive satisfy any federal,
state or local tax withholding obligation with respect to TRSUs and PRSUs by
withholding shares from the shares otherwise issuable to the Executive, provided
that such shares shall not exceed the minimum applicable tax withholding
required by law, or such higher amount that does not result in adverse
accounting treatment for the Company, as approved in advance by the Compensation
Committee.

 

14.                  Committee Determinations

 

All determinations with respect to the TRSUs and PRSUs shall be made by the
Compensation Committee, in good faith and in compliance with this Exhibit B. Any
such determinations shall be final and binding on the Executive and MFA.

 

 32 

 

 

Exhibit C

 

Release

 

This Release of Claims (this “Release”) is made as of _________________,by and
between MFA FINANCIAL, INC. (“MFA”) and ________________ (the “Executive”).

 

(a)       The Executive, on behalf of himself, his agents, heirs, successors,
assigns, executors and administrators, in consideration for the termination
payments and other consideration provided for under the Employment Agreement
entered into by MFA and the Executive, as from time to time amended in
accordance with its terms (the “Employment Agreement”), hereby forever releases
and discharges MFA, and its successors, its affiliated entities, and, in such
capacities, its past and present directors, employees, agents, attorneys,
accountants, representatives, plan fiduciaries, successors and assigns from any
and all known and unknown causes of action, actions, judgments, liens,
indebtedness, damages, losses, claims, liabilities, and demands of whatsoever
kind and character in any manner whatsoever arising on or prior to the date of
this Release, including but not limited to (i) any claim for breach of contract,
breach of implied covenant, breach of oral or written promise, wrongful
termination, intentional infliction of emotional distress, defamation,
interference with contract relations or prospective economic advantage,
negligence, misrepresentation or employment discrimination, and including
without limitation alleged violations of Title VII of the Civil Rights Act of
1964, as amended, prohibiting discrimination based on race, color, religion, sex
or national origin; the Family and Medical Leave Act; the Americans With
Disabilities Act; the Age Discrimination in Employment Act; other federal, state
and local laws, ordinances and regulations; (ii) any and all liability that was
or may have been alleged against or imputed to MFA by the Executive or by anyone
acting on his behalf; (iii) all claims for monetary or equitable relief,
employment or reemployment with MFA in any position, and any punitive,
compensatory or liquidated damages; and (iv) all rights to and claims for
attorneys’ fees and costs except as otherwise provided in the Employment
Agreement. The only claims that are not being waived and released by the
Executive under this Release are (i) claims for indemnification or D&O coverage
or any claim arising under, or preserved by, Section 5 of the Employment
Agreement, (ii) claims that, by applicable law, cannot be waived, (iii) claims
based on any wrongful act or omission occurring after the date Executive signs
this Release, (iv) claims to benefits under any compensation or benefit plan,
program or arrangement in which the Executive was participating as of the date
of termination of his employment, and (v) claims challenging the legality of
this Release in a legal proceeding pursuant to the Older Workers Benefit
Protection Act and the Age Discrimination in Employment Act. The Executive
acknowledges that the Executive has not made any claims or allegations related
to sexual harassment or sexual abuse and none of the termination payments and
other consideration provided for under the Employment Agreement are related to
sexual harassment or sexual abuse.

 

(b)       Except as provided in Section (c) below, the Executive warrants,
represents and certifies that he has not filed or instituted, and, no person or
agency has filed or instituted on his behalf and/or at his direction, any
complaints, lawsuits, arbitration proceedings, actions, causes of action, in law
or equity, administrative charges, claims, controversies, demands, grievances
and/or proceedings whatsoever against any Releasee, in any forum. The Executive
represents and warrants that he has not assigned any claim released herein.

 

 

 

 

(c)       Nothing in this Release or the Employment Agreement restricts or
prohibits the Executive from initiating communications directly with, responding
to any inquiries from, providing testimony before, providing confidential
information to, reporting possible violations of law or regulation to, or from
filing a claim or assisting with an investigation directly with a
self-regulatory authority or a government agency or entity, including the U.S.
Equal Employment Opportunity Commission, the Department of Labor, the National
Labor Relations Board, the Department of Justice, the Securities and Exchange
Commission, the Congress, and any agency Inspector General (collectively, the
“Regulators”), or from making other disclosures that are protected under the
whistleblower provisions of state or federal law or regulation. However, to the
maximum extent permitted by law, the Executive is waiving the Executive’s right
to receive any individual monetary relief from MFA or any others covered by the
Release of Claims resulting from such claims or conduct, regardless of whether
the Executive or another party has filed them, and in the event the Executive
obtains such monetary relief, MFA will be entitled to an offset for the payments
made pursuant to this Agreement. This Agreement does not limit the Executive’s
right to receive an award from any Regulator that provides awards for providing
information relating to a potential violation of law. The Executive does not
need the prior authorization of MFA to engage in conduct protected by this
paragraph, and the Executive does not need to notify MFA that the Executive has
engaged in such conduct.

 

Please take notice that federal law provides criminal and civil immunity to
federal and state claims for trade secret misappropriation to individuals who
disclose a trade secret to their attorney, a court, or a government official in
certain, confidential circumstances that are set forth at 18 U.S.C. §§
1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a
suspected violation of the law, or in connection with a lawsuit for retaliation
for reporting a suspected violation of the law.

 

(d)       BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT:

 

(1)       HE HAS RECEIVED A COPY OF THIS RELEASE AND WAS OFFERED A PERIOD OF
TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;

 

(2)       IF HE SIGNS THIS RELEASE PRIOR TO THE EXPIRATION OF TWENTY-ONE DAYS,
HE KNOWINGLY AND VOLUNTARILY WAIVES AND GIVES UP THIS RIGHT OF REVIEW;

 

(3)       HE HAS THE RIGHT TO REVOKE THIS RELEASE FOR A PERIOD OF SEVEN (7) DAYS
AFTER HE SIGNS IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE
COMPANY’S GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH
DAY AFTER THE DAY ON WHICH HE SIGNED THIS RELEASE;

 

(4)       THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN
DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE RELEASE HAVING BEEN REVOKED (THE
“EFFECTIVE DATE”);

 

 

 

 

(5)       THIS RELEASE WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE
REVOCATION PERIOD REFERRED TO IN SECTION (d)(3).

 

(6)       THE COMPANY ADVISES THE EXECUTIVE TO CONSULT WITH AN ATTORNEY.
THEREFORE, HE IS AWARE OF HIS RIGHT TO CONSULT AN ATTORNEY, HAS BEEN ADVISED IN
WRITING TO CONSULT WITH AN ATTORNEY, AND HAS HAD THE OPPORTUNITY TO CONSULT WITH
AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS RELEASE;

 

(7)       NO PROMISE OR INDUCEMENT FOR THIS RELEASE HAS BEEN MADE EXCEPT AS SET
FORTH IN THIS RELEASE;

 

(8)       HE IS LEGALLY COMPETENT TO EXECUTE THIS RELEASE AND ACCEPT FULL
RESPONSIBILITY FOR IT; AND

 

(9)       HE HAS CAREFULLY READ THIS RELEASE, ACKNOWLEDGES THAT HE HAS NOT
RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN
THIS DOCUMENT, AND WARRANTS AND REPRESENTS THAT HE IS SIGNING THIS RELEASE
KNOWINGLY AND VOLUNTARILY.

 

IN WITNESS WHEREOF, the parties have hereunto set their hands this __________
day of ___________________.

  

 

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