EXHIBIT
10.1

     

    SECOND
AMENDED AND RESTATED

    EMPLOYMENT
AGREEMENT

     

    THIS
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is entered into as
of the 7th day of
June, 2010 by and between MFA
FINANCIAL, INC., a Maryland corporation ("MFA"), and STEWART ZIMMERMAN, an individual
residing at the address set forth on the signature page hereof (the
"Executive").

     

    WITNESSETH:

     

    WHEREAS, MFA and the Executive entered
into an amended and restated employment agreement, effective as of April 16,
2006 and amended as of December 10, 2008 (the "Employment
Agreement");

     

    WHEREAS, MFA and the Executive desire to
amend the terms of the Executive's employment and extend the period of
employment set forth in the Employment Agreement to December 31, 2012 on the
terms and conditions set forth in this Agreement; 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 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, which commenced on April 16, 2006, shall continue until December 31,
2012, unless terminated earlier in accordance with Paragraph 5
hereof.

     

    
      	
               
      

            	
              2.

            	
              Position;
      Duties and Responsibilities.

            


    

     

    (a)  The Executive shall be employed as the
Chairman and CEO, reporting directly to the Board of Directors of MFA (the
“Board
of Directors”), 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 Board
of Directors

     

    (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 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 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
nine hundred thousand dollars ($900,000).  In addition to Base Salary,
the Executive shall receive the following annual grants of common stock of the
Company (the fair market value of such stock at the time of grant (i.e.,
$100,000), together with the Base Salary for such year, "Base
Compensation"), subject to
the Executive’s continuing employment with the Company on the date of
grant:

     

    
      	
               
      

            	
              (i)

            	
              On April 16, 2006 and on January
      1st (or the first business day thereafter) of each of the following six
      years, the Executive shall receive a grant of common stock with an
      aggregate fair market value on such date (or the first business day
      thereafter) of $100,000;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Each such award shall be subject
      to definitive documentation, and such shares of stock shall be fully
      vested and non-forfeitable upon the date of grant, but in no event may be
      sold or transferred prior to the time the value of the Executive’s
      holdings in MFA exceeds five times his Base Compensation (and thereafter
      may be sold or transferred to the extent the value of the Executive’s
      stock holdings exceeds such
multiple).

            


    

     

    (b)  Performance
Bonus.  The
Executive, President and Executive Vice President shall be eligible to
participate in a Performance Bonus Pool for Senior Executives (the “Bonus
Pool”) each year during the
Term of Employment.  The aggregate Bonus Pool shall be determined by
reference to MFA’s Return on Average Equity (“ROAE”) as more fully described in Exhibit A
to this Agreement.  Subject to the right of the Compensation Committee
of the Board of Directors (the “Compensation
Committee”) to determine
the portion of the Bonus Pool to be allocated to the Executive, allocations as
between the President and Executive Vice President, if any, shall be made by the
Compensation Committee together with the Executive based upon each participant’s performance during the applicable
period.  The Compensation Committee, in its discretion, can adjust the
aggregate Bonus Pool upward or downward in any year 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 (the "Performance
Bonus") shall
be paid in a combination of cash and restricted stock based on the total Bonus
Pool (after any reduction or increase referred in the immediately-preceding
paragraph), as follows:  (i) Bonus Pool (as adjusted) up to
$2,700,000:  seventy-five percent (75%) will be paid in cash and
twenty-five (25%) percent will be paid in restricted stock; (ii) the incremental
total Bonus Pool (as adjusted) between $2,700,000 and
$4,050,000:  sixty-five percent (65%) will be paid in cash and
thirty-five percent (35%) will be paid in restricted stock; (iii)  the
incremental total Bonus Pool (as adjusted) in excess of
$4,050,000:  fifty percent (50%) will be paid in cash and fifty
percent (50%) will be paid in restricted stock.  In each case referred
to above, the period of restriction with respect to the applicable 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.  Notwithstanding the
foregoing, any unvested shares of restricted stock shall immediately vest in
full on
December 31, 2012;
provided, that, the Executive remains in
continuous employment with MFA through December 31, 2012 or has terminated
employment with MFA prior to such date under circumstances described in Section
5(a), (b) or (d) hereof.  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 five 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 five times the Executive’s Base Salary as of the
date of the Executive’s termination of employment (provided,
however, that
(i) this sentence shall no longer apply following the six-month anniversary of
the Executive’s termination of employment, and (ii) the Executive shall be
permitted to sell vested shares of restricted stock, notwithstanding such
transfer restriction, to satisfy his
income and
employment tax
obligations related to the vesting of such shares).  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 Executive shall be
eligible to receive such stock option, restricted stock, phantom share 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 the 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 six 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, properly receipted in accordance with MFA's policies,
incurred by Executive in connection with his employment.

     

    
      
         


      

      
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              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 Compensation accrued or earned but unpaid and any
other payments payable to the Executive pursuant to Paragraph 5(e) 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 two (2) times the Executive’s then current Base Compensation,
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,
Executive's health insurance coverage shall be continued at MFA's expense for
the duration of such Disability; provided, that, if such coverage cannot be
provided under MFA's health insurance policy for the duration of such
Disability, such coverage or the cost of comparable coverage shall be provided
by MFA until the Executive's attainment of age 70 or such later date through
which coverage is permissible under MFA's health insurance
policy.

     

    (b)  Termination
Without Cause or for Good Reason.  In the event the
Executive's employment is terminated by MFA without Cause or by the Executive
for Good Reason, MFA shall pay the Executive an amount (the "Severance
Amount") equal to three (3)
times the greater of (i) the Executive's combined Base Compensation and actual
Performance Bonus for the preceding fiscal year or (ii) the average for the
three preceding years of the Executive's combined actual Base Compensation and
Performance Bonus.  Fifty percent of the Severance Amount shall be
paid within five (5) days after the date the Executive terminates for Good
Reason or is terminated by the Company for any reason other than Cause, and the
remaining 50% of the Severance Amount shall be paid in three equal monthly
installments beginning on the first business day of the month following the
month of such termination; provided, however, in no event shall any portion of
the Severance Amount be payable after March 15th of the year following the year
in which such termination occurs.  For the avoidance of doubt,
expiration of the Term of Employment as set forth in Paragraph 1(b) 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 otherwise give rise to any payments under this Paragraph
5(b).  It is further agreed that the execution of this Agreement shall
not give rise to a right of termination of employment by the Executive for Good
Reason.

     

    (c)  Termination
by MFA for Cause or Voluntary Termination by the Executive.  In the event the
Executive's employment is terminated by MFA for Cause, or is terminated 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 Compensation accrued or earned but unpaid
and any other payments payable to the Executive pursuant to Paragraph 5(e)
below, as of the date of termination.


    
      
         


      

      
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    (d)  Termination
Related to Change in Control.  In the event of (1) the
termination of the Executive's employment by MFA without Cause that occurs both
within two months before a Change in Control and following the occurrence of a
Pre-Change-in-Control Event, (2) the resignation of his employment by the
Executive for any reason within six months following a Change in Control, or (3)
the termination of the Executive's employment by MFA other than for Cause or the
Employee's resignation of his employment for Good Reason within twenty-four
months following a Change in Control,

     

    
      	
               
      

            	
              (i)

            	
              MFA shall pay to Executive in a
      lump sum, within 30 days following the termination of employment, an
      amount equal to 300% of the sum of (a) the Executive's then current Base
      Compensation and (b) the Executive's bonus for the immediately preceding
      year;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              all of the Executive's outstanding
      restricted stock, phantom shares 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 Internal Revenue Code of
1986, as amended (the "Code") in connection with a Change in
Control, the amounts payable or benefits to be provided to the Executive shall
be reduced 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).

     

    (e)  
Other
Payments.  Upon
the termination of the Executive's 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;

            


    

     

    
      	
               
      

            	
              (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 the 2004
      Equity Compensation Plan and under all other applicable plans and programs
      of MFA, as provided in Paragraph 4 above;
  and

            


    

     

    
      
         


      

      
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              (v)

            	
              upon the termination of the
      Executive's employment pursuant to Paragraphs 5(a) or 5(b), all of the
      Executive's outstanding restricted stock, phantom shares 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.

            


    

     

    (f)   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.

     

    (g)  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, 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.

     

    (h)  Mutual
Release.  MFA's
obligation to make any payment or provide any benefit pursuant to this Paragraph
5 shall be contingent upon, and is the consideration for, the Executive
executing and delivering to MFA a general release (the "Release"), substantially in the form annexed
hereto as Exhibit B, releasing MFA, and all current and former members, officers
and employees of MFA, from any claims relating to the Executive's employment
hereunder, other than claims relating to continuing obligations under, or
preserved by, (x) this Agreement or (y) any compensation or benefit plan,
program or arrangement in which the Executive was participating as of the date
of termination of his employment, and no such amounts shall be provided until
the Executive executes and delivers to MFA a letter which provides that the
Executive had not revoked such Release after seven days following the date of
the Release.  In all events, the Release shall be executed by the
Executive within 60 days of termination of employment in order for the Executive
to receive any severance benefits hereunder.  The Release shall also
be executed by MFA and delivered to the Executive as part of the consideration
for the Executive's execution and delivery of the Release, and, except as
otherwise provided under the terms of the Release, shall release the Executive
from any and all claims MFA may have against the
Executive.


    
      
         


      

      
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              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 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, (i) 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 Board of Directors; 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 (x) reasonable
prior written notice to the Executive setting forth the reasons for the decision
to terminate the Executive for Cause, (y) an opportunity for the Executive,
together with his counsel, to be heard by the Board of Directors, and (z)
delivery to the Executive of a notice of termination approved by said Board of
Directors stating 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 Board of Directors 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:

     

    
      	
               
      

            	
              (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

            


    

     

    
      
         


      

      
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              (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 shareholders 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)  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.

     

    
      
         


      

      
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    (d)  Good
Reason.  "Good
Reason" shall
mean:

     

    
      	
               
      

            	
              (i)

            	
              except as otherwise provided in
      Section 2(a), 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 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 failure by MFA to honor any of
      its material obligations
herein.

            


    

     

    (e)  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.

     

    (f)   Pre-Change-in-Control
Event.  A
"Pre-Change-in-Control
Event" shall mean the
occurrence of any one of the following events:

     

    
      	
               
      

            	
              (i)

            	
              the Board shall adopt a resolution
      to the effect that any person has taken actions which, if consummated,
      would result in such person acquiring effective control of the business
      and affairs of MFA;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              there shall commence a tender
      offer or proxy contest resulting in any of the transactions specified in
      subparagraphs (i)-(iii) of Paragraph
  6(b);

            


    

     

    
      	
               
      

            	
              (iii)

            	
              MFA shall make any agreement
      resulting in any of the transactions specified in subparagraphs (i)-(iii)
      of Paragraph 6(b);

            


    

     

    
      	
               
      

            	
              (iv)

            	
              there shall be a public
      announcement of a transaction of the kind specified in subparagraphs
      (i)-(iii) of Paragraph 6(b);
or

            


    

     

    
      	
               
      

            	
              (v)

            	
              any other meeting, writing or
      written communication with, by or to the Board of Directors or any officer
      or executive of MFA, that is held, made or undertaken in good faith in
      anticipation of a Change in
Control.

            


    

     

    
      
         


      

      
        - 9 -

        
          

        

      

      
         


      

    

     

    (g)  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.

     

    (h)  Tangible Net
Worth.  "Tangible Net
Worth" shall mean
stockholder equity less (i) goodwill and (ii) preferred stockholder
equity.

     

    7.           Covenant Not
To Compete.

     

    The
Executive and MFA recognize that, due
to the nature of Executive’s employment
and relationship with MFA, the Executive has access to and develops confidential
business information, proprietary information, and trade secrets relating to the
business and operations of MFA.  The Executive acknowledges that (i)
such information is valuable to the business of MFA,  (ii) disclosure
to, or use for the benefit of, any person or entity other than MFA, would cause
irreparable damage to MFA, (iii) the principal business of MFA is acquiring
mortgage-backed securities (the “Business”), (iv)
MFA is one of the limited number of persons who have developed a business such
as the Business, and (v) the Business is national in scope.  The
Executive further acknowledges that his duties for MFA include the duty to
develop and maintain client, customer, employee and other business relationships
on behalf of MFA; and that access to and development of those close business
relationships for MFA render his services special and unique.  In
recognition that the goodwill and business relationships described herein are
valuable to MFA, and that loss of or damage to those relationships would destroy
or diminish the value of MFA, and in consideration of the compensation
arrangements (including any payments pursuant to Paragraph 5 hereunder), and
other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Executive, the
Executive agrees as follows:

     

    (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 any of
its subsidiaries or affiliates, if any, 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 the Business of MFA or as specifically required by law or by
court order, 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: (i) is or becomes publicly known
through no act or omission on the Executive's part; (ii) was rightfully known by
the Executive without confidentiality restriction before disclosure to the
Executive by MFA; or (iii) becomes rightfully known by the Executive without
confidentiality restriction from a source other than MFA that does not owe a
duty of confidentiality to MFA with respect thereto.

     

    
      
         


      

      
        - 10 -

        
          

        

      

      
         


      

    

     

    (b)  Prohibited
Activities.  Since the Executive’s
services to MFA are essential and because the Executive has access to MFA’s
Confidential Information, the Executive covenants and agrees
that:

     

    
      	
               
      

            	
              (i)

            	
              in
      the event of the termination of the Executive’s employment with MFA, 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 engaged
      in any element of the Business), or partner with, or as an officer,
      director, employee or consultant with, (A) any entity or person (other
      than a mortgage REIT described in clause (B) below) engaged in any element
      of the Business, 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, for a
      period of five months following termination of his employment with MFA, or
      (B) any mortgage REIT for a period of six months following termination of
      his employment with MFA; provided, however, in the event that either (x)
      the Executive
      continues as Chairman of the Board past December 31, 2012 and voluntarily
      resigns as Chairman of the Board of Directors prior to the date of the
      Company's 2013 annual meeting or (y) the Executive remains the Chairman of
      the Board of Directors through the date of the Company's 2013 annual
      meeting, the restrictions set forth in clauses (A) and (B) shall extend
      for an additional five months, and six months, respectively, following the
      date of such voluntary
      resignation in the case of clause (x) or following the date of such
      annual meeting in
      the case of clause (y), as applicable.  Notwithstanding
      the foregoing, nothing herein shall prevent the Executive from providing
      services to or otherwise be associated with a subsidiary, division or
      affiliate of an entity or person that is engaged in the Business so long
      as (x) the Executive’s services are not provided, directly or indirectly,
      within the division, subsidiary or business unit of the entity that
      engages in the Business, and the Executive has no responsibilities
      regarding the Business and (y) the Executive shall provide the Company
      with advance written notice of his entering any such service relationship
      and shall notify the Executive’s then-current employer (or other entity to
      which the Executive provides services) of the Executive’s obligations
      under this
      Agreement.

            


    

     

    
      
         


      

      
        - 11 -

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              (ii)

            	
              during the Term of Employment, and
      during the one-year period following the termination of the Executive’s
      employment with MFA for any reason, 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 to terminate employment with
      MFA, or to become employed by, or to enter into a business relationship
      with, any other person or entity; or (B) engage in any activity
      intentionally to interfere with, disrupt or damage the Business of MFA, or
      its relationships with any client, supplier or other business relationship
      of MFA.

            


    

     

    (c)  MFA
Materials.  The
Executive acknowledges that all originals and copies of materials, records and
documents relating
to the business of MFA which were 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 with willful intent to
damage the other, 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 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.

     

    (e)  Transition.  Regardless of the reason for
his departure from MFA, the Executive agrees that, at MFA’s sole costs and expense, for a
period of not more than 30 days after termination of the Executive, he 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,
subject to the Executive’s obligations to his new employer.

     

    (f)   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 relating to MFA and to cooperate
fully, 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 hereunder. Such cooperation will include all assistance that MFA, its
counsel or its 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 reimburse
the Executive for all reasonable expenses, including travel, lodging and meals,
incurred by him in fulfilling his obligations under this Paragraph 7(f) and,
except as may be required by law or by court order, should the Executive then be
employed by an entity other than MFA or
otherwise engage in a business enterprise, such
cooperation will not materially interfere with the Executive’s then current
employment or
business activity.

     

    
      
         


      

      
        - 12 -

        
          

        

      

      
         


      

    

     

    (g)  Remedies.  The Executive declares that
the foregoing limitations in Paragraphs 7(a) through 7(f) above are reasonable
and necessary for the adequate protection of the business and the goodwill of
MFA.  If any restriction contained in this Paragraph 7 shall be deemed
to be invalid, illegal or unenforceable by reason of the extent, duration or
scope thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, scope, or other provisions hereof to
make the restriction consistent with applicable law, and in its reduced form
such restriction shall then be enforceable in the manner contemplated
hereby.  In the event that the Executive breaches any of the promises
contained in this Paragraph 7, the Executive acknowledges that MFA’s remedy at
law for damages will be inadequate and that MFA will be entitled to specific
performance, a temporary restraining order or preliminary injunction to prevent
the Executive’s prospective or continuing breach and to maintain the status
quo.  The existence of this right to injunctive relief, or other
equitable relief, or MFA’s exercise of any of these rights, shall not limit any
other rights or remedies MFA may have in law or in equity, including, without
limitation, the right to arbitration contained in Paragraph 17 hereof and the
right to compensatory and monetary damages.  The Executive hereby
agrees to waive his right to a jury trial with respect to any action commenced
to enforce the terms of this Agreement.

     

    
      	
               
      

            	
              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 (and, to
the extent applicable, such duties performed pursuant to Section 2(b)
hereof), 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.  During the Term of
Employment and for six years following the date of the Executive's termination
as an officer of MFA, 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.

     

    
      	
               
      

            	
              10.

            	
              Representation.

            


    

     

    MFA represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that its
entering into this Agreement and the performance of its obligations under this
Agreement will not violate any agreement between MFA and any other person, firm
or organization or any law or governmental regulation.

     

    
      
         


      

      
        - 13 -

        
          

        

      

      
         


      

    

     

    
      	
               
      

            	
              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.

     

    
      	
               
      

            	
              12.

            	
              Amendment or
      Waiver.

            


    

     

    This
Agreement cannot be changed, modified or amended without the consent in writing
of both the Executive and MFA.  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.

     

    
      	
               
      

            	
              16.

            	
              Governing
      Law.

            


    

     

    This
Agreement and all rights thereunder, and any controversies or disputes arising
with respect thereto, shall be governed by and construed and interpreted in
accordance with the laws of the State of New York, applicable to agreements made
and to be performed entirely within such State, without regard to conflict of
laws provisions thereof that would apply the law of any other
jurisdiction.


    
      
         


      

      
        - 14
-

        
          

        

      

      
         


      

    

     

    
      	
               
      

            	
              17.

            	
              Dispute
      Resolution.

            


    

     

    In the
event of any dispute, controversy or claim arising out of or relating to this
Agreement or Executive's employment or termination thereof (other than a
controversy or claim arising under Paragraph 7, to the extent necessary for MFA
(or its affiliates where applicable) to enforce the provisions thereof), the
parties hereby agree to settle such dispute, controversy or claim in a binding
arbitration by a single arbitrator in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, which arbitration shall be
conducted in New York, New York.  The parties agree that the arbitral
award shall be final and non-appealable and shall be the sole and exclusive
remedy between the parties hereunder.  The parties agree that judgment
on the arbitral award may be entered in any court having competent jurisdiction
over the parties or their assets.  All reasonable fees and expenses
related to any such arbitration (including reasonable attorneys' fees and
related disbursements) shall be paid by MFA.

     

    
      	
               
      

            	
              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.

     

    
      	
               
      

            	
              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 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 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.

     

    
      	
               
      

            	
              21.

            	
              Counterparts.

            


    

     

    This
Agreement may be executed in two or more counterparts.


    
      
         


      

      
        - 15
-

        
          

        

      

      
         


      

    


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


     

    
      
        
          	
                  MFA
      Financial, Inc.

                
	 
      
	
                  By: 

                	
                  /s/ James A. Brodsky

                
	
                  Name:  James
      A. Brodsky

                
	
                  Title:  Lead
      Director of the Board

                
	 
      
	
                  /s/ Stewart Zimmerman

                
	
                  Stewart
      Zimmerman

                


        

      

    

    


    
      Executive's
address:

    

    


    
      3063
Wynsum Avenue

    

    
      Merrick,
NY 11566

    
 

    
      
         


      

      
        - 16
-

        
          

        

      

      
         


      

    


    EXHIBIT
A


     

    AGGREGATE
PERFORMANCE BONUS POOL FOR SENIOR EXECUTIVES

     

    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.

     

    
      
        
          
            
              	
                      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 events to 

                      discretion
      of the Compensation
      Committee to increase

                       or
      decrease such amount
      as described above)

                    
	
                      19%
      - 20%

                    	 
      
	
                      20%
      - 21%+

                    	 
      


            

          

        

      

    
 

    
      
         


      

      
        - 17
-

        
          

        

      

      
         


      

    


    EXHIBIT
B


     

    MUTUAL
RELEASE

    


    This
Mutual Release of Claims (this "Release") is made as of
_____________, by and between MFA FINANCIAL, INC. (the "Company") and
_________________ (the "Executive").

    
      	
               
      

            	
              1.

            	
              Release by the
      Company.

            


    

     

    (a)  The
Company on behalf of itself, its agents, successors, affiliated entities and
assigns, in consideration for the Executive's execution and delivery of this
Release, hereby forever releases and discharges the Executive, and his agents,
heirs, successors, assigns, executors and administrators, 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, defamation, interference with contract
relations or prospective economic advantage, negligence, misrepresentation; (ii)
any and all liability that was or may have been alleged against or imputed to
the Executive by the Company or by anyone acting on its behalf; (iii) any
punitive, compensatory or liquidated damages; and (iv) all rights to and claims
for attorneys' fees and costs except as otherwise provided in his second amended
and restated employment agreement with the Company dated June __, 2010 (the
"Employment
Agreement").

    (b)  The
Company 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 Company
shall promptly withdraw it, with prejudice, to the extent it has the power to do
so.  The Company represents and warrants that it has not assigned any
claim released herein, or authorized any other person to assert any claim on its
behalf.


    
      
         


      

      
        - 18
-

        
          

        

      

      
         


      

    

    
 

    (c)  Anything
to the contrary notwithstanding in this Release or the Employment Agreement,
this Release shall not apply to claims or damages based on (i) any right or
claim that arises after the date on which the Company executes this Release,
including any right to and enforce the Employment Agreement with respect to
provisions pertaining to matters that arise after the date of the Release and
that survive termination of employment or (ii) any act of willful misconduct,
gross negligence, fraud or misappropriation of funds.

    
      	
               
      

            	
              2.

            	
              Release by 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, hereby forever
releases and discharges the Company, 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 the Company
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 the Company by the Executive
or by anyone acting on his behalf; (iii) all claims for wages, monetary or
equitable relief, employment or reemployment with the Company 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.


    
      
         


      

      
        - 19
-

        
          

        

      

      
         


      

    

    
 

    (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.

    (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 the Company as a consequence of such
action, suit, claim, charge or proceeding shall be repaid to the Company by the
Executive within ten (10) days of his receipt thereof.


    
      
         


      

      
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    (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;


    
      
         


      

      
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    (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.


    
      
         


      

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

    


    
      
        
          
            
              
                
                  
                    
                      	 
      
	
                              Executive

                            
	 
	
                              MFA
      FINANCIAL, INC.

                            
	 
	
                              By:

                            	 
      


                    

                  

                

              

            

          

        

      

    
 

    
      
         


      

      
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