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Untitled Document

Exhibit
  10.2  

AMENDED
  AND RESTATED

  EMPLOYMENT AGREEMENT

     THIS
  AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered
  into as of the 25th day of September, 2003 by and between MFA MORTGAGE INVESTMENTS,
  INC., a Maryland corporation (“MFA”), and WILLIAM S. GORIN, an individual
  residing at 1050 Fifth Avenue, New York, New York, 10028 (the “Executive”).

W I T N
  E S S E T H :  

     WHEREAS,
  MFA and the Executive entered into an employment agreement, effective as of
  August 1, 2002 (the “Employment Agreement”); 

     WHEREAS,
  MFA and the Executive desire to extend the period of employment set forth in
  the Employment Agreement to July 31, 2006 on the same terms and conditions as
  are otherwise set forth in the Employment 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 under this Agreement shall include the Initial Term and
  each Renewal Term. The Initial Term commenced as
  of August 1, 2002 and shall continue until July 31, 2006. The Term of Employment
  shall automatically renew for a one-year period (each such renewal, a “Renewal
  Term”) at the end of the Initial Term and each Renewal Term, unless either
  party shall give notice to the other not less than six months prior to the end
  of the Initial Term or any Renewal Term, as the case may be, of his or its intent
  not to renew such Initial Term or Renewal Term, as the case may be. 

   2. Position;
  Duties and Responsibilities. 

     (a)
  During the Term of Employment, the Executive shall be employed as Chief Financial
  Officer/Executive Vice President of MFA, reporting
  directly to the President and Chief Executive Officer of MFA the (“CEO”),
  with such duties and day-to-day management responsibilities as are customarily
  performed by persons holding such offices at similarly situated mortgage REITs
  and such other duties as may be mutually agreed upon between the Executive and
  the CEO. 

     (b)
  During the Term of Employment, the Executive shall, without additional compensation,
  also (i) serve on the board of directors of,
  serve as an officer of, and/or perform such executive and consulting services
  for, or on behalf of, such subsidiaries or affiliates of MFA as the CEO and/or
  the Board of Directors of MFA (the “Board of Directors”) may, from
  time to time, request. MFA and such subsidiaries and affiliates are hereinafter
  referred to, collectively, as the “Company.” For purposes of this
  Agreement, the term “affiliate” shall have the meaning ascribed thereto
  in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Act”).

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     (c)
  During the Term of Employment, the Executive shall serve MFA faithfully, diligently
  and to the best of his ability and shall devote
  substantially all of his time and efforts to his employment and the performance
  of his duties under this Agreement. Nothing herein shall preclude the Executive
  from engaging in charitable and community affairs and managing his personal
  financial and legal affairs, so long as such activities do not materially interfere
  with his carrying out his duties and responsibilities under this Agreement.

   3. Compensation.
  

     (a)
  Base Salary. During the Term of Employment, the Executive shall be entitled
  to receive an annualized base salary (the “Base Salary”)
  equal to the product of .20% times MFA’s Tangible Net Worth; provided,
  that the maximum aggregate amount of Base Salary payable to the Executive in
  any 12-month period from August 1st of one year through July 31st of the next
  year shall not exceed $750,000. The Base Salary shall be calculated semi-annually
  on June 30 and December 31 of each year (each, a “Calculation Period”)
  and shall be paid during the subsequent six-month period commencing August 1
  and February 1, respectively (each, a “Payment Period”), in accordance
  with MFA’s normal payroll practices. For example, if the Base Salary determined
  as of June 30, 2002 is $688,000, approximately one-twelfth of that amount will
  be paid to the Executive each month during the Payment Period commencing on
  August 1, 2002 and ending on January 31, 2003, and payments of the Base Salary
  for the Payment Period commencing on February 1, 2003 and ending on July 31,
  2003 will be based on the calculation of Tangible Net Worth as of December 31,
  2002. If MFA’s annualized Return on Equity for any Calculation Period shall
  be less than 10%, then the Base Salary for the next following Payment Period
  shall be reduced (i) to the product of .19% times MFA’s Tangible Net Worth
  if the annualized Return on Equity is less than 10% but equal to or greater
  than 5%, and (ii) to the product of .18% times MFA’s Tangible Net Worth
  if the annualized Return on Equity is less than 5%. An illustration of the method
  of calculating the Base Salary and Return on Equity is provided in Schedule
  I hereto. 

     (b)
  Performance Bonus. The Executive shall be eligible to receive an annual
  performance bonus in such amount, in such manner and at
  such time as shall be determined by the Compensation Committee of the Board
  of Directors or the Board of Directors, as the case may be. 

     (c)
  Long-Term Incentive Program. The Executive shall be eligible to receive
  such stock option, restricted stock or dividend equivalent
  rights grants as the Compensation Committee of the Board of Directors or the
  Board of Directors, as the case may be, shall deem appropriate. 

     (d)
  Annual Review. The Compensation Committee of the Board of Directors or
  the Board of Directors, as the case may be, shall, at least annually, review
  the Executive's entire compensation package to determine whether it continues
  to meet MFA's compensation objectives. 

   4. Employee
  Benefit Programs and Fringe Benefits.  

     During
  the Term of Employment, the Executive shall be entitled to five weeks of vacation
  each calendar year and to participate in all executive incentive and employee
  benefit programs of MFA now or hereafter made available to MFA’s senior
  executives or salaried employees generally, as such programs may be in effect
  from time to time. MFA shall reimburse the Executive for any and all necessary,
  customary and usual business expenses, properly receipted in accordance with
  MFA’s policies, incurred by Executive in connection with his employment.

   5. Termination
  of Employment. 

     (a)
  Termination Due to Death or Disability. If the Executive's employment
  is terminated during the Term of Employment by reason of
  the Executive’s death or Disability, the Executive’s Term of Employment
  shall terminate automatically without further obligations to the Executive,
  his legal representative or his estate, as the case may be, under this Agreement
  except for (i) any compensation earned but not yet paid, including and without
  limitation, any amount of Base Salary accrued or earned but unpaid and any other
  payments payable to the Executive pursuant to Paragraph 5(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) continued payment on a monthly basis
  of the Executive’s then current Base Salary, as calculated pursuant to
  Paragraph 3(a) above, for a period of one year following the date of such termination,
  which shall be paid to the Executive, his legal representative or his estate,
  as the case may be. 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 65 or such later
  date through which coverage is permissible under MFA’s health insurance
  policy. 

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     (b)
  Termination Without Cause or for Good Reason. In the event the Executive's
  employment is terminated by MFA without Cause (including
  by notice of MFA’s determination not to renew the Initial Term or any Renewal
  Term pursuant to Paragraph 1(b)) or by the Executive for Good Reason, unless
  any such termination is preceded by the Executive’s giving notice of his
  determination not to renew the Initial Term or any Renewal Term pursuant to
  Paragraph 1(b), the Executive shall be entitled to both continued payments of
  his then current Base Salary and continued health insurance coverage at MFA’s
  expense, until the later to occur of (i) the expiration of the Term of Employment,
  or (ii) the first anniversary of such termination of employment, such Base Salary
  being payable at the same time such amounts would have been payable to the Executive
  had his employment not terminated. 

     (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
  (including pursuant to Paragraph 1(b)), the Executive shall be entitled to any
  compensation earned but not yet paid, including and without limitation, any
  amount of Base Salary accrued or earned but unpaid and any other payments payable
  to the Executive pursuant to Paragraph 5(e) below, as of the date of termination.

(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 and
  in anticipation of a Change in Control, (2) the resignation of his employment
  by the Executive for any reason within three 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 twelve 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 Salary and (b) the Executive’s bonus for the immediately preceding
      year;

	 	(ii)	all of the Executive’s
      outstanding stock options shall immediately vest in full and become exercisable
      for a period of 90 days from the date of termination but in no event beyond
      the date on which any 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.
    

The Executive, in his sole
  and absolute discretion, may elect to reduce any such payment in order to avoid
  imposition of the excise tax under Section 4999 of the Internal Revenue Code
  of 1986, as amended. 

     (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 such deferred amounts);

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	 	(iii)	reimbursement for
      reasonable business expenses incurred but not yet reimbursed by MFA; and

	 	(iv)	any other benefits
      to which the Executive or his legal representative may be entitled under
      applicable plans and programs of MFA, as provided in Paragraph 4 above.

     (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. 

   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 the Company,
  (ii) engagement in willful misconduct, willful or gross negligence, or fraud,
  embezzlement or misappropriation relating to significant amounts, in each case
  in connection with the performance of his duties under this Agreement; (iii)
  failure to adhere to the lawful directions of the CEO and/or the Board of Directors
  that are reasonably consistent with his duties and position provided for herein;
  (iv) breach in any material respect of any of the provisions of Paragraph 7
  of this Agreement resulting in material and demonstrable economic injury to
  MFA; (v) chronic or persistent substance abuse that materially and adversely
  affects his performance of his duties under this Agreement; or (vi) breach in
  any material respect of the terms and provisions of this Agreement resulting
  in material and demonstrable economic injury to MFA. Notwithstanding the foregoing,
  (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 CEO or, in his
  absence, 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 CEO or, in his absence, the Board of Directors, and (z) delivery to the
  Executive of a notice of termination approved by said CEO or, in his absence,
  the Board of Directors, stating his or its good faith opinion that the Executive
  has engaged in actions or conduct described in the preceding sentence, which
  notice specifies the particulars of such action or conduct in reasonable detail;
  provided, however, MFA may suspend the Executive with pay until such time as
  his right to appear before the CEO or the Board of Directors, as the case may
  be, has been exercised, so long as such appearance is within two (2) weeks of
  the date of suspension. 

     (b)
  Change in Control. A “Change in Control” shall mean the occurrence
  of any one of the following events: 

	 	(i)	any “person,”
      as such term is used in Sections 13(d) and 14(d) of the Act (other than
      MFA, any of its affiliates or any trustee, fiduciary or other person or
      entity holding securities under any employee benefit plan or trust of MFA
      or any of its affiliates) together with all affiliates and “associates”
      (as such term is defined in Rule 12b-2 under the Act) of such person, shall
      become the “beneficial owner” (as such term is defined in Rule
      13d-3 under the Act), directly or indirectly, of securities of MFA representing
      30% or more of either (A) the combined voting power of MFA’s then outstanding
      securities having the right to vote in an election of the Board of Directors
      (“voting securities”) or (B) the then outstanding shares of common
      stock of MFA (“Shares”) (in either such case other than as a result
      of an acquisition of securities directly from MFA); or 

	 	(ii)	persons who, as of
      the effective date of MFA’s Second Amended and Restated 1997 Stock
      Option Plan, 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 the Plan, be
      considered an Incumbent Director; or 

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	 	(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 50% 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).

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

	 	(i)	a material diminution
      in the Executive's title, duties or responsibilities;

	 	(ii)	relocation of the
      Executive's place of employment without his consent outside the New York
      City metropolitan area; 

	 	(iii)	the failure of MFA
      to pay within thirty (30) business days any 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. "Non Cash Items" shall mean depreciation, non cash
  merger expenses, gains/losses on asset sales, and impairment charges.

     
  (f) Return on Equity. "Return on Equity" shall mean six months GAAP net
  income plus (minus) certain Non Cash Items divided by average Tangible Net Worth,
  annualized.

     
  (g) Tangible Net Worth. "Tangible Net Worth" shall mean stockholder equity
  less goodwill.

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    7. Covenant
  Not To Compete.  

     The
  Executive will not, without the prior written consent of MFA, manage, operate,
  control or be connected as a stockholder (other than as a holder of shares publicly
  traded on a stock exchange or the NASDAQ National Market System, provided that
  the Executive shall not own more than five percent of the outstanding shares
  of any publicly traded company) or partner with, or as an officer, director,
  employee or consultant of, any mortgage REIT for a period of one year following
  termination of his employment with MFA. During such one-year period, the Executive
  shall not solicit any employees of the Company to work for any mortgage REIT.
  Except as otherwise required by law, the Executive shall keep confidential all
  materials, files, reports, correspondence, records and other documents (collectively
  the “Company Materials”) used, prepared or made available to him in
  connection with his employment by MFA and which have not otherwise been made
  available to the public, and upon termination of his employment shall return
  such Company Materials to MFA. The Executive acknowledges that MFA may seek
  injunctive relief or other specific enforcement of its rights under this Paragraph.

   20. Indemnification.
   

     MFA
  shall indemnify the Executive to the fullest extent permitted by Maryland law
  in effect as of the date hereof in connection with the Executive’s duties
  with the Company, 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. 

   21. 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.

   22. 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.

   23. 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. 

   24. 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. 

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   25. 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. 

   26. 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. 

   27. 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. 

   28. 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.

   29. 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. 

   30. 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. 

   31. Counterparts.
   

     This
  Agreement may be executed in two or more counterparts.
   

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

	 	MFA Mortgage
      Investments, Inc.
	 	 	 	

      

      
	 	 	By:	/s/ Stewart Zimmerman
	 	 	 	Name: Stewart Zimmerman
	 	 	 	Title: Chief Executive
      Officer and President
	 	 	 	
 
 
	 	 	 	/s/ William S.
      Gorin
	 	 	 	      William
      S. Gorin

7EXHIBIT 10.1

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

         Agreement made this 21st day of August , 2003 between Vuong Quang Quoc
("Vuong"), as Tenant and Smog Centers of California, LLC ("Smog Centers"), as
Assignee.

                                    Recitals

         A. Vuong as Tenant is a party to a Real Estate Lease dated April 4,
2001 ("Lease") with Manuel Nunez, as Landlord.

         B. Vuong possesses all right, title and interest in and to the Lease,
as tenant, and desires to sell, assign and transfer the Lease to Smog Centers,
as Assignee and Smog Centers desires to accept such sale, assignment and
transfer upon the terms and conditions set forth in this Agreement.

         C. To their respective best knowledge, Vuong and Landlord have no
claims or defenses one against the other by reason of the Lease.

         D. Vuong and Smog have entered into an Asset Acquisition Agreement
dated August 21, 2003 regarding the sale and purchase of all of the assets used
by Vuong in connection with the operation of a motor vehicle smog emissions test
center on the property subject to the Lease.

         Now, therefore, in consideration of the mutual covenants contained
herein set forth and for other good and valuable consideration, it is agreed as
follows:

         1. ASSIGNMENT. Vuong hereby sells, assigns and transfers to Smog
Centers any and all of Vuong's right, title and interest in and to the Lease.
The sale, assignment and transfer is made without recourse whatsoever to Vuong
and with out any representations and warranties, express or implied, of any
nature whatsoever.

         2. ACCEPTANCE AND INDEMNIFICATION. Smog Centers hereby accepts the
foregoing sale, assignment and transfer and promises to pay all rent and
additional rent and to faithfully perform all other covenants, stipulations,
agreements and obligations under the Lease accruing on and after August 21,
2003, or otherwise attributable to the period commencing on that date and
continuing thereafter and Vuong shall be responsible to the period prior
thereto. Smog Centers shall indemnify and hold Vuong harmless from any and all
claims, demands, actions, causes of action, suits, proceedings, damages,
liabilities and costs and expenses of every nature whatsoever which relate to
the Lease or the premises demised thereunder arising on or after August 21,
2003.

Assignment and Assumption Agreement- Page 1

<PAGE>
         3. MODIFICATION OF LEASE. Vuong agrees that Landlord and Smog Centers
may change, modify or amend the Lease in any way, including the rental to be
paid thereunder, and that further assignments may be made, without notice to or
consent of Vuong and without in any manner releasing or relieving Vuong from
liability under the Lease as originally executed by the parties thereto.

         4. CONSENT OF LANDLORD. In consideration of the foregoing, the Landlord
hereby consents to the assignment of the Lease by Vuong to Smog Centers, but
upon the express condition that neither such consent nor the collection of rent
from Smog Centers shall be deemed a waiver or relinquishment for the future of
the covenant against assignment or subletting, nor shall the acceptance of Smog
Centers as tenant be construed as releasing Vuong from the full performance of
the provisions of the Lease.

         5. ASSIGNEE'S EXPENSES. All taxes and other governmental charges and
fees, including without limitation, any and all transfer taxes, sales taxes and
recording fees, related to the transaction evidenced by this Agreement shall be
paid by Smog Centers.

         6. BENEFIT. Subject to the provisions in this Agreement restricting
assignment, this Agreement shall be binding upon and inure to the benefit heirs,
executor, administrators, successors and assigns of the parties.

         7. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:

         If to Vuong, to:

         Vuong Quang Quoc
         -------------------
         -------------------

         If to Smog Centers, to:

         Stephen D. Wilson
         3790 Via de la Valle, Suite 103
         Del Mar, California 92014
         Facsimile:_________________

         8. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California without regard to its rules on conflict of laws.

Assignment and Assumption Agreement- Page 2

<PAGE>
         9. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.

         10. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of will deemed to be an original and together shall
constitute one and same instrument.

         11. ATTORNEY'S FEES. In the event the services of an attorney at law
are necessary to enforce any of the terms of this Agreement or to resolve any
disputes arising under this Agreement, the prevailing Party shall be entitled to
recover its attorney's fees from the losing Party as determined in the
appropriate trial and/or appellate court, bankruptcy court or on a Petition for
Review.

         12. NON-WAIVER. No delay or failure by either party to exercise any
right under this Agreement, and not partial or single exercise of that right,
shall be constitute a waiver of that or any other right,

         13. COMPLETE AGREEMENT. This Agreement and other agreements referred to
herein set forth the entire understanding of the parties hereto with respect to
the matters provided herein and supersede all prior agreements, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any of the parties or by any officer, employer or representative of
any party.

         14. REPRESENTATION BY COUNSEL. This Agreement has been prepared by
legal counsel for and on behalf of Smog Centers. Vuong has been advised by Smog
Centers to obtain his own legal counsel in connection with this Agreement and
the transaction contemplated herein. Vuong has informed Smog Centers that he has
elected not to seek the advice of his own legal counsel.

         IN WITNESS WHEREOF, the parties have executed this Agreement by their
respective authorized officers as of the date first above written.

         Tenant:
         ------------------------------------
         Vuong Quang Quoc

         Assignee:
         Smog Centers of California, LLC

         By:______________________________
              Manager

         Landlord:
            ------------------------------------
             Manuel Nunez

Assignment and Assumption Agreement- Page 3

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