Document:

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                                                                  EXHIBIT 10.3

                         EXECUTIVE EMPLOYMENT AGREEMENT

                                (MARK K. JOSEPH)

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of July, 2003 (the "Effective Date") by and between MUNICIPAL MORTGAGE & EQUITY,
LLC, a Delaware limited liability company ("Employer"), and MARK K. JOSEPH
("Executive").

         WHEREAS, Employer is engaged in the business of acquiring and providing
asset management services for real estate and debt and equity investments
therein, with a particular emphasis on investments generating tax-exempt income
and investments in, or secured by, multi-family properties, congregate care, and
assisted living facilities and similar properties;

         WHEREAS, Executive is the founder of Employer, has been its Chairman
and Chief Executive Officer from Employer's inception, and has particular skill,
experience, and background in all activities, investments, and services in which
the Employer primarily engages; and

         WHEREAS, Employer and Executive wish to enter into a continuing
employment relationship that envisions the execution of a succession plan, the
gradual reduction of Executive's employment responsibilities, and a phased-in
transition of management control to others who will continue the business of the
Employer into the future; and

         WHEREAS, To accomplish that goal, Employer and Executive desire to
enter into the continuing employment relationship under the terms set forth in
this Agreement.

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employer and Executive
hereby agree as follows:

         1. TERM OF AGREEMENT - EMPLOYMENT PHASES

         The term of this Agreement (the "Term") shall be divided into two
Employment Phases, and shall end upon the expiration of the second Employment
Phase, as follows:

                  (a) Employment Phase I. Employment Phase I shall commence on
the Effective Date and shall continue until June 30, 2005.

                  (b) Employment Phase II. Employment Phase II shall commence
immediately upon the conclusion of Employment Phase I, and shall continue until
December 31, 2008.

         2. EMPLOYMENT AND DUTIES. Executive agrees to devote his best efforts,
attention, and skill in performing the duties of his position during each
Employment Phase, as defined in Section 1 above. Provided that his activity does
not violate any provision of this Agreement (including the noncompetition
provisions of Section 7 below) or materially interfere with his

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performance of his duties hereunder, nothing herein shall prohibit Executive
from (a) participating in any other business activities, other than those in
which he is already participating at the time this Agreement is executed,
without advance approval by the Board of Directors (the "Board"), in accordance
with any terms and conditions of such approval, such approval not to be
unreasonably withheld or delayed, (b) engaging in charitable, civic, fraternal,
or trade group activities, or (c) investing in other entities or business
ventures. Executive's duties during each Employment Phase shall be as follows:

                  (a) Employment Phase I. During Employment Phase I, Executive
shall continue to be employed by Employer as Chairman and CEO of Employer and
shall continue to perform the duties and responsibilities he was performing
prior to execution of this Agreement and any other duties and responsibilities
consistent with the types of duties and responsibilities typically performed by
a person serving as Chairman and CEO of comparable businesses. In addition,
Executive undertakes to work with the President and Chief Operating Officer of
Employer, to put in place a management system that will provide sufficient
operating support to enable the President, with Board approval, to assume the
office of CEO at the end of Employment Phase I.

                  (b) Employment Phase II. During Employment Phase II, Executive
shall serve as Chairman of the Board of Employer and shall in collaboration with
the CEO be responsible for (i) management's relations with the Board and its
governance; (ii) implementation of Sarbanes/Oxley requirements and internal
controls; (iii) recruitment of candidates for the Board; (iv) branding and
public relations and acting as spokesperson for Employer; (v) engaging with
senior management in strategic planning; (vi) work with funding group in seeking
pension fund capital; and (vii) political and governmental relations. During
Employment Phase II, Executive shall continue to serve as a member of Employer's
Senior Management Committee and Executive Committee; and perform any other
duties and matters as assigned to him by the Board or agreed to with the CEO. In
general, Executive shall remain sufficiently involved in and informed about
Employer's affairs to enable him to perform all of these roles.

                  (c) Subsequent to Employment Phase II. Following expiration of
Employment Phase II, Executive shall continue to make himself available for
consulting services to the Employer for such reasonable period and on such terms
as Executive and the Board shall mutually agree, but any failure by either party
to reach mutual agreement with respect to such consulting services terms shall
not constitute a breach of this Agreement.

         3. COMPENSATION

         As compensation for performing the services required by this Agreement,
and during the Term, Executive shall be compensated as follows:

                  (a) Employment Phase I. During Employment Phase I, Executive
shall continue to be compensated as Employer's most senior executive and shall
receive the following:

                           (i) Base Compensation: Employer shall pay to
Executive a salary ("Base Compensation") at the annual rate of Three Hundred
Twenty-Five Thousand Dollars ($325,000) through June 30, 2004, payable in
accordance with the general policies and procedures of

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Employer for payment of salaries to executive personnel, but in any event no
less frequently than every two weeks, in substantially equal installments,
subject to withholding for applicable federal, state, and local taxes.
Executive's Base Compensation shall increase by Twenty-Five Thousand Dollars
($25,000) for the year ending June 30, 2005.

                           (ii) Incentive Compensation:

                                    A. In addition to Base Compensation,
Executive shall be eligible to receive additional compensation ("Incentive
Compensation"), pursuant to such Incentive Compensation Plan as may from time to
time be adopted by Employer. The Incentive Compensation Plan will have two
components. First, the Plan will provide that Executive is eligible to receive
an annual bonus payable in cash, unrestricted shares, or restricted shares of up
to Three Hundred Seventy-Five Thousand Dollars ($375,000) during the first year
of this Agreement (i.e., the first year of Employment Phase I) based on meeting
goals for fiscal year 2003, and up to Four Hundred Thousand Dollars ($400,000)
during the second year of this Agreement (i.e., the second year of Employment
Phase I) based on meeting goals for fiscal year 2004. This component of the
Incentive Compensation Plan will provide that the amount of the bonus will be
based on a formula tied to the Executive's performance and Employer's
company-wide performance. The formula will be initially determined (and may be
modified from time to time) by the Compensation Committee; provided, however,
that the formula will have criteria and metrics that are substantially similar
to those used to calculate incentive compensation for Employer's other senior
executives. Second, the Plan will provide that Executive may earn additional
Incentive Compensation of up to Two Hundred Thousand Dollars ($200,000) per year
for the Company's fiscal years 2003 and 2004 for Employer's corporate
performance measured by 8% CAD growth in each of the fiscal years 2003 and 2004.

                                    B. Incentive Compensation may at the
election of the Compensation Committee take the form of cash or the stock of
Municipal Mortgage & Equity, LLC (the "Company") and, to the extent it consists
of stock, may be awarded under the Employer's Share Incentive Plan as in effect
from time to time. Executive acknowledges that the formula set forth in the
Incentive Compensation Plan may vary for each employee who participates therein.
Incentive Compensation for any given fiscal year (including the partial year
2003) shall be determined no later than 60 days after the end of Employer's
fiscal year and paid no later than 75 days after the close of the fiscal year.

                  (b) Employment Phase II. During Employment Phase II, Executive
shall receive as Base Compensation each year $1.00 plus an amount determined by,
and in the discretion of, the Company's Compensation Committee, up to 50% of the
total compensation paid to the Company's CEO.

                  (c) Deferred Compensation. Coincident with the execution of
this Agreement, in order to provide additional compensation to Executive as an
inducement to his entering into this Agreement, Employer shall enter into the
Deferred Compensation Agreement, in the form attached hereto as EXHIBIT A (the
"Deferred Compensation Agreement"), which is incorporated into and makes up a
part of this Agreement, to provide Executive with a deferred benefit of $3
Million that vests immediately on execution of this Agreement. For a term of 5
years after

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Employment Phase II, as further inducement for Executive to enter into this
Agreement, Executive shall be provided with office space and an administrative
assistant comparable to that which he receives during Employment Phase I and
Employment Phase II.

         4. EXECUTIVE BENEFITS.

                  (a) During the Term of this Agreement, Executive and his
eligible dependents shall have the right to participate in any retirement,
pension, insurance, health, or other benefit plan or program adopted by Employer
(or in which Employer participates) to the same extent as any other executive
officer of the Employer, subject, in the case of a plan or program, to all of
the terms and conditions thereof, and to any limitations imposed by law.
Executive shall have the right, to the extent permitted under any applicable
law, to participate concurrently in plans or programs sponsored by others
(including self-employment plans or programs) and in plans or programs sponsored
by Employer.

                  (b) Tax Benefit Adjustment. If, as a result of the ownership
of common shares by Executive, Executive shall either lose personal income tax
deductions, be required to report additional personal taxable income, or be
required to pay additional taxes or charges, which deductions, income or taxes
would not have been lost, reportable, or payable, as the case may be, had
Executive not owned any common shares, Employer shall pay Executive a bonus on
April 1 of each calendar year equal to all additional taxes or charges Executive
is required to pay, attributable to the prior calendar year, which would not
have been payable had Executive not owned common shares. THIS SECTION IS NOT
INTENDED TO COMPENSATE EXECUTIVE FOR THE INCOME TAX CONSEQUENCES OF RECEIVING OR
EXERCISING OPTIONS FOR OR ACQUIRING COMMON SHARES.

         5. EXPENSES.

         Executive shall be entitled to receive, within a reasonable period of
time after he has delivered to the Employer an itemized statement thereof, and
after presentation of such invoices or similar records as the Employer may
reasonably require, reimbursement for all necessary and reasonable expenses
incurred by him in connection with the performance of his duties.

         6. TERMINATION AND TERMINATION BENEFITS.

                  (a) Termination by Employer.

                           (i) Without Cause. Employer may terminate this
Agreement and Executive's employment at any time without Cause, as defined
below, upon ninety (90) days prior written notice to Executive, during which
period Employer shall have the option to require Executive to continue to
perform his duties under this Agreement. In such event, Executive shall be paid
(A) all amounts earned, but yet unpaid, through the date of Executive's
cessation of employment, (B) all Base Compensation that otherwise would have
been payable under this Agreement through the expiration of Employment Phase II,
to the extent not yet paid, and (C) all other benefits to which Executive is
entitled under this Agreement and the Deferred Compensation Agreement. The
amounts payable under the immediately preceding sentence shall be paid to
Executive, in one lump sum payment, as soon as practicable following Executive's

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cessation of employment. In addition, upon Employer's termination of Executive's
employment without Cause, Executive shall become fully vested in any and all
outstanding deferred share awards, share options, and other Long-Term
Incentives, and he and his dependents shall be provided, at the Employer's
expense, with group health plan continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") or any applicable state law,
and thereafter through the expiration of Employment Phase II with health
coverage comparable to their coverage under the Employer's group health plans.

                           (ii) With Cause. Employer may terminate this
Agreement and Executive's employment with Cause upon ten (10) days prior written
notice to Executive. In such event, Executive shall be paid his Base
Compensation and all other benefits to which he is entitled under this Agreement
and the Deferred Compensation Agreement up through the effective date of
termination. For purposes of this Agreement, termination for "Cause" shall mean
(A) acts or omissions by the Executive with respect to the Employer which
constitute intentional misconduct or a knowing violation of law; (B) receipt by
the Executive of money, property, or services from the Employer or from another
person dealing with Employer in violation of law or this Agreement, (C) material
breach by Executive of the noncompetition provisions of this Agreement, (D)
material breach by the Executive of his duty of loyalty to the Employer, (E)
gross negligence by the Executive in the performance of his duties, or (F)
repeated failure by the Executive to perform services that have been reasonably
requested of him by the Board, following notice and, following such notice, a
30-day opportunity to cure and if such requests are consistent with this
Agreement.

                           (iii) Disability. If due to Disability, as defined
below, Executive shall fail to materially perform the material duties required
by this Agreement, Employer may terminate this Agreement and Executive's
employment upon 30 days written notice to Executive. In such event, Executive
shall be paid his Base Compensation and receive all benefits owing to him under
this Agreement and the Deferred Compensation Agreement and shall receive his
proportionate share of Incentive Compensation (based on the ratio which the
number of full and partial calendar months worked during the year bears to 12)
for the year in which the termination occurs. In addition, upon Executive's
termination of employment for Disability, Executive shall become fully vested in
any and all outstanding deferred share awards, share options, and other
Long-Term Incentives. Executive shall be considered to have a Disability under
this paragraph if, due to illness, physical or mental impairment, or other
incapacity, he is unable to work for a total of 120 or more business days during
any 12-month period. Nothing in this paragraph shall be construed to limit
Executive's rights to the benefits of any disability insurance policy provided
by Employer and this Section shall not be construed as varying the terms of any
such policy in any manner adverse to Executive.

                  (b) Termination by Executive. Executive may terminate this
Agreement for Good Reason upon 90 days prior written notice to Employer. In such
event, Executive shall be paid (A) all amounts earned, but yet unpaid, through
the date of Executive's cessation of employment, (B) all Base Compensation that
otherwise would have been payable under this Agreement through the expiration of
Employment Phase II, to the extent not yet paid, and (C) all other benefits to
which Executive is entitled under this Agreement and the Deferred Compensation
Agreement. The amounts payable under the immediately preceding sentence shall be
paid to

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Executive, in one lump sum payment, as soon as practicable following Executive's
cessation of employment. In addition, upon Executive's termination of employment
for Good Reason, Executive shall become fully vested in any and all outstanding
deferred share awards, share options, and other Long-Term Incentives, and he and
his dependents shall be provided at the Employer's expense, with group health
plan continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") or any applicable state law, and thereafter through the
expiration of Employment Phase II with health coverage comparable to their
coverage under the Employer's group health plans. Executive shall have "Good
Reason" to terminate his employment if (i) his compensation, as in effect at any
given time, shall be reduced without his consent, (ii) Employer shall fail to
provide any of the material payments or benefits provided for under this
Agreement, (iii) Employer shall materially reduce or alter Executive's duties,
or (iv) Employer shall require Executive to take any act which would be a
violation of federal, state, or local criminal law.

                  (c) Termination Compensation in Connection with a Change in
Control. The acquisition of voting control of the Employer by any one or more
persons or entities who are directly, or indirectly through one or more
intermediaries, under common control, or who are related to each other within
the meaning of Sections 267 and 707(b) of the Internal Revenue Code, shall be
deemed a "Change in Control." In the event Executive's employment is terminated
within eighteen months of a Change in Control, Termination Compensation shall be
equal to two (2) years of the Base Compensation provided herein for Employment
Phase I, payable in a lump sum on the effective date of Executive's termination.
Such Termination Compensation shall be in addition to all other compensation and
benefits, including vesting of Long-Term Incentives, to which Executive is
entitled for a termination without Cause under Section 6(a)(i) above, and shall
be payable even in the event of a termination effective as of the end of the
Term.

                  (d) Death Benefit. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of Executive's death. In
such event, Executive's estate shall be paid two (2) years' Base Compensation as
follows: to the extent of any insurance carried by Employer on Executive's life,
the death benefit shall be payable in a lump sum within five (5) business days'
of Employer's receipt of the insurance proceeds; any portion of the death
benefit not covered by insurance shall be paid in eight equal installments
payable on the first day of each calendar quarter following Executive's death.
Employer shall carry as much life insurance on Executive's life as the Board on
recommendation of the CEO or COO may from time to time determine. In addition,
upon Executive's termination of employment due to his death, any and all
outstanding deferred share awards, share options and other Long-Term Incentives
in his name shall become fully vested. Executive's estate shall be paid all
amounts earned, but yet unpaid, through the date of Executive's death and all
other benefits to which Executive's estate is entitled under this Agreement and
the Deferred Compensation Agreement.

                  (e) No Mitigation Duty. Notwithstanding any other provision of
this Agreement, Executive shall not be obligated in any way to mitigate the
Employer's obligations to him under this Section 6, and any amounts earned by
Executive subsequent to his termination of employment with Employer shall not
serve as an offset to the payments due him by the Employer under this Section 6.

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         7. COVENANT NOT TO COMPETE.

                  (a) Noncompetition. From and after the Effective Date and
continuing for the longer of (i) 12 months following the expiration or
termination of this Agreement or (ii) the remainder of the Term of this
Agreement, Executive shall not without the prior written consent of the Board
(w) become employed by, or undertake to work for, directly or indirectly,
whether as an advisor, principal, agent, partner, officer, director, employee,
shareholder, associate, or consultant of or to, any person, partnership,
corporation, or other business entity which is a Major Competitor of Employer in
the business of offering, promoting, or syndicating to any person, including
developers, investors, or project sponsors, low income housing tax credits under
Section 42 of the Internal Revenue Code or the business of offering, promoting,
or providing financing for multifamily properties to any person, including the
developers, sponsors, and owners of such properties, (x) solicit any employee of
Employer to change employment, (y) solicit for the purpose of offering,
providing, or syndicating low-income housing tax credits or offering or
providing multifamily debt financing, any client, customer, or investor of
Employer or any of its subsidiaries that closed (in any capacity) a tax credit
or debt financing transaction with Employer or any of its subsidiaries during
the thirty-six (36) months preceding Executive's termination, or (z) disclose
proprietary or confidential information of the Employer or its subsidiaries,
including without limitation, tax, deal structuring, pricing, customer, client,
revenue, expense, or other similar information; provided, however, if Employer
terminates Executive without cause under Section 6(a)(i) of this Agreement, or
the Executive resigns for good reason under Section 6(b), clause (2) of this
paragraph (a) shall not apply. As used herein "Major Competitor" shall mean
Charter Mac and its Affiliates, GMAC and its Affiliates, and any other person or
entity whose primary business lines include providing multifamily debt financing
or low-income housing tax credit equity to the developers, sponsors and owners
of such properties, unless the net worth of such person or entity (if privately
held) or the market capitalization of such company (if publicly held) is less
than $200 Million.

                  (b) Reasonable Restrictions. Executive acknowledges that the
restrictions of subparagraph (a) above are reasonable, fair, and equitable in
scope, term, and duration, are necessary to protect the legitimate business
interests of the Employer, and are a material inducement to the Employer to
enter into this Agreement. Employer and Executive both agree that in the event a
court shall determine any portion of the restrictions in subparagraph (a) are
not reasonable, the court may change such restrictions, including without
limitation the geographical restrictions and the duration restrictions, to
reflect a restriction that the court will enforce as reasonable.

                  (c) Specific Performance. Executive acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and that, if
Executive shall fail to abide by any of the restrictions set forth in
subparagraph (a), Employer will have no adequate remedy at law. Executive
therefore confirms that Employer shall have the right, in the event of a
violation of subparagraph (a), to injunctive relief to enforce the terms of this
Section 7.

         8. INDEMNIFICATION AND LIABILITY INSURANCE.

         Employer hereby agrees to defend, indemnify, and hold Executive
harmless, to the

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maximum extent allowed by law, from any and all liability for acts or omissions
of Executive performed in the course of Executive's employment (or reasonably
believed by Executive to be within the scope of his employment) or service on
the Board of Directors, provided that such acts or omissions do not constitute
(a) criminal conduct, (b) willful misconduct, or (c) a fraud upon, or breach of
Executive's duty of loyalty to, the Employer. Employer shall, at all times
during which Executive may be subject to claims for acts or omissions performed
by him under this Agreement, carry Directors' and Officers' liability insurance
covering Executive in commercially reasonable amounts, but in any event not less
than Five Million Dollars ($5,000,000). The provisions of this Section 8 shall
survive the termination of this Agreement.

         9. MISCELLANEOUS.

                  (a) Complete Agreement. This Agreement, including the Deferred
Compensation Agreement which is incorporated herein, constitutes the entire
agreement among the parties with respect to the matters set forth herein and
supersedes all prior understandings and agreements between the parties as to
such matters. No amendments or modifications shall be binding unless set forth
in writing and signed by both parties.

                  (b) Successors and Assigns. Neither party may assign his or
its rights or interest under this Agreement without the prior written consent of
the other party, except that Employer's interest in this Agreement may be
assigned to a successor by operation of law or to a purchaser purchasing
substantially all of Employer's business. This Agreement shall be binding upon
and shall inure to the benefit of each of the parties and their respective
permitted successors and assigns.

                  (c) Severability. Each provision of this Agreement is
severable, so that, if any part of this Agreement shall be deemed invalid or
unenforceable, the balance of this Agreement shall be enforced so as to give
effect as to the intent of the parties.

                  (d) Representations of Employer. Employer represents and
warrants to Executive that it has the requisite limited liability company power
to enter into this Agreement and perform the terms hereof and that the
execution, delivery, and performance of this Agreement have been duly authorized
by all appropriate company action.

                  (e) Construction. This Agreement shall be governed in all
respects by the internal laws of the State of Maryland (excluding reference to
principles of conflicts of law). As used herein, the singular shall include the
plural, the plural shall include the singular, and the use of any pronoun shall
be construed to refer to the masculine, feminine, or neuter, all as the context
may require.

                  (f) Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed given on the date sent if
delivered by hand or by facsimile, and on the next business day if sent by
overnight courier or by United States mail, postage prepaid, to each party at
the following address (or at such other address as a party may specify by notice
under this section):

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                  IF TO EMPLOYER:

                           MMA Financial, LLC
                           621 East Pratt Street, 3rd Floor
                           Baltimore, Maryland 21202
                           Attention: Chief Operating Officer

                  IF TO EXECUTIVE:

                           Mark K. Joseph
                           1006 Winding Way
                           Baltimore, Maryland 21210

                  (g) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one instrument.

         IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed this Agreement as of the date and year first above written.

WITNESS:                                    EMPLOYER:

                                            Municipal Mortgage & Equity, LLC
/s/ Melva Balducci
----------------------------------          By:   /s/ Janet E. McHugh
                                                --------------------------------
                                                  Name: Janet E. McHugh
                                                        ------------------------
                                                  Title:  Senior Vice President
                                                          and Secretary
                                                        ------------------------

                                            EXECUTIVE:

/s/ Melva Balducci                          /s/ Mark K. Joseph
----------------------------------          ------------------------------------
                                            Mark K. Joseph

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                                                                    ATTACHMENT A

                         DEFERRED COMPENSATION AGREEMENT

                                       FOR

                                 MARK K. JOSEPH

         This Deferred Compensation Agreement (this "Agreement") is entered into
between Municipal Mortgage & Equity, LLC, a Delaware limited liability company
("MuniMae"), and Mark K. Joseph ("Mr. Joseph"), effective as of July 1, 2003
(the "Effective Date").

                              W I T N E S S E T H:

         WHEREAS, Mr. Joseph is a key employee of MuniMae;

         WHEREAS, MuniMae wishes to establish an arrangement to provide deferred
compensation for Mr. Joseph;

         WHEREAS, this Agreement is intended to be an unfunded arrangement
maintained primarily for the purpose of providing deferred compensation to Mr.
Joseph as a member of a select group of management or highly-compensated
employees of MuniMae, within the meaning of Sections 201(2), 301(a)(3) and
401(a) of the Employee Retirement Security Act of 1974, as amended ("ERISA");

                  NOW, THEREFORE, in consideration of the premises and mutual
promises in this Agreement, MuniMae and Mr. Joseph agree as follows:

         1.       DEFERRED COMPENSATION.

                  (a)      CREDIT TO ACCOUNT. MuniMae will credit Three Million
Dollars ($3,000,000) to a recordkeeping account established on the books of
MuniMae on behalf of Mr. Joseph (the "Account") as of the Effective Date.

                  (b)      ACCOUNT IS PART OF CORPORATION'S GENERAL ASSETS. All
right, title and interest in and to the Account shall at all times be the sole
and absolute property of MuniMae. In no event shall the Account be deemed to
constitute a fund or security for the payment of benefits under this Agreement.
The Account shall, for all purposes, be a part of the general assets of MuniMae.
To the extent that Mr. Joseph or his estate acquires a right to receive payments
under this Agreement, such right shall be no greater than the right of any
unsecured, general creditor of MuniMae.

         2.       VESTING OF ACCOUNT. Mr. Joseph will, at all times on and after
the Effective Date, be fully vested in and have a non-forfeitable right to the
balance of the Account to be paid in accordance with the terms of this
Agreement.

         3.       EARNINGS. The balance of the Account shall not be adjusted to
reflect any hypothetical or actual earnings prior to distribution.

<PAGE>

         4.       FUNDING.

                  (a)      GRANTOR TRUST. As soon as practicable after the
Effective Date, MuniMae shall establish an irrevocable grantor trust for the
purpose of providing for the payment of benefits under this Agreement in
accordance with Section 5 (the "Trust"). The terms of the Trust shall be
consistent with the requirements applicable under the Internal Revenue Code of
1986, as amended, in order to avoid causing any amount credited to the Account
to be includible in Mr. Joseph's gross income for federal income tax purposes
before MuniMae pays such amount to Mr. Joseph. The trustee of the Trust shall be
a commercial trustee mutually selected by MuniMae and Mr. Joseph. To the extent
any amount payable to Mr. Joseph under this Agreement is paid from the Trust,
MuniMae shall have no further obligation to pay such amount. MuniMae may
contribute to the Trust such assets as MuniMae deems appropriate for the purpose
of providing for its obligations under this Agreement.

                  (b)      OBLIGATION TO FUND. Except as provided below, MuniMae
shall have no obligation to set aside, earmark or entrust any fund or money with
which to pay its obligations under this Agreement. Prior to, but in connection
with, the consummation of any Change in Control (as defined in that certain
Employment Agreement by and between MuniMae and Mr. Joseph entered into on even
date herewith), MuniMae shall contribute assets to the Trust that have a fair
market value equal to the balance of the Account as of the date of the
consummation of the Change in Control. Any assets set aside or purchased by
MuniMae to provide for its obligations under this Agreement, including any asset
transferred to the Trust, shall be subject to the claims of MuniMae's general
creditors, and Mr. Joseph shall not be deemed to have any lien nor right, title
or interest in or to any such assets.

         5.       PAYMENT OF THE ACCOUNT.

                  (a)      IN GENERAL. MuniMae will distribute to Mr. Joseph the
balance of the Account in cash in substantially equal monthly installments over
a 36-month period, the first of which will be made within 30 days after the
earlier of (i) the annual general meeting of the stockholders of MuniMae held in
2005 or (ii) Mr. Joseph's termination of employment with MuniMae for any reason.

                  (b)      IN CONNECTION WITH MR. JOSEPH'S DEATH. In the event
of Mr. Joseph's death before the entire balance of the Account has been
distributed to Mr. Joseph, the balance of the Account, to the extent not
previously distributed, will be distributed in a single sum cash payment to Mr.
Joseph's estate as soon as practicable after the Administrator receives notice
of Mr. Joseph's death.

         6.       ADMINISTRATION. For purposes of ERISA, MuniMae shall be the
"Named Fiduciary" and "Plan Administrator" of the plan for which this Agreement
is hereby designated the written plan instrument. The person or persons
designated by the Board of Directors of MuniMae shall fulfill the
responsibilities of MuniMae as Plan Administrator (the "Administrator"). The
Administrator shall have complete discretion in construing the terms of the
Agreement and determining claims under Section 7, and the determinations of the
Administrator in that regard shall be final and binding on all parties. The
Named Fiduciary, the Plan Administrator and Administrator may employ others to
render advice with regard to its responsibilities under the plan. The Named
Fiduciary may also allocate fiduciary responsibilities to others.

         7.       CLAIMS PROCEDURE.

                  (a)      INITIAL CLAIMS. In the event that a dispute arises
over any payment under this Agreement and the payment is not paid to Mr. Joseph
(or to his estate in the case of Mr. Joseph's death),

                                     - 2 -
<PAGE>

the claimant of such payment must file a written claim with the Administrator
within 60 days from the date payment is refused. The Administrator and MuniMae
shall review the written claim and, if the claim is denied in whole or in part,
shall provide, in writing and within 90 days of receipt of such claim, the
specific reasons for such denial and reference to the provisions of this
Agreement upon which the denial is based and any additional material or
information necessary to perfect the claim. Such written notice shall further
indicate the steps to be taken by the claimant if a further review of the claim
denial is desired.

                  (b)      APPEALS. If the claimant desires a second review, he
or she shall notify the Administrator in writing within 60 days of the first
claim denial. The claimant may review the Agreement or any documents relating
thereto and submit any written issues and comments he or she may feel
appropriate. In its discretion, the Administrator shall then review the second
claim and provide a written decision within 60 days of receipt of such claim.
This decision shall likewise state the specific reasons for the decision and
shall include reference to specific provisions of the Agreement upon which the
decision is based.

         8.       MISCELLANEOUS.

                  (a)      EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. Nothing
contained in this Agreement shall affect the right of Mr. Joseph to participate
in or be covered by any qualified or non-qualified pension, profit-sharing,
group, bonus or other supplemental compensation or fringe benefit plan of
MuniMae. Any amounts payable under this Agreement shall not be deemed salary or
other compensation to Mr. Joseph for the purposes of computing benefits to which
Mr. Joseph may be entitled under any other arrangement established by MuniMae
for the benefit of its employees.

                  (b)      WITHHOLDING TAXES. MuniMae shall have the right to
make such provision as it deems necessary or appropriate to satisfy any
obligations it may have to collect or withhold federal, state or local income
and employment taxes incurred by reason of the payment or deferral of
compensation pursuant to this Agreement. In lieu thereof, MuniMae shall have the
right to withhold the amount of such taxes from any other sums due or to become
due from MuniMae to Mr. Joseph upon such terms and conditions as MuniMae may
prescribe.

                  (c)      NO RIGHT OF EMPLOYMENT. Nothing in this Agreement
shall be construed or interpreted as giving Mr. Joseph the right to be retained
in the service and employment of MuniMae, and MuniMae and Mr. Joseph each
reserves the rights to terminate such employment in accordance with the
Employment Agreement dated effective July 1, 2003 between MuniMae and Mr.
Joseph.

                  (d)      ASSIGNMENT AND ALIENATION PROHIBITED. Neither Mr.
Joseph nor any beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber, in advance, any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance owed by Mr. Joseph or his beneficiary
nor be transferable by operation of law in the event of bankruptcy, insolvency
or otherwise. In the event Mr. Joseph or any beneficiary attempts assignment,
commutation, hypothecation, transfer or disposal of the benefits under this
Agreement, MuniMae's liabilities shall immediately cease and terminate.

                  (e)      ENTIRE AGREEMENT; AMENDMENT. This Agreement sets
forth the entire understanding between Mr. Joseph and MuniMae concerning its
subject matter and supersedes any prior

                                     - 3 -
<PAGE>

negotiations or understandings, whether oral or written. This Agreement may be
amended only by a written instrument executed by Mr. Joseph and MuniMae.

                  (f)      OBLIGATIONS BINDING ON ANY SUCCESSOR IN INTEREST.
This Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.

                  (g)      APPLICABLE LAW. The validity and interpretation of
this Agreement, to the extent not governed by federal law, shall be governed by
the laws of the State of Maryland, without application of the conflict of laws
principles thereof.

                  (h)      HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

                  (i)      COUNTERPARTS. This Agreement may be executed in one
or more counterparts, which together will constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the first date written above.

ATTEST:                                     Municipal Mortgage & Equity, LLC

/s/ Melva Balducci                          By: Janet E. McHugh
------------------------------------            --------------------------------
                                            Print Name: Janet E. McHugh
                                                        ------------------------
                                            Title: Senior Vice President and
                                                   Secretary
                                                   -----------------------------

WITNESS:                                    MARK K. JOSEPH

/s/ Melva Balducci                          /s/ Mark K. Joseph
------------------------------------        ------------------------------------

                                     - 4 -<PAGE>

                                                                    EXHIBIT 10.4

                        MUNICIPAL MORTGAGE & EQUITY, LLC

                              EMPLOYMENT AGREEMENT
                              [Michael L. Falcone]

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of July, 2003 by and between MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware
limited liability company ("Employer") and Michael L. Falcone ("Employee").

         WHEREAS, Employer is engaged in the business of acquiring and providing
asset management services for real estate and debt and equity investments
therein, with a particular emphasis on investments generating tax-exempt income
and investments in, or secured by, multi-family properties, congregate care and
assisted living facilities and similar properties;

         WHEREAS, Employee has particular skill, experience and background in
investments and asset management services of the type in which the Employer
primarily engages; and

         WHEREAS, Employer and Employee desire to enter into an employment
relationship, the terms of which are to be set forth in this Agreement.

         NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employer and Employee
hereby agree as follows:

         1.       Employment and Duties. Employer agrees to hire Employee, and
Employee agrees to be employed by Employer, as President and Chief Operating
Officer of Employer on the terms and conditions provided in this Agreement.
Employee shall perform the duties and responsibilities reasonably determined
from time to time by the CEO of the Employer consistent with the types of duties
and responsibilities typically performed by a person serving as President and
Chief Operating Officer of businesses similar to that of Employer. In addition,
Employee undertakes to work with the current Chief Executive Officer and
Chairman of the Board of Directors to put in place a management system that will
provide sufficient operating support to enable Employee, with Board approval, to
assume the office of Chief Executive Officer as of July 1, 2005. Employee agrees
to devote his best efforts and full time attention and skill in performing the
duties of this position. Provided that such activity shall not violate any
provision of this Agreement (including the noncompetition provisions of Section
8 below) or materially interfere with his performance of his duties hereunder,
nothing herein shall prohibit Employee (a) from participating in any other
business activities approved in advance by the CEO in accordance with any terms
and conditions of such approval, such approval not to be unreasonably withheld
or delayed, (b) from engaging in charitable, civic, fraternal or trade group
activities, or (c) from investing in other entities or business ventures.

CONFIDENTIAL
<PAGE>

         2.       Compensation. As compensation for performing the services
required by this Agreement, and during the term of this Agreement, Employee
shall be compensated as follows:

                  (a)      Base Compensation. Employer shall pay to Employee a
salary ("Base Compensation") at the annual rate of Three Hundred Fifty Thousand
Dollars ($350,000), through June 30, 2004, payable in accordance with the
general policies and procedures of the Employer for payment of salaries to
executive personnel, but in any event no less frequently than every two weeks,
in substantially equal installments, subject to withholding for applicable
federal, state and local taxes. Employee's Base Compensation shall increase by
Twenty-Five Thousand Dollars ($25,000) per year on July 1, 2004 during the
Initial Term of this Agreement. Additional increases in Base Compensation, if
any, shall be determined by the Compensation Committee of the Board of Directors
(the "Board") based on the recommendation of the CEO and on periodic reviews of
Employee's performance conducted on at least an annual basis. During the term of
this Agreement, Employee's annual Base Compensation shall not be reduced below
the initial Base Compensation set forth above.

                  (b)      Incentive Compensation.

                           (i)      In addition to Base Compensation, Employee
shall be eligible to receive additional compensation ("Incentive Compensation"),
pursuant to such Incentive Compensation Plan as may from time to time be adopted
by the Employer. The Incentive Compensation Plan will have two components.
First, the Plan will provide that Employee is eligible to receive an annual
bonus payable in cash, unrestricted shares or restricted shares of up to Three
Hundred Twenty-Five Thousand Dollars ($325,000) during the first year of this
Agreement based on meeting goals for fiscal year 2003, and up to Three Hundred
Fifty Thousand Dollars ($350,000) during the second year of this Agreement based
on meeting goals for fiscal year 2004. This component of the Incentive
Compensation Plan will provide that the amount of the bonus will be based on a
formula tied to the Employee's performance and Employer's company-wide
performance. The formula will be initially determined (and may be modified from
time to time) by the Compensation Committee on the recommendation of the CEO;
provided, however, that the formula will have criteria and metrics that are
substantially similar to that used to calculate incentive compensation for the
Employer's other senior executives. Second, the Plan will provide that Employee
may earn additional Incentive Compensation of up to Two Hundred Thousand Dollars
($200,000) per year for the Company's fiscal year 2004 for Employer's corporate
performance measured by 8% CAD growth in fiscal year 2004.

                           (ii)     Incentive Compensation may at the election
of the Compensation Committee take the form of cash or the stock of Municipal
Mortgage & Equity, LLC (the "Company") and, to the extent it consists of stock,
may be awarded under the Employer's Share Incentive Plan as in effect from time
to time. Employee acknowledges that the formula set forth in the Incentive
Compensation Plan may vary for each employee who participates therein. Incentive
Compensation for any given fiscal year (including the partial year 2003) shall
be determined no later than 60 days after the end of Employer's fiscal year and
paid no later than 75 days after the close of the fiscal year. Except as
otherwise specifically provided herein, if Employee shall be

CONFIDENTIAL

                                       2

<PAGE>

employed for only a portion of a fiscal year for which Employee is eligible for
Incentive Compensation, no Incentive Compensation shall be payable.

                           3.       Employee Benefits.

                  (a)      During the term of this Agreement, Employee and his
eligible dependents shall have the right to participate in any retirement,
pension, insurance, health or other benefit plan or program adopted by Employer
(or in which Employer participates) to the same extent as any other officer of
the Employer, subject, in the case of a plan or program, to all of the terms and
conditions thereof, and to any limitations imposed by law. To the extent that
Employee has similar benefits under a plan or program established by any other
entity, Employee shall nonetheless have the right to the benefits provided by
Employer's plan or program; provided, however, that where by the terms of any
plan or program, or under applicable law, Employee may only participate in one
such plan or program, Employee shall have the option to limit his participation
to the plan or program sponsored by Employer, or to such other plan or program.
Employee shall have the right, to the extent permitted under any applicable law,
to participate concurrently in plans or programs sponsored by others (including
self-employment plans or programs) and in plans or programs sponsored by
Employer.

                  (b)      Tax Benefit Adjustment. If, as a result of the
ownership of common shares by Employee, Employee shall either lose personal
income tax deductions, be required to report additional personal taxable income,
or be required to pay additional taxes or charges, which deductions, income or
taxes would not have been lost, reportable, or payable, as the case may be, had
Employee not owned any common shares, Employer shall pay Employee a bonus on
April 1 of each calendar year equal to all additional taxes or charges Employee
is required to pay, attributable to the prior calendar year, which would not
have been payable had Employee not owned common shares. THIS SECTION IS NOT
INTENDED TO COMPENSATE EMPLOYEE FOR THE INCOME TAX CONSEQUENCES OF RECEIVING OR
EXERCISING OPTIONS FOR OR ACQUIRING COMMON SHARES.

         4.       Vacation, Sickness and Leaves of Absence. Employee shall be
entitled to the normal and customary amount of paid vacation provided to
officers of Employer, but in no event less than seven (7) weeks during each
fiscal year. Employee shall provide Employer with reasonable notice of
anticipated vacation dates. Any vacation days that are not taken in a given
fiscal year shall accrue and carryover from year to year, and, upon any
termination of this Agreement for any reason whatsoever, all accrued and unused
vacation time will be paid to Employee within 10 days of such termination based
on his annual rate of Base Compensation in effect on the date of such
termination; provided, however, that no more than ten (10) days of accrued
vacation may be carried over at any time. In addition, Employee shall be
entitled to such sick leave and holidays, with pay, as Employer provides to
other officers. Up to ten (10) days of unused sick leave shall be carried
forward or compensated upon termination of employment. Employee may also be
granted leaves of absence with or without pay for such valid and legitimate
reasons as the Board on recommendation from the CEO, in its sole and absolute
discretion, may determine.

         5.       Expenses. Employee shall be entitled to receive, within a
reasonable period of time after he has delivered to the Employer an itemized
statement thereof, and after presentation of such

CONFIDENTIAL

                                       3

<PAGE>

invoices or similar records as the Employer may reasonably require,
reimbursement for all necessary and reasonable expenses incurred by him in
connection with the performance of his duties.

         6.       Term. The initial term of this Agreement shall be for two
years (2) years (the "Initial Term"), commencing on July 1, 2003 (the "Effective
Date") and ending on June 30, 2005, at which time Employer and Employee
anticipate that, subject to Board approval, a new agreement will be negotiated
that reflects Employee's new responsibilities connected with the CEO title.
Unless otherwise superceded, this Agreement shall automatically renew for
successive one-year periods after the end of the Initial Term, unless at least
thirty days prior to the commencement of any such extension period either party
shall give the other party written notice of its intention to terminate this
Agreement. This Agreement may also be terminated at the times and under the
circumstances set forth in section 7 below. The term of this Agreement in effect
at any given time is herein referred to as the "Term". Any termination of this
Agreement shall be subject to Section 8 below.

         7.       Termination and Termination Benefits.

                  (a)      Termination by Employer.

                           (i)      Without Cause. Employer may terminate this
Agreement and Employee's employment at any time upon ninety (90) days prior
written notice to Employee, during which period Employer shall have the option
to require Employee to continue to perform his duties under this Agreement.
Employee shall be paid his Base Compensation and all other benefits to which he
is entitled under this Agreement up through the effective date of termination,
plus a proportionate share of Incentive Compensation for the year in which the
termination occurs, based on the ratio which the number of calendar months
(including any partial months) worked bears to twelve (12) (the "Proportionate
Share"). In addition, Employee shall become fully vested in any and all
outstanding deferred share awards, share options or other type of award made to
Employee but not yet vested at the time of such termination under the Employer's
Share Incetive Plans.

                           (ii)     With Cause. Employer may terminate this
Agreement with cause upon ten (10) days prior written notice to Employee. In
such event, Employee shall be paid his Base Compensation and all other benefits
to which he is entitled under this Agreement up through the effective date of
termination. For purposes of this Section, termination for cause shall mean (A)
acts or omissions by the Employee with respect to the Employer which constitute
intentional misconduct or a knowing violation of law; (B) receipt by the
Employee of money, property or services from the Employer or from another person
dealing with Employer in violation of law or this Agreement, (C) breach by
Employee of the noncompetition provisions of this Agreement, (D) breach by the
Employee of his duty of loyalty to the Employer, (E) gross negligence by the
Employee in the performance of his duties, (F) repeated failure by the Employee
to perform services that have been reasonably requested of him by the CEO or
Board, following thirty (30) days notice and opportunity to cure and if such
requests are consistent with this Agreement, (G) violation of Employer's
policies with respect to alcohol or drug use or abuse which could under those
policies result in an employee's termination, or (H) conviction of a crime
(other than minor traffic violations).

CONFIDENTIAL

                                       4

<PAGE>

                           (iii)    Disability. If due to illness, physical or
mental disability, or other incapacity, Employee shall fail to perform the
duties required by this Agreement, Employer may terminate this Agreement upon 30
days written notice to Employee. In such event, Employee shall be paid his Base
Compensation and receive all benefits owing to him under this Agreement through
the effective date of termination and shall receive his Proportionate Share of
Incentive Compensation for the year in which the termination occurs. In
addition, Employee shall become fully vested in any and all outstanding deferred
share awards, share options or other type of award made to Employee but not yet
vested at the time of such termination under the Employer's Share Incentive
Plans. Employee shall be considered disabled under this paragraph if he is
unable to work due to disability for a total of 120 or more business days during
any 12-month period. Nothing in this paragraph shall be construed to limit
Employee's rights to the benefits of any disability insurance policy provided by
Employer and this Section shall not be construed as varying the terms of any
such policy in any manner adverse to Employee.

                  (b)      Termination by Employee. Employee may terminate this
Agreement for good reason upon 30 days prior written notice to Employer. In such
event, Employee shall be paid his Base Compensation and shall receive all
benefits through the date of termination. In addition, Employee shall become
fully vested in any and all outstanding deferred share awards, share options or
other type of award made to Employee but not yet vested at the time of such
termination under the Employer's Share Incentive Plans. Employee shall have
"good reason" to terminate his employment if (i) his Base Compensation, as in
effect at any given time, shall be reduced without his consent, (ii) Employer
shall fail to provide any of the material payments or benefits provided for
under this Agreement, (iii) Employer shall, without Employee's consent,
materially reduce or alter Employee's duties as President and Chief Operating
Officer having the general responsibility of overseeing Employer's corporate
function or (iv) Employer shall require Employee to take any action which would
be a violation of federal, state or local criminal law. With respect to clause
(iii), Employee shall be deemed to have consented if such consent is either
expressly given or if no objection to any change in duties is given in writing
within sixty (60) days of such change being implemented.

                  (c)      Termination Compensation.

                           (i)      Termination Without Cause or for Good
Reason. In the event of a termination of this Agreement prior to the end of the
Term, pursuant to Section 7(a)(i), 7(a)(iii) or 7(b), Employer, in addition to
the Base Compensation, benefits and Incentive Compensation (if any) payable as
provided in such sections, shall pay to Employee additional compensation
("Termination Compensation") as follows. If the termination does not follow a
Change in Control (as defined in subparagraph (ii) below), Termination
Compensation shall be equal to the greater of (a) twelve (12) months Base
Compensation or (b) the Base Compensation that Employee would have received
during the remaining Term of this Agreement. Termination Compensation shall be
paid in four equal quarterly payments beginning on the first day of the first
calendar month following the termination date, unless Employer elects to make
such payments sooner. Such Termination Compensation shall be in addition to all
other compensation and benefits to which Employee is entitled for termination
relating to a Change of Control under Section 7(c)(ii) below.

CONFIDENTIAL

                                       5

<PAGE>

                           (ii)     Change in Control. The acquisition of voting
control of the Employer by any one or more persons or entities who are directly,
or indirectly through one or more intermediaries, under common control, or who
are related to each other within the meaning of Sections 267 and 707(b) of the
Internal Revenue Code, shall be deemed a "Change in Control." In the event
Employee is terminated within eighteen months of a Change in Control,
Termination Compensation shall be equal to three (3) years Base Compensation and
three (3) years of Incentive Compensation equal to the maximum opportunity
stated in Section 2(b)(i) above payable in a lump sum on the effective date of
Employee's termination. In addition, Employee shall become fully vested in any
and all outstanding deferred share awards, share options or other type of award
made to Employee but not yet vested at the time of such termination under the
Employer's Share Incentive Plans. Such Termination Compensation shall be in
addition to all other compensation and benefits to which Employee is entitled
for a termination without cause under Section 7(a)(i) above, and shall be
payable even in the event of a termination effective as of the end of the Term.

                  (d)      Death Benefit. Notwithstanding any other provision of
this Agreement, this Agreement shall terminate on the date of Employee's death.
In such event, Employee's estate shall be paid two (2) years' Base Compensation
as follows: to the extent of any insurance carried by Employer on Employee's
life, the death benefit shall be payable in a lump sum within five (5) business
days' of Employer's receipt of the insurance proceeds; any portion of the death
benefit not covered by insurance shall be paid in eight equal installments
payable on the first day of each calendar quarter following Employee's death.
Employer shall carry as much life insurance on Employee's life as the Board on
recommendation of the CEO may from time to time determine. In addition, upon
Employee's death, all outstanding deferred share awards, share options or other
type of award made to Employee but not yet vested at the time of death under the
Employer's Share Incentive Plans shall be considered vested and paid out to
Employee's estate.

         8.       Covenant Not to Compete.

                  (a)      Noncompetition. From and after the Effective Date and
continuing for the longer of (i) 12 months following the expiration or
termination of this Agreement or (ii) the remainder of the Term of this
Agreement, Employee shall not without the prior written consent of the Board (w)
become employed by, or undertake to work for, directly or indirectly, whether as
an advisor, principal, agent, partner, officer, director, employee, shareholder,
associate or consultant of or to, any person, partnership, corporation or other
business entity which is a Major Competitor of Employer in the business of
offering, promoting or syndicating to any person, including developers,
investors, or project sponsors, low income housing tax credits under Section 42
of the Internal Revenue Code or the business of offering, promoting or providing
financing for multifamily properties to any person, including the developers,
sponsors and owners of such properties, (x) solicit any employee of Employer to
change employment or (y) solicit for the purpose of offering, providing or
syndicating low-income housing tax credits or offering or providing multifamily
debt financing, any client, customer or investor of Employer or any of its
subsidiaries which closed (in any capacity) a tax credit or debt financing
transaction with Employer or any of its subsidiaries during the thirty-six (36)
months preceding Employee's

CONFIDENTIAL

                                       6

<PAGE>

termination, or (z) disclose proprietary or confidential information of the
Employer or its subsidiaries, including without limitation, tax, deal
structuring, pricing, customer, client, revenue, expense, or other similar
information; provided, however, if Employer terminates Employee without cause
under Section 7(a)(i) of this Agreement, or the Employee resigns for good reason
under Section 7(b), clause (2) of this paragraph (a) shall not apply. As used
herein "Major Competitor" shall mean Charter Mac and its Affiliates, GMAC and
its Affiliates, and any other person or entity whose primary business lines
include providing multifamily debt financing or low-income housing tax credit
equity to the developers, sponsors and owners of such properties, unless the net
worth of such person or entity (if privately held) or the market capitalization
of such company (if publicly held) is less than $200 Million.

                  (b)      Reasonable Restrictions. Employee acknowledges that
the restrictions of subparagraph (a) above are reasonable, fair and equitable in
scope, term and duration, are necessary to protect the legitimate business
interests of the Employer, and are a material inducement to the Employer to
enter into this Agreement. Employer and Employee both agree that in the event a
court shall determine any portion of the restrictions in subparagraph (a) are
not reasonable, the court may change such restrictions, including without
limitation the geographical restrictions and the duration restrictions, to
reflect a restriction which the court will enforce as reasonable.

                  (c)      Specific Performance. Employee acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and that if
Employee shall fail to abide by any of the restrictions set forth in
subparagraph (a), Employer will suffer harm for which there is no adequate
remedy at law. Employee therefore confirms that Employer shall have the right,
in the event of a violation of subparagraph (a), to injunctive relief to enforce
the terms of this Section 8 in addition to any other remedies available at law
or in equity.

         9.       Indemnification and Liability Insurance. Employer hereby
agrees to defend, indemnify and hold Employee harmless, to the maximum extent
allowed by law, from any and all liability for acts or omissions of Employee
performed in the course of Employee's employment (or reasonably believed by
Employee to be within the scope of his employment) provided that such acts or
omissions do not constitute (a) criminal conduct, (b) willful misconduct, or (c)
a fraud upon, or breach of Employee's duty of loyalty to, the Employer. Employer
shall at all times carry Directors' and Officers' liability insurance in
commercially reasonable amounts, but in any event not less than Five Million
Dollars ($5,000,000).

         10.      Miscellaneous.

                  (a)      Complete Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the matters set forth herein
and supersedes all prior understandings and agreements between the parties as to
such matters. No amendments or modifications shall be binding unless set forth
in writing and signed by both parties.

CONFIDENTIAL

                                       7

<PAGE>

                  (b)      Successors and Assigns. Neither party may assign its
rights or interest under this Agreement without the prior written consent of the
other party, except that Employer's interest in this Agreement may be assigned
to a successor by operation of law or to a purchaser purchasing substantially
all of Employer's business, and Employee's benefits under this Agreement may be
assigned by operation of law to Employee's heirs, devisees and personal
representatives. This Agreement shall be binding upon and shall inure to the
benefit of each of the parties and their respective permitted successors and
assigns.

                  (c)      Severability. Each provision of this Agreement is
severable, such that if any part of this Agreement shall be deemed invalid or
unenforceable, the balance of this Agreement shall be enforced so as to give
effect as to the intent of the parties.

                  (d)      Representations of Employer. Employer represents and
warrants to Employee that it has the requisite limited liability company power
to enter into this Agreement and perform the terms hereof and that the
execution, delivery and performance of this Agreement have been duly authorized
by all appropriate company action.

                  (e)      Construction. This Agreement shall be governed in all
respects by the internal laws of the State of Maryland (excluding reference to
principles of conflicts of law). As used herein, the singular shall include the
plural, the plural shall include the singular, and the use of any pronoun shall
be construed to refer to the masculine, feminine or neuter, all as the context
may require.

                  (f)      Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed given on the date sent if
delivered by hand or by facsimile, and on the next business day if sent by
overnight courier or by United States mail, postage prepaid, to each party at
the following address (or at such other address as a party may specify by notice
under this section):

                  IF TO EMPLOYER:

                           Municipal Mortgage and Equity, LLC
                           621 East Pratt Street
                           Suite 300
                           Baltimore, Maryland  21202
                           Attention: Chairman of the Board

                  IF TO EMPLOYEE:

                           Michael L. Falcone
                           8 Englewood Road
                           Baltimore, MD 21210

CONFIDENTIAL

                                       8
<PAGE>

                  (g)      Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one instrument.

                            [SIGNATURE PAGE FOLLOWS]

CONFIDENTIAL

                                       9

<PAGE>

         IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed this Agreement as of the date and year first above written.

WITNESS:                                    EMPLOYER:

                                            MUNICIPAL MORTGAGE & EQUITY, LLC

/s/ Janet E. McHugh                         By:      /s/ Mark K. Joseph
---------------------------                          ---------------------------
                                                     Mark K. Joseph
                                                     Chief Executive Officer

                                            EMPLOYEE:

/s/ Janet E. McHugh                        /s/ Michael L. Falcone
---------------------------                ---------------------------
                                           Michael L. Falcone

CONFIDENTIAL

                                       10

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