Unassociated Document


    
      Exhibit
10.3

    

     

    MFA
MORTGAGE INVESTMENTS, INC.

     

    SECOND
AMENDED AND RESTATED

    2003
NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

     

    1.           Purpose

     

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

     

    2.           Effective
Date

     

    This Plan
shall become effective on the Effective Date.

     

    3.           Definitions

     

    In this
Plan, the following definitions shall apply:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Deferral Period” - the
five-year period, if so elected, during which Compensation for a particular year
is to be deferred.  At the conclusion of the Deferral Period, such
deferred Compensation will be paid out in a lump sum or, if so elected, in a
specified number of annual installments not to exceed five years.  If
the deferred Compensation is paid out in annual installments, such installment
payments shall be treated as a series of separate payments for purposes of
Section 409A of the Code.  Except as otherwise provided in Section
8(a) of the Plan, payment(s) will commence, or be made in a lump sum, no earlier
than January 15 of the year first following the five-year anniversary of
the applicable election date.  For example, if during 2002 a
Participant elects the Deferral Period (i.e., 5 years) for Compensation
deferred in 2003, the payment(s) shall be made/commence on or about
January 15, 2008.

     

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

     

    “Effective Date” -
December 19, 2002, the date the Plan was adopted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    4.           Administration

     

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

     

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

     

    5.           Election to Defer
Compensation

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    6.           Deferred Compensation
Account

     

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

     

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

     

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

     

    7.           Valuation

     

    The value
of an Account as of any date on which a settlement payment is to be made under
Section 8 shall be the amount equal to the number of Deferred Stock Units
then credited to the Participant’s Account times the Fair Market Value of a
Share on the last trading day preceding the payment date.

     

    
      
        
        

      

      
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    8.           Settlement

     

    (a)           General.  An
Account shall be distributed or commence distribution to a Participant on the
earlier of (i) the year first following the year in which a Termination of
Service occurs, or (ii) with respect to any particular Account, the year
first following the year in which the five-year Deferral Period elected by such
Participant for such Account expires.  Notwithstanding the foregoing,
all distribution elections shall provide that no payments may commence with
respect to any Account any later than the year first following the Participant’s
72nd birthday, or such other date as may, subject to Section 409A of the Code,
be approved by the Administrator.  To the extent that an Account is to
be distributed to a Participant in accordance with this Section 8, such
distribution shall occur on or about, but no earlier than, January 15
of the applicable distribution year.

     

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

     

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

     

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

     

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

     

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

     

    9.           Non-Assignability

     

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

     

    10.           Amendment and
Termination

     

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

     

    
      
        
        

      

      
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    11.           Governing
Law

     

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

     

    12.           Severability

     

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

     

    13.           Compliance

     

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

     

    14.           Withholding

     

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

     

    
      
        
        

      

      
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    MFA
MORTGAGE INVESTMENTS, INC.

     

    SECOND
AMENDED AND RESTATED

    2003
NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

     

    ANNUAL PARTICIPANT ELECTION
FORM FOR 2004 DEFERRALS

    Annual
Director Compensation 20__

     

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

     

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

     

    I elect
to defer _____ 50% or _____ 100% of the aggregate value of the annual retainer
payable to a Nonemployee Director for service on the Board of the
Corporation.

     

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

     

    3.           SETTLEMENT
(Check one):

     

    
      	
            	
              _____

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

            


    

    
      	
            	
              _____

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

            


    

     

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

     

     

    
      Dated: _____________________                                  __________________________________                                                     

      Signature of
Director

    

    
       

      
        	 


      

       

    

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

     

    
      	
            	
              _____

            	
              I
      do not wish to participate in the
Plan.

            


    

     

     

    Dated: _____________________                                  __________________________________                                                     

    Signature of Director

     

    
      	 


    

     

    Accepted on the ___ day of ___________, 20__

    on behalf
of MFA Mortgage Investments, Inc.

     

    By:
________________________________________

     

    FEDERAL
TAX ASPECTS

     

    The
following discussion is a general description of expected Federal income tax
results under current law.  The information is not tax advice, it is
intended to be for general guidance only and does not give a full description of
all the tax issues which may apply to you.  You should also remember
that tax laws may change from time to time.  You should consult your
own tax advisors regarding the impact of the Plan, and your election thereunder,
with respect to any federal, state, local or other taxes.

     

    The Plan
is intended to be a non-qualified deferred compensation plan under the
provisions of the Internal Revenue Code. At the time a Participant’s deferral of
Compensation is made, it is intended that such Participant will not recognize
income for Federal income tax purposes. In addition, Deferred Stock Units
credited pursuant to Section 6(b) of the Plan are not intended to be
treated as income at the time they are credited to the Account of a
Participant.

     

    Participants
will recognize ordinary income at the time the Participant deferrals, together
with the earnings credited to these amounts, are actually paid out or made
available to the Participants. The amount of such ordinary income will equal the
amount of cash received.

     

    The Plan
is not intended to be a tax-qualified plan under Section 401 (a) of the
Internal Revenue Code and is not intended to be subject to ERISA. The
Corporation has not received any ruling from the Internal Revenue Service
concerning the tax consequences of the Plan.