Exhibit 10.3
 
MFA MORTGAGE INVESTMENTS, INC.
 
SECOND AMENDED AND RESTATED
2003 NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN
 
1.           Purpose
 
The purpose of the Plan is to provide Nonemployee Directors of the Corporation
with an opportunity to defer 100% or 50% of their Compensation while at the same
time aligning their interests more closely with the interests of the
stockholders of the Corporation.  This Plan is an amendment and complete
restatement of the Amended and Restated 2003 Nonemployee Directors’ Deferred
Compensation Plan.
 
2.           Effective Date
 
This Plan shall become effective on the Effective Date.
 
3.           Definitions
 
In this Plan, the following definitions shall apply:
 
“Account” - the account maintained by the Corporation for Deferred Stock Units
credited in accordance with Section 6 of the Plan.
 
“Administrator” - the person, persons or entity appointed by the Board from time
to time to manage and administer the Plan.
 
“Board” - the Board of Directors of the Corporation.
 
“Code” - the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
 
“Common Stock” - the Corporation’s common stock, $0.01 par value per share.
 
“Compensation” - the aggregate value of all annual compensation payable to a
Nonemployee Director for service on the Board (exclusive of any reimbursable
expenses relating to such Nonemployee Director’s service on the Board).
 
“Corporation” - MFA Mortgage Investments, Inc., a Maryland corporation, and its
successors.
 
“Deferral Period” - the five-year period, if so elected, during which
Compensation for a particular year is to be deferred.  At the conclusion of the
Deferral Period, such deferred Compensation will be paid out in a lump sum or,
if so elected, in a specified number of annual installments not to exceed five
years.  If the deferred Compensation is paid out in annual installments, such
installment payments shall be treated as a series of separate payments for
purposes of Section 409A of the Code.  Except as otherwise provided in Section
8(a) of the Plan, payment(s) will commence, or be made in a lump sum, no earlier
than January 15 of the year first following the five-year anniversary of the
applicable election date.  For example, if during 2002 a Participant elects the
Deferral Period (i.e., 5 years) for Compensation deferred in 2003, the
payment(s) shall be made/commence on or about January 15, 2008.
 
“Deferred Stock Unit” - a credit to a Participant’s Account under Section 6(c)
that represents the right to receive a cash payment equal to the Fair Market
Value of one Share on settlement of the Account.
 
“Effective Date” - December 19, 2002, the date the Plan was adopted.
 

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“Fair Market Value” - for any date, the average of the high and low sales prices
for Shares of the Corporation’s Common Stock, as reported by the New York Stock
Exchange or such other relevant exchange on which the Corporation’s Common Stock
is traded.
 
“Nonemployee Director” - a member of the Board who is not also an employee of
the Corporation and/or an employee of any affiliate of the Corporation.
 
“Participant” - each Nonemployee Director who elects to defer 100% or 50% of his
or her Compensation under this Plan.
 
“Plan” - MFA Mortgage Investments, Inc. Second Amended and Restated 2003
Nonemployee Directors’ Deferred Compensation Plan, as it may be amended from
time to time.
 
“Second Election” -  an election pursuant to Section 5(c)(4) of the Plan which
changes the Nonemployee Director’s prior deferral election.
 
 “Share” - a share of Common Stock of the Corporation.
 
“Termination of Service” - termination of service with the Corporation, which
shall be interpreted in a manner that is consistent with the definition of a
“separation from service” under Section 409A of the Code and Treasury Regulation
1.409A-1(h).
 
4.           Administration
 
(a)           Subject to the oversight of the Board, the Administrator shall
have authority to administer the Plan, including conclusive authority to
construe and interpret the Plan, to establish rules, policies, procedures, forms
and notices for use in carrying out the Plan, and to make all other
determinations necessary or desirable for administration of the Plan.  The
Administrator may delegate some or all of its functions to another person(s) as
it may deem appropriate.
 
(b)           Notwithstanding any other provision herein to the contrary, the
Administrator shall administer the Plan and exercise authority and discretion
under the Plan, to satisfy the requirements of Section 409A of the Code or any
exemption thereto.
 
5.           Election to Defer Compensation
 
(a)           Amount of Deferral.  A Nonemployee Director may elect to defer
receipt of 50% or 100% of such Nonemployee Director’s Compensation otherwise
thereafter payable to such Nonemployee Director.
 
(b)           Manner of Electing Deferral.  An election to defer Compensation
shall be made by each Participant by giving written notice to the Administrator
in the form approved by the Administrator.  Such notice shall address, without
limitation:
 
(1)           the percentage of Compensation for the next calendar year to be
deferred;
 
(2)           if applicable, an election for the Account to be settled following
a five-year Deferral Period; and
 
(3)           an election for the Account to be settled in either a lump-sum
payment or in a specified number of annual installments (not to exceed five).
 
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(c)           Time of Election; Effectiveness; Change of Election.
 
(1)           An election to defer Compensation shall be made by a Nonemployee
Director no later than the end of the taxable year preceding the year for which
the Compensation was earned.  Notwithstanding the foregoing, a Nonemployee
Director who first becomes eligible to participate in the Plan may make an
election to defer any future Compensation within 30 days after the date of such
eligibility; provided, however, that such deferral election shall only apply to
the pro rata portion of the Compensation that is earned from the date of such
election through the remainder of the year.
 
(2)           An election shall be irrevocable as of the last day of the
calendar year in which the election is made and shall continue in effect until
the end of the calendar year for which Compensation is earned.
 
(3)           A Nonemployee Director may change a deferral election annually by
making different elections in the Annual Participant Election Form provided by
the Administrator; all such changes shall only be effective prospectively for
subsequent calendar years commencing at or after the time of such notice.
 
(4)           Notwithstanding the foregoing, with respect to any previously
deferred amounts, a Nonemployee Director may make a Second Election, which must,
except as may otherwise be permitted under the rules applicable under Section
409A of the Code, (A) be effective at least one year after it is made, or, in
the case of payments to commence at a specific time, be made at least one year
before the first scheduled payment, and (B) defer the commencement of
distributions (and each affected distribution) for at least five years.
 
6.           Deferred Compensation Account
 
(a)           Establishment of Account.  The Corporation will maintain
Account(s) for each Participant for each year in which they elect to participate
in the Plan, which will reflect the Compensation deferred by such Participant
for a given calendar year.  Accounts under this Plan shall be unfunded and shall
represent only an unsecured claim against the general assets of the Corporation.
 
(b)           Deferred Stock Units.  In any given calendar year, a Participant
may elect to defer either 100% or 50% of the Compensation earned by such
Participant in the form of Deferred Stock Units.  Such deferral election shall
be made in accordance with the provisions of Sections 5(b) and 5(c) of the
Plan.  The number of Deferred Stock Units credited to the Participant’s Account,
at the time such Compensation would otherwise have been payable absent the
election to defer, will be equal to (i) the otherwise payable amount divided by
(ii) the Fair Market Value of a Share on the last trading day preceding the
credit date.  In addition, on each date on which a cash dividend is payable on
the Shares, the Participant’s Account shall be credited with a number of
Deferred Stock Units equal to (i) the per Share cash dividend times the number
of Deferred Stock Units then credited to the Account, divided by (ii) the Fair
Market Value of a Share on the last trading day preceding the dividend payment
date. Accounts shall be credited with fractional Deferred Stock Units, rounded
to the third decimal place.  Such additional Deferred Stock Units shall be paid
to the Participant at the same time as Deferred Stock Units are received by the
Participant with respect to the deferral of Compensation.
 
(b)           Adjustments.  In case of a stock split, stock dividend, or other
relevant change in capitalization of the Corporation, the number of Deferred
Stock Units credited to a Participant’s Account shall be adjusted in such manner
as the Administrator deems appropriate.
 
7.           Valuation
 
The value of an Account as of any date on which a settlement payment is to be
made under Section 8 shall be the amount equal to the number of Deferred Stock
Units then credited to the Participant’s Account times the Fair Market Value of
a Share on the last trading day preceding the payment date.
 
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8.           Settlement
 
(a)           General.  An Account shall be distributed or commence distribution
to a Participant on the earlier of (i) the year first following the year in
which a Termination of Service occurs, or (ii) with respect to any particular
Account, the year first following the year in which the five-year Deferral
Period elected by such Participant for such Account expires.  Notwithstanding
the foregoing, all distribution elections shall provide that no payments may
commence with respect to any Account any later than the year first following the
Participant’s 72nd birthday, or such other date as may, subject to Section 409A
of the Code, be approved by the Administrator.  To the extent that an Account is
to be distributed to a Participant in accordance with this Section 8, such
distribution shall occur on or about, but no earlier than, January 15 of the
applicable distribution year.
 
(b)           Lump Sum.  If a Participant elects lump sum settlement, an amount
of cash equal to the value of the Account determined in accordance with
Section 7 shall be paid to the Participant in accordance with Section 8(a).
 
(c)           Installment Payments.  If a Participant elects settlement in
installments, an amount of cash determined as hereafter provided shall be paid
to the Participant in accordance with Section 8(a) in each year of the
installment payment period elected.  The amount of each installment shall be
equal to (i) the value of the Account as of the payment date for such
installment, determined in accordance with Section 7, divided by (ii) the number
of unpaid installments.  Each installment payment shall be debited to the
Deferred Stock Units in a Participant’s Account.
 
(d)           Payment on Death.  Notwithstanding a Participant’s settlement
election, in the event of a Participant’s death an amount of cash equal to the
remaining value of the Account determined as provided in Section 7 shall be paid
in a single payment to the Participant’s estate as soon as possible, without
undue delay, but in no event later than 90 days after the date of the
Participant’s death.
 
(e)           No Early Withdrawal.  No withdrawal may be made from a
Participant’s Account except as provided in this Section 8.
 
(f)           Cash Settlement Only.  Settlement of an Account under this Plan
shall be made only in cash, via wire transfer or check in U.S. dollars.
 
9.           Non-Assignability
 
The right of a Participant to receive any unpaid portion of the Participant’s
Account may not be assigned or transferred except by will or the laws of descent
and distribution, and may not be pledged or encumbered or be subject to
attachment, execution, or levy of any kind.
 
10.           Amendment and Termination
 
This Plan may be amended, modified or terminated by the Board at any time
(taking into account, without limitation, Section 409A of the Code as the Board
may deem appropriate), provided that no such amendment, modification or
termination shall, without the consent of a Participant, adversely affect such
Participant’s rights with respect to amounts accrued in the Participant’s
Account.
 
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11.           Governing Law
 
This Plan and all actions taken under it shall be governed by the laws of the
State of New York, without reference to conflict of law principles.
 
12.           Severability
 
If any provision of this Plan shall be deemed illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining provisions of the
Plan but shall be fully severable.
 
13.           Compliance
 
The Administrator is authorized to take such steps as may be necessary
including, without limitation, delaying effectiveness of a Participant’s
election or delaying settlement of an Account, in order to ensure that this Plan
and all actions taken under it comply with any law, regulation, or listing
requirement which the Administrator deems applicable or desirable, including the
exemption provided by Rule 16b-3 under the Securities Exchange Act of 1934, as
amended.
 
14.           Withholding
 
If the Corporation concludes that any tax is owing with respect to any deferral
of income or payment hereunder, the Corporation shall withhold such amounts from
any payments due the Participant, or otherwise make appropriate arrangements
with the Participant for satisfaction of such obligation.
 
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MFA MORTGAGE INVESTMENTS, INC.
 
SECOND AMENDED AND RESTATED
2003 NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN
 
ANNUAL PARTICIPANT ELECTION FORM FOR 2004 DEFERRALS
Annual Director Compensation 20__
 
In accordance with the provisions of the MFA Mortgage Investments, Inc. Second
Amended and Restated 2003 Nonemployee Directors’ Deferred Compensation Plan (the
“Plan”), I hereby make the following elections pursuant to the Plan:
 
1.           AMOUNT OF COMPENSATION DEFERRAL  -  I hereby elect to defer the
annual Compensation otherwise earned and payable in to me in 20__ by the
Corporation as follows:  (Check one if participating in Plan)
 
I elect to defer _____ 50% or _____ 100% of the aggregate value of the annual
retainer payable to a Nonemployee Director for service on the Board of the
Corporation.
 
2.           DEFERRAL PERIOD – I hereby elect the five-year Deferral Period for
Compensation earned during 20­­­­__, such that payment will be deferred until on
or about January 15, 20__.    _____  Yes          _____  No
 
3.           SETTLEMENT (Check one):
 
_____
I elect to the following installment payment period:  _____ (indicate between
two and five years) OR

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

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

 

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

 
 
Dated: _____________________                                  __________________________________                                                     
Signature of Director
 

 

 
Accepted on the ___ day of ___________, 20__
on behalf of MFA Mortgage Investments, Inc.
 
By: ________________________________________
 
FEDERAL TAX ASPECTS
 
The following discussion is a general description of expected Federal income tax
results under current law.  The information is not tax advice, it is intended to
be for general guidance only and does not give a full description of all the tax
issues which may apply to you.  You should also remember that tax laws may
change from time to time.  You should consult your own tax advisors regarding
the impact of the Plan, and your election thereunder, with respect to any
federal, state, local or other taxes.
 
The Plan is intended to be a non-qualified deferred compensation plan under the
provisions of the Internal Revenue Code. At the time a Participant’s deferral of
Compensation is made, it is intended that such Participant will not recognize
income for Federal income tax purposes. In addition, Deferred Stock Units
credited pursuant to Section 6(b) of the Plan are not intended to be treated as
income at the time they are credited to the Account of a Participant.
 
Participants will recognize ordinary income at the time the Participant
deferrals, together with the earnings credited to these amounts, are actually
paid out or made available to the Participants. The amount of such ordinary
income will equal the amount of cash received.
 
The Plan is not intended to be a tax-qualified plan under Section 401 (a) of the
Internal Revenue Code and is not intended to be subject to ERISA. The
Corporation has not received any ruling from the Internal Revenue Service
concerning the tax consequences of the Plan.