AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered
into as of the 30th day of June, 2011 (the “Effective Date”) by and between MFA
Financial, Inc. (“MFA”), and Craig L. Knutson (the “Executive”).
 
WITNESSETH:
 
WHEREAS, MFA and the Executive entered into an amended and restated employment
agreement, effective as of July 1, 2009 (the “Former Employment Agreement”);
 
WHEREAS, MFA and the Executive desire to amend and restate the terms of the
Executive’s employment; 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 below.
 
NOW THEREFORE, in consideration of the foregoing premises and the mutual
agreements herein contained, the parties hereto agree to amend and restate the
Former Employment Agreement in its entirety to read 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 Paragraph 2 below for the Term of Employment, subject to the
terms and conditions of this Agreement.
 
(b)           The term of employment (the “Term of Employment”) under this
Agreement shall commence on the Effective Date and continue until December 31,
2013; provided that if December 31, 2013 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 Paragraph 5 hereof.
 
2.           Position; Duties and Responsibilities.
 
(a)           During the Term of Employment, the Executive shall be employed as
Executive Vice President of MFA, reporting to the Chairman and Chief Executive
Officer of MFA (the “CEO”), with such duties and day-to-day management
responsibilities as are customarily 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 (i) 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 CEO and/or the Board of
Directors of MFA (the “Board of Directors”) 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”).

 
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(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 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 $450,000.
 
(b)           Performance Bonus. The amount of the Executive’s annual bonus for
2011 shall be determined by the Compensation Committee in its discretion. For
2012, the Executive shall participate in a bonus pool substantially similar to
the Performance Bonus Pool for Senior Executives (as described more fully
below), provided that (i) the bonus pool for 2012 shall be the dollar value of
the Bonus Pool determined pursuant to the 2012 schedule included in Exhibit A,
and (ii) the Compensation Committee may increase or decrease the amount of such
bonus pool for 2012 in its discretion. For 2013, the Executive shall be eligible
to participate in the Performance Bonus Pool for Senior Executives (the “Bonus
Pool”). The aggregate Bonus Pool for 2013 shall be determined by reference to
MFA’s Return on Average Equity (“ROAE”) as more fully described in Exhibit A to
this Agreement. Allocations to participants in the Bonus Pool for 2013 shall be
made by the Compensation Committee together with the CEO based upon the
Compensation Committee’s assessment of each participant’s performance during the
applicable period. The Compensation Committee, in its discretion, can adjust the
aggregate Bonus Pool for 2013 upward or downward by as much as thirty percent
(30%) depending upon the Compensation Committee’s assessment of MFA’s leverage
strategy, share price performance relative to the S&P financial index or other
relevant indices, share price relative to peer group, total return (share price
change plus dividend), and its other asset management activities, as well as the
Executive’s individual performance, among other considerations, as determined by
the Compensation Committee.

 
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The amount allocated to the Executive from the Bonus Pool shall be paid in a
combination of cash and restricted stock based on the total Bonus Pool, with up
to 40% of the Bonus Pool (as determined by the Compensation Committee) to be
paid in restricted stock. The period of restriction with respect to shares of
restricted stock shall lapse with respect to six and one quarter percent (6.25%)
of the shares on the last business day of each quarter commencing with the
quarter beginning with the first calendar quarter following the end of the
fiscal year to which the Bonus Pool relates, with the lapse of all restrictions
occurring four years following the date of grant. Under the terms of the
definitive award agreement, the Executive shall be entitled to receive any
dividends payable with respect to any shares subject to restriction at such time
as such shares are no longer subject to restrictions. Vested shares of such
restricted stock cannot be transferred or sold during the Executive’s employment
by MFA until the value of the Executive’s stock holdings in MFA (including
shares of restricted stock) exceeds four times the Executive’s Base Salary; and,
following the termination of Executive’s employment with the Company, vested
shares of such restricted stock 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). Cash payments from the Bonus Pool will be made as soon as
practicable after such portion of the Bonus Pool is vested and nonforfeitable,
and in no event later than January 16th of the next following calendar year.
 
(c)           Equity Compensation. The Company shall grant the Executive 25,000
phantom shares, effective as of each of the date of this Agreement and each
anniversary thereof in 2012, 2013 and 2014 if the Executive is then employed by
the Company, and shall also grant promptly after the date hereof 100,000
dividend equivalent rights, in each case on terms and conditions that are
consistent with Exhibit B and this Agreement. The Executive shall be eligible to
receive such other stock option, restricted stock, phantom share, restricted
stock unit or dividend equivalent rights grants or other equity awards as the
Compensation Committee or the Board of Directors, as the case may be, shall deem
appropriate.
 
(d)           Discretion to Increase Compensation. Nothing in this Agreement
shall preclude the Board of Directors or the Compensation Committee from
increasing or considering increasing the Executive’s compensation during the
Term of Employment. The Base Salary as adjusted to reflect any increase shall be
the Base Salary for all purposes of this Agreement.
 
4.           Employee Benefit Programs and Fringe Benefits. During the Term of
Employment, the Executive shall be entitled to five weeks of vacation each
calendar year and 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 Death or Disability. If the Executive’s
employment is terminated during the Term of Employment by reason of the
Executive’s death or Disability, 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
for (i) any compensation earned but not yet paid, including and without
limitation, any amount of Base Salary accrued or earned but unpaid and any other
payments payable to the Executive pursuant to Paragraph 5(f) below, which
amounts shall be promptly paid in a lump sum to the Executive, his legal
representative or his estate, as the case may be, and (ii) a lump sum payment in
an amount equal to the Executive’s Base Salary which shall be paid to the
Executive, his legal representative or his estate, as the case may be, as soon
as possible (without undue delay), but in no event later than March 15th
following the calendar year in which such termination occurs. In the event of
such termination due to his Disability, the Company shall reimburse the
Executive for 100% of the COBRA premiums incurred by the Executive during the
18-month period following the Executive’s termination.
 
 
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(b)           Termination By MFA Without Cause or By the Executive for Good
Reason. In the event the Executive’s employment is terminated by MFA without
Cause or by the Executive for Good Reason, (A) the Executive shall be entitled
to an amount (the “Severance Amount”) equal to the sum of (i) 75% of his then
current Base Salary, (ii) an amount equal to 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 equal ratable installments
in accordance with applicable MFA payroll practices over the nine (9) month
period following such termination, the “Severance Period”), (B) the Company
shall reimburse the Executive for 100% of the COBRA premiums incurred by the
Executive during the 12-month period following the Executive’s date of
termination and (C) any equity-based compensation previously granted to the
Executive as part of his annual bonus, whether before or during the Term of
Employment, shall immediately vest. If such termination occurs prior to December
31, 2011, the Severance Amount determined pursuant to Paragraph 5(b) of the
Former Agreement shall be paid at the time and in the amount determined pursuant
thereto, and any excess amounts payable under this Paragraph 5(b) shall be paid
in accordance herewith. The parties agree that a termination of the Executive’s
employment pursuant to this Paragraph 5(b) or Paragraph 5(c) below shall not be
a breach of this Agreement and does not relieve either party of its/his other
obligations hereunder.
 
(c)           Termination by MFA for Cause or Voluntary Termination by the
Executive. In the event the Executive’s employment is terminated during the Term
of Employment either by MFA for Cause, or by the Executive on his own initiative
for other than a Good Reason, the Executive shall be entitled to any
compensation earned but not yet paid, including and without limitation, any
amount of Base Salary accrued or earned but unpaid and any other payments
payable to the Executive pursuant to Paragraph 5(f) below, as of the date of
termination.
 
(d)           Garden Leave. The Executive shall provide no less than 90 days
written notice of 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 Paragraph 5(e) and MFA shall provide
the Executive 90 days written notice of any termination of the Executive’s
employment for Cause or without Cause during the Term of Employment, other than
a termination during the period described in Paragraph 5(e); 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 MFA that are reasonably
consistent with the Executive’s status as a senior executive of MFA and (ii)
continue to be paid his Base Salary and to be eligible to participate in MFA’s
benefits programs, but shall not be eligible to earn any annual bonus with
respect to a calendar year that ends after the commencement of the Garden
Leave.  During the Garden Leave, MFA may require the Executive to resign from
any position with MFA or its affiliates 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 MFA to effect a successful transition of
client and customer relationships to the person or persons designated by MFA.
 
 
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(e)           Termination Related to Change in Control. In the event of  the
termination of the Executive’s employment by MFA other than for Cause or the
Executive’s resignation of his employment for Good Reason within twelve months
following a Change in Control,
 
(i)           MFA shall immediately pay to Executive in a lump sum, but in all
events within two and one half months following the calendar year in which such
termination of employment occurs, an amount equal to 1.5 times the sum of (a)
the Executive’s then current Base Salary and (b) the Executive’s Average Bonus;
 
(ii)         all of the Executive’s outstanding restricted stock, phantom
shares, restricted stock units and stock options shall immediately vest in full
and such options shall remain exercisable, and any dividend equivalents
associated therewith shall continue to be payable, until the earlier of (a) 90
days following the date of such termination and (b) the date on which each such
option would have expired had the Executive’s employment not terminated; and
 
(iii)         the Executive shall continue to participate in all health, life
insurance, retirement and other benefit programs at MFA’s expense for the
balance of the Term of Employment, to the same extent as though the Executive’s
employment had not terminated.
 
To the extent necessary to avoid imposition of the excise tax under Section 4999
of the Code in connection with a Change in Control, each cash payment and
benefit to be provided to the Executive that constitutes a “parachute payment”
shall be reduced pro rata such that the reduction of compensation to be provided
to the Executive is minimized. In applying this principle, the reduction shall
be made in a manner consistent with the requirements of Section 409A of the
Code, and where two economically equivalent amounts are subject to reduction but
payable at different times, such amounts shall be reduced on a pro rata basis
(but not below zero).
 
(f)           Other Payments. Upon the termination of the Executive’s employment
during the Term of Employment, in addition to the amounts payable under any
Paragraph above, the Executive shall be entitled to receive the following:
 
(i)           any annual bonus earned during one or more preceding years but not
paid;
 
(ii)          any vested deferred compensation (including any interest accrued
on or appreciation in value of such deferred amounts) in accordance with the
applicable plan documents;
 
 
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(iii)         reimbursement for reasonable business expenses incurred but not
yet reimbursed by MFA;
 
(iv)        any other benefits to which the Executive or his legal
representative may be entitled under all applicable plans and programs of MFA,
as provided in Paragraph 4 above; and
 
(v)         upon the termination of the Executive’s employment during the Term
of Employment pursuant to Paragraph 5(a) or 5(b) above, and subject to Paragraph
5(i) below, (A) all of the Executive’s outstanding equity-based awards (e.g.,
restricted stock, phantom shares, restricted stock units and stock options) that
would otherwise have vested within 12 months of such termination shall
immediately vest and (B) all vested options shall remain exercisable, and any
dividend equivalents associated therewith shall continue to be payable, until
the earlier of (x) 90 days following the date of such termination and (y) the
date on which each such option would have expired had the Executive’s employment
not terminated.  Notwithstanding the foregoing, any equity award 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 any
service-based pro ration of such award shall be determined by crediting the
Executive with service to the next anniversary of the date of grant of such
award.
 
(g)           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 Paragraph 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.
 
(h)           Payments Subject to Section 409A. Notwithstanding anything herein
to the contrary, the Executive shall not be entitled to any payment pursuant to
this Paragraph 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 Paragraph 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. 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 (i) 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 and (ii) as applicable, such payments shall be
treated as a series of separate payments for purposes of Section 409A of the
Code.  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.
 
 
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(i)           Release. MFA’s obligation to make any payment or provide any
benefit pursuant to this Paragraph 5 (other than pursuant to Paragraphs
5(f)(i)-(iv) above) shall be contingent upon, and is the consideration for, (A)
the Executive executing and delivering to MFA, within 60 days after termination
of his employment, a general release (the “Release”), substantially in the form
annexed hereto as Exhibit C, and (B) such release becoming irrevocable in
accordance with its terms.  In the event that the 60-day period referred to in
the immediately preceding sentence spans two calendar years, payments required
to be made hereunder 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.
 
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) conviction, or entry
of a guilty plea or a plea of nolo contendre with respect to, 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 CEO and/or the Board of
Directors that are reasonably consistent with his duties and position provided
for herein; (iv) breach in any material respect of any of the provisions of
Paragraph 7 of this Agreement resulting in material and demonstrable economic
injury to MFA; (v) chronic or persistent substance abuse that materially and
adversely affects his performance of his duties under this Agreement 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, (a) the Executive shall be given written notice of any action or
failure to act that is alleged to constitute Cause (a “Default”), and 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 or, in his absence, the Board of Directors and (b) regardless of whether the
Executive is able to cure any Default, the Executive shall not be deemed to have
been terminated for Cause without (I) reasonable prior written notice to the
Executive setting forth the reasons for the decision to terminate the Executive
for Cause, (II) an opportunity for the Executive, together with his counsel, to
be heard by the CEO or, in his absence, the Board of Directors and (III)
delivery to the Executive of a notice of termination approved by said CEO or, in
his absence, the Board of Directors, stating his or its 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 or the Board of Directors,
as the case may be, has been exercised, so long as such appearance is within two
(2) weeks of the date of suspension.
 
(b)           Change in Control. A “Change in Control” shall mean the occurrence
of any one of the following events to the extent such event also constitutes a
“change in control event” for purposes of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”):
 
 
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(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) together with all affiliates and
“associates” (as such term is 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 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)         there shall occur (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 60% 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 or proposal for the liquidation or
dissolution of MFA.
 
Notwithstanding the foregoing, a “Change in 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 in Control” shall be deemed to have occurred for purposes of this
Paragraph 6(b).

(c)           Competitor. “Competitor” shall mean (i) any mortgage REIT, (ii)
any entity or person engaged in any element of acquiring mortgage backed
securities, 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 mortgage backed securities, or (iii) any entity that
manages or advises (including any external advisor) either a mortgage REIT or an
entity or person engaged in any element of acquiring mortgage backed securities,
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 mortgage backed securities.
 
 
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(d)         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 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).
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.
 
(e)         Good Reason. “Good Reason” shall mean:
 
(i)           a material diminution in the Executive’s title, duties or
responsibilities;
 
(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 thirty (30) business days any
material payment due from MFA;
 
(iv)        the failure of MFA to pay within a reasonable period after the date
when amounts are required to be paid to the Executive under any benefit programs
or plans; or
 
(v)         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.
 
(f)         Non Cash Items and Merger Expenses. “Non Cash Items and Merger
Expenses” shall mean depreciation, merger expenses, gains/losses on asset sales,
and impairment charges; provided that these items and expenses shall allow for
adjustment to exclude events pursuant to changes in GAAP and certain non-cash
items at the discretion of MFA’s independent directors.
 
 
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(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 earlier of: (A) the later of
(i) the first anniversary of the delivery of a Notice of Termination or (ii) the
nine (9) month anniversary of the Executive’s termination of employment and (B)
December 31, 2013; provided that if a Garden Leave period commenced (or was
required to have commenced) during 2013, the Restricted Period shall end on the
first anniversary of the date such Garden Leave commenced (or was required to
have commenced).
 
(i)           Return on Average Equity. “Return on Average Equity” shall mean
twelve months GAAP net income plus (minus) certain Non Cash Items and Merger
Expenses divided by average Tangible Net Worth, for the period ending November
30th.
 
(j)           Tangible Net Worth. “Tangible Net Worth” shall mean stockholder
equity less (i) goodwill and (ii) preferred stockholder equity.
 
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 MFA and/or any of its subsidiaries or affiliates,
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, MFA or any of its
subsidiaries or affiliates (“Confidential Information”), and, except in
furtherance of his employment by MFA or as specifically required by law or by
court order or in the course of carrying out his duties for MFA, 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 MFA. 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 MFA; marketing plans, projections,
presentations or strategies of MFA; financial and budget information of MFA;
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 MFA or any of its
subsidiaries or affiliates and any other party; and any other information of
whatever nature, which gives to MFA or any of its subsidiaries or affiliates 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 Paragraph 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 a home
computer and security system, 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, information that he
reasonably believes may be needed for tax purposes, and copies of plans,
programs and agreements relating to his employment.
 
 
10

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(b)           Non-Competition. The Executive acknowledges that during the
Executive’s employment with MFA 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 MFA and/or its affiliates, which, if disclosed,
would unfairly and inappropriately assist in competition against MFA and/or its
affiliates; (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) MFA and its affiliates
have substantial relationships with their customers and the Executive has had
and will continue to have access to these customers; (iv) the Executive has
received and will receive specialized training from MFA and its affiliates; (v)
the Executive has generated and will continue to generate goodwill for MFA and
its affiliates in the course of the Executive’s employment and (vi) the
Executive’s services are unique and irreplaceable.  Therefore, in consideration
of the Executive’s continued employment with MFA, of the compensation and
benefits provided to the Executive under this Agreement, of MFA’s agreement to
make severance benefits available pursuant to Paragraph 5(b), and of the
Executive’s being granted access to the customers, trade secrets and other
Confidential Information of MFA and/or its affiliates, 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 MFA and its
affiliates from unfair and inappropriate competition:
 
(i)           During the Restricted Period, the Executive will not, without the
prior written consent of MFA, 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 as an officer, director, employee or consultant of,
any Competitor.  Notwithstanding the foregoing, this Paragraph 7(b)(i) shall not
preclude the Executive from providing services to an entity with two or more
lines of businesses, one of which is a Competitor, so long as the Executive
provides services only to the non-competitive businesses and does not directly
or indirectly provide supervisory, managerial or other services to any line of
business that is a 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), (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; (B) hire or retain any person who
was an employee of MFA or its affiliates within the six month period preceding
such action; or (C) engage in any activity intentionally to interfere with,
disrupt or damage the business of MFA of its affiliates, or its relationship
with any client, supplier or other business relationship of MFA.
 
 
11

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(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.
 
(d)           No Disparagement. Each of the Executive and MFA agrees that,
except as required by applicable law or compelled by process of law, 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
Paragraph shall (x) 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 (y) prohibit the
Executive from making truthful statements in the course of carrying out his
duties for MFA.
 
(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 MFA or its affiliates 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 MFA or its affiliates. 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 Paragraph 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.
 
 
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(f)           Remedies. The Executive agrees that these restraints are necessary
for the reasonable and proper protection of MFA and its affiliates and their
respective 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 are 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.  The
Executive acknowledges that each of these covenants has a unique, very
substantial and immeasurable value to MFA and its affiliates, 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 MFA and equitable enforcement of the covenant would be proper.  The
Executive therefore agrees that MFA, 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 and MFA further agree that, in the event that any provision of this
Paragraph 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
Paragraph 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 Paragraph 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 Paragraph 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 Paragraph 7.
 
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.           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).
 
 
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10.         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 entering into this Agreement and the performance of its or his
obligations under this Agreement will not violate any agreement between to which
it or he is a party.
 
11.         Entire Agreement. This Agreement contains the entire agreement
between MFA and the Executive concerning the subject matter hereof and
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.
 
12.         Amendment or Waiver. This Agreement can only be changed, modified or
amended with the consent 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 an authorized officer of MFA, as the case
may be.
 
13.         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.
 
14.         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.
 
15.         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.
 
 
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16.         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 Paragraph 18; 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.
 
17.         Legal Fees.
 
(a)           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.
 
(b)           Subject to Paragraph 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, any
other agreement or arrangement between the Executive and MFA, the Executive’s
employment with MFA, or the termination thereof 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.
 
18.         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.
 
19.         Headings. The headings of the paragraphs 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.
 
20.         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.
 
 
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
 

 
MFA FINANCIAL, INC.
       
By:
/s/ Stewart Zimmerman
   
Name: Stewart Zimmerman
   
Title: Chairman and Chief Executive Officer
       
By:
/s/ Craig L. Knutson
   
Name: Craig L. Knutson
   
Title: Executive Vice President

 
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Exhibit A
 
1.
2012 Bonus Pool

 
The following chart shall be applicable only with respect to the Executive’s
annual bonus for 2012.
 
Aggregate bonus pool can be adjusted upward or downward in any year by as
determined by the Compensation Committee dependent upon the Compensation
Committee’s assessment of MFA’s leverage strategy, share price performance
relative to the S&P financial index or other relevant indices, share price
relative to peer group, total return (share price change plus dividend), and its
other asset management activities, as well as the Executive’s individual
performance, among other considerations, as determined by the Compensation
Committee.
 
MFA ROAE
 
Range
 
Less than 4.5%
  $ 250,000          
4.5% - 5%
  $ 250,000     $ 316,666  
5% - 6%
  $ 316,666     $ 383,333  
6% - 7%
  $ 383,333     $ 450,000  
7% - 8%
  $ 450,000     $ 600,000  
8% - 9%
  $ 600,000     $ 750,000  
9% - 10%
  $ 750,000     $ 900,000  
10% - 11%
  $ 900,000     $ 1,050,000  
11% - 12%
  $ 1,050,000     $ 1,200,000  
12% - 13%
  $ 1,200,000     $ 1,350,000  
13% - 14%
  $ 1,350,000     $ 1,500,000  
14% - 15%
  $ 1,500,000     $ 1,650,000  
15% - 16%
  $ 1,650,000     $ 1,800,000  
16% - 17%
  $ 1,800,000     $ 1,950,000  
17% - 18%
  $ 1,950,000     $ 2,100,000  
18% - 19%
 
Minimum of $2,100,000 (subject, in all
 
19% - 20%
 
events to discretion of the Compensation
 
20% - 21 %+
 
Committee to increase or decrease such
     
amount as described above)
 

2.
2013 Bonus Pool

 
The following chart shall be applicable only with respect to the Executive’s
annual bonus for 2013.
 
Aggregate bonus pool can be adjusted upward or downward in any year by as much
as 30%, dependent upon the Compensation Committee’s assessment of MFA’s leverage
strategy, share price performance relative to the S&P financial index or other
relevant indices, share price relative to peer group, total return (share price
change plus dividend), and its other asset management activities, as well as the
Executive’s individual performance, among other considerations, as determined by
the Compensation Committee.

 
Exh. A-1

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Exhibit A (cont'd)
 
MFA ROAE
 
Range
 
Less than 4.5%
  $ 750,000        
4.5% - 5%
  $ 750,000     $ 950,000  
5% - 6%
  $ 950,000     $ 1,150,000  
6% - 7%
  $ 1,150,000     $ 1,350,000.  
7% - 8%
  $ 1,350,000     $ 1,800,000  
8% - 9%
  $ 1,800,000     $ 2,250,000  
9% - 10%
  $ 2,250,000     $ 2,700,000  
10% - 11%
  $ 2,700,000     $ 3,150,000  
11% - 12%
  $ 3,150,000     $ 3,600,000  
12% - 13%
  $ 3,600,000     $ 4,050,000  
13% - 14%
  $ 4,050,000     $ 4,500,000  
14% - 15%
  $ 4,500,000     $ 4,950,000  
15% - 16%
  $ 4,950,000     $ 5,400,000  
16% - 17%
  $ 5,400,000     $ 5,850,000  
17% - 18%
  $ 5,850,000     $ 6,300,000  
18% - 19%
 
Minimum of $6,300,000 (subject, in all
 
19% - 20%
 
events to discretion of the Compensation
 
20% - 21 %+
 
Committee to increase or decrease such
     
amount as described above)
 

 
 
A-2

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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 they will apply to grants under Paragraph 3(c) of the
Agreement to which this Exhibit B is attached.

 
1.
Eligibility: Employees designated by the Company’s Compensation Committee
(“Participants”) will be eligible to receive annual grants of phantom shares
(“Phantom Shares”) and dividend equivalent rights (“DERs”).

 
 
a.
Each Phantom Share will entitle a participant, upon vesting, to one share of
Company common stock.

 
 
b.
Each DER will entitle a participant to dividends payable on one share of Company
common stock.

 
 
2.
Phantom Share Vesting: Each RSU grant will be eligible to vest ratably over the
three-year period following the grant date.  Two-thirds (2/3) of each RSU grant
(the “Performance RSUs”) will ratably vest based on the achievement of
performance goals over the applicable three-year period and one-third (1/3) of
each RSU grant (the “Time RSUs”) will ratably time vest over the three-year
period.

 
 
a.
Performance Vesting:  33-1/3% of the Performance Phantom Shares will vest on
each of the first three anniversaries of the grant date if the Company’s Total
Shareholder Return (as determined by the Compensation Committee in good faith)
for the year ending on such anniversary is at least 10%.  The applicable
Performance Phantom Shares will be forfeited if a 10% TSR is not achieved in the
applicable year.

 
 
b.
Time Vesting: 33-1/3% of the Time Phantom Shares will vest on each of the first
three anniversaries of the grant date if the Participant is employed by the
Company on such anniversary.

 
 
c.
Termination of Employment: Subject to Paragraph 5(f)(v) of the Agreement to
which this Exhibit B is attached, all unvested Phantom Shares will be forfeited
upon any termination of employment.

 
 
3.
Settlement.  The Phantom Shares will settle upon vesting.

 
 
4.
Holding Policy: The Company’s Compensation Committee may impose stock holding
requirements similar to those set forth in Paragraph 3(b) of the Agreement to
which this Exhibit B is attached.

 
 
5.
DERs: Participants will be entitled to receive the applicable dividend payment
with respect to each outstanding DER.  A DER will be canceled at the time of
settlement or forfeiture of a Phantom Share.

 
 
Exh. B-1

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Exhibit C
 
Release
 
This Release of Claims (this “Release”) is made as of _________________, by and
between MFA MORTGAGE INVESTMENTS, INC. (“MFA”) and ________________ (the
“Executive”).
 
Release.
 
(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 Amended and
Restated 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; and any unemployment
or workers’ compensation law, excepting only those obligations of MFA pursuant
to Paragraph 5 of the Employment Agreement or otherwise continuing under the
Employment Agreement and any 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; (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 wages, 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. Notwithstanding the foregoing, nothing in this Release shall operate
to (i) waive, any claim for indemnification, contribution or D&O coverage or any
claim arising under, or preserved by, Paragraph 5 of the Employment Agreement or
(ii) require the Executive to relinquish any right to property previously
transferred to him by the Company.
 
(b)           The Executive shall not file or cause to be filed any action,
suit, claim, charge or proceeding with any federal, state or local court or
agency relating to any claim within the scope of this Release. In the event
there is presently pending any action, suit, claim, charge or proceeding within
the scope of this Release, or if such a proceeding is commenced in the future,
the Executive shall promptly withdraw it, with prejudice, to the extent he has
the power to do so. The Executive represents and warrants that he has not
assigned any claim released herein, or authorized any other person to assert any
claim on his behalf.
 
 
Exh. C-1

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Exhibit C (cont'd)
 
(c)           In the event any action, suit, claim, charge or proceeding within
the scope of this Release is brought by any government agency, putative class
representative or other third party to vindicate any alleged rights of the
Executive, (i) the Executive shall, except to the extent required or compelled
by law, legal process or subpoena, refrain from participating, testifying or
producing documents therein and (ii) all damages, inclusive of attorneys’ fees,
if any, required to be paid to the Executive by MFA as a consequence of such
action, suit, claim, charge or proceeding shall be repaid to MFA by the
Executive within ten (10) days of his receipt thereof.
 
(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 2(d)(3). HE AGREES NOT TO CHALLENGE ITS
ENFORCEABILITY;
 
(6)          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
 
 
C-2

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Exhibit C (cont'd)
 
(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.
 
 
C-3

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Exhibit C (cont'd)
 
IN WITNESS WHEREOF, the parties have hereunto set their hands this __________
day of ___________________.
 

 
By:
       
Name:
   
Title: Executive

 
 
C-4

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